Beaumont City Council
May 2, 2023

Parity Bonds Outstanding as of the date of such proposed reduction; and (ii) the District is not delinquent in the payment of the principal of or interest on the Bonds or any Parity Bonds.

Third, the District will covenant in the Indenture that, in the event that any initiative is adopted by the qualified electors within the District which purports to reduce the maximum Special Tax below the levels specified in the preceding paragraph or to limit the power of the District to levy the Special Taxes for the purposes set forth in the Indenture, it will commence and pursue legal action in order to preserve its ability to comply with such covenants. The District can provide no assurance that any such legal action will be successful. See the caption "SPECIAL RISK FACTORS — Proposition 218."
Fourth, the District will covenant in the Indenture that it will not adopt any policy pursuant to the Act permitting the tender of Bonds or Parity Bonds in full payment or partial payment of any Special Taxes unless the District has first received a certificate from an Independent Financial Consultant that the acceptance of such a tender will not result in the District having insufficient Net Taxes to pay the principal of and interest on the Bonds and Parity Bonds when due.

Although the Special Taxes constitute liens on taxed parcels within the District, they do not constitute a personal indebtedness of the owners of property within the District. Moreover, other liens for taxes and assessments already exist on the property located within the District and others could come into existence in the future in certain situations without the consent or knowledge of the City or the landowners in the District. See the captions "THE COMMUNITY FACILITIES DISTRICT — Direct and Overlapping Debt" and "SPECIAL RISK FACTORS — Direct and Overlapping Indebtedness." There is no assurance that property owners will be financially able to pay the annual Special Taxes or that they will pay such taxes even if financially able to do so, all as more fully described under the caption "SPECIAL RISK FACTORS." Proceeds of Foreclosure Sales. The net proceeds received following a judicial foreclosure sale of property within the District resulting from a property owner's failure to pay the Special Taxes when due are included within the Net Taxes pledged to the payment of principal of and interest on the Bonds and any Parity Bonds under the Indenture.

Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of any Special Tax or receipt by the District of Special Taxes in an amount which is less than the Special Taxes levied, the City Council, as the legislative body of the District, may order that Special Taxes be collected by a Superior Court action to foreclose the lien within specified time limits. In such an action, the real property subject to the unpaid amount may be sold at a judicial foreclosure sale. Under the Act, the commencement of judicial foreclosure following the nonpayment of a Special Tax is not mandatory. However, the District will covenant in the Indenture for the benefit of the owners of the Bonds and any Parity Bonds that it will: (i) commence judicial foreclosure proceedings against parcels with delinquent Special Taxes in excess of $2,500 by the December 1 following the close of each Fiscal Year in which such Special Taxes were due; and (ii) commence judicial foreclosure proceedings against all parcels with delinquent Special Taxes by the December 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than 95% of the total Special Tax levied; and (iii) diligently pursue such foreclosure proceedings until the delinquent Special Taxes are paid; provided that, notwithstanding the foregoing, the District may elect to defer foreclosure proceedings on any parcel so long as the amount in the 2023 Bonds Reserve Subaccount is at least equal to the 2023 Bonds Reserve Requirement and the amounts in all other Subaccounts of the Reserve Account is at least equal to the applicable Reserve Requirement.

The District will covenant in the Indenture that it will deposit the net proceeds of any foreclosure in the Special Tax Fund and will apply such proceeds remaining after the payment of Administrative Expenses to make current payments of principal and interest on the Bonds and any Parity Bonds, to bring the amount on deposit in the 2023 Bonds Reserve Subaccount up to the 2023 Bonds Reserve Requirement and the amount on deposit in any other Subaccount of the Reserve Account up to the applicable Reserve Requirement, and to pay any 21 4877-5532-3965v8/022599-0033

delinquent installments of principal or interest due on the Bonds and any Parity Bonds. See APPENDIX D — "SUMMARY OF THE INDENTURE — COVENANTS AND WARRANTY — Covenants" herein.

If foreclosure is necessary and other funds (including amounts in the 2023 Bonds Reserve Subaccount) have been exhausted, debt service payments on the Bonds could be delayed unless the foreclosure proceedings produce sufficient net foreclosure sale proceeds. Judicial foreclosure actions are subject to the normal delays associated with court cases and may be further slowed by bankruptcy actions, involvement by agencies of the federal government and other factors beyond the control of the City and the District. See the caption "SPECIAL RISK FACTORS — Enforcement Delays — Bankruptcy." Moreover, no assurances can be given that the real property subject to foreclosure and sale at a judicial foreclosure sale will be sold or, if sold, that the net proceeds of such sale will be sufficient to pay any delinquent Special Tax installment. See the caption "SPECIAL RISK FACTORS — Property Values." Although the Act authorizes the District to cause such an action to be commenced and diligently pursued to completion, the Act does not impose on the District or the City any obligation to purchase or acquire any lot or parcel of property sold at a foreclosure sale if there is no other purchaser at such sale. The Act provides that, in the case of a delinquency, the Special Tax will have the same lien priority as is provided for ad valorem taxes.

No Teeter Plan
The District does not participate in the County's Teeter Plan described above. Accordingly, the collection of Special Taxes is subject to delinquencies. 2023 Bonds Reserve Subaccount of the Reserve Account of the Special Tax Fund In order to secure further the payment of principal of and interest on the Bonds, the District is required, upon delivery of the Bonds, to deposit in the 2023 Bonds Reserve Subaccount and thereafter to maintain in the 2023 Bonds Reserve Subaccount an amount equal to the 2023 Bonds Reserve Requirement. The term "2023 Bonds Reserve Requirement" is defined in the Indenture to mean, that amount as of any date of calculation, equal to the lesser of: (i) 10% of the initial principal amount of the Bonds; (ii) Maximum Annual Debt Service on the then Outstanding Bonds; (iii) 125% of average Annual Debt Service on the then Outstanding Bonds; provided, however, that the 2023 Bonds Reserve Subaccount shall not exceed $ . The Reserve Requirement may be satisfied in whole or in part by cash, a Reserve Policy (as defined in the Indenture), or a combination thereof. On the date of issuance of the Bonds, the District will deposit $ from proceeds of the Bonds into the 2023 Bonds Reserve Subaccount to satisfy the 2023 Bonds Reserve Requirement.

The 2023 Bonds Reserve Subaccount only secures and the amounts therein are only available to pay the principal of, redemption premium, if any, and interest on the Bonds. In connection with the issuance of a series of Parity Bonds, if any, the District may establish an additional Subaccount within the Reserve Account which secures such series of Parity Bonds. Such additional Subaccounts within the Reserve Account established for Parity Bonds will not secure the Bonds.

Subject to the limits on the maximum annual Special Tax levy set forth in the Rate and Method and in the Indenture, the District will covenant in the Indenture to levy Special Taxes in an amount sufficient, in light of the other intended uses of the Special Tax proceeds, to maintain the balance in the 2023 Bonds Reserve Subaccount at the 2023 Bonds Reserve Requirement and any other Subaccount of the Reserve Account at the applicable Reserve Requirement. Amounts in the 2023 Bonds Reserve Subaccount are to be applied: (i) to pay debt service on the Bonds, including Sinking Fund Payments, to the extent that other monies are not available therefor; (ii) to redeem Bonds in the event of prepayment of Special Taxes, to optionally redeem Bonds or in connection with a partial defeasance of Bonds, in accordance with the Indenture; and (iii) to pay any rebate requirements with respect to the Bonds. See Appendix D under the caption "CREATION OF FUNDS AND APPLICATION OF PROCEEDS — Reserve Account of the Special Tax Fund. 22 4877-5532-3965v8/022599-0033

Surplus Fund
After the transfer of Administrative Expenses to the Administrative Expense Fund up to the Administrative Expenses Cap, the payment of principal of and interest on the Bonds when due, transfers to the Redemption Account to pay principal and premium, if any, on Bonds called for redemption, transfers to replenish the Reserve Account to the Reserve Requirement and any required transfers to the Rebate Fund, as soon as practicable after each September 1, and in any event prior to each September 15, the Trustee will transfer all remaining amounts in the Special Tax Fund to the Surplus Fund, other than amounts in the Special Tax Fund which (i) the District has included as being available in the Special Tax Fund in calculating the amount of the levy of Special Taxes for such Fiscal Year pursuant to the Indenture or (ii) amounts to be transferred to the Acquisition and Construction Fund because such amounts were included in the levy of Special Taxes for the previous Fiscal Year to pay for the acquisition or construction of the Project. Moneys deposited in the Surplus Fund may be applied to pay the principal of, including Sinking Fund Payments, premium, if any, and interest on the Bonds and any Parity Bonds when due in the event that moneys in the Special Tax Fund and the Reserve Account of the Special Tax Fund are insufficient therefor, to replenish the Reserve Account to the Reserve Requirement, to pay Administrative Expenses in excess of the Administrative Expenses Cap, to pay Project Costs, or for any other lawful purpose of the District.

The amounts in the Surplus Fund are not pledged to the repayment of the Bonds or any Parity Bonds and may be used by the District for any lawful purpose.

Issuance of Parity Bonds
The Indenture provides that, upon satisfaction of certain conditions, the District may issue Parity Bonds payable from the Net Taxes and other amounts deposited in the Special Tax Fund (other than in the Administrative Expenses Account therein) and secured by a lien and charge upon such amounts equal to the lien and charge securing the Outstanding Bonds and any other Parity Bonds theretofore issued; provided, however, Parity Bonds may only be issued: (i) for the purpose of refunding all or a portion of the Bonds or any Parity Bonds then Outstanding, or (ii) for other purposes of the District in a principal amount not to exceed $13,110,000*.

Parity Bonds may be issued subject to certain additional specific conditions, which are conditions precedent to the issuance of any such Parity Bonds, including:

Where the Parity Bonds are being issued other than to refund the Bonds or other Parity Bonds, the District shall have received a certificate of the Special Tax Administrator certifying that (i) the maximum Special Taxes (based on development status of the Taxable Property at the time of issuance of such Parity Bonds) that may be levied in each Fiscal Year, less the Administrative Expenses Cap, is not less than 110% of the Annual Debt Service in the Bond Year that begins in such Fiscal Year; and (ii) the Value of District Property is not less than four (4) times the sum of Direct Debt for District Property plus Overlapping Debt allocable to all property in the District subject to the Special Tax. For purposes of the foregoing certificate of the Special Tax Administrator, all calculations shall consider the Parity Bonds proposed to be issued to be Outstanding. If the Parity Bonds are issued to refund the Bonds or other Parity Bonds, the District shall have received a certificate of an Independent Financial Consultant certifying that in each Bond Year the Annual Debt Service on the Bonds and Parity Bonds to remain Outstanding following the issuance of the Parity Bonds proposed to be issued is less than the Annual Debt Service on the Bonds and Parity Bonds Outstanding prior to the issuance of such Parity Bonds. See APPENDIX D — "SUMMARY OF THE INDENTURE — DEFEASANCE AND PARITY BONDS" for a complete description of the conditions precedent for the issuance of Parity Bonds.

Preliminary, subject to change.
23 4877-5532-3965v8/022599-0033

As further development occurs within the District, the District expects to issue Parity Bonds for the purpose of financing additional facilities.

THE COMMUNITY FACILITIES DISTRICT
General
The City formed the District on February 7, 2017. The District is located in the northeastern portion of the City and is bounded by Starlight Avenue to the west, N. Highland Springs Avenue to the east and Cougar Way to the north. Tri Pointe is developing the land within the District into a residential development of 704 age - restricted (55+) single family detached homes known as "Altis Beaumont" in the City. The Vuepoint, a 16,000 square foot community center that offers several swimming pools, five pickleball courts, a billiards lounge, a fitness club, as well as studies and outdoor event spaces is located at the center of Altis Beaumont. Since the first homes were completed in 2019, Altis Beaumont has won several architectural design and planning awards.

The District is part of a master planned community known as "Sundance." At buildout, Sundance is expected to consist of approximately 4,450 residential units on approximately 1,195 acres of land, with 13.5 acres of commercial/industrial land uses and the balance set aside for public/quasi/public uses. The Sundance master planned community is complete, with the exception of the remaining units to be developed and sold in the District.

Status of Development in the District
As of February 1, 2023, the date of value set forth in the Appraisal Report (as hereinafter defined), 416 homes within the District had been built and sold to individual homeowners, and Tri Pointe owned 24 completed homes (4 of which were in escrow) which include 12 model homes, 23 homes under construction (none of which were in escrow), 116 lots in a finished condition without any vertical construction thereon (none of which were in escrow), and 125 lots in a partially fmished condition (none of which were in escrow).

As of February 1, 2023, building permits had been issued for 561 of the parcels within the District and no additional building permits were issued prior to March 1, 2023; accordingly, 561 lots will be classified as Developed Property, and Special Taxes will be levied against such properties in Fiscal Year 2023-24. The Bonds have been sized so that the Assigned Special Taxes on the 561 parcels of Developed Property as of February 1, 2023 produce an amount equal to at least 110% of the debt service due on the Bonds plus Administrative Expenses of $30,000. Neither the Assigned Special Taxes nor the Administrative Expenses escalate over time.

As of April 10, 2023, an additional 8 completed homes had been conveyed to individual homeowners and 14 homes were under contract to be sold. Homes under contract may not result in closed escrows as sales contracts are subject to cancellation. The Developer currently expects to complete and convey all homes planned within the District to individual homebuyers by the third quarter of 2025. See "PROPERTY OWNERSHIP AND THE DEVELOPMENT" and "SPECIAL RISK FACTORS" — "Increasing Mortgage Interest Rates" for a discussion on how rising mortgage interest rates may impact the Developer's ability to complete development within the District as planned.

All property planned for residential development in the District is being developed by the Developer.

The area remaining to be built in the District has been graded; however, certain infrastructure (water, street improvements, streetlights and dry utilities including power, gas cable and phone) necessary to build out the balance of homes remains to be completed within the District. See the aerial photo of the District following the table of contents for a depiction of the development of the District as of December 4, 2022.

The Developer currently expects to complete and convey all homes planned within the District to individual homebuyers by the third quarter of 2025. See "PROPERTY OWNERSHIP AND THE DEVELOPMENT" and "SPECIAL RISK FACTORS" — "Increasing Mortgage Interest Rates" for a discussion 24 4877-5532-3965v8/022599-0033

on how rising mortgage interest rates may impact the Developer's ability to complete development within the District as planned.

Annual Debt Service for the Bonds has been structured so that Assigned Special Taxes levied on all taxable parcels of Developed Property (561 lots) as of February 1, 2023, assuming no delinquencies, will generate in each Fiscal Year not less than 110% of debt service payable with respect to the Bonds in the calendar year that begins in that Fiscal Year, plus estimated Administrative Expenses, assuming that Special Taxes are levied and collected on such Developed Property in the District pursuant to the Rate and Method.

Table 1 below sets forth the Assigned Special Tax per unit of Developed Property and Final Map Property, the Fiscal Year 2023-24 projected Special Tax levy and the percent of such levy based on land use class. The District expects to levy the Special Tax only on Developed Property and not on Final Map Property in Fiscal Year 2023-24, however, the District has the ability to levy the Special Tax on Final Map Property under the Rate and Method if necessary to meet the Special Tax Requirement.

TABLE 1

CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2016-3 (SUNDANCE)

ASSIGNED SPECIAL TAXES
Tax
Land Use) Class
Residential
Residential
Residential
Residential
Residential
Residential
Residential
Residential
Residential
Final Map Property
Total
D1
D2
D3
D4
D5
D6
D7
D8
D9
FM
(1)
(2)
(3)
Building Square Footage
Less than 1,426 sq. ft.
1,426 sq. ft. to 1,575 sq. ft.
1,576 sq. ft. to 1,725 sq. ft.
1,726 sq. ft. to 1,875 sq. ft.
1,876 sq. ft. to 2,025 sq. ft
2,026 sq. ft. to 2,175 sq. ft.
2,176 sq. ft. to 2,325 sq. ft.
2,326 sq. ft. to 2,475 sq. ft
Greater than 2,475 sq. ft.

N/A
Total
Fiscal Year Projected
Fiscal Year 2023-24 Fiscal Year
2023-24 Projected 2023-24
No. of Assigned Special Tax Special Tax Percent
Parcels Special Tax(2) Per Parcel Levy (3) of Total
25 $1,366 $1,366 $ 34,150 3.82%
181 1,436 1,436 259,916 29.08
102 1,520 1,520 155,040 17.34
39 1,590 1,590 62,010 6.94
92 1,659 1,659 152,628 17.07
18 1,785 1,785 32,130 3.59
76 1,855 1,855 140,980 15.77
7 1,980 1,980 13,860 1.55
21 2,058 2,058 43,218 4.83
143 14,310 0 0 0.00
704 $ 893,932 100.00%
Reflects Developed Property unless otherwise noted as Final Map Property.

Assigned Special Tax is per Unit for Residential Property and per Acre for Final Map Property.

Levied in an amount sufficient to cover debt service on the Bonds, pay Administrative Expenses of $30,000, and bring the total Special Tax levy to an amount equal to the Assigned Special Tax Rate.

Source: Webb Municipal Finance, LLC.

Description of Authorized Facilities
Pursuant to a Settlement Agreement with the Developer, the Developer agreed to pay and/or advance certain development impact fees ("DIF Fees") to the City for the construction of certain facilities. The City has used and will use a portion of these DIF Fees to construct certain authorized facilities benefiting the District (collectively, the "DIF Facilities"). The Bond proceeds deposited to the Acquisition and Construction Fund, held under the Indenture, are expected to be used to reimburse the Developer for the cost of the DIF Facilities, along with certain other eligible public infrastructure improvements.

Appraisal Report
The estimated assessed value of the property within the District, as shown on the County's assessment roll for Fiscal Year 2022-23, is approximately $113,661,854. However, as a result of the requirements of Article XIIIA of the California Constitution, a property's assessed value is not necessarily indicative of its market value. 4877-5532-3965v8/022599-0033
25 Page364of786

In order to provide information with respect to the value of the property within the District, the City engaged Integra Realty Resources, the Appraiser, to prepare the Appraisal Report. The Appraiser has an "MAI" designation from the Appraisal Institute and has prepared numerous appraisals for the sale of land -secured municipal bonds. The Appraiser was selected by the City through a request for proposal process and has no material relationships with the City, the District, or the owners of the land within the District other than the relationship represented by the engagement to prepare the Appraisal Report. The City instructed the Appraiser to prepare its analysis and report in conformity with City -approved guidelines and the Appraisal Standards for Land Secured Financings published in 1994 and revised in 2004 by the California Debt and Investment Advisory Commission. A copy of the Appraisal Report is included as APPENDIX I —"APPRAISAL REPORT" to this Official Statement.

The purpose of the Appraisal Report was to estimate the market value, by parcel, and aggregate value of the "as is" condition of the property within the District subject to the Special Taxes because such property did not have an improved value on the Fiscal Year 2022-23 County Assessor's roll. The remainder of the taxable property is valued in the Appraisal based on its assessed value. The estimate of market value takes into consideration and assumes the improvements to be funded with the proceeds of the Bonds have been installed and that the development costs provided to the Appraiser by the Developer include all of the costs necessary to bring the subject properties to a finished lot condition. The Appraisal Report appraised 494 of the lots within the District ($132,062,000) and relied on the assessed value for the remaining 210 lots ($87,152,262). Subject to the contingencies, assumptions and limiting conditions set forth in the Appraisal Report, the Appraiser concluded that, as of February 1, 2023 the value of the Taxable Parcels (based on appraised and assessed values) within the District was $219,214,262. In the Bring Forward Letter, the Appraiser concludes, based on the assumptions and limiting conditions set forth therein, that as of April 17, 2023, the value of the appraiser property was not less than the market value as of the date of value.

In estimating the market value, the Appraiser utilized a sales comparison approach for the completed single family homes and a land residual analysis for the remaining property to derive a value indication for the fmalized lots within each tract adjusted by any costs to complete such finished lots.

Reference is made to Appendix I for a complete list of the assumptions and limiting conditions and a full discussion of the appraisal methodology and the basis for the Appraiser's opinions. In the event that any of the contingencies, assumptions and limiting conditions are not actually realized, the value of the property within the District may be less than the amount reported in the Appraisal Report. In any case, there can be no assurance that any portion of the property within the District would actually sell for the amount indicated by the Appraisal Report.

The Appraisal Report merely indicates the Appraiser's opinion as to the market value of the property referred to therein as of the date and under the conditions specified therein. The Appraiser's opinion reflects conditions prevailing in the applicable market as of the date of the Appraisal Report. The Appraiser's opinion does not predict the future value of the subject property, and there can be no assurance that market conditions will not change adversely in the future. See, for example, "SPECIAL RISK FACTORS— Impact of Economic Conditions on the Development in the District."
It is a condition precedent to the issuance of the Bonds that the Appraiser deliver to the District a certification to the effect that, while the Appraiser has not updated the Appraisal Report since its date and has not undertaken any obligation to do so, nothing has come to the attention of the Appraiser subsequent to the date of the Appraisal Report that would cause the Appraiser to believe that the value of the property that it appraised in the District is less than the value reported in the Appraisal Report. However, the Appraiser notes that acts and events may have occurred since the date of the Appraisal Report which could result in both positive and negative effects on market value within the District.
26 4877-5532-3965v8/022599-0033

Value -to -Lien Ratios
Table 2 below incorporates the values assigned to parcels in the Appraisal Report, the estimated principal amount of the Bonds allocable to each category of parcels and the estimated assessed/appraised value - to -lien ratios for various categories of parcels based upon land values as of February 1, 2023 as set forth in the Appraisal Report and based on information received from the Developer. Based on the principal amount of the Bonds, the estimated assessed/appraised District -wide value -to -lien ratio including all Taxable Property as of February 1, 2023 is 24.66` -to -1. This ratio does not include other direct and overlapping debt within the District.

See "—Direct and Overlapping Indebtedness" below. Taking that direct and overlapping debt into account, the ratio of the aggregate assessed/appraised value of the Taxable Property within the District to the total principal amount of all direct and overlapping bonded debt for the District is approximately 15.30 -to -1. The District expects to levy the Special Tax only on Developed Property and not on Final Map Property in Fiscal Year 2023- 24, however, the District has the ability to levy the Special Tax on Final Map Property under the Rate and Method if necessary to meet the Special Tax Requirement. The estimated appraised/assessed District -wide value -to -lien ratio of Developed Property as of February 1, 2023 is 22.63* -to -1. This ratio does not include other direct and overlapping debt within the District. See "—Direct and Overlapping Indebtedness" below. Taking that direct and overlapping debt into account, the ratio of the aggregate assessed/appraised value of Developed Property within the District to the total principal amount of all direct and overlapping bonded debt for the District is approximately 14.04* -to -1.

TABLE 2

CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2016-3

ASSESSED/APPRAISED VALUE -TO -LIEN RATIOS

ALLOCATED BY PROPERTY OWNER
Percent of
Projected Projected
Fiscal Year Fiscal Year Assessed/
Percent of 2023-24 2023-24 Assessed/ Appraised
Property Owner/ Maximum Maximum Special Tax Special Tax Appraised Allocation of Value -to - Development Status'!) Parcels Special Tax Special Tax Levj/2 Levy Value Bonds(')* Lient44' Developed -Tri Pointe 137 $ 260,319 19.24% $ 217,122 24.29% $ 23,844,442 $ 2,159,241 11.04:1 Developed - Individual Owners 424 809,534 59.82 676,810 75.71 177,308,820 6,730,759 26.34:1 Subtotal Developed 561 $1,069,853 79.05% $ 893,932 100.00% $ 201,153,262 $ 8,890,000 22.63:1 Final Map - Tri Pointe 143 $ 283,495 20.95% $ 0 0.00% $ 18,061,000 $ 0 N/A Subtotal Approved 143 $ 283,495 20.95% $0 0.00% $ 18,061,000 $ 0 N/A Total 704 $1,353,348 100.00% $ 893,932 100.00% $ 219,214,262 $ 8,890,000 24.66:1 Preliminary, subject to change.
(1) Ownership status is based on information from the Developer as of April 10, 2023. (2) Levied in an amount sufficient to cover debt service on the Bonds, pay Administrative Expenses of $30,000, and bring the total Special Tax levy to an amount equal to the Assigned Special Tax Rate. (3) Based on projected Fiscal Year 2023-24 Special Tax levy. (4) Aggregate value -to -lien based upon the par amount of the Bonds. Excludes direct and overlapping debt shown in Table 5.

Source: Webb Municipal Finance, LLC.
* Preliminary, subject to change.
27 4877-5532-3965v8/022599-0033

Assessed Valuation History
The following table represents the historical assessed valuation of the Taxable Property in the District as shown on the County Assessor's roll for Fiscal Years 2018-19 through 2022-23.

TABLE 3

CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2016-3

HISTORICAL ASSESSED VALUES
Parcels with
Improvement
Assessed
Fiscal Year Total Parcels Value
2018-19(2) 5 1
2019-20 376 12
2020-21 704 89
2021-22 704 178
2022-23 704 324
(1)
(2)
Land Assessed
Value
$ 4,270,478
4,277,659
8,634,964
13,077,849
21,544,727
Improvement
Assessed
Value
$ 560,000
2,911,700
25,853,815
50,166,269
92,117,127
Total Assessed
Valuation(')
$ 4,830,478
7,189,359
34,488,779
63,244,118
113,661,854
Annual
Percent
Change
N/A

48.83%
379.72

83.38 79.72
As of January 1 of each year as shown on the County Assessor's Rolls. Total Assessed Value is calculated as the sum of Land Assessed Value and Improvement Assessed Value.

While 5 parcels were included on the County Assessor's Rolls in Fiscal Year 2018-19, the Special Tax levy did not commence until Fiscal Year 2019-20.

Source: Riverside County Assessor data compiled by Webb Municipal Finance, LLC. 4877-5532-3965v8/022599-0033
28

Table 4 below summarizes the assessed/appraised value -to -lien of the Developed Property within the District by value -to -lien range based on development status as of February 1, 2023.

TABLE 4

CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2016-3

ASSESSED/APPRAISED VALUE -TO -LIEN STRATIFICATION FOR PARCELS OF DEVELOPED PROPERTY Projected Percent of
Fiscal Year Fiscal Fiscal Year Percent of Percent of
Percent 2023-24 Year 2023-24 Total Assessed/ Assessed/ Aggregate Appraised No. of of Total Special Tax 2023-24 Assigned Assigned Appraised Appraised Allocation of Value-to- Value-to-Lient11 Parcels Parcels Levy(4) Levy Special Tax Special Tax Value Value Bonds(5)* Lien* Less than 10.00:1 121 21.57% $ 192,554 21.54% $ 192,554 21.54% $ 16,246,000 8.08% $ 1,914,916 8.48:1

10.00:1 to 14.99:1(2) 0 0.00 0 0.00 0 0.00 0 0.00 0 N/A

15.00:1 to 19.99:1 7 1.25 12,453 1.39 12,453 1.39 2,250,225 1.12 123,843 18.17:1

20.00:1 to 24.99:1 127 22.64 209,247 23.41 209,247 23.41 48,983,560 24.35 2,080,925 23.54:1

25.00:1 to 29.99:1 291 51.87 452,684 50.64 452,684 50.64 124,764,634 62.02 4,501,865 27.71:1 Greater than 29.99:1(3) 15 2.67 26,994 3.02 26 994 3.02 8,908,843 4.43 268,451 33.19:1 Total 561 100.00% $ 893,932 100.00% $ 893,932 100.00% $201,153,262 100.00% $ 8,890,000 22.63:1 Preliminary, subject to change.
(1) Assessed/Appraised value -to -lien based upon par amount of the Bonds. Excludes direct and overlapping debt shown in Table 5. (2) Minimum estimated appraised value -to -lien is 7.26:1. (3) Highest estimated appraised value -to -lien is 42.67 :1 04) Levied in an amount sufficient to cover debt service on the Bonds, pay Administrative Expenses of $30,000, and bring the total Special Tax levy to an amount equal to the Assigned Special Tax Rate.
(5) Based on projected Fiscal Year 2023-24 Special Tax levy.

Source: Webb Municipal Finance, LLC.
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Direct and Overlapping Debt
The District is included within the boundaries of overlapping local agencies providing governmental services. Some of these local agencies have outstanding bonds, and/or the authority to issue bonds, payable from taxes or assessments. The existing and authorized indebtedness payable from taxes and assessments that may be levied upon the property within the District is shown in Table 5 below. In addition to current debt, new community facilities districts and/or special assessment districts could be formed in the future encompassing all or a portion of the property within the District; and such districts or the agencies that formed them could issue more bonds and levy additional special taxes or assessments.

TABLE 5

CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2016-3

DIRECT AND OVERLAPPING DEBT
I. ASSESSED/APPRAISED VALUE
Assessed/Appraised Valuation(') $219,214,262
II. LAND SECURED BOND INDEBTEDNESS
Parcels
in Amount
Outstanding Direct and Overlapping Bonded Debt Type 2016-3 Issued Outstanding % Applicable Applicable CFD 2016-3 BEAUMONT CFD 704 $8,890,000 $8,890,000(2) 100.00% $ 8,890,000' TOTAL OUTSTANDING LAND SECURED BONDED DEBT (3) $ 8,890,000* Parcels
in Amount
Authorized and Unissued Direct and Overlapping Bonded Debt Type 2016-3 Authorized Unissued % Applicable Applicable CFD 2016-3 BEAUMONT CFD 704 $22,000,000 $13,110,000 100.00% $ 13,110,000' TOTAL UNISSUED LAND SECURED INDEBTEDNESS (3> $ 13,110,000* TOTAL OUTSTANDING AND UNISSUED LAND SECURED INDEBTEDNESS $ 22,000,000 III. GENERAL OBLIGATION BOND INDEBTEDNESS
Parcels
in % Amount
Outstanding Direct and Overlapping Bonded Debt Type 2016-3 Issued Outstanding Applicable(4) Applicable Beaumont Unified School B & I (0.07777%) GO 704 $112,564,160 $114,620,539 2.69% $ 3,033,276 MT San Jacinto Comm (0.01320%) GO 704 247,850,000 253,195,000 0.20 505,252 San Gorgonio Memorial Healthcare District (0.06242%) GO 704 97,260,000 100,090,000 1.95 1,897,926 San Gorgonio Pass Water Agency (0.17500%) GO 704 0 0 1.62 0 TOTAL OUTSTANDING GENERAL OBLIGATION BONDED DEBT (3> $ 5,436,454 Parcels
in % Amount
Authorized and Unissued Direct and Overlapping Indebtedness Type 2016-3 Authorized Unissued Applicable(4> Applicable Beaumont Unified School B & I (0.07777%) GO 704 $141,000,000 $16,051,417 2.69% $ 432,539 MT San Jacinto Comm (0.01320%) GO 704 295,000,000 0 0.20 0 San Gorgonio Memorial Healthcare District (0.06242%) GO 704 108,000,000 0 1.95 0 San Gorgonio Pass Water Agency (0.17500%) GO 704 0 0 1.62 0 TOTAL UNISSUED GENERAL OBLIGATION INDEBTEDNESS $ 432,539 TOTAL OUTSTANDING AND UNISSUED GENERAL OBLIGATION INDEBTEDNESS $ 5,868,993 TOTAL OF ALL OUTSTANDING DIRECT AND OVERLAPPING BONDED DEBT $ 14,326,454' TOTAL OF ALL OUTSTANDING AND UNISSUED DIRECT AND OVERLAPPING INDEBTEDNESS $ 27,868,993* IV. Ratios to Assessed/Appraised Valuation
Outstanding Land Secured Bonded Debt
Total Outstanding Bonded Debt

24.66':1

15.30':1
' Preliminary, subject to change.
(1) Assessed/appraised value is per the Appraisal Report with a date of value as of February 1, 2023. (2) Amount outstanding is equal to the initial principal of the Bonds. (3) Additional bonded debt or available bond authorization may exist but is not shown because a tax was not levied for Fiscal Year 2022-23. (4) Percentage applicable determined by Fiscal Year 2022-23 Equalized Roll Assessed Value information.

Source: Webb Municipal Finance, LLC.
4877-5532-3965v8/022599-0033
30

Annual Debt Service for the Bonds has been structured so that Assigned Special Taxes levied on all taxable parcels of Developed Property, assuming no delinquencies, will generate in each Fiscal Year not less than 110% of debt service payable with respect to the Bonds in the calendar year that begins in that Fiscal Year, plus the Administrative Expenses Cap, assuming that Special Taxes are levied and collected on such Developed Property in the District pursuant to the Rate and Method.

Based on the principal amount of the Bonds, interest costs, Administrative Expenses being levied at the Administrative Expenses Cap, and Fiscal Year 2022-23 tax rates for all other taxing jurisdictions within the District, the total projected Fiscal Year 2023-24 average effective tax rate for Developed Property in the District as of February 1, 2023, is approximately 1.88% of the average value for parcels with improvement value. The following Table 6 sets forth the estimated total tax obligation of property in the District based on the average home size and an average value in the District, as set forth in the Appraisal Report.

TABLE 6

CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2016-3
ESTIMATED AVERAGE TAX OBLIGATION AT BUILDOUTtt>
Average Home Value(2)
Ad Valorem Property Taxes:

Ad -Valorem Tax Rate (1.00%)
Beaumont Unified School (0.07777%)
San Gorgonio Pass Memorial Hospital (0.06242%)
San Gorgonio Pass Water District (0.17500%)
Mt. San Jacinto Community College District (0.01320%)
Total General Property Taxes
Assessment, Special Taxes & Parcel Charges:

CFD 2016-3(3)
CFD 2016-3 Public Serv(4)
CFD 2016-3 Maint Serv(5)

FLD CNTL STORMWATER /CLEANWATER
San Gorgonio Hospital Measure D
Total Assessment Charges
Average Total Property Tax
Average Effective Tax Rate
$ 420,117
$ 4,201.17
326.73
262.24
735.21

55.46 $ 5,580.80
$ 1,594.98
546.61

94.60 2.84

60.52 $ 2,299.55
$ 7,880.35

1.88%
(1) Average Fiscal Year 2023-23 tax rates based upon Fiscal Year 2022-23 Overlapping Taxes and Assessment Rates. (2) Average Home Value is based upon average Appraised/Assessed Values for Developed parcels indicated as Complete per the Appraisal Report.
(3) Reflects the District's Average Projected Fiscal Year 2023-24 Special Tax levy for Developed Property indicated as Complete per the Appraisal Report.
(4) Reflects the District's Fiscal Year 2023-24 projected Special Tax levy for facilities for Developed Property. Per the Rate and Method, the maximum special tax for public safety services for the prior fiscal year shall be adjusted by the greater of (i) an amount equal to the positive annual percent change in the Consumer Price Index for the Calendar Year ending in December of the prior fiscal year or (ii) five percent. As CPI data for December 2022 is not available, the percentage calculated pursuant to (i) cannot be precisely estimated. Instead, an estimate of 5.00% has been utilized. (5) Reflects the District's Fiscal Year 2023-24 projected Special Tax levy for Developed Property. Per the Rate and Method, the maximum special tax for maintenance services for the prior fiscal year shall be adjusted by the greater of (i) an amount equal to the positive annual percent change in the Consumer Price Index for the Calendar Year ending in December of the prior fiscal year or (ii) two percent. As CPI data for December 2022 is not available, the percentage calculated pursuant to (i) cannot be precisely estimated. Instead, an estimate of 2.00% has been utilized.

Source: Webb Municipal Finance, LLC, based on Home Value information provided by Riverside County. 4877-5532-3965v8/022599-0033
31

Delinquency History
Special Taxes within the District were first levied in Fiscal Year 2019-20 in the amount of $100,822.

For each Fiscal Year, the first installment of the Special Taxes becomes due on December 10 and the second installment becomes due on April 10. Table 7 below summarizes the annual secured tax levies within the District and the amounts delinquent as of March 31, 2023 for Fiscal Years 2019-20 through 2022-23. Future delinquencies could increase as a result of factors such as changes in the local or national economy, increases in the mortgage rates and/or increases in the unemployment rate in the area. See "SPECIAL RISK FACTORS — Special Tax Delinquencies" and "SPECIAL RISK FACTORS —Increasing Mortgage Interest Rates." TABLE 7

CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2016-3

SPECIAL TAX LEVIES, DELINQUENCIES, AND DELINQUENCY RATES FISCAL YEARS 2019-20 THROUGH 2022-23
As of Fiscal Year End As of March 31, 2023
Fiscal Amount Parcels Parcels Amount Percent Parcels Amount Percent Year Levied Levied Delinquent Delinquent Delinquent Delinquent Delinquent Delinquent 2019-200> $100,822.00 61 9 $10,346.00 10.26% 0 $ 0.00 0.00% 2020-21 207,685.00 124 8 10,782.00 5.19 0 0.00 0.00
2021-22 486,922.00 297 9 8,248.00 1.69 0 0.00 0.00
2022-23(2) 299,434.50 373 N/A N/A N/A 7 5,361.50 1.79
(1) Fiscal Year 2019-20 was the first year the special tax was levied. (2) Accounts for first installment only.

Source: Webb Municipal Finance, LLC and Riverside County Tax Collector.

Top Taxpayers
As of April 10 2023, individual homeowners owned 424 of the 561 parcels of Developed Property in the District. Based on ownership status and development status as of April 10, 2023, individual homeowners are projected to be responsible for 75.71% of the Special Taxes projected to be levied on Developed Property in Fiscal Year 2023-24, with the Developer being responsible for the other 24.29%.

As of April 10, 2023, individual homeowners owned 424 of the 704 parcels of Taxable Property in the District. Based on ownership status and development status as of April 10, 2023, individual homeowners are projected to be responsible for 59.82% of the Maximum Special Tax that may be levied on Taxable Property in Fiscal Year 2023-24, with the Developer being responsible for the other 40.18%.

The District expects to levy the Special Tax only on the 561 parcels classified as Developed Property as of April 10, 2023 and not on the 143 parcels of Final Map Property in Fiscal Year 2023-24, however, the District has the ability to levy the Special Tax on Final Map Property under the Rate and Method if necessary to meet the Special Tax Requirement. The District is not aware of any individual, other than the Developer, who owns more than one parcel within the District.

PROPERTY OWNERSHIP AND THE DEVELOPMENT
The information regarding the development and ownership of the Property contained under this caption, "PROPERTY OWNERSHIP AND THE DEVELOPMENT" has been provided by representatives of Tri Pointe Homes IE-SD, Inc., a California corporation (the "Developer" or "Tri Pointe"), and has not been independently confirmed or verified by the Underwriter, the City or the District. The Underwriter, the City and the District make no representation as to the accuracy or adequacy of the information contained under this caption. There may be material adverse changes in this information after the date of this Official Statement. Neither the Bonds 32 4877-5532-3965v8/022599-0033

nor the Special Taxes securing the Bonds are personal obligations of the Developer or any affiliate thereof or any other property owner and, in the event that any property owner defaults in the payment of its Special Taxes, the District may proceed with judicial foreclosure but has no direct recourse to the assets of any property owner or any affiliate thereof. See "SPECIAL RISK FACTORS" herein. " The Developer
As previously defined in this Official Statement as the "Developer" or "Tri Pointe" is Tri Pointe Homes IE-SD, Inc., a California corporation, which is an indirect, wholly -owned subsidiary of Tri Pointe Homes, Inc., a Delaware corporation ("Tri Pointe Homes"), a publicly traded company whose common stock is listed on the New York Stock Exchange under the ticker symbol "TPH". Tri Pointe Homes is engaged in the design, construction and sale of innovative single-family attached and detached homes in 15 markets across ten states and the District of Columbia. Effective January 15, 2021, Tri Pointe Homes changed its corporate name from "TRI Pointe Group, Inc." to "Tri Pointe Homes, Inc." and consolidated its six regional homebuilding brands into one unified name—Tri Pointe Homes.

Tri Pointe Homes is subject to the informational requirements of the Exchange Act and, in accordance therewith, files reports, proxy statements, and other information, including financial statements, with the SEC.

Such filings, set forth, among other things, certain data relative to the consolidated results of operations and financial position of Tri Pointe Homes and its consolidated subsidiaries, including Tri Pointe, as of such dates (e.g., see Tri Pointe Homes' Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on February 21, 2023, and Tri Pointe Homes' Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, as filed with the SEC on October 27, 2022).

The SEC maintains an Internet web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC, including Tri Pointe Homes. The address of such Internet web site is www.sec.gov . All documents filed by Tri Pointe Homes pursuant to the requirements of the Exchange Act after the date of this Official Statement will be available for inspection in such manner as the SEC prescribes. Copies of Tri Pointe Homes' most recent Annual Report on Form 10-K and each of its other quarterly and current reports, including any amendments, are available in the "investors" portion of its website at www.tripointehomes.com .

The foregoing website addresses and references to filings with the SEC are given for reference and convenience only, and the information on such websites and on file with the SEC does not form a part of this Official Statement and is not incorporated by reference herein. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on such websites. Tri Pointe Homes and Tri Pointe are not obligated to advance funds for construction or development or to pay ad valorem property taxes or the Special Taxes and investors should not rely on the information and financial statements contained on such websites in evaluating whether to buy, hold or sell the Bonds. The information contained on such websites may be incomplete or inaccurate and has not been reviewed by the City or the Underwriter.

Development and Financing Plan
The Altis Beaumont development includes 704 planned age -restricted (55+) single family detached homes with 18 floor plans ranging in size from approximately 1,419 square feet to approximately 2,559 square feet. The following table describes the development and ownership status as of April 10, 2023 by floor plan within the Altis Beaumont development.
33 4877-5532-3965v8/022599-0033

TABLE 8

ALTIS BEAUMONT

DEVELOPMENT AND OWNERSHIP STATUS
(AS OF APRIL 10, 2023)
Estimated
Total Home Closings Completed Homes Partially Homes
Units Square as of April Homes/ Under Finished Finished in Base Home Floor Plan Planned Footage 10, 2023 Models Construction Lots Lots Escrow Prices Avid
Plan 1 25 1,661 23 2 0 0 0 0 $340,000
Plan 2 15 1,802 14 1 0 0 0 0 359,000
Plan 3 25 1 929 24 1 0 0 0 0 374.000
Total Avid 65 61 4 0 0 0 0
Elan
Plan 1 26 2,278 26 0 0 0 0 0 $402,000
Plan 2 7 2,404 7 0 0 0 0 0 408,000
Plan 3 21 2159 21 0 0 0 0 0 423.000
Total Elan 54 54 0 0 0 0 0 Closed Out
Lina
Plan 1 43 1,934 4 5 3 15 16 1 $452,000
Plan 2 44 1,989 7 1 2 17 17 1 466,000
Plan 3 43 2 186 7 1 3 15 17 3 491.000
Total Lina 130 18 7 8 47 50 5
Mira
Plan 1 13 1,972 13 0 0 0 0 0 $377,000
Plan 1 2 2,626 2 0 0 0 0 0 365,000
Plan 2 18 2,174 17 1 0 0 0 0 418,000
Plan 3 22 2,230 22 0 0 0 0 0 400,000
Total Mira 55 54 1 0 0 0 0
Rosa
Plan 1 46 1,419 6 1 6 12 21 1 $396,000
Plan 2 44 1,563 7 1 4 12 20 3 412,000
Plan 3 43 1 763 6 1 6 11 19 2 434,000
Total Rosa 133 19 3 16 35 60 6
Vita
Plan 1 98 1,473 82 3 0 2 11 2 $418,000
Plan 2 83 1,534 65 2 0 3 13 1 423,000
Plan 3 86 1 682 71 3 0 3 9 0 440,000
Total Vita 267 218 8 0 8 33 3
Total 704 424 23 24 90 143 14
Source: The Developer.

As of April 10, 2023, of the 704 dwelling units planned within the District, individual homeowners owned 424 completed homes, while the Developer owned the remaining 23 completed homes (14 of which were in escrow) which include 12 model homes, 24 homes under construction (none of which were in escrow), 90 lots in a finished condition without any vertical construction thereon (none of which were in escrow) and 143 lots in a partially finished condition. As of April 10, 2023, of the 280 home sites owned by Tri Pointe, 14 were in escrow.

As of April 10, 2023, the area remaining to be built in the District has been graded; however, certain infrastructure (water, street improvements, streetlights and dry utilities including power, gas cable and phone) necessary to build out the balance of homes remain to be completed within the District. No discretionary approvals or remediation is necessary in order for Tri Pointe to complete its active development projects within the District. Tri Pointe anticipates closing escrow to individual homebuyers on all of the remaining homes 34 4877-5532-3965v8/022599-0033

planned within the District by the third quarter of 2025. Sales contracts are subject to cancelation and, therefore, homes currently in escrow may not result in closed escrows with the prospective homebuyers.

To date, Tri Pointe has financed its land acquisition and various site development costs related to its property in the District through internally generated funds (which may include home sales revenues and funding from its parent company Tri Pointe Homes). As of April 10, 2023, Tri Pointe has expended approximately $148.7 million on land acquisition and development and homebuilding costs in the District. As of such date, Tri Pointe expects to incur approximately $34.1 million on remaining development and homebuilding costs in the District.

Tri Pointe expects to use internally generated funds (which may include home sales revenues and funding from its parent company Tri Pointe Homes) to complete its developments within the District, and believes that it will have sufficient funds available to complete its planned development as described in this Official Statement.

Although Tri Pointe expects to have sufficient funds available to complete its development in the District as described in this Official Statement, there can be no assurance that amounts necessary to finance the remaining development costs will be available to Tri Pointe when needed. While Tri Pointe Homes has made such internal funding available in the past, there can be no assurance whatsoever of its willingness or ability to do so in the future. Neither Tri Pointe, nor any other entity or person is under any legal obligation of any kind to expend funds for the development of and construction of homes on Tri Pointe's property in The District or the payment of ad valorem property taxes or the Special Taxes. Any contributions by Tri Pointe or any other entity or person to fund the costs of such development are entirely voluntary.

If and to the extent that the aforementioned sources are inadequate to pay the costs to complete the planned development by Tri Pointe within The District and other financing is not put into place, there could be a shortfall in the funds required to complete the planned development by Tri Pointe or to pay ad valorem property taxes or Special Taxes related to Tri Pointe's property in The District, and the remaining portions of such development may not be completed. Many factors beyond Tri Pointe's control, or a decision by Tri Pointe to alter its current plans, may cause the actual sources and uses to differ from the projections. See "SPECIAL RISK FACTORS" herein for a discussion of risk factors." Except as described in this Official Statement and except for those consents, permits, authorizations, certifications and approvals of governmental entities required in the ordinary course of development, Tri Pointe has no actual knowledge of any impediment to construction or obtaining land use entitlements which could be reasonably expected to have a material adverse effect on its ability to complete the planned development of its property within The District as described in the Official Statement.

Although the information in this Official Statement reflects the current development expectations of Tri Pointe, no assurance can be given that home construction and sales will be carried out on the schedule and according to the plans described herein, or that the home construction and sale plans or base prices set forth above will not change after the date of this Official Statement. Moreover, rising interest rate may affect prospective buyers' willingness or ability to close escrow or enter into future sales contracts. See "SPECIAL RISK FACTORS — Increasing Mortgage Interest Rates." Tri Pointe reserves the right to change its development at any time without notice. Additionally, homes under contract to be sold may not result in closed escrows as sales contracts are subject to cancellation. See "SPECIAL RISK FACTORS — Concentration of Property Ownership."
Increasing Mortgage Interest Rates. Most of the purchasers of Tri Pointe's homes finance their acquisitions with mortgage financing. As such, rising interest rates, decreased availability of mortgage financing or of certain mortgage programs, higher down payment requirements or increased monthly mortgage costs could have a negative impact on the estimated absorption rates of Tri Pointe's planned for -sale homes in the District.

Further, a combination of higher mortgage rates, delays in construction stemming from delays in the supply 35 4877-5532-3965v8/022599-0033
Page374of786

chain, homebuyers' inability to sell their existing homes and adverse changes in local, regional or national economic conditions, among other factors, could contribute to an increase in Tri Pointe's rate of home order cancellations. An increase in the level of such cancellations could similarly have a negative impact on the estimated absorption rates of Tri Pointe's planned for -sale homes in the District.

SPECIAL RISK FACTORS
The purchase of the Bonds involves significant risks and is not an appropriate investment for all investors. The following is a discussion of certain risk factors which should be considered, in addition to other matters set forth herein, in evaluating the investment quality of the Bonds. The Bonds have not been rated by a rating agency. This discussion does not purport to be comprehensive or defmitive and does not purport to be a complete statement of all factors which may be considered as risks in evaluating the credit quality of the Bonds.

The occurrence of one or more of the events discussed herein could adversely affect the ability or willingness of property owners in the District to pay their Special Taxes when due. Such failures to pay Special Taxes could result in the inability of the District to make full and punctual payments of debt service on the Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect the value of the property in the District. See "—Property Values" and "—Limited Secondary Market." Concentration of Ownership
Based on ownership status and development status of Developed Property as of February 1, 2023, approximately 25.78% of the Special Taxes projected to be levied in Fiscal Year 2023-24 will be payable by the Developer. Based on ownership status and development status of Developed Property as of April 10, 2023, approximately 24.29% of the Special Taxes projected to be levied in Fiscal Year 2023-24 will be payable by the Developer. The Bonds have been sized so that the Assigned Special Taxes on the 561 parcels of Developed Property produce an amount equal to at least 110% of the debt service due on the Bonds plus Administrative Expenses of $30,000.

Failure of the Developer, entities affiliated with the Developer or any successor(s), to pay the annual Special Taxes when due could result in a draw on the Reserve Account of the Special Tax Fund, and ultimately a default in payments of the principal of, and interest on, the Bonds, when due. No assurance can be given that the Developer or any successors, will complete the remaining intended construction and development in the District.

Risks of Real Estate Secured Investments Generally
The Bond Owners will be subject to the risks generally incident to an investment secured by real estate, including, without limitation: (i) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of the District, the supply of or demand for competitive properties in such area, and the market value of residential property or buildings and/or sites in the event of sale or foreclosure; (ii) changes in real estate tax rates and other operating expenses, governmental rules (including, without limitation, zoning laws and laws relating to endangered species and hazardous materials) and fiscal policies; (iii) natural disasters (including, without limitation, earthquakes, wildfires and floods), which may result in uninsured losses; (iv) adverse changes in local market conditions; and (v) increased delinquencies due to rising mortgage costs and other factors.

No assurance can be given that the property owners within the District will pay Special Taxes in the future or that they will be able to pay such Special Taxes on a timely basis. See the caption "— Enforcement Delays — Bankruptcy" for a discussion of certain limitations on the District's ability to pursue judicial proceedings with respect to delinquent parcels.
36 4877-5532-3965v8/022599-0033

Limited Obligations
The Bonds and interest thereon are not payable from the general funds of the City. Except with respect to the Net Taxes, neither the credit nor the taxing power of the District or the City is pledged for the payment of the Bonds or the interest thereon, and, except as provided in the Indenture, no Owner of the Bonds may compel the exercise of any taxing power by the District or the City or force the forfeiture of any City or District property.

The principal of, premium, if any, and interest on the Bonds are not a debt of the City or a legal or equitable pledge, charge, lien or encumbrance upon any of the City's or the District's property or upon any of the City's or the District's income, receipts or revenues, except the Net Taxes and other amounts pledged under the Indenture.

The District's legal obligations with respect to any delinquent Special Taxes are limited to: (i) payments from the Subaccounts of the Reserve Account to the extent of funds on deposit therein; and (ii) the institution of judicial foreclosure proceedings under certain circumstances with respect to any parcels for which Special Taxes are delinquent. See the caption "SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales." The Bonds cannot be accelerated in the event of any default.

The obligation to pay Special Taxes does not constitute a personal obligation of the current or subsequent owners of the respective parcels which are subject to such liens. See the caption "— Payment of the Special Tax is Not a Personal Obligation of the Property Owners." Enforcement of Special Tax payment obligations by the District is limited to judicial foreclosure in the Superior Court of California, County of Placer.

There is no assurance that any current or subsequent owner of a parcel subject to a Special Tax lien will be able to pay the amounts due or that such owner will choose to pay such amounts even though financially able to do so.

Failure by owners of the parcels to pay Special Tax installments when due, delay in foreclosure proceedings, or the inability of the District to sell parcels that have been subject to foreclosure proceedings for amounts sufficient to cover the delinquent installments of Special Taxes levied against such parcels may result in the inability of the District to make full or timely payments of debt service on the Bonds, which may in turn result in the depletion of the 2023 Bonds Reserve Subaccount. See the caption "— Enforcement Delays — Bankruptcy.

Insufficiency of Special Taxes
As discussed below, the Special Taxes may not produce revenues sufficient to pay the debt service on the Bonds due to nonpayment of the amounts levied.

In order to pay debt service on the Bonds, it is generally necessary that the Special Taxes be paid in a timely manner. Should the Special Taxes not be paid on time, the District has established 2023 Bonds Reserve Subaccount under the Indenture to be maintained in an amount equal to the 2023 Bonds Reserve Requirement to pay debt service on the Bonds to the extent other funds are not available. See "SOURCES OF PAYMENT FOR THE BONDS — 2023 Bonds Reserve Subaccount of the Reserve Account of the Special Tax Fund." The District will covenant in the Indenture to maintain in the 2023 Bonds Reserve Subaccount an amount equal to the 2023 Bonds Reserve Requirement, subject, however, to the availability of Net Taxes in amounts sufficient to do so and to the limitation that the District may not levy the Special Tax in any Fiscal Year at a rate in excess of the maximum amounts permitted under the Rate and Method. See Appendix A and Appendix D hereto. As a result, if a significant number of Special Tax delinquencies occurs within the District, the District could be unable to replenish the 2023 Bonds Reserve Subaccount to the 2023 Bonds Reserve Requirement due to the limitations on the amount of the Special Tax that may be levied. If such defaults were to continue in successive years, the 2023 Bonds Reserve Subaccount could be depleted and a default on the Bonds could occur.

The 2023 Bonds Reserve Subaccount only secures and the amounts therein are only available to pay the principal of, redemption premium, if any, and interest on the Bonds. In connection with the issuance of a series 37 4877-5532-3965v8/022599-0033

of Parity Bonds, if any, the District may establish additional Subaccounts within the Reserve Account which secures such series of Parity Bonds. Such additional Subaccounts within the Reserve Account established for Parity Bonds will not secure the Bonds.

The Act provides that, if any property within the District not otherwise exempt from the Special Tax is acquired by a public entity through a negotiated transaction, or by gift or devise, the Special Tax will continue to be levied on and enforceable against the public entity that acquired the property. In addition, the Act provides that, if property subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property is to be treated as if it were a special assessment and be paid from the eminent domain award. The constitutionality and operation of these provisions of the Act have not been tested in the courts, but it is doubtful that they would be upheld as to, for example, property owned by the federal government. If for any reason property within the District becomes exempt from taxation by reason of ownership by a non-taxable entity such as the federal government or another public agency, subject to the limitation of the Maximum Special Tax, the Special Tax will be reallocated to the remaining taxable parcels within the District. This would result in the owners of such property paying a greater amount of the Special Tax and could have an adverse impact upon their willingness and/or ability to pay the Special Tax. Moreover, if a substantial portion of additional land within the District became exempt from the Special Tax because of public ownership, or otherwise, the Maximum Special Tax which could be levied upon the remaining acreage might not be sufficient to pay principal of and interest on the Bonds when due and a default will occur with respect to the payment of such principal and interest.

The District will covenant in the Indenture that, under certain circumstances, it will institute foreclosure proceedings to sell any property with delinquent Special Taxes in order to obtain funds to pay debt service on the Bonds. If foreclosure proceedings were ever instituted, any mortgage or deed of trust holder could, but would not be required to, advance the amount of the delinquent Special Tax to protect its security interest. See "SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales" for provisions which apply in the event of such foreclosure and which the District is required to follow in the event of delinquencies in the payment of the Special Tax.

In the event that sales or foreclosures of property are necessary, there could be a delay in payments to Owners of the Bonds (if the 2023 Bonds Reserve Subaccount has been depleted) pending such sales or the prosecution of such foreclosure proceedings and receipt by the City on behalf of the District of the proceeds of sale. The District may adjust the future Special Tax levied on taxable parcels in the District, subject to limitations described above under the caption "THE DISTRICT — Rate and Method of Apportionment," to provide an amount required to pay interest on and principal of the Bonds, and the amount, if any, necessary to replenish the 2023 Bonds Reserve Subaccount to an amount equal to the 2023 Bonds Reserve Requirement, and to pay all current expenses. There is, however, no assurance that the total amount of the Special Tax that could be levied and collected against taxable parcels in the District will be at all times sufficient to pay the amounts required to be paid by the Indenture, even if the Special Tax is levied at the Maximum Special Tax rates. See "— Enforcement Delays — Bankruptcy."
No assurance can be given that the real property subject to sale or foreclosure will be sold, or if sold, that the proceeds of sale will be sufficient to pay any delinquent installments of the Special Tax. The Act does not require the City to purchase or otherwise acquire any lot or parcel of property to be sold at foreclosure if there is no other purchaser at such sale. The Act and the Indenture do specify that the Special Tax will have the same lien priority as for ad valorem property taxes in the case of delinquency. Section 53356.6 of the Act requires that property sold pursuant to foreclosure under the Act be sold for not less than the amount of judgment in the foreclosure action, plus post judgment interest and authorized costs, unless the consent of the owners of 75% of the Outstanding Bonds and any Parity Bonds is obtained.

Prior to July 1, 1983, the right of redemption from foreclosure sales was limited to a period of one year from the date of sale. Under legislation effective July 1, 1983, the statutory right of redemption from such foreclosure sales has been repealed. However, a period of 20 days must elapse after the date on which the notice 38 4877-5532-3965v8/022599-0033

of levy of the interest in real property was served on the judgment debtor before the sale of such lot or parcel can be made. Furthermore, if the purchaser at the sale is the judgment creditor (e.g., the District), an action may be commenced by the delinquent property owner within 90 days after the date of sale to set aside such sale. The constitutionality of the aforementioned legislation, which repeals the one-year redemption period, has not been tested and there can be no assurance that, if tested, such legislation will be upheld. (Section 701.680 of the Code of Civil Procedure of the State).

Increasing Mortgage Interest Rates
30 -year fixed mortgage interest rates have increased substantially over the past year and are expected to continue to increase in the near term. Increases in mortgage interest rates could have a negative impact on the estimated absorption rates of the planned for -sale residential units in the District described herein. With respect to entry-level households, increased mortgage interest rates may adversely impact the affordability of homes and may increase mortgage payment levels for owning a lower -priced home relative to renting a residence, thereby making purchasing less attractive. With respect to move -up households, higher mortgage interest rates may impact the desire of current homeowners to move from their present home due to the fact that their present home likely has a relatively low mortgage interest rate. In addition, the new home would likely have a higher interest rate on a new mortgage loan as well as higher purchase price and property taxes. Such considerations may decrease the desire for move -up households to purchase a new home.

Impact of Economic Conditions on the Development in the District Certain events and factors which negatively affect the regional, State and national economies could have an adverse effect on the pace at which the merchant builders are able to complete and sell homes and demand by and the ability of individuals to purchase homes within the District. Such events and factors could include rising inflation and interest rates, persistent supply chain issues, further impacts of the COVID-19 pandemic and global market instability caused by the war in Ukraine. Any adverse impact of the foregoing and other economic factors on the projects in the District and the real estate market in general cannot be predicted.

Natural Disasters
The District, like all California communities, may be subject to unpredictable seismic activity, fires, floods, or other natural disasters. Southern California is a seismically active area. Seismic activity represents a potential risk for damage to buildings, roads, and property within the District. In addition, land susceptible to seismic activity may be subject to liquefaction during the occurrence of such event. The property within the District is located in a Fault -Rupture Hazard Zone (formerly referred to as an Alquist-Priolo Special Study Zone), as defined by Special Publication 42 (revised January 1994) of the California Department of Conservation, Division of Mines and Geology. The District is located approximately 1.3 miles southwest of the Banning Fault and 3.1 miles northwest of the San Gorgonio Pass Fault. The District is not located in a flood plain area.

In recent years, wildfires have caused extensive damage throughout the State. In some instances, entire neighborhoods have been destroyed. Several of the fires that occurred in recent years damaged or destroyed property in areas that were not previously considered to be at risk from such events. Some commentators believe that climate change will lead to even more frequent and more damaging wildfires in the future. Additionally, wildfires increase the risk of mudslides in areas like the District that are surrounded by hillsides. In general, property damage due to wildfire or mudslides could result in a significant decrease in the market value of property in the District and in the ability or willingness of property owners to pay Special Taxes.

Western Riverside County, in which the District is located, has previously experienced large-scale wildfires that resulted in the destruction of homes and businesses. According to the City's Municipal Code, which incorporates portions of the County's Ordinance 787 and the California Fire Code by reference, the District is not located in a Very High Fire Hazard Severity Zone. More information regarding Fire Hazard Severity Zones, including the most recent Fire Hazard Severity Zone Maps, can be found at the California 39 4877-5532-3965v8/022599-0033

Department of Forestry and Fire Protection website at http://frap.fire.ca.gov/index , though such website is not incorporated herein by reference. Homeowner's insurance is available to property owners within the District, and the coverage provided by such insurance typically insures against fire damage, although there is no assurance that homeowners within the District will purchase or maintain such insurance.

In the event of a severe earthquake, fire, flood or other natural disaster, there may be significant damage to both property and infrastructure in the District. As a result, a substantial portion of the property owners may be unable or unwilling to pay the Special Taxes when due. In addition, the value of land in the District could be diminished in the aftermath of such a natural disaster, reducing the resulting proceeds of foreclosure sales in the event of delinquencies in the payment of the Special Taxes.

Hazardous Substances
While government taxes, assessments and charges are a common claim against the value of a parcel, other less common claims may also be relevant. One of the most serious in terms of the potential reduction in the value of a parcel is a claim with regard to a hazardous substance. In general, the owners and operators of a parcel may be required by law to remedy conditions relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as "CERCLA" or the "Super Fund Act," is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar in effect. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of a parcel whether or not the owner (or operator) had anything to do with creating or handling the hazardous substance.

The effect, therefore, should any of the parcels within the District be affected by a hazardous substance, is to reduce the marketability and value by the costs of remedying the condition.

The District is not aware of the presence of any federally or state classified hazardous substances in violation of any environmental laws, located on the property within the District. However, it is possible that such materials do currently exist and that the District is not aware of them.

It is possible that property in the District may be liable for hazardous substances in the future as a result of the existence, currently, of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or the existence, currently, on the property of a substance not presently classified as hazardous but which may in the future be so classified. Additionally, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling such substance.

All of these possibilities could have the effect of reducing the value of the applicable property.

Direct and Overlapping Indebtedness
The ability of an owner of property within the District to pay the applicable Special Taxes could be affected by the existence of other taxes and assessments imposed upon taxable parcels. See "THE COMMUNITY FACILITIES DISTRICT — Direct and Overlapping Debt" herein. The City and other public agencies whose boundaries overlap those of the District could impose additional taxes or assessment liens on the property within the District in order to finance public improvements or services to be located or provided inside of or outside of such area. The lien created on the property within the District through the levy of such additional taxes may be on a parity with the lien of the Special Taxes applicable to the property within the District.

The imposition of additional liens on a parity with the Special Taxes may reduce the ability or willingness of property owners to pay the Special Taxes and increase the possibility that foreclosure proceeds will not be adequate to pay delinquent Special Taxes.
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Payment of the Special Tax is not a Personal Obligation of the Property Owners An owner of a taxable parcel is not personally obligated to pay Special Taxes. Rather, Special Taxes are an obligation which is secured only by a lien against the taxable parcel. If the value of a taxable parcel is not sufficient, taking into account other liens imposed by public agencies, to secure fully Special Taxes, the District has no recourse against the property owner.

Property Values
The value of the property within the District is a critical factor in determining the investment quality of the Bonds. If a property owner is delinquent in the payment of Special Taxes, the District's only remedy is to commence foreclosure proceedings against the delinquent parcel in an attempt to obtain funds to pay the Special Taxes. Reductions in property values due to a downturn in the economy, physical events such as earthquakes, fires or floods, stricter land use regulations, delays in development or other events will adversely impact the security underlying the Special Taxes. See "THE COMMUNITY FACILITIES DISTRICT —Value -to -Lien Ratios."
The Appraiser has estimated, on the basis of certain definitions, assumptions and limiting conditions contained in the Appraisal Report that as of February 1, 2023, the value of the Taxable Parcels within the District was $219,214,262. The Appraisal Report is based on a number of assumptions and limiting conditions as stated in APPENDIX I —"APPRAISAL REPORT." The Appraisal Report does not reflect any possible negative impact which could occur by reason of future slow or no growth voter initiatives, an economic downturn, any potential limitations on development occurring due to time delays, an inability of any landowner to obtain any needed development approval or permit, the presence of hazardous substances or other adverse soil conditions within the District, the listing of endangered species or the determination that habitat for endangered or threatened species exists within the District, or other similar situations.

Prospective purchasers of the Bonds should not assume that the land and improvements within the District could be sold for the amount stated in the Appraisal Report at a foreclosure sale for delinquent Special Taxes. In arriving at the estimate of market value of the appraised parcels in the Appraisal Report, the Appraiser assumes that any sale will be sold in a competitive market after a reasonable exposure time, and assuming that neither the buyer or seller is under duress, which is not always present in a foreclosure sale. See APPENDIX I — "APPRAISAL REPORT" for a description of other assumptions made by the Appraiser and for the definitions and limiting conditions used by the Appraiser. Any event which causes one of the Appraiser's assumptions to be untrue could result in a reduction of the value of the land within the District from that estimated by the Appraiser.

The assessed values set forth in this Official Statement do not represent market values arrived at through an appraisal process and generally reflect only the sales price of a parcel when acquired by its current owner, adjusted annually by an amount determined by the County Assessor, generally not to exceed an increase of more than 2% per fiscal year. No assurance can be given that a parcel could actually be sold for its assessed value.

No assurance can be given that any bid will be received for a parcel with delinquent Special Taxes offered for sale at foreclosure or, if a bid is received, that such bid will be sufficient to pay all delinquent Special Taxes. See APPENDIX D —"SUMMARY OF CERTAIN PROVISIONS OF THE BOND INDENTURE — COVENANTS AND WARRANTY —Covenants —Commence Foreclosure Proceedings." Parity Taxes and Special Assessments
Property within the District is subject to taxes and assessments imposed by other public agencies also having jurisdiction over the land within the District. See "THE COMMUNITY FACILITIES DISTRICT — Direct and Overlapping Indebtedness."
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As further development occurs within the District, the District expects to issue Parity Bonds for the purpose of financing additional facilities. See the caption "SOURCES OF PAYMENT FOR THE BONDS — Additional Parity Bonds."
The Special Taxes and any penalties thereon will constitute a lien against the lots and parcels of land on which they will be annually imposed until they are paid. Such lien is on a parity with all special taxes and special assessments levied by other agencies and is co -equal to and independent of the lien for general property taxes regardless of when they are imposed upon the same property. The Special Taxes have priority over all existing and future private liens imposed on the property except, possibly, for liens or security interests held by the Federal Deposit Insurance Corporation. See "—Bankruptcy and Foreclosure." Neither the District nor the City has control over the ability of other entities and districts to issue indebtedness secured by special taxes, ad valorem taxes or assessments payable from all or a portion of the property within the District. In addition, the landowners within the District may, without the consent or knowledge of the District, petition other public agencies to issue public indebtedness secured by special taxes and ad valorem taxes or assessments. Any such special taxes or assessments may have a lien on such property on a parity with the Special Taxes and could reduce the estimated value -to -lien ratios for the property within the District described herein. See "SOURCES OF PAYMENT FOR THE BONDS" and "THE COMMUNITY FACILITIES DISTRICT —Direct and Overlapping Indebtedness" and "THE COMMUNITY FACILITIES DISTRICT —Value-to-Lien Ratios."
Disclosures to Future Purchasers
The willingness or ability of an owner of a parcel to pay the Special Tax even if the value is sufficient may be affected by whether or not the owner was given due notice of the Special Tax authorization at the time the owner purchased the parcel, was informed of the amount of the Special Tax on the parcel should the Special Tax be levied at the maximum tax rate and the risk of such a levy and, at the time of such a levy, has the ability to pay it as well as pay other expenses and obligations. The District has caused a notice of the Special Tax to be recorded in the Office of the Recorder for the County of Riverside against each parcel. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such Special Tax obligation in the purchase of a property within the District or lending of money thereon.

The Act requires the subdivider (or its agent or representative) of a subdivision to notify a prospective purchaser or long-term lessor of any lot, parcel, or unit subject to a special tax under the Act of the existence and maximum amount of such special tax using a statutorily prescribed form. California Civil Code Section 1102.6b requires that in the case of transfers other than those covered by the above requirement, the seller must at least make a good faith effort to notify the prospective purchaser of the special tax lien in a format prescribed by statute. Failure by an owner of the property to comply with the above requirements, or failure by a purchaser or lessor to consider or understand the nature and existence of the Special Tax, could adversely affect the willingness and ability of the purchaser or lessor to pay the Special Tax when due.

Enforcement Delays — Bankruptcy
In the event of a delinquency in the payment of the Special Taxes, the District is required to commence enforcement proceedings under the circumstances described under the caption "SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales." However, prosecution of such proceedings could be delayed due to crowded local court calendars or by bankruptcy, insolvency and other laws generally affecting creditors' rights (such as the Soldiers' and Sailors' Relief Act of 1940) and by the laws of the State relating to judicial and non judicial foreclosure. Although bankruptcy proceedings would not cause the liens of the Special Taxes to become extinguished, bankruptcy of a person or entity with an interest in the applicable property could result in a delay in the enforcement proceedings because federal bankruptcy laws provide for an automatic stay of foreclosure and tax sale proceedings. Any such delay could increase the likelihood of delay 42 4877-5532-3965v8/022599-0033

or default in payment of the principal of and interest on the applicable Bonds. The various legal opinions to be delivered in connection with the issuance of the Bonds, including Bond Counsel's approving legal opinion, are qualified as to the enforceability of the Bonds and the Indenture by reference to bankruptcy, reorganization, moratorium, insolvency and other laws affecting the rights of creditors generally or against public entities such as the District.

Special Tax Delinquencies
Under provisions of the Act, the Special Taxes, from which funds necessary for the payment of principal of, and interest on, the Bonds are derived, will be billed to the properties within the District on the regular ad valorem property tax bills sent to owners of such properties by the County of Riverside Tax Collector. The Act currently provides that such Special Tax installments are due and payable, and bear the same penalties and interest for non-payment, as do ad valorem property tax installments.

See APPENDIX D —"SUMMARY OF CERTAIN PROVISIONS OF THE BOND INDENTURE — COVENANTS AND WARRANTY —Covenants —Commence Foreclosure Proceedings" for a discussion of the provisions which apply, and procedures which the District is obligated to follow under the Indenture, in the event of delinquencies in the payment of Special Taxes. See "—Bankruptcy and Foreclosure" for a discussion of the policy of the Federal Deposit Insurance Corporation regarding the payment of special taxes and assessment and limitations on the District's ability to foreclosure on the lien of the Special Taxes in certain circumstances.

The District does not participate in the County's Teeter Plan. Accordingly, the collection of Special Taxes is subject to delinquencies. See "THE COMMUNITY FACILITIES DISTRICT — Delinquency History for more information related to prior years Special Tax levies and delinquencies.

FDIC/Federal Government Interests in Properties
General. The ability of the District to foreclose the lien of delinquent unpaid Special Tax installments may be limited with regard to properties in which the Federal Deposit Insurance Corporation (the "FDIC"), the Drug Enforcement Agency, the Internal Revenue Service, or other federal agency has or obtains an interest.

The supremacy clause of the United States Constitution reads as follows: "This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the contrary notwithstanding." This means that, unless Congress has otherwise provided, if a federal governmental entity owns a parcel that is subject to Special Taxes within the District but does not pay taxes and assessments levied on the parcel (including Special Taxes), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments.

Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and the District wishes to foreclose on the parcel as a result of delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on a parity with the Special Taxes and preserve the federal government's mortgage interest. In Rust v. Johnson (9th Circuit; 1979) 597 F.2d 174, the United States Court of Appeal, Ninth Circuit held that the Federal National Mortgage Association ("FNMA") is a federal instrumentality for purposes of this doctrine, and not a private entity, and that, as a result, an exercise of state power over a mortgage interest held by FNMA constitutes an exercise of state power over property of the United States.

The District has not undertaken to determine whether any federal governmental entity currently has, or is likely to acquire, any interest (including a mortgage interest) in any of the parcels subject to the Special Taxes 43 4877-5532-3965v8/022599-0033

within the District, and therefore expresses no view concerning the likelihood that the risks described above will materialize while the Bonds are outstanding.

FDIC. In the event that any financial institution making any loan which is secured by real property within the District is taken over by the FDIC, and prior thereto or thereafter the loan or loans go into default, resulting in ownership of the property by the FDIC, then the ability of the District to collect interest and penalties specified by State law and to foreclose the lien of delinquent unpaid Special Taxes may be limited. The FDIC's policy statement regarding the payment of state and local real property taxes (the "Policy Statement") provides that property owned by the FDIC is subject to state and local real property taxes only if those taxes are assessed according to the property's value, and that the FDIC is immune from real property taxes assessed on any basis other than property value. According to the Policy Statement, the FDIC will pay its property tax obligations when they become due and payable and will pay claims for delinquent property taxes as promptly as is consistent with sound business practice and the orderly administration of the institution's affairs, unless abandonment of the FDIC's interest in the property is appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law, to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts. If any property taxes (including interest) on FDIC -owned property are secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay those claims. The Policy Statement further provides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC's consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC's consent.

The Policy Statement states that the FDIC generally will not pay non -ad valorem taxes, including special assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it purports to secure the payment of any such amounts. Special taxes imposed under the Act and a special tax formula which determines the special tax due each year are specifically identified in the Policy Statement as being imposed each year and therefore covered by the FDIC's federal immunity. The Ninth Circuit has issued a ruling on August 28, 2001 in which it determined that the FDIC, as a federal agency, is exempt from special taxes under the Act.

The District is unable to predict what effect the application of the Policy Statement would have in the event of a delinquency in the payment of Special Taxes on a parcel within the District in which the FDIC has or obtains an interest, although prohibiting the lien of the Special Taxes to be foreclosed out at a judicial foreclosure sale could reduce or eliminate the number of persons willing to purchase a parcel at a foreclosure sale. Such an outcome could cause a draw on the Reserve Account and perhaps, ultimately, if enough property were to become owned by the FDIC, a default in payment on the Bonds.

Bankruptcy and Foreclosure
Bankruptcy, insolvency and other laws generally affecting creditors' rights could adversely impact the interests of owners of the Bonds in at least two ways. First, the payment of property owners' taxes and the ability of the District to foreclose the lien of a delinquent unpaid Special Tax pursuant to its covenant to pursue judicial foreclosure proceedings may be limited by bankruptcy, insolvency or other laws generally affecting creditors' rights or by the laws of the State relating to judicial foreclosure. See "SOURCES OF PAYMENT FOR THE BONDS —Special Taxes —Proceeds of Foreclosure Sales." In addition, the prosecution of a foreclosure could be delayed due to many reasons, including crowded local court calendars or lengthy procedural delays.

Second, the Bankruptcy Code might prevent moneys on deposit in the Acquisition and Construction Fund from being applied to pay interest on the Bonds and/or to redeem Bonds if bankruptcy proceedings were brought by or against a landowner or other party and if the court found that the landowner or other party had an interest in such moneys within the meaning of Section 541(a)(1) of the Bankruptcy Code. 44 4877-5532-3965v8/022599-0033

Although a bankruptcy proceeding would not cause the Special Taxes to become extinguished, the amount of any Special Tax lien could be modified if the value of the property falls below the value of the lien.

If the value of the property is less than the lien, such excess amount could be treated as an unsecured claim by the bankruptcy court. In addition, bankruptcy of a property owner could result in a delay in prosecuting Superior Court foreclosure proceedings. Such delay would increase the likelihood of a delay or default in payment of delinquent Special Tax installments and the possibility of delinquent Special Tax installments not being paid in full.

On July 30, 1992, the United States Court of Appeals for the Ninth Circuit issued its opinion in a bankruptcy case entitled In re Glasply Marine Industries. In that case, the court held that ad valorem property taxes levied by Snohomish County in the State of Washington after the date that the property owner filed a petition for bankruptcy were not entitled to priority over a secured creditor with a prior lien on the property.

Although the court upheld the priority of unpaid taxes imposed before the bankruptcy petition, unpaid taxes imposed after the filing of the bankruptcy petition were declared to be "administrative expenses" of the bankruptcy estate, payable after all secured creditors. As a result, the secured creditor was able to foreclose on the property and retain all the proceeds of the sale except the amount of the pre -petition taxes.

The Bankruptcy Reform Act of 1994 (the "Bankruptcy Reform Act") included a provision which excepts from the Bankruptcy Code's automatic stay provisions, "the creation of a statutory lien for an ad valorem property tax imposed by . . . a political subdivision of a state if such tax comes due after the filing of the petition [by a debtor in bankruptcy court]." This amendment effectively makes the Glasply holding inoperative as it relates to ad valorem real property taxes. However, it is possible that the original rationale of the Glasply ruling could still result in the treatment of post -petition special taxes as "administrative expenses," rather than as tax liens secured by real property, at least during the pendency of bankruptcy proceedings.

According to the court's ruling, as administrative expenses, post -petition taxes would be paid, assuming that the debtor had sufficient assets to do so. In certain circumstances, payment of such administrative expenses may be allowed to be deferred. Once the property is transferred out of the bankruptcy estate (through foreclosure or otherwise), it would at that time become subject to current ad valorem taxes.

The Act provides that the Special Taxes are secured by a continuing lien which is subject to the same lien priority in the case of delinquency as ad valorem taxes. No case law exists with respect to how a bankruptcy court would treat the lien for Special Taxes levied after the filing of a petition in bankruptcy court. Glasply is controlling precedent on bankruptcy courts in the State. If the Glasply precedent was applied to the levy of the Special Taxes, the amount of Special Taxes received from parcels whose owners declare bankruptcy could be reduced.

The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel's approving legal opinion) will be qualified, as to the enforceability of the various legal instruments, by moratorium, bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally.

No Acceleration Provision
The Bonds do not contain a provision allowing for the acceleration of the Bonds in the event of a payment default or other default under the terms of the Bonds or the Indenture or in the event interest on the Bonds becomes included in gross income for federal income tax purposes. Pursuant to the Indenture, an owner is given the right for the equal benefit and protection of all owners of the Bonds similarly situated to pursue certain remedies described in APPENDIX D —"SUMMARY OF CERTAIN PROVISIONS OF THE BOND INDENTURE —EVENTS OF DEFAULT; REMEDIES" and "—Limitations on Remedies." 45 4877-5532-3965v8/022599-0033
Page384of786

Loss of Tax Exemption
As discussed under the caption "TAX MATTERS" herein, interest on the Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date the Bonds were issued as a result of future acts or omissions of the District in violation of its covenants in the Indenture with respect to compliance with certain provisions of the Internal Revenue Code of 1986. Should such an event of taxability occur, the Bonds are not subject to early redemption and will remain outstanding until maturity or until redeemed under the redemption provisions contained in the Indenture.

Limited Secondary Market
There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that such Bonds can be sold for any particular price. Although the District has committed to provide certain statutorily required financial and operating information, there can be no assurance that such information will be available to Bondowners on a timely basis. See "CONTINUING DISCLOSURE." Any failure to provide annual financial information, if required, does not give rise to monetary damages but merely an action for specific performance. Occasionally, because of general market conditions, lack of current information, the absence of a credit rating for the Bonds or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price.

Proposition 218
An initiative measure commonly referred to as the "Right to Vote on Taxes Act" (the "Initiative") was approved by the voters of the State at the November 5, 1996 general election. The Initiative added Article XIIIC and Article XIIID to the California Constitution. According to the "Title and Summary" of the Initiative prepared by the California Attorney General, the Initiative limits "the authority of local governments to impose taxes and property -related assessments, fees and charges." The provisions of the Initiative as they may relate to community facilities district are subject to interpretation by the courts. The Initiative could potentially impact the Special Taxes available to the District to pay the principal of and interest on the Bonds as described below.

Among other things, Section 3 of Article XIIIC states that ". . . the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge." The Act provides for a procedure which includes notice, hearing, protest and voting requirements to alter the rate and method of apportionment of an existing special tax. However, the Act prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the Act unless such legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt. On July 1, 1997, a bill was signed into law by the Governor of the State enacting Government Code Section 5854, which states that:
"Section 3 of Article XIIIC of the California Constitution, as adopted at the November 5, 1996, general election, shall not be construed to mean that any owner or beneficial owner of a municipal security, purchased before or after that date, assumes the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of contractual rights protected by Section 10 of Article I of the United States Constitution." Accordingly, although the matter is not free from doubt, it is likely that the Initiative has not conferred on the voters the power to repeal or reduce the Special Taxes if such reduction would interfere with the timely retirement of the Bonds.

It may be possible, however, for voters or the City Council, acting as the legislative body of the District, to reduce the Special Taxes in a manner which does not interfere with the timely repayment of the Bonds, but 46 4877-5532-3965v8/022599-0033

which does reduce the maximum amount of Special Taxes that may be levied in any year below the existing levels. Furthermore, no assurance can be given with respect to the future levy of the Special Taxes in amounts greater than the amount necessary for the timely retirement of the Bonds. Therefore, no assurance can be given with respect to the levy of Special Taxes for Administrative Expenses. Nevertheless, to the maximum extent that the law permits it to do so, the District will covenant that it will not initiate proceedings under the Act to reduce the maximum Special Tax rates on parcels within the District. In connection with the foregoing covenant, the City Council has made a legislative finding and determination that any elimination or reduction of Special Taxes below the foregoing level would interfere with the timely retirement of the Bonds. The District will also covenant that, in the event an initiative is adopted which purports to alter the Rate and Method, it will commence and pursue legal action in order to preserve its ability to comply with the foregoing covenant. However, no assurance can be given as to the enforceability of the foregoing covenants.

The California Court of Appeal, Fourth Appellate District, Division One, issued its opinion in City of San Diego v. Melvin Shapiro, et al. (D063997) (the "San Diego Decision"). The case involved a Convention Center Facilities District (the "CCFD") established by the City of San Diego ("San Diego"). The CCFD is a fmancing district much like a community facilities district established under the provisions of the Act. The CCFD is comprised of all of the real property in San Diego. However, the special tax to be levied within the CCFD was to be levied only on hotel properties located within the CCFD.

The election authorizing the special tax was limited to owners of hotel properties and lessees of real property owned by a governmental entity on which a hotel is located. Thus, the election was not a registered voter election. Such approach to determining who would constitute the qualified electors of the CCFD was modeled after Section 53326(c) of the Act, which generally provides that, if a special tax will not be apportioned in any tax year on residential property, the legislative body may provide that the vote shall be by the landowners of the proposed district whose property would be subject to the special tax. The Court held that the CCFD special tax election was invalid under the California Constitution because Article XIIIA, Section 4 thereof and Article XIIIC, Section 2 thereof require that the electors in such an election be the registered voters within the district.

The facts of the San Diego Decision show that there were thousands of registered voters within the CCFD (viz., all of the registered voters in San Diego). The elections held in the District had less than 12 registered voters at the time of the election to authorize the Special Tax. In the San Diego Decision, the Court expressly stated that it was not addressing the validity of landowner voting to impose special taxes pursuant to the Act in situations where there are fewer than 12 registered voters. Thus, by its terms, the Court's holding does not apply to the Special Tax election in the District. Moreover, Section 53341 of the Act provides that any "action or proceeding to attack, review, set aside, void or annul the levy of a special tax... shall be commenced within 30 days after the special tax is approved by the voters." Similarly, Section 53359 of the Act provides that any action to determine the validity of bonds issued pursuant to the Act be brought within 30 days of the voters approving the issuance of such bonds.

The interpretation and application of Article XIII C and Article XIII D will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination or the timeliness of any remedy afforded by the courts. See "—Limitations on Remedies."
No Ratings — Limited Secondary Market
The District has not applied to have the Bonds rated by any nationally recognized bond rating company, and it does not expect to do so in the future. See "—Limited Secondary Market." 47 4877-5532-3965v8/022599-0033

Ballot Initiatives
Articles XIII A, XIII B, XIII C and XIII D were adopted pursuant to measures qualified for the ballot pursuant to California's constitutional initiative process and the State Legislature has in the past enacted legislation which has altered the spending limitations or established minimum funding provisions for particular activities. On March 6, 1995, in the case of Rossi v. Brown, the State Supreme Court held that an initiative can repeal a tax ordinance and prohibit the imposition of further such taxes and that the exemption from the referendum requirements does not apply to initiatives. From time to time, other initiative measures could be adopted by California voters or legislation enacted by the legislature. The adoption of any such initiative or legislation might place limitations on the ability of the State, the City, or local districts to increase revenues or to increase appropriations within the District.

Potential Early Redemption of Bonds from Prepayments or Other Sources Property owners within the District, including the Developer, and any individual property owner, are permitted to prepay their Special Taxes at any time. Such Prepayments could also be made from the proceeds of bonds issued by or on behalf of an overlapping special assessment district or community facilities district. Such Prepayments will result in an extraordinary redemption of the Bonds on the Interest Payment Date for which timely notice may be given under the Indenture following the receipt of the Prepayment. The resulting extraordinary redemption of Bonds that were purchased at a price greater than par could reduce the otherwise expected yield on such Bonds. See the caption "THE BONDS —Redemption— Special Mandatory Redemption from Special Tax Prepayments."
Cybersecurity
The City, like many other public and private entities, relies on a large and complex technology environment to conduct its operations. As a recipient and provider of personal, private, or sensitive information, the City is subject to multiple cyber threats including, but not limited to, hacking, viruses, malware and other attacks on computer and other sensitive digital networks and systems. Entities or individuals may attempt to gain unauthorized access to the City's digital systems for the purposes of misappropriating assets or information or causing operational disruption and damage. To date, the City has not experienced an attack on its computer operating systems which resulted in a breach of its cybersecurity systems that are in place. However, no assurances can be given that the City's efforts to manage cyber threats and attacks will be successful or that any such attack will not materially impact the operations or finances of the City.

Limitations on Remedies
Remedies available to the owners of the Bonds may be limited by a variety of factors and may be inadequate to assure the timely payment of principal of and interest on the Bonds or to preserve the tax-exempt status of interest on the Bonds.

Bond Counsel has limited its opinion as to the enforceability of the Bonds and of the Indenture to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium, or other similar laws affecting generally the enforcement of creditor's rights, by equitable principles and by the exercise of judicial discretion and by limitations on remedies against public agencies in the State of California. The Bonds are not subject to acceleration. The lack of availability of certain remedies or the limitation of remedies may entail risks of delay, limitation or modification of the rights of the owners.

CONTINUING DISCLOSURE
District Continuing Disclosure. Pursuant to a Continuing Disclosure Certificate (the "Continuing Disclosure Certificate"), the District will agree to provide, or cause to be provided, to the Municipal Securities Rulemaking Board through its Electronic Municipal Market Access (EMMA) website, or other repository 48 4877-5532-3965v8/022599-0033

authorized under Rule 15c2 -12(b)(5) adopted by the Securities and Exchange Commission (the "Rule"), certain annual financial information and operating data concerning the District. The District Reports are to be filed not later than February 10 of each year, beginning February 10, 2024. The District Reports will include the audited financial statements of the District, if any are prepared. The District does not currently prepare audited financial statements and does not anticipate doing so in the future. The full text of the Continuing Disclosure Certificate is set forth in APPENDIX E —"FORM OF DISTRICT CONTINUING DISCLOSURE CERTIFICATE." Notwithstanding any provision of the Indenture, failure of the District to comply with the Continuing Disclosure Certificate shall not be an event of default under the Indenture. However, any Owner or Beneficial Owner of the Bonds may take such action as is necessary and appropriate, including seeking mandate or a judgment for specific performance, to cause the District to comply with its obligations with respect to the Continuing Disclosure Certificate.

In connection with the SEC Order, the BFA conducted a review of noncompliance with all existing continuing disclosure undertakings of the City of Beaumont Community Facilities District No. 93-1 ("CFD 93- 1") with respect to bonds issued by the BFA. See the caption "INTRODUCTION —SEC Order." The BFA identified omissions and deficiencies in prior continuing disclosure filings for Fiscal Years 2003 through 2013.

Such omissions and deficiencies included the late filing of annual reports, the late filing of or failure to file the City's audited and/or unaudited financial statements, the failure to file completed information on the status of facilities being constructed with bond proceeds, the failure to file one or more rating change notices and information concerning the certificates of occupancy and certificates of final inspection. Such omissions and deficiencies also included the failure to report certain information concerning the assessed valuation date, special tax delinquency data and reserve fund balances, cash flow management fund balances, rate stabilization fund balances, improvement fund balances, residual fund balances, special escrow fund balances, the aggregate number of building permits issued, statements of the reserve requirement, cash flow management fund requirement and rate stabilization fund requirement, and to link certain annual reports to all relevant CUSIPs.

See Appendix H — "SECURITIES AND EXCHANGE COMMISSION ORDER." The BFA has caused CFD 93-1 to make corrective filings for Fiscal Years 2013-14 through 2017-18 with EMMA, including the filing of audited and unaudited financial statements for Fiscal Years 2013-14 through 2017-18, supplements to certain prior continuing disclosure annual reports and notices of the failure to file certain continuing disclosure annual reports and audited financial statements.

The City will assist the District in preparing the District Reports. In order to ensure ongoing compliance by the District with its continuing disclosure undertaking, (i) City staff will take steps to ensure that the filing due date is correctly documented in policies and procedures and a single City staff member has been assigned primary responsibility to monitor compliance; and (ii) the City has contracted with a consultant to assist in filing accurate, complete and timely disclosure reports on behalf of the District.

Developer Continuing Disclosure. Tri Pointe will also covenant in a Developer Continuing Disclosure Certificate, the form of which is set forth in Appendix F, for the benefit of the Owners, to provide semi-annual reports containing updates of certain development information within the Official Statement regarding its property in the District and notices of certain significant events. The specific nature of the information to be contained in the semi-annual reports or notices of significant events and certain other terms of the continuing disclosure obligations of Tri Pointe is contained in Appendix F — "FORM OF DEVELOPER CONTINUING DISCLOSURE CERTIFICATE."
To the actual knowledge of Tri Pointe, Tri Pointe has not failed to comply in any material respects with its previous undertakings by it to provide periodic continuing disclosure reports or notices of listed events with respect to community facilities district or assessment district bond issues in southern California within the past five years.
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The obligations of Tri Pointe under its Developer Continuing Disclosure Certificate will terminate upon the earliest to occur of: (i) the legal defeasance, prior redemption or payment in full of all of the Bonds, (ii) the date on which Tri Pointe and any affiliate of Tri Pointe, collectively, are no longer responsible for the payment of at least 20% of the total Special Taxes to be levied within the District in the current Fiscal Year, (iii) the date on which all of the Special Taxes attributable to the taxable property in the District have been paid or prepaid in full or (iv) the date on which Tri Pointe and any affiliate of Tri Pointe, collectively, have conveyed to homebuyers at least 564 of the 704 residential units planned to be constructed by Tri Pointe in the District subject to the Special Tax.

STATE AND FEDERAL INVESTIGATIONS AND

CRIMINAL CHARGES INVOLVING FORMER CITY OFFICIALS
On April 22, 2015, the Federal Bureau of Investigation and the Riverside County District Attorney's Office served search warrants on Beaumont City Hall and two other locations. The search warrants and the subsequent investigation resulted in charges for corruption and embezzlement being brought against seven (7) former City officials: former City Manager Alan Kapanicas, former Economic Development Director David Dillon, former City Planner Ernest Egger, former Finance Director William Aylward, former Police Chief Francis Dennis Coe Jr., former Public Works Director Deepak Moorjani and former City Attorney Joseph Sandy Aklufi. All seven (7) of these former City officials have pled guilty to date with several of them having agreed to pay restitution in connection with their plea arrangements. All of the former officials either resigned or were terminated by 2015.

In addition to the SEC Order described under the caption "INTRODUCTION- SEC Order" and attached as Appendix H, in August 2017, the SEC entered into settlements with former City Manager Alan Kapanicas, the BFA's former underwriter, O'Connor & Company Securities, Inc., and former investment banker Anthony Wetherbee in connection with the BFA's failure to meet its annual continuing disclosure obligations from 2003 to 2013. In consenting to the SEC settlement without admitting or denying the findings, Mr. Kapanicas agreed to be barred from participating in any future municipal offerings and pay a penalty of $37,500. Additionally, in consenting to the SEC settlement without admitting or denying the findings, O'Connor & Company Securities, Inc., agreed to comply with a number of undertakings and pay a $150,000 penalty, and Mr. Wetherbee agreed to serve a suspension from the securities industry for six (6) months and pay a $15,000 penalty.

On May 11, 2017, the Riverside County District Attorney on behalf of the Criminal Grand Jury of the County of Riverside filed an indictment against former Beaumont City Councilmember Mark Orozco accusing him of ten (10) felony counts, including attempting to solicit a bribe from the Developer. On September 28, 2017, Mr. Orozco pleaded guilty to one (1) felony count of bribery and one (1) felony count of perjury.

Mr. Orozco resigned from the City Council on October 24, 2017, and agreed not to seek another public office.

TAX MATTERS
In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, and assuming certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes, and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals.

However, it should be noted that for tax years beginning after December 31, 2022, with respect to applicable corporations as defined in Section 59(k) of the Internal Revenue Code of 1986, as amended (the "Code"), generally certain corporations with more than $1,000,000,000 of average annual adjusted financial statement income, interest (and original issue discount) with respect to the Bonds might be taken into account in determining adjusted financial statement income for purposes of computing the alternative minimum tax imposed by Section 55 of the Code on such corporations. In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State of California personal income tax. 50 4877-5532-3965v8/022599-0033

The excess of the stated redemption price at maturity of a Bond over the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity is to be sold to the public) constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Bond Owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by the Bond Owner will increase the Bond Owner's basis in the applicable Bond.

Bond Counsel's opinion as to the exclusion from gross income of interest (and original issue discount) on the Bonds is based upon certain representations of fact and certifications made by the District and others and is subject to the condition that the District complies with all requirements of the Code, that must be satisfied subsequent to the issuance of the Bonds to assure that interest (and original issue discount) on the Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause the interest (and original issue discount) on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The District has covenanted to comply with all such requirements.

The amount by which a Bond Owner's original basis for determining loss on sale or exchange in the applicable Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable bond premium, which must be amortized under Section 171 of the Code; such amortizable Bond premium reduces the Bond Owner's basis in the applicable Bond (and the amount of tax- exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of Bond premium may result in a Bond Owner realizing a taxable gain when a Bond is sold by the Owner for an amount equal to or less (under certain circumstances) than the original cost of the Bond to the Owner. Purchasers of the Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable Bond premium.

The Internal Revenue Service (the "IRS") has initiated an expanded program for the auditing of tax- exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for audit by the IRS. It is also possible that the market value of the Bonds might be affected as a result of such an audit of the Bonds (or by an audit of similar Bonds). No assurance can be given that in the course of an audit, as a result of an audit, or otherwise, Congress or the IRS might not change the Code (or interpretation thereof) subsequent to the issuance of the Bonds to the extent that it adversely affects the exclusion from gross income of interest (and original issue discount) on the Bonds or their market value.

SUBSEQUENT TO THE ISSUANCE OF THE BONDS THERE MIGHT BE FEDERAL, STATE, OR

LOCAL STATUTORY CHANGES (OR JUDICIAL OR REGULATORY CHANGES TO OR

INTERPRETATIONS OF FEDERAL, STATE, OR LOCAL LAW) THAT AFFECT THE FEDERAL, STATE,

OR LOCAL TAX TREATMENT OF THE BONDS INCLUDING THE IMPOSITION OF ADDITIONAL

FEDERAL INCOME OR STATE TAXES BEING IMPOSED ON OWNERS OF TAX-EXEMPT STATE OR LOCAL OBLIGATIONS, SUCH AS THE BONDS. THESE CHANGES COULD ADVERSELY AFFECT THE MARKET VALUE OR LIQUIDITY OF THE BONDS. NO ASSURANCE CAN BE GIVEN THAT

SUBSEQUENT TO THE ISSUANCE OF THE BONDS STATUTORY CHANGES WILL NOT BE

INTRODUCED OR ENACTED OR JUDICIAL OR REGULATORY INTERPRETATIONS WILL NOT OCCUR HAVING THE EFFECTS DESCRIBED ABOVE. BEFORE PURCHASING ANY OF THE BONDS,

ALL POTENTIAL PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING

POSSIBLE STATUTORY CHANGES OR JUDICIAL OR REGULATORY CHANGES OR INTERPRETATIONS, AND THEIR COLLATERAL TAX CONSEQUENCES RELATING TO THE BONDS.

Bond Counsel's opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. Bond Counsel has not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. The authorizing resolutions and the Tax Certificate relating to the Bonds permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the effect on the exclusion from gross income of interest (and original issue discount) on the Bonds for federal income tax purposes with respect to any Bond if 51 4877-5532-3965v8/022599-0033

any such action is taken or omitted based upon the advice of counsel other than Stradling Yocca Carlson & Rauth, a Professional Corporation.

Although Bond Counsel has rendered an opinion that interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes provided that the District continues to comply with certain requirements of the Code, the ownership of the Bonds and the accrual or receipt of interest with respect to the Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any such tax consequences. Accordingly, before purchasing any of the Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences relating to the Bonds.

A copy of the proposed form of opinion of Bond Counsel is attached hereto as Appendix B.

LEGAL MATTERS
The legal opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel, approving the validity of the Bonds in substantially the form set forth as Appendix B hereto, will be made available to purchasers at the time of original delivery. Certain legal matters will be passed upon for the District and the City by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Disclosure Counsel and for the Underwriter by Kutak Rock LLP, Irvine, California, as counsel to the Underwriter. Bond Counsel expresses no opinion to the Owners of the Bonds as to the accuracy, completeness or fairness of this Official Statement or other offering materials relating to the Bonds and expressly disclaims any duty to do so.

ABSENCE OF LITIGATION
No litigation is pending or threatened concerning the validity of the Bonds and a certificate of the District to that effect will be furnished to the Underwriter at the time of the original delivery of the Bonds.

Neither the City nor the District is aware of any litigation pending or threatened which questions the existence of the District or the City or contests the authority of the District to levy and collect the Special Taxes or to issue and retire the Bonds.

NO RATING
The District has not made and does not contemplate making application to any rating agency for the assignment of a rating to the Bonds.

UNDERWRITING
The Bonds are being purchased by the Underwriter. The Underwriter has agreed to purchase the Bonds at a price of $ (being the $ aggregate principal amount thereof, plus net original issue premium of $ and less Underwriter's discount of $ ). The purchase contract relating to the Bonds provides that the Underwriter will purchase all of the Bonds if any are purchased. The obligation to make such purchase is subject to certain terms and conditions set forth in the purchase contract, the approval of certain legal matters by counsel and certain other conditions.

The Underwriter may offer and sell the Bonds to certain dealers and others at prices lower than the offering price stated on the cover page thereof. The offering price may be changed from time to time by the Underwriter.

FINANCIAL INTERESTS
The fees being paid to the Underwriter, Bond Counsel, Disclosure Counsel, Municipal Advisor to the City, the Special Tax Consultant, the Trustee and Underwriter's Counsel are contingent upon the issuance and 52 4877-5532-3965v8/022599-0033

delivery of the Bonds. The fees being paid to the Appraiser are not contingent upon the issuance and delivery of the Bonds. From time to time, Bond Counsel represents the Underwriter on matters unrelated to the Bonds.

PENDING LEGISLATION
The District is not aware of any significant pending legislation which would have material adverse consequences on the Bonds or the ability of the District to pay the principal of and interest on the Bonds when due.

ADDITIONAL INFORMATION
The purpose of this Official Statement is to supply information to prospective buyers of the Bonds.

Quotations and summaries and explanations of the Bonds and documents contained in this Official Statement do not purport to be complete, and reference is made to such documents for full and complete statements and their provisions. Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact.

The execution and delivery of this Official Statement by the City Manager of the City has been duly authorized by the City Council acting in its capacity as the legislative body of the District.

CITY OF BEAUMONT COMMUNITY FACILITIES
DISTRICT NO. 2016-3 (SUNDANCE)
By:

City Manager
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APPENDIX A

RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX

RATE AND METHOD OF APPORTIONMENT FOR
COMMUNITY FACILITIES DISTRICT NO. 2016-3 (SUNDANCE)

OF THE CITY OF BEAUMONT
A Special Tax as hereinafter defined shall be levied on and collected in Community Facilities District No. 2016- 3 (Sundance) ("CFD No. 2016-3") each Fiscal Year, in an amount determined by the City Council of the City of Beaumont through the application of the appropriate Special Tax for "Developed Property", "Final Map Property" and "Undeveloped Property". All of the real property in CFD No. 2016-3, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent, and in the manner herein provided.

SECTION A

DEFINITIONS
The terms hereinafter set forth have the following meanings:
"Acre" or "Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, or other recorded County parcel map or instrument. The square footage of an Assessor's Parcel is equal to the Acreage multiplied by 43,560. "Act" means the Mello -Roos Communities Facilities Act of 1982, as amended, being Chapter 2.5, Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of CFD No. 2016-3: the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the City or otherwise); the costs of remitting the Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 2016-3 or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No. 2016-3 or any designee thereof of complying with City or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs associated with the release of funds from an escrow account; the costs associated with the issuance of Bonds, and the City's annual administration fees and third party expenses. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD No. 2016-3 for any other administrative purposes, including attorney's fees and other costs related to commencing and pursuing to completion any foreclosure, or otherwise addressing the disposition of delinquent Special Taxes. "Assessor's Parcel" means a lot or parcel of land designated on an Assessor's Parcel Map with an assigned Assessor's Parcel Number within the boundaries of CFD No. 2016-3. "Assessor's Parcel Map" means an official map of the Assessor of the County designating parcels by Assessor's Parcel Number.
"Assigned Special Tax" means the Special Tax of that name described in Section D below.

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"Backup Special Tax for Facilities" means the Special Tax of that name described in Section E below. "Bonds" means any obligation to repay a sum of money, including obligations in the form of bonds, notes, certificates of participation, long-term leases, loans from government agencies, or loans from banks, other financial institutions, private businesses, or individuals, or long-term contracts, or any refunding thereof, to which Special Taxes for Facilities have been pledged.
"Building Permit" means a permit for new construction for a residential dwelling or non-residential structure.

For purpose of this definition, "Building Permit" shall not include permits for construction or installation, retaining walls, utility improvements, or other such improvements not intended for human habitation. "Building Square Footage" or "BSF" means the square footage of assessable internal living space, exclusive of garages or other structures not used as living space, as determined by reference to the building permit application for such Assessor's Parcel, as determined by the CFD Administrator. "Calendar Year" means the period commencing January 1 of any year and ending the following December 31. "CFD Administrator" means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement for Facilities, the Special Tax Requirement for Maintenance Services, the Special Tax Requirement for Public Services, and providing for the levy and collection of the Special Taxes. "CFD Boundary Map" means the map recorded at CFD formation, and attached hereto as Exhibit A. "CFD No. 2016-3" or "CFD" means City of Beaumont Community Facilities District No. 2016-3 (Sundance) established by the City under the Act.
"City" means the City of Beaumont.
"City Council" means the City Council of the City, acting as the legislative body of CFD No. 2016-3, or its designee.
"Consumer Price Index" means the index published monthly by the U.S. Department of Labor, Bureau of Labor Statistics for all urban consumers in the Los Angeles -Riverside -Orange County area. "County" means the County of Riverside.
"Developed Property" means all Assessor's Parcels for which Building Permits were issued on or before March 1 of the prior Fiscal Year, provided that such Assessor's Parcels were created on or before January 1 of the prior Fiscal Year and that each such Assessor Parcel is associated with a Lot, as determined by the CFD Administrator. "Dwelling Unit" means each separate residential dwelling unit that comprises an independent facility capable of conveyance or rental separate from adjacent residential dwelling units. "Exempt Property" means all Assessor's Parcels designated as being exempt from Special Taxes as provided for in Section J, as determined by the CFD Administrator. "Final Map" means a subdivision of property evidenced by the recordation of a final map, parcel map, or lot line adjustment, pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or the recordation of a condominium plan pursuant to California Civil Code 1352 that creates individual lots for which building permits may be issued without further subdivision. "Final Map Property" means Assessor's Parcels: (i) that are included in a Final Map that was recorded prior to the January 1 preceding the Fiscal Year in which the Special Tax is being levied, and (ii) for which a Building A-2
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Permit was not issued prior to March 1 preceding the Fiscal Year in which the Special Tax is being levied, as determined by the CFD Administrator.
"Fiscal Year" means the period commencing on July 1 of any year and ending the following June 30. "Indenture" means the indenture, fiscal agent agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time. "Land Use Category" means any of the categories listed in the tables included in Section D. "Lot" means an individual legal lot created by a Final Map for which a Building Permit could be issued. "Maintenance Services" means the services permitted under the Act including, without limitation, street sweeping, traffic signal maintenance, the maintenance, landscaping and lighting of publicly owned parks, parkways, streets, roads and open spaces, flood and storm protection services, and the operation of storm drainage systems contained within the boundaries of CFD No. 2016-3 and the City. "Maximum Special Tax" means the Maximum Special Tax for Facilities, the Maximum Special Tax for Maintenance Services, and the Maximum Special Tax for Public Services. "Maximum Special Tax for Facilities" means the maximum Special Tax for Facilities, determined in accordance with Section C, which can be levied by CFD No. 2016-3 in any Fiscal Year on any Assessor's Parcel. "Maximum Special Tax for Maintenance Services" means the maximum Special Tax for Maintenance Services, determined in accordance with Section C, which can be levied by CFD No. 2016-3 in any Fiscal Year on any Assessor's Parcel.
"Maximum Special Tax for Public Services" means the maximum Special Tax for Public Services, determined in accordance with Section C, which can be levied by CFD No. 2016-3 in any Fiscal Year on any Assessor's Parcel.
"Minimum Acreage" means the smallest allowable amount of taxable acreage. For CFD No. 2016-3, it shall not be less than 84.04 acres.
"Non -Residential Property" means all Assessor's Parcels of Developed Property for which a building permit was issued for any type of non-residential use, as determined by the CFD Administrator. "Operating Fund for Maintenance Services" means a fund that shall be maintained for CFD No. 2016-3 for any Fiscal Year to pay for the actual costs of providing the Maintenance Services and the Administrative Expenses attributable to providing such Maintenance Services. "Operating Fund for Public Services" means a fund that shall be maintained for CFD No. 2016-3 for any Fiscal Year to pay for the actual costs of providing the Public Services and the Administrative Expenses attributable to providing such Public Services.
"Operating Fund Balance" means the amount of funds in the applicable Operating Fund at the end of the preceding Fiscal Year.
"Partial Prepayment Amount" means the amount required to prepay a portion of the Special Tax for the Facilities obligation for an Assessor's Parcel, as described in Section H. "Prepayment Amount" means the amount required to prepay the Special Tax for the Facilities obligation in full for an Assessor's Parcel, as described in Section G.

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"Property Owner Association" means a corporation formed by a real estate developer for the purpose of marketing, managing, and selling of homes and lots in a residential subdivision. "Property Owner's Association Property" means all Assessor's Parcels which, as of July 1st of the Fiscal Year in which the Special Tax is being levied, have been conveyed, dedicated to, or irrevocably offered for dedication to a property owner association, including any master or sub -association. "Proportionately" means that the ratio of the actual Special Tax levy to the applicable Maximum Special Tax is equal for all applicable Assessors' Parcels.
"Public Property" means all Assessor's Parcels which, as of July 1st of the Fiscal Year in which the Special Tax is being levied, are used for rights -of -way or any other purpose and is owned by, dedicated to, or irrevocably offered for dedication to the federal government, the State of California, the County, or any other local jurisdiction, provided, however, that any property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified according to its use. "Public Services" means the services permitted under the Act including, without limitation, police and fire protection, ambulance and paramedic services provided within the boundaries of CFD No. 2016-3 and the City. "Residential Floor Area" means all of the square footage of living area within the perimeter of a residential dwelling unit, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The CFD Administrator shall determine the Residential Floor Area based upon the Building Permit issued for such residential dwelling unit.
"Residential Property" means all Assessor's Parcels of Developed Property for which a building permit has been issued for purposes of constructing one or more residential dwelling units, as determined by the CFD Administrator.
"Special Tax(es)" means the Special Tax for Facilities, the Special Tax for Maintenance Services, and the Special Tax for Public Services.
"Special Tax for Facilities" means any of the Special Taxes authorized to be levied within CFD No. 2016-3 pursuant to the Act to fund the Special Tax Requirement for Facilities. "Special Tax for Maintenance Services" means any of the Special Taxes authorized to be levied by CFD No. 2016-3 pursuant to the Act to fund the Special Tax Requirement for Maintenance Services. Under no circumstances shall this Special Tax be eligible for prepayment of any kind. "Special Tax for Public Services" means any of the Special Taxes authorized to be levied by CFD No. 2016- 3 pursuant to the Act to fund the Special Tax Requirement for Public Services. Under no circumstances shall this Special Tax be eligible for prepayment of any kind. "Special Tax Requirement for Facilities" means the amount required in any Fiscal Year to pay: (i) the debt service or the periodic costs on all outstanding Bonds due in the Calendar Year that commences in such Fiscal Year, (ii) Administrative Expenses, (iii) the costs associated with the release of funds from an escrow account, (iv) any amount required to establish or replenish any reserve funds established in association with the Bonds, (v) the collection or accumulation of funds for the acquisition or construction of facilities authorized by CFD No. 2016-3 provided that the inclusion of such amount does not cause an increase in the levy of Special Tax for Facilities on Final Map Property or Undeveloped Property, less (vi) any amounts available to pay debt service or other periodic costs on the Bonds pursuant to any applicable bond Indenture, fiscal agent agreement, or trust agreement.

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"Special Tax Requirement for Maintenance Services" means that amount to be collected in any Fiscal Year to pay for certain costs as required to meet the needs of CFD No. 2016-3 for Maintenance Services in both the current Fiscal Year and the next Fiscal Year. The costs to be covered shall be the (i) direct costs for Maintenance Services (ii) amount necessary to fund an operating reserve for the costs of Maintenance Services as determined by the Administrator, and (iii) Administrative Expenses, less (iv) a credit in an amount equal to the Operating Fund Balance. Under no circumstances shall the Special Tax Requirement for Maintenance Services include funds for bonds.
"Special Tax Requirement for Public Services" means the amount to be collected in any Fiscal Year to pay for certain costs as required to meet the needs of CFD No. 2016-3 for Public Services in both the current Fiscal Year and the next Fiscal Year. The costs to be covered shall be the (i) direct costs for Public Services (ii) amount necessary to fund an operating reserve for the costs of Public Services as determined by the Administrator, and (iii) Administrative Expenses, less (iv) a credit in an amount equal to the Operating Fund Balance. Under no circumstances shall the Special Tax Requirement for Public Services include funds for bonds. "Taxable Property" means all Assessor's Parcels within CFD No. 2016-3, which are not Exempt Property, as determined by the CFD Administrator.
"Trustee" means the firm that holds and administers assets on behalf of CFD No. 2016-3 under and pursuant to the Indenture.
"Undeveloped Property" means all Assessor's Parcels of Taxable Property which are not Developed Property or Final Map Property, as determined by the CFD Administrator.

SECTION B

CLASSIFICATION OF ASSESSOR'S PARCELS
Each Fiscal Year, beginning with Fiscal Year 2017-18, each Assessor's Parcel shall be classified as Taxable Property or Exempt Property. In addition, each Assessor's Parcel of Taxable Property shall be further classified as Developed Property, Final Map Property or Undeveloped Property. Lastly, each Assessor's Parcel of Developed Property shall further be classified as Residential Property or Non -Residential Property.

SECTION C

MAXIMUM SPECIAL TAXES

1. Developed Property
a. The Maximum Special Tax for Facilities for each Assessor's Parcel of Residential Property that is classified as Developed Property in any Fiscal Year shall be the amount determined by the greater of (i) the application of the Assigned Special Tax for Facilities in the tables included in Section D below or (ii) the application of the Backup Special Tax for Facilities. The Maximum Special Tax for Facilities for each Assessor's Parcel of Non -Residential Property that is classified as Developed Property in any Fiscal Year shall be the Assigned Special Tax in the Table 1 included in Section D below. b. The Maximum Special Tax for Maintenance Services for each Assessor's Parcel of Residential Property that is classified as Developed Property in Fiscal Year 2017-18 shall be $79 per unit. The Maximum Special Tax for Maintenance Services for each Assessor's Parcel of Non -Residential Property that is classified as Developed Property in Fiscal Year 2017-18 shall be $657 per Acre.

On each July 1, commencing July 1, 2018, the Maximum Special Tax for Maintenance Services for the prior Fiscal Year shall be adjusted by the greater of (i) an amount equal to the percentage change increase in the Consumer Price Index for the Calendar Year ending in December of the prior Fiscal Year or (ii) two percent (2%).

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c. The Maximum Special Tax for Public Services for each Assessor's Parcel of Residential Property that is classified as Developed Property in Fiscal Year 2017-18 shall be $419 per unit.

On each July 1, commencing July 1, 2018, the Maximum Special Tax for Public Services for the prior Fiscal Year shall be adjusted by the greater of (i) an amount equal to the percentage change increase in the Consumer Price Index for the Calendar Year ending in December of the prior Fiscal Year or (ii) five percent (5%).

2. Final Map Property
a. The Maximum Special Tax for Facilities for each Assessor's Parcel classified as Final Map Property shall be the Assigned Special Tax set forth in Section D below. b. The Maximum Special Tax for Maintenance Services for each Assessor's Parcel of Residential Property that is classified as Final Map Property in Fiscal Year 2017-18 shall be $657 per Acre.

On each July 1, commencing July 1, 2018, the Maximum Special Tax for Maintenance Services for the prior Fiscal Year shall be adjusted by the greater of i) an amount equal to the percentage change increase in the Consumer Price Index for the Calendar Year ending in December of the prior Fiscal Year or ii) two percent (2%).
c. Final Map Property shall not be subject to the Maximum Special Tax for Public Services.

3. Undeveloped Property
a. The Maximum Special Tax for Facilities for each Assessor's Parcel classified as Undeveloped Property shall be the Assigned Special Tax set forth in Section D below. b. Undeveloped Property shall not be subject to the Maximum Special Tax for Maintenance Services. c. Undeveloped Property shall not be subject to the Maximum Special Tax for Public Services.

SECTION D

ASSIGNED SPECIAL TAX FOR FACILITIES

1. Developed Property
Each Fiscal Year, beginning with Fiscal Year 2017-18, each Assessor's Parcel of Developed Property shall be subject to an Assigned Special Tax. The Assigned Special Tax applicable to an Assessor's Parcel of Developed Property for any Fiscal Year shall be determined pursuant to Table 1 below.

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TABLE 1

ASSIGNED SPECIAL TAX RATES FOR FACILITIES

FOR DEVELOPED PROPERTY
Land Use Category
Building Square Footage
Assigned Special Tax
Residential Property
2,475
$2,058 per Dwelling Unit
Non -Residential Property
N/A
$14,310 per Acre

2. Final Map Property and Undeveloped Property
Each Fiscal Year, beginning with Fiscal Year 2017-18, each Assessor's Parcel of Final Map Property and Undeveloped Property shall be subject to an Assigned Special Tax. The Assigned Special Tax applicable to an Assessor's Parcel of Final Map Property and Undeveloped Property for any Fiscal Year shall be $14,310 per Acre.

SECTION E

BACKUP ANNUAL SPECIAL TAX FOR FACILITIES
Each Fiscal Year, beginning with Fiscal Year 2017-18, each Assessor's Parcel of Developed Property classified as Residential Property shall be subject to a Backup Special Tax for Facilities. In each Fiscal Year, the Backup Special Tax for Facilities rate for Developed Property classified as Residential Property shall be the rate per Lot calculated according to the following formula:

RxA
B=
L
The terms above have the following meanings:

B = Backup Special Tax for Facilities per Lot in each Fiscal Year.

R = Maximum Special Tax for Facilities rate per Acre for Undeveloped Property.

A = Acreage of Developed Property classified or to be classified as Residential Property.

L = Lots which are classified or to be classified as Residential Property.

Notwithstanding the foregoing, if Assessor's Parcels of Developed Property which are classified or to be classified as Residential Property are subsequently changed or modified by recordation of a lot line adjustment or similar instrument, then the Backup Special Tax for Facilities for the area that has been changed or modified shall be a rate per square foot of Acreage calculated as follows:

1. Determine the total Backup Special Tax for Facilities anticipated to apply to the changed or modified Final Map area prior to the change or modification.

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2. The result of paragraph 1 above shall be divided by the Acreage of Developed Property classified or to be classified as Residential Property which is ultimately expected to exist in such changed or modified Final Map area, as reasonably determined by the CFD Administrator.

3. The result of paragraph 2 above shall be divided by 43,560. The result is the Backup Special Tax for Facilities per square foot of Acreage which shall be applicable to Assessor's Parcels of Developed Property classified as Residential Property in such changed or modified Final Map area for all remaining Fiscal Years in which the Special Tax for Facilities may be levied.

SECTION F

METHOD OF APPORTIONMENT OF THE SPECIAL TAXES

1. Commencing with Fiscal Year 2017-18 and for each subsequent Fiscal Year, the City Council shall levy Special Taxes for Facilities on all Taxable Property until the amount of Special Tax for Facilities equals the Special Tax Requirement for Facilities in accordance with the following steps:

Step One:

Step Two:

Step Three:

Step Four:

Step Five:

The Special Tax for Facilities shall be levied Proportionately on each Assessor's Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax for Facilities rates in the table included in Section D as needed to satisfy the Special Tax Requirement for Facilities.

If additional moneys are needed to satisfy the Special Tax Requirement for Facilities after the first step has been completed, the Special Tax for Facilities shall be levied Proportionately on each Assessor's Parcel of Final Map Property, at up to 100% of the Assigned Special Tax for Facilities applicable to each such Assessor's Parcel as needed to satisfy the Special Tax Requirement for Facilities.

If additional moneys are needed to satisfy the Special Tax Requirement for Facilities after the first two steps have been completed, the Annual Special Tax for Facilities shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property, excluding any Undeveloped Property exempt from the Special Tax pursuant to Section J, at up to 100% of the Assigned Special Tax for Facilities applicable to each such Assessor's Parcel as needed to satisfy the Special Tax Requirement for Facilities.

If additional moneys are needed to satisfy the Special Tax Requirement for Facilities after the first three steps have been completed, then for each Assessor's Parcel of Developed Property whose Maximum Special Tax for Facilities is the Backup Special Tax for Facilities shall be increased Proportionately from the Assigned Special Tax for Facilities up to 100% of the Backup Special Tax for Facilities as needed to satisfy the Special Tax Requirement for Facilities.

If additional moneys are needed to satisfy the Special Tax Requirement for Facilities after the first four steps have been completed, the Special Tax for Facilities shall be levied Proportionately on each Assessor's Parcel of Property Owner's Association Property and Public Property, found not to be exempt pursuant to Section J, at up to 100% of the Maximum Special Tax for Facilities applicable to each such Assessor's Parcel as needed to satisfy the Special Tax Requirement for Facilities.

2. Commencing with Fiscal Year 2017-18 and for each subsequent Fiscal Year, the City Council shall levy Special Taxes for Maintenance Services on all Taxable Property until the amount of Special Tax for Maintenance Services equals the Special Tax Requirement for Maintenance Services in accordance with the following steps:
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Step One:

Step Two:

The Special Tax for Maintenance Services shall be levied Proportionately on each Assessor's Parcel of Developed Property at up to 100% of the applicable Maximum Special Tax for Maintenance Services as needed to satisfy the Special Tax Requirement for Maintenance Services.

If additional moneys are needed to satisfy the Special Tax Requirement for Maintenance Services after the first step has been completed, the Special Tax for Maintenance Services shall be levied Proportionately on each Assessor's Parcel of Final Map Property, at up to 100% of the Maximum Special Tax for Maintenance Services applicable to each such Assessor's Parcel as needed to satisfy the Special Tax Requirement for Maintenance Services.

3. Commencing with Fiscal Year 2017-18 and for each subsequent Fiscal Year, the City Council shall levy Special Taxes for Public Services on all Taxable Property until the amount of the Special Tax for Public Services equals the Special Tax Requirement for Public Services in accordance with the following steps:

Step One:

The Special Tax for Public Services shall be levied Proportionately on each Assessor's Parcel of Developed Property at up to 100% of the applicable Maximum Special Tax for Public Services as needed to satisfy the Special Tax Requirement for Public Services.

Under no circumstances will the Special Tax for Facilities, the Special Tax for Maintenance Services, or the Special Tax for Public Services levied against any Assessor's Parcel used as a private residence be increased as a consequence of delinquency or default by the owner of any other Assessor's Parcel or Parcels within the CFD by more than ten percent (10%) of the Special Tax that would have been levied in that Fiscal Year, had there never been any such delinquencies or defaults, pursuant to California Government Code Section 53321(d), as in effect on the date of formation of CFD No. 2016-3.

SECTION G

PREPAYMENT OF SPECIAL TAX FOR FACILITIES
The following additional definitions apply to this Section G:
"CFD Public Facilities" means $16,000,000, or such lessor amount as determined by the CFD Administrator, expressed in 2017 dollars, which shall increase by the Construction Inflation Index on January 1, 2018, and on each January 1 thereafter, or such lower amount (i) shall be determined by the City as sufficient to provide the public facilities under the authorized bonding program for CFD No. 2016-3, or (ii) determined by the City Council concurrently with a covenant that it will not issue any more Bonds to be supported by Special Taxes levied under this Rate and Method of Apportionment.
"Construction Fund" means an account specifically identified in the Indenture or functionally equivalent to hold funds, which are currently available for expenditure to acquire or construct public facilities eligible under CFD No. 2016-3.
"Construction Inflation Index" means the annual percentage change in the Engineering News -Record Building Cost Index for the city of Los Angeles, measured as of the Calendar Year which ends in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the City that is reasonably comparable to the Engineering News -Record Building Cost Index for the City of Los Angeles.
"Future Facilities Costs" means the CFD Public Facilities minus public facility costs available to be funded through existing construction or escrow accounts that have been funded by the Outstanding Bonds, and minus public facility costs funded by interest earnings on the Construction Fund actually earned prior to the date of prepayment.
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"Outstanding Bonds" means all previously issued Bonds issued and secured by the levy of Special Taxes for Facilities which will remain outstanding after the first interest and/or principal payment date following the current Fiscal Year, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayments of Special Taxes for Facilities.

The Special Tax for Facilities obligation of an Assessor's Parcel of Developed Property, an Assessor's Parcel of Final Map Property or Undeveloped Property for which a building permit has been issued or an Assessor's Parcel of Undeveloped Property that is classified as Undeveloped Property pursuant to Section J may be prepaid in full, provided that there are no delinquent Special Taxes, penalties, or interest charges outstanding with respect to such Assessor's Parcel at the time the Special Tax for Facilities obligation would be prepaid. The Prepayment Amount for an Assessor's Parcel eligible for prepayment shall be determined as described below.

An owner of an Assessor's Parcel intending to prepay the Special Tax for Facilities obligation shall provide the City with written notice of intent to prepay, and within 5 days of receipt of such notice, the City shall notify such owner of the amount of the non-refundable deposit determined to cover the cost to be incurred by CFD No. 2016-3 in calculating the proper amount of a prepayment. Within 15 days of receipt of such non-refundable deposit, the City shall notify such owner of the prepayment amount of such Assessor's Parcel.

The Prepayment Amount for each applicable Assessor's Parcel shall be calculated according to the following formula (capitalized terms defined below):

Bond Redemption Amount
plus Redemption Premium
plus Future Facilities Amount
plus Defeasance
plus Administrative Fee
less Reserve Fund Credit
equals Prepayment Amount
As of the date of prepayment, the Prepayment Amount shall be calculated as follows:

1. For Assessor's Parcels of Developed Property, compute the Assigned Special Tax for Facilities and the Backup Special Tax for Facilities applicable to the Assessor's Parcel. For Assessor's Parcels of Final Map Property or Undeveloped Property, excluding any Undeveloped Property pursuant to Section J, compute the Assigned Special Tax for Facilities and the Backup Special Tax for Facilities as though it was already designated as Developed Property based upon the building permit issued or to be issued for that Assessor's Parcel. For an Assessor's Parcel classified as Undeveloped Property pursuant to Section J, compute the Assigned Special Tax for Facilities for that Assessor's Parcel.

2. For each Assessor's Parcel of Developed Property, Final Map Property or Undeveloped Property to be prepaid, (a) divide the Assigned Special Tax for Facilities computed pursuant to paragraph 1 for such Assessor's Parcel by the sum of the estimated Assigned Special Tax for Facilities applicable to all Assessor's Parcels of Taxable Property at buildout, as reasonably determined by the CFD Administrator, and (b) divide the Backup Special Tax for Facilities computed pursuant to paragraph 1 for such Assessor's Parcel by the sum of the estimated Backup Special Tax for Facilities applicable to all Assessor's Parcels of Taxable Property at buildout, as reasonably determined by the CFD Administrator.

3. Multiply the larger quotient computed pursuant to paragraph 2(a) or 2(b) by the Outstanding Bonds. The product shall be the "Bond Redemption Amount".

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4. Multiply the Bond Redemption Amount by the applicable redemption premium, if any, on the Outstanding Bonds to be redeemed with the proceeds of the Bond Redemption Amount. This product is the "Redemption Premium."

5. Compute the Future Facilities Cost.

6. Multiply the larger quotient computed pursuant to paragraph 2(a) or 2(b) by the amount determined pursuant to paragraph 5 to determine the Future Facilities Cost to be prepaid (the "Future Facilities Amount").

7. Compute the amount needed to pay interest on the Bond Redemption Amount, the Redemption Premium, and the Reserve Fund Credit (see step 11) to be redeemed with the proceeds of the Prepayment Amount until the earliest redemption date for the Outstanding Bonds.

8. Estimate the amount of interest earnings to be derived from the reinvestment of the Bond Redemption Amount plus the Redemption Premium until the earliest call date for the Outstanding Bonds.

9. Subtract the amount computed pursuant to paragraph 8 from the amount computed pursuant to paragraph 7. This difference is the "Defeasance."

10. Estimate the administrative fees and expenses associated with the prepayment, including the costs of computation of the Prepayment Amount, the costs of redeeming Bonds, and the costs of recording any notices to evidence the prepayment and the redemption. This amount is the "Administrative Fee."

11. Calculate the "Reserve Fund Credit" as the lesser of: (a) the expected reduction in the applicable reserve requirements, if any, associated with the redemption of Outstanding Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirements in effect after the redemption of Outstanding Bonds as a result of the prepayment from the balance in the applicable reserve funds on the prepayment date. Notwithstanding the foregoing, if the reserve fund requirement is satisfied by a surety bond or other instrument at the time of the prepayment, then no Reserve Fund Credit shall be given. Notwithstanding the foregoing, the Reserve Fund Credit shall in no event be less than 0.

12. The Prepayment Amount is equal to the sum of the Bond Redemption Amount, the Redemption Premium, the Future Facilities Amount, the Defeasance, and the Administrative Fee, less the Reserve Fund Credit.

With respect to a Special Tax for Facilities obligation that is prepaid pursuant to this Section H, the City Council shall indicate in the records of CFD No. 2016-3 that there has been a prepayment of the Special Tax for Facilities obligation and shall cause a suitable notice to be recorded in compliance with the Act within thirty (30) days of receipt of such prepayment to indicate the prepayment of the Special Tax for Facilities obligation and the release of the Special Tax for Facilities lien on such Assessor's Parcel and the obligation of such Assessor's Parcel to pay such Special Taxes for Facilities shall cease.

Notwithstanding the foregoing, no prepayment will be allowed unless the amount of Special Tax for Facilities that may be levied on Taxable Property in each future Fiscal Year, net of Administrative Expenses, shall be at least 1.1 times the regularly scheduled annual interest and principal payments on all currently Outstanding Bonds in each future Fiscal Year.

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SECTION H

PARTIAL PREPAYMENT OF SPECIAL TAX FOR FACILITIES
The Special Tax for Facilities obligation of an Assessor's Parcel of Developed Property, or an Assessor's Parcel of Final Map Property or Undeveloped Property for which a building permit has been issued and will be classified as Developed Property in the next Fiscal Year, as calculated in this Section H below, may be partially prepaid, provided that there are no delinquent Special Taxes, penalties, or interest charges outstanding with respect to such Assessor's Parcel at the time the Special Tax for Facilities obligation would be prepaid.

The Partial Prepayment Amount shall be calculated according to the following formula:

PP=PGxF
The terms above have the following meanings:

PP = the Partial Prepayment Amount.

PG = the Prepayment Amount calculated according to Section G.

F = the percent by which the owner of the Assessor's Parcel is partially prepaying the Special Tax for Facilities obligation.

With respect to any Assessor's Parcel that is partially prepaid, the City Council shall indicate in the record of CFD No. 2016-3 that there has been a partial prepayment of the Special Tax for Facilities obligation and shall cause a suitable notice to be recorded in compliance with the Act within thirty (30) days of receipt of such partial prepayment of the Special Tax for Facilities obligation, to indicate the partial prepayment of the Special Tax for Facilities obligation and the partial release of the Special Tax for Facilities lien on such Assessor's Parcel, and the obligation of such Assessor's Parcel to pay such prepaid portion of the Special Tax for Facilities shall cease.

Notwithstanding the foregoing, no partial prepayment will be allowed unless the amount of Special Tax for Facilities that may be levied on Taxable Property in each future Fiscal Year after such partial prepayment, net of Administrative Expenses, shall be at least 1.1 times the regularly scheduled annual interest and principal payments on all currently Outstanding Bonds in each future Fiscal Year.

SECTION I

TERMINATION OF SPECIAL TAX
For each Fiscal Year that any Bonds are outstanding the Special Tax for Facilities shall be levied on all Assessor's Parcels subject to the Special Tax for Facilities. If any delinquent Special Tax for Facilities remain uncollected prior to or after all Bonds are retired, the Special Tax for Facilities may be levied to the extent necessary to reimburse CFD No. 2016-3 for uncollected Special Taxes for Facilities associated with the levy of such Special Taxes for Facilities, but no later than 2055-56 Fiscal Year. The Special Tax for Maintenance Services and the Special Tax for Public Services shall be levied as long as each is needed to meet the Special Tax Requirement for Maintenance Services and the Special Tax Requirement for Public Services, as determined at the sole discretion of the City Council.

SECTION J

EXEMPTIONS
The City shall classify as Exempt Property (i) Assessor's Parcels defined as Public Property, (ii) Assessor's Parcels which are used as places of worship and are exempt from ad valorem property taxes because they are owned by a religious organization, (iii) Assessor's Parcels used exclusively by a Property Owner's Association, or (iv) Assessor's Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement, provided that no such classification would reduce the sum of the Taxable Property to less than the Minimum Acreage. Notwithstanding the above, the City Council shall not classify an Assessor's Parcel as Exempt Property if such classification would reduce the sum of the Taxable Property to A-12
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less than the Minimum Acreage. Assessor's Parcels which cannot be classified as Exempt Property because such classification would reduce the Acreage of the Taxable Property to less than the Minimum Acreage will continue to be classified as Taxable Property, and will continue to be subject to Special Taxes accordingly.

Tax-exempt status will be assigned by the CFD Administrator in chronological order. If an Assessor's Parcel's classification is changed after the initial status is assigned, then its tax-exempt status will be revoked.

SECTION K

APPEALS
Any taxpayer may file a written appeal of the Special Taxes on his/her Assessor's Parcel(s) with the CFD Administrator, provided that the appellant is current in his/her payments of Special Taxes. During pendency of an appeal, all Special Taxes previously levied must be paid on or before the payment date established when the levy was made. The appeal must specify the reasons why the appellant claims the Special Tax is in error. The CFD Administrator shall review the appeal, meet with the appellant if the CFD Administrator deems necessary, and advise the appellant of its determination. If the CFD Administrator agrees with the appellant, the CFD Administrator shall take any of the following actions, in order of priority, in order to correct the error:
(i) amend the Special Tax levy for the current Fiscal Year prior to the payment date; (ii) require the CFD to reimburse the taxpayer the amount of the overpayment to the extent of the available funds of CFD No. 2016-3; or
(iii) grant a credit against, eliminate or reduce the future Special Taxes levied on the taxpayer's property within CFD No. 2016-3 in the amount of the overpayment provided that the CFD Administrator can certify there are sufficient Special Taxes to pay for the Special Tax Requirements for Facilities.

SECTION L

MANNER OF COLLECTION
The Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that CFD No. 2016-3 may collect the Special Tax at a different time or in a different manner if necessary to meet its financial obligations.

SECTION M

INTERPRETATIONS
The City Council may interpret this Rate and Method of Apportionment of Special Tax by ordinance or resolution for purposes of clarifying any vagueness or ambiguity. Any decision of the City Council shall be final and binding as to all persons.

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4877-5532-3965v8/022599-0033
98L 10 9017 abed

I HEREBY CERTIFY THAT THE WITHIN MAP SHOWING

PROPOSED BOUNDARIES OF COMMUNITY FACILITIES
DISTRICT N0. 2016-3, CITY OF BEAUMONT, COUNTY OF

RIVERSIDE, STATE OF CALIFORNIA, WAS APPROVED BY THE CITY

CO UNCIL OF THE CITY OF BEAUMONT, RIVERSIDE COUNTY AT A

REGULAR MEETING THEREOF, HELD ON THE DAY
2016, BY RESOLUTION NO.

COW CLERK

QTY OF BEAUMONT

FILED IN THE OFFICE OF THE CITY QERK, CITY OF BEAUMONT, THIS __DAY OF , 2016

QTY CLERK

QTY OF BEAUMONT
RECORDED THIS DAY OF , 2016
AT THE HOUR OF O'CLOCK _M IN BOOK
PAGE _ OF MAPS OF ASSESSMENT AND COMMUNITY

FACILITIES DISTRICTS IN THE OFFICE OF THE COUNTY

RECORDER, IN THE COUNTY OF RIVERSIDE, STATE OF
CALIFORNIA.

FEE: NO. :

PETER ALDANA, ASSESSOR, COUNTY CLERK, RECORDER
BY:

DEPUTY
S,n S , .4VoC_o ._
OMM IJNIN FA CE'.
2003 oVe � / DISTRICT 0516 3

VICINITY MAP
(NO T TO SCALE)
LEGEND
THIS HG Al(ARY M AP 001RECILY 530615 IHE BOLW OAR1F5 OF THE WEBBCO MMUNITY 042112TIES/1506122 PARCEL NLTEE25 ARE 5IYER5IDE COUNTY ASSESSORS PARCEL NIOHBE 5, 612 DETAILS CO KE/PAWS K§SO CIA TES THE LIVES AND 0IME V51065 OF LOTS ER PAR 225 REFER TO THE a..,., ..,,. r:,E.— 2000101/ 455255020 MAPS 0102 FECAL YEAR 2016-2017.

BOUNDARY MAP
C OMMUNITY FACILITIES DISTRICT N O. 2016-3

CITY OF BEAU MONT

COUNTY OF RIVERSIDE, STATE OF CALIF ORNIA
750- 1,500 Feet

CRC BOUNDARY

PARCEL LINE
BEAll MONT CIT YB OUNDA RY

ASSESSOR'S PARCEL NUMBER
SHEET 1 OF 1

APPENDIX B

FORM OF OPINION OF BOND COUNSEL
Bond Counsel will deliver an opinion for the Bonds substantially in the form set forth below:
, 2023
City of Beaumont
Community Facilities District No. 2016-3
Beaumont, California
Re: $ City of Beaumont Community Facilities District No. 2016-3 (Sundance) 2023 Special Tax Bonds
Ladies and Gentlemen:

We have examined the Constitution and the laws of the State of California, a certified record of the proceedings of the City of Beaumont (the "City") taken in connection with the authorization and issuance by the City of Beaumont Community Facilities District No. 2016-3 (Sundance) (the "District") of its 2023 Special Tax Bonds in the aggregate principal amount of $ (the "Bonds") and such other information and documents as we consider necessary to render this opinion. In rendering this opinion, we have relied upon certain representations of fact and certifications made by the District, the initial purchasers of the Bonds and others. We have not undertaken to verify through independent investigation the accuracy of the representations and certifications relied upon by us.

The Bonds have been issued pursuant to the Mello -Roos Community Facilities Act of 1982, as amended (comprising Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California), Resolution No. , adopted by the City Council of the City acting in its capacity as the legislative body of the District (the "City Council") on May 2, 2023 (the "Resolution"), and an Indenture dated as of May 1, 2023 (the "Indenture"), by and between the District and Wilmington Trust, National Association, as the trustee (the "Trustee"). All capitalized terms not defined herein shall have the meaning set forth in the Indenture.

The Bonds are dated their date of delivery and mature on the dates and in the amounts set forth in the Indenture. The Bonds bear interest payable semiannually on each March 1 and September 1, commencing on September 1, 2023, at the rates per annum set forth in the Indenture. The Bonds are registered Bonds in the form set forth in the Indenture, redeemable in the amounts, at the times and in the manner provided for in the Indenture.

Based upon our examination of the foregoing, and in reliance thereon and on all matters of fact as we deem relevant under the circumstances, and upon consideration of applicable laws, we are of the opinion that:
(1) The Bonds have been duly and validly authorized by the District and are legal, valid and binding limited obligations of the District, enforceable in accordance with their terms and the terms of the Indenture, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors' rights generally, by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases, and by the limitations on legal remedies against public agencies in the State of California. The Bonds are limited obligations of the District but are not a debt of the City, the County of Riverside, the State of California or any other political subdivision thereof within the meaning of any constitutional or statutory limitation, and, except for the Special Taxes, neither the faith and credit nor the taxing power of the City, the County of Riverside, the State of California, or any of its political subdivisions is pledged for the payment thereof.

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(2) The execution and delivery of the Indenture has been duly authorized by the District, and the Indenture is valid and binding upon the District and is enforceable in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors' rights generally, by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases, and by the limitations on legal remedies against public agencies in the State of California; provided, however, we express no opinion as to the enforceability of the covenant of the District contained in the Indenture to levy Special Taxes for the payment of Administrative Expenses or as to any provisions therein relating to indemnification, penalty, waiver, choice of law or choice of forum.
(3) The Indenture creates a valid pledge of that which the Indenture purports to pledge, subject to the provisions of the Indenture, except to the extent that enforceability of the Indenture may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors' rights generally, by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases, and by the limitations on legal remedies against public agencies in the State of California.
(4) Under existing statutes, regulations, rulings and judicial decisions, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals; however, for tax years beginning after December 31, 2022, with respect to applicable corporations as defined in Section 59(k) of the Internal Revenue Code of 1986, as amended (the "Code"), interest (and original issue discount) with respect to the Bonds might be taken into account in determining adjusted financial statement income for the purposes of computing the alternative minimum tax imposed on such corporations. (5)
income tax.

Interest (and original issue discount) on the Bonds is exempt from State of California personal (6) The difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity are to be sold to the public) and the stated redemption price at maturity with respect to such Bond constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Bondowner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by a Bondowner will increase the Bondowner's basis in the applicable Bond.
(7) The amount by which a Bondowner's original basis for determining loss on sale or exchange in the applicable Bond (generally the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable Bond premium which must be amortized under Section 171 of the Code; such amortizable Bond premium reduces the Bondowner's basis in the applicable Bond (and the amount of tax- exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of Bond premium may result in a Bondowner realizing a taxable gain when a Bond is sold by the owner for an amount equal to or less (under certain circumstances) than the original cost of the Bond to the owner.

The opinions expressed herein as to the exclusion from gross income for federal income tax purposes of interest (and original issue discount) on the Bonds are subject to the condition that the City and the District comply with all requirements of the Code, that must be satisfied subsequent to the issuance of the Bonds to assure that such interest (and original issue discount) will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest (and original issue discount) on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The City and the District have covenanted to comply with all such requirements.

Except as set forth in paragraphs (4), (5), (6) and (7) above, we express no opinion as to any tax consequences related to the Bonds.
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Certain requirements and procedures contained or referred to in the Indenture and Tax Certificate may be changed, and certain actions may be taken, under the circumstances and subject to the terms and conditions set forth in the Indenture and Tax Certificate, upon the advice or with the approving opinion of counsel nationally recognized in the area of tax-exempt obligations. We express no opinion as to the effect on the exclusion of interest (and original issue discount) on the Bonds from gross income for federal income tax purposes on and after the date on which any such change occurs or action is taken upon the advice or approval of counsel other than Stradling Yocca Carlson & Rauth, a Professional Corporation.

Our opinion is limited to matters governed by the laws of the State of California and federal law. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction.

The opinions expressed herein are based upon an analysis of existing statutes, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. We call attention to the fact that the foregoing opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether such actions or events are taken (or not taken) or do occur (or do not occur). Our engagement with respect to the Bonds terminates upon their issuance, and we disclaim any obligation to update the matters set forth herein.

We express no opinion herein as to the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds and expressly disclaim any duty to advise the owners of the Bonds with respect to the matters contained in the Official Statement and any other offering material relating to the Bonds.

Respectfully submitted,
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APPENDIX C

DEMOGRAPHIC INFORMATION REGARDING THE COUNTY OF RIVERSIDE

AND THE CITY OF BEAUMONT
The Bonds are not obligations of the City of Beaumont (the "City') or the County of Riverside (the "County') and do not represent a lien or charge against any funds or property of the City or the County. The following information is provided only to give prospective investors an overview of the general economic condition of the City, the County and the State of California (the "State ).

The COVID-19 outbreak is ongoing, and the duration and severity of the outbreak, and the economic and other impacts of actions that may be taken by governmental authorities to contain the outbreak or to treat its impact, are developing and uncertain. Certain information set forth in this Appendix C predates the outbreak of the COVID-19 pandemic and should not be relied upon as representative of the current demographics within the City, the County and the State.

General
The City was incorporated in 1912 under the General Laws of the State. The City is located approximately 78 miles east of Los Angeles and encompasses an area of 30.9 square miles. The City has an estimated population of approximately 54,690 persons as of January 1, 2022.

Population
The following table offers population figures for the City, the County and the State as of January 1 for the years 2018 through 2022.

Area 2018 2019 2020 2021 2022
City of Beaumont 48,013 49,913 51,731 54,313 54,690
County of Riverside 2,397,662 2,419,057 2,440,719 2,424,587 2,435,525 State of California 39,519,535 39,605,361 39,648,938 39,303,157 39,185,605 Source: California State Department of Finance, Demographic Research Unit. March 2021 Benchmark.

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Building Activity
The following tables provide summaries of the building permit valuations and the number of new dwelling units authorized in the City and County from 2017 through 2021.

BUILDING PERMIT VALUATIONS
City of Beaumont
2017-2021
2017 2018 2019 2020 2021
Valuation ($000):

Residential $121,802 $183,244 $159,847 $73,829 141,171
Non-residential 10,219 271,487 30,156 25,559 16,448
Total* $132,021 $454,731 $190,003 $99,388 $157,619
Residential Units:

Single family 715 656 528 271 494
Multiple family 2 112 0 0 0
Total 717 768 528 271 494
* May not foot due to rounding.

Source: Construction Industry Research Board.

BUILDING PERMIT VALUATIONS
County of Riverside
2017-2021
2017 2018 2019 2020 2021
Valuation ($000):

Residential $1,903,417 $2,558,081 $2,275,405 $2,519,303 $2,262,642 Non-residential 1,433,691 1,959,680 1,285,856 1,153,778 1,543,998 Total* $3,337,108 $4,517,761 $3,561,261 $3,673,081 $3,806,640 Residential Units:

Single family 6,265 7,540 6,563 8,443 7,360
Multiple family 1,070 1,628 1,798 723 1,126
Total 7,335 9,168 8,361 9,166 8,486
* May not foot due to rounding.

Source: Construction Industry Research Board.

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Employment
The following table shows the largest employers located in the County as of fiscal year 2021.

LARGEST EMPLOYERS
County of Riverside
2021
Rank Name of Business

1. County of Riverside

2. Amazon

3. March Air Reserve Base

4. University of California -Riverside

5. Stater Brothers Markets

6. Moreno Valley Unified School District

7. Kaiser Permanente Riverside Medical Center

8. Corona -Norco Unified School District

9. Hemet Unified School District

10. Ross Dress for Less
Employees Type of Business
22,952
10,500
9,600
8,909
8,304
6,250
5,780
5,478
4,460
4,313
County Government
Online Retail
Military Reserve Base
University
Grocery Store
School District
Medical Center
School District
School District
Retail
Source: County of Riverside Annual Comprehensive Financial Report for the year ending June 30, 2021.

Employment and Industry
Employment data by industry is not separately reported on an annual basis for the City but is compiled for the Riverside -San Bernardino -Ontario Metropolitan Statistical Area (the "MSA"), which includes all of Riverside and San Bernardino Counties. In addition to varied manufacturing employment, the MSA has large and growing commercial and service sector employment, as reflected in the table below. 4877-5532-3965v8/022599-0033
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The following table represents the Annual Average Labor Force and Industry Employment for the County for the period from 2017 through 2021.

RIVERSIDE -SAN BERNARDINO-ONTARIO MSA

INDUSTRY EMPLOYMENT & LABOR FORCE - BY ANNUAL AVERAGE
2017 2018 2019 2020 2021
Civilian Labor Force 2,012,900 2,045,000 2,074,500 2,088,600 2,118,200 Civilian Employment 1,909,500 1,956,800 1,989,700 1,880,500 1,961,800 Civilian Unemployment 103,400 88,200 84,800 208,100 156,400 Civilian Unemployment Rate 5.1% 4.3% 4.1% 10.0% 7.4%
Total Farm 14,500 14,500 15,400 14,100 13,900
Total Nonfarm 1,453,300 1,506,600 1,552,800 1,495,200 1,569,100 Total Private 1,202,300 1,249,400 1,291,600 1,247,200 1,325,400 Goods Producing 196,400 206,100 208,900 201,300 205,400 Mining & Logging 1,000 1,200 1,200 1,300 1,400
Construction 97,400 105,200 107,200 104,900 109,200
Manufacturing 98,000 99,800 100,600 95,100 94,800
Service Providing 1,256,900 1,300,500 1,343,800 1,293,900 1,363,700 Trade, Transportation & Utilities 363,900 379,400 395,100 406,900 443,100 Wholesale Trade 63,100 66,100 67,700 65,600 67,000
Retail Trade 180,900 181,200 180,700 168,800 177,600
Transportation, Warehousing &
Utilities 119,900 132,100 146,600 172,500 198,600
Information 11,600 11,400 11,500 9,400 9,600
Financial Activities 44,700 44,600 45,000 44,100 44,900 Professional & Business Services 147,300 152,000 158,700 155,400 167,300 Educational & Health Services 226,700 239,500 250,300 248,700 253,300 Leisure & Hospitality 166,300 170,600 175,900 141,300 158,900 Other Services 45,400 45,800 46,200 40,200 43,000
Government 251.000 257.200 261.200 248.000 243.600
Total, All Industries 1,467,800 1,521,100 1,568,100 1,509,300 1,583,000 Note: Does not include proprietors, self-employed, unpaid volunteers or family workers, domestic workers in households and persons involved in labor-management trade disputes. Employment reported by place of work. Items may not add to total due to independent rounding.

The "Total, All Industries" data is not directly comparable to the employment data found in this Appendix C.

Source: State of California, Employment Development Department, March 2021 Benchmark.

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The following table summarizes the labor force, employment and unemployment figures for the period from 2017 through 2021 for the City, the County, the State and the nation as a whole.

CITY OF BEAUMONT,

COUNTY OF RIVERSIDE,

STATE OF CALIFORNIA AND UNITED STATES
Average Annual Civilian Labor Force, Employment and Unemployment Unemployment
Year and Area Labor Force Employments) Unemployment(2) Rate (%)(3) 2017
Beaumont 21,500 20,600 900 4.0%
Riverside County 1,072,200 1,015,800 56,300 5.3
State of California 19,312,000 18,393,100 918,900 4.8
United States(4) 160,320,000 153,337,000 6,982,000 4.4
2018
Beaumont 22,700 21,900 800 3.3%
Riverside County 1,091,400 1,042,700 48,700 4.5
State of California 19,398,200 18,582,800 815,400 4.2
United Statese> 162,075,000 155,761,000 6,314,000 3.9
2019
Beaumont 23,000 22,300 800 3.3%
Riverside County 1,104,000 1,057,900 46,100 4.2
State of California 19,411,600 18,627,400 784,200 4.0
United States(4) 163,539,000 157,538,000 6,001,000 3.7
2020
Beaumont 23,800 21,700 2,100 8.8%
Riverside County 1,107,700 997,700 110,000 9.9
State of California 18,821,200 16,913,100 1,908,100 10.1 United States 160,472,000 147,795,000 12,947,000 8.1
2021
Beaumont 24,200 22,700 1,500 6.3%
Riverside County 1,129,600 1,046,700 82,800 7.3
State of California 18,923,200 17,541,900 1,381,200 7.3 United States 161,204,000 152,581,000 8,623,000 5.3
(1) Includes persons involved in labor-management trade disputes. (2) Includes all persons without jobs who are actively seeking work. (3) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures in this table.
(4) Not strictly comparable with data for prior years.

Source: California Employment Development Department, March 2021 Benchmark and U.S. Department of Labor, Bureau of Labor Statistics.

Personal Income
Personal Income is the income that is received by all persons from all sources. It is calculated as the sum of wage and salary disbursements, supplements to wages and salaries, proprietors' income with inventory valuation and capital consumption adjustments, rental income of persons with capital consumption adjustment, personal dividend income, personal interest income, and personal current transfer receipts, less contributions for government social insurance.

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The personal income of an area is the income that is received by, or on behalf of, all the individuals who live in the area; therefore, the estimates of personal income are presented by the place of residence of the income recipients.

Total personal income in Riverside County increased by 91.8% between 2007 and 2021. The following tables summarize personal income for Riverside County for 2007 through 2021.

PERSONAL INCOME
Riverside County
2007-2021
(Dollars in Thousands)
Annual
Year Riverside County Percent Change
2007 $65,615,218 5.5%
2008 66,862,826 1.9
2009 65,663,326 (1.8)
2010 68,084,905 3.7
2011 72,170,010 6.0
2012 74,093,810 2.7
2013 76,470,084 3.2
2014 80,268,670 5.0
2015 85,386,347 6.4
2016 89,644,299 5.0
2017 93,156,635 3.9
2018 97,619,217 4.8
2019 102,037,774 4.5
2020 114,090,413 11.8
2021 125,820,553 10.3
Source: U.S. Department of Commerce, Bureau of Economic Analysis.

The following table summarizes per capita personal income for Riverside County, California and the United States for 2011-2021. This measure of income is calculated as the personal income of the residents of the area divided by the resident population of the area.

PER CAPITA PERSONAL INCOME
2011 through 2021
Riverside County, State of California and United States Year Riverside County State of California United States 2011 $32,308 $45,574 $42,747
2012 32,774 48,154 44,548
2013 33,450 48,549 44,798
2014 34,670 51,332 46,887
2015 36,418 54,632 48,725
2016 37,693 56,667 49,613
2017 38,605 58,942 51,550
2018 39,955 61,663 53,786
2019 41,385 64,513 56,250
2020 45,834 70,192 59,765
2021 51,180 76,614 64,143
Note: Per capita personal income was computed using Census Bureau midyear population estimates. Estimates for 2011-2021 reflect county population estimates available as of March 2021.

Source: U.S. Department of Commerce, Bureau of Economic Analysis.

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Taxable Sales
The table below presents taxable sales for the years 2017 through 2021 for the City.

TAXABLE SALES
City of Beaumont
2017-2021
(Dollars in Thousands)
Year
Permits Taxable Transactions
2017 1,281 $429,066
2018 1,382 455,471
2019 1,441 475,414
2020 1,543 616,039
2021 1,336 1,229,150
Source: Taxable Sales in California, California Department of Tax and Fee Administration for 2017-2021.

The table below presents taxable sales for the years 2017 through 2021 for the County.

Year

TAXABLE SALES
County of Riverside
2017-2021
(Dollars in Thousands)
Permits Taxable Transactions
2017 58,969 36,407,460
2018 61,433 38,919,498
2019 64,063 40,626,998
2020 69,284 42,313,474
2021 64,335 55,535,196
Source: Taxable Sales in California, California Department of Tax and Fee Administration for 2017-2021 4877-5532-3965v8/022599-0033
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APPENDIX D

SUMMARY OF CERTAIN PROVISIONS OF THE BOND INDENTURE
The following is a summary of certain provisions of the Indenture which are not described elsewhere.

This summary does not purport to be comprehensive and reference should be made to the Indenture for a full and complete statement of the provisions thereof.

DEFINITIONS
Unless the context otherwise requires, the following terms have the following meanings:

Account. The term "Account" means any account created pursuant to the Indenture.

Acquisition and Construction Fund. The term "Acquisition and Construction Fund" means the fund by that name established pursuant to the Indenture.

Acquisition Agreement. The term "Acquisition Agreement" means that certain Acquisition Agreement by and among the City, the District and Pardee Homes, a California corporation, together with any amendments thereto
Act. The term "Act" means the Mello -Roos Community Facilities Act of 1982, as amended, being Section 53311 et seq. of the California Government Code.

Administrative Expense Account. The term "Administrative Expense Account" means the account by that name created and established in the Special Tax Fund pursuant to the Indenture.

Administrative Expenses. The term "Administrative Expenses" means the administrative costs with respect to the calculation and collection of the Special Taxes, including all attorneys' fees, expenses and other costs related thereto (including those of the Trustee's counsel), the fees and expenses of the Trustee, any fees and related costs for credit enhancement for the Bonds or any Parity Bonds which are not otherwise paid as Costs of Issuance, any costs related to the District's compliance with state and federal laws requiring continuing disclosure of information concerning the Bonds and the District, and any other costs otherwise incurred by City staff on behalf of the District in order to carry out the purposes of the District as set forth in the Resolution of Formation and any obligation of the District under the Indenture.

Administrative Expenses Cap. The term "Administrative Expenses Cap" means $30,000 per year, commencing July 1, 2023.

Alternate Penalty Account. The term "Alternate Penalty Account" means the account by that name created and established in the Rebate Fund pursuant to the Indenture.

Annual Debt Service. The term "Annual Debt Service" means the principal amount of any Outstanding Bonds or Parity Bonds payable in a Bond Year either at maturity or pursuant to a Sinking Fund Payment and any interest payable on any Outstanding Bonds or Parity Bonds in such Bond Year, if the Bonds and any Parity Bonds are retired as scheduled.

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Authorized Investments. The term "Authorized Investments" means any of the following which at the time of investment are legal investments under the laws of the State for the moneys proposed to be invested therein:
(1) For all purposes, including defeasance investments in refunding escrow accounts:
(a) cash; or
(b) obligations of, or obligations guaranteed as to principal and interest by, the U.S. or any agency or instrumentality thereof, when such obligations are backed by the full faith and credit of the U.S., including U.S. Treasury obligations, all direct or fully guaranteed obligations, Farmers Home Administration, General Services Administration, guaranteed Title XI financing, Government National Mortgage Association (GNMA) and State and Local Government Series; or
(c) obligations of government -sponsored agencies that are not backed by the full faith and credit of the U.S. Government: Federal Home Loan Mortgage Corporation (FHLMC) debt obligations, Farm Credit System (formerly: Federal Land Banks, Federal Intermediate Credit Banks and Banks for Cooperatives), Federal Home Loan Banks (FHL Banks), Federal National Mortgage Association (FNMA) debt obligations, Financing Corp. (FICO) debt obligations, Resolution Funding Corp. (REFCORP) debt obligations and U.S.

Agency for International Development (U.S.A.I.D.) guaranteed notes. (2) For all purposes other than defeasance investments in refunding escrow accounts:
(a) obligations of any of the following federal agencies, which obligations represent the full faith and credit of the United States of America: Export -Import Bank, Rural Economic Community Development Administration, U.S. Maritime Administration, Small Business Administration, U.S. Department of Housing & Urban Development (PHAs), Federal Housing Administration and Federal Financing Bank; (b) direct obligations of any of the following federal agencies, which obligations are not fully guaranteed by the full faith and credit of the United States of America: senior debt obligations issued by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC), obligations of the Resolution Funding Corporation (REFCORP) and senior debt obligations of the Federal Home Loan Bank System;
(c) U.S. dollar denominated deposit accounts, federal funds and bankers' acceptances with domestic commercial banks (including those of the Trustee and its affiliates) which have a rating on their short term certificates of deposit on the date of purchase of "A-1" or "A-1+" by S&P and "P-1" by Moody's and maturing no more than 360 days after the date of purchase (ratings on holding companies are not considered as the rating of the bank);
(d) commercial paper which is rated at the time of purchase in the single highest classification "A-1+" by S&P and "P-1" by Moody's and which matures not more than 270 days after the date of purchase;
(e) investments in a money market fund rated "AAm," "AAm-G" or better by S&P, including funds for which the Trustee or its affiliates provide investment advisory or other management services; (0 pre -refunded municipal obligations defined as follows: any bonds or other obligations of any state of the United States of America, or any agency, instrumentality or local governmental unit of any such state, which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice, and D-2
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(i) which are rated, based on irrevocable escrow account or fund (the "escrow"), in the highest rating category of S&P and Moody's or any successors thereto; or (ii) (1) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or obligations described in paragraph (1)(b) above, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate; and (2) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate; (g) municipal obligations rated "Aaa/AAA" or general obligations of states with a rating of at least "Aa2/AA" or higher by both Moody's and S&P; (h) Investment Agreements (supported by appropriate opinions of counsel); and (i) the Local Agency Investment Fund of the State, created pursuant to Section 16429.1 of the California Government Code, to the extent that the Trustee is authorized to register such investment in its name.

The value of the above investments will be determined as follows:
(a) for the purpose of determining the amount in any fund, all Authorized Investments credited to such fund will be valued at market value. The Trustee will determine the market value based on accepted industry standards, including the Trustee's internal systems, and from accepted industry providers.

Accepted industry providers include, but are not limited to, pricing services provided by Financial Times Interactive Data Corporation, Bank of America Merrill Lynch or Salomon Smith Barney. Notwithstanding anything to the contrary in the Indenture, in making any valuation of investments thereunder, the Trustee may utilize computerized securities pricing services that may be available to it, including those available through its regular accounting system, and rely thereon;
(b) as to certificates of deposit and bankers acceptances: the face amount thereof, plus accrued interest thereon; and
(c) as to any investment not specified above: the value thereof established by prior agreement between the City and the Trustee.

Authorized Representative of the District. The term "Authorized Representative of the District" means the Mayor, City Manager, Administrative Services Director, Finance Director or City Clerk of the City, or any other officer or employee authorized by the City Council of the City or by an Authorized Representative of the District to undertake the action referenced in the Indenture as required to be undertaken by an Authorized Representative of the District.

Bond Counsel. The term "Bond Counsel" means Stradling Yocca Carlson & Rauth, a Professional Corporation, or another attorney at law or a firm of attorneys selected by the District of nationally recognized standing in matters pertaining to the tax-exempt nature of interest on bonds issued by states and their political subdivisions duly admitted to the practice of law before the highest court of any state of the United States of America or the District of Columbia.

Bond Register. The term "Bond Register" means the books which the Trustee will keep or cause to be kept on which the registration and transfer of the Bonds and any Parity Bonds are recorded.

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Bonds. The term "Bonds" means the District's 2023 Special Tax Bonds issued on , 2023 in the aggregate principal amount of $
Bond Year. The term "Bond Year" means the twelve-month period commencing on September 2 of each year and ending on September 1 of the following year, except that the first Bond Year for the Bonds or an issue of Parity Bonds will begin on the Delivery Date and end on the first September 1 which is not more than 12 months after the Delivery Date.

Business Day. The term "Business Day" means a day which is not a Saturday or Sunday or a day of the year on which banks or trust companies in New York, New York, Wilmington, Delaware, Los Angeles, California, or the city where the Principal Office of the Trustee is located, are not required or authorized by law, regulation or executive order, to close or to remain closed.

Certificate of an Authorized Representative. The term "Certificate of an Authorized Representative" means a written certificate or warrant request executed by an Authorized Representative of the District.

City. The term "City" means the City of Beaumont, County of Riverside, State of California.

City Council. The term "City Council" means the City Council of the City.

City Facilities Account. The term "City Facilities Account" means the account by that name created and established in the Acquisition and Construction Fund pursuant to the Indenture.

Code. The term "Code" means the Internal Revenue Code of 1986, as amended, and any Regulations, rulings, judicial decisions, and notices, announcements, and other releases of the United States Treasury Department or Internal Revenue Service interpreting and construing it.

Continuing Disclosure Certificate. The term "Continuing Disclosure Certificate" means that certain Continuing Disclosure Certificate dated as of April 12, 2023, as originally executed by the District and as it may be from time to time amended or supplemented in accordance with its terms.

Costs of Issuance. The term "Costs of Issuance" means the costs and expenses incurred in connection with the formation of the District and the issuance and sale of the Bonds or any Parity Bonds, including the acceptance and initial annual fees and expenses of the Trustee and its counsel, legal fees and expenses, costs of printing the Bonds and Parity Bonds and the preliminary and final official statements for the Bonds and Parity Bonds, fees of financial consultants, costs of the appraisal and all other related fees and expenses, including reimbursement to property owners within the District for design, engineering and legal costs, as set forth in a Certificate of an Authorized Representative of the District.

Costs of Issuance Account. The term "Costs of Issuance Account" means the account by that name created and established in the Acquisition and Construction Fund pursuant to the Indenture.

Delivery Date. The term "Delivery Date" means, with respect to the Bonds and each issue of Parity Bonds, the date on which the bonds of such issue were issued and delivered to the initial purchasers thereof.

Depository. The term "Depository" means The Depository Trust Company, New York, New York, and its successors and assigns as securities depository for the Bonds, or any other securities depository acting as Depository under the Indenture.

Direct Debt for District Property. The term "Direct Debt for District Property" means that portion of the aggregate principal amount of the Outstanding Bonds and Parity Bonds which is allocable to the property in the District.

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District. The term "District" means City of Beaumont Community Facilities District No. 2016-3 (Sundance) established pursuant to the Act and Resolution No. 2017-06 adopted by the City Council of the City on February 7, 2017.

Event of Default. The term "Event of Default" means an event described under the caption "EVENT OF DEFAULT."
Fiscal Year. The term "Fiscal Year" means the period beginning on July 1 of each year and ending on the next following June 30.

Funds. The term "Funds" means any funds created pursuant to the Indenture.

Gross Taxes. The term "Gross Taxes" means the amount of all Special Taxes received by the District together with the proceeds collected from the sale of property pursuant to foreclosure for the delinquency of such Special Taxes remaining after the payment of all costs related to such foreclosure actions.

Indenture. The term "Indenture" means the Bond Indenture, together with any Supplemental Indenture approved as described under the caption "AMENDMENTS TO INDENTURE." Independent Financial Consultant. The term "Independent Financial Consultant" means a financial consultant or firm of such consultants generally recognized to be well qualified in the financial consulting field, appointed and paid by the District, who, or each of whom: (1) is in fact independent and not under the domination of the District or the City; (2) does not have any substantial interest, direct or indirect, in the District or the City; and (3) is not connected with the District or the City as a member, officer or employee of the District or the City, but who may be regularly retained to make annual or other reports to the District or the City.

Interest Account. The term "Interest Account" means the account by that name created and established in the Special Tax Fund pursuant to the Indenture.

Interest Payment Date. The term "Interest Payment Date" means September 1, 2023 and each March 1 and September 1 thereafter; provided, however, that, if any such day is not a Business Day, interest up to the Interest Payment Date will be paid on the Business Day next succeeding such date.

Investment Agreement. The term "Investment Agreement" means one or more agreements for the investment of funds of the District complying with the criteria therefor as set forth in subsection (2)(h) of the definition of Authorized Investments in the Indenture.

Maximum Annual Debt Service. The term "Maximum Annual Debt Service" means the maximum sum obtained for any Bond Year prior to the final maturity of the Bonds and any Parity Bonds by adding the following for each Bond Year: (1) the principal amount of all Outstanding Bonds and Parity Bonds payable in such Bond Year either at maturity or pursuant to a Sinking Fund Payment; and (2) the interest payable on the aggregate principal amount of all Bonds and Parity Bonds Outstanding in such Bond Year if the Bonds and Parity Bonds are retired as scheduled.

Moody's. The term "Moody's" means Moody's Investors Service, Inc., its successors and assigns.

Net Taxes. The term "Net Taxes" means Gross Taxes minus amounts set aside to pay Administrative Expenses.

Nominee. The term "Nominee" means the nominee of the Depository, which may be the Depository, as determined from time to time as described under the caption "GENERAL AUTHORIZATION AND BOND TERMS —Initial Depository and Nominee."
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Ordinance. The term "Ordinance" means Ordinance No. 1082 adopted by the City Council on February 21, 2017 providing for the levying of the Special Tax.

Outstanding. The terms "Outstanding" or "Outstanding Bonds and Parity Bonds" means all Bonds and Parity Bonds theretofore issued by the District, except: (i) Bonds and Parity Bonds theretofore cancelled or surrendered for cancellation as described under the caption "MISCELLANEOUS —Cancellation of Bonds and Parity Bonds;" (ii) Bonds and Parity Bonds for payment or redemption of which monies have been theretofore deposited in trust (whether upon or prior to the maturity or the redemption date of such Bonds or Parity Bonds), provided that, if such Bonds or Parity Bonds are to be redeemed prior to the maturity thereof, notice of such redemption has been given as provided in the Indenture or any applicable Supplemental Indenture for Parity Bonds; and (iii) Bonds and Parity Bonds which have been surrendered to the Trustee for transfer or exchange pursuant to the Indenture or for which a replacement has been issued as described under the caption "GENERAL AUTHORIZATION AND BOND TERMS —Mutilated, Lost, Destroyed or Stolen Bonds or Parity Bonds." Overlapping Debt. The term "Overlapping Debt" means with respect to any property within the District, the sum of (a) the aggregate amount of all unpaid assessments which are a lien on such property and which are pledged to secure the repayment of bonds, plus (b) a portion of the principal amount of any outstanding bonds of other community facilities districts which are payable at least partially from special taxes to be levied on such property (the "Other CFD Bonds") determined by multiplying the aggregate principal amount of the Other CFD Bonds by a fraction, the numerator of which is the amount of special taxes levied for the Other CFD Bonds on such property and the denominator of which is the total amount of special taxes levied for the Other CFD Bonds on all parcels of property which are subject to the levy of such special taxes, based upon information which is available for the then current Fiscal Year.

Owner. The term "Owner" means the person or persons in whose name or names any Bond or Parity Bond is registered.

Parity Bonds. The term "Parity Bonds" means all bonds, notes or other similar evidences of indebtedness issued, payable out of the Net Taxes and which, as provided in the Indenture or any Supplemental Indenture, rank on a parity with the Bonds.

Participants. The term "Participants" means those broker -dealers, banks and other financial institutions from time to time for which the Depository holds Bonds or Parity Bonds as securities depository.

Person. The term "Person" means natural persons, firms, corporations, partnerships, associations, trusts, public bodies and other entities.

Prepayments. The term "Prepayments" means any amounts paid by the District to the Trustee and designated by the District as a prepayment of Special Taxes for one or more parcels in the District made in accordance with the RMA.

Principal Account. The term "Principal Account" means the account by that name created and established in the Special Tax Fund pursuant to the Indenture.

Principal Office of the Trustee. The term "Principal Office of the Trustee" means the office of the Trustee located in Costa Mesa, California, or such other office or offices as the Trustee may designate from time to time by notice to the Owners and the District, or the designated office of any successor Trustee (or such other address as such successor Trustee may designate from time to time by notice to the Owners and the District), where it principally conducts and administers its corporate trust business under indentures pursuant to which municipal or governmental obligations are issued.

Project. The term "Project" means those public facilities described in the Acquisition Agreement which are to be acquired or constructed within and outside of the District, including all engineering, planning and D-6
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design services and other incidental expenses related to such facilities and other facilities, if any, authorized by the qualified electors within the District from time to time.

Project Costs. The term "Project Costs" means the amounts necessary to finance the Project, to create and replenish any necessary reserve funds, to pay the initial and annual costs associated with the Bonds or any Parity Bonds, including, but not limited to, remarketing, credit enhancement, Trustee and other fees and expenses relating to the issuance of the Bonds or any Parity Bonds and the formation of the District, and to pay any other "incidental expenses" of the District, as such term is defined in the Act.

Rating Agency. The term "Rating Agency" means Moody's or S&P, or both, as the context requires.

Rebate Account. The term "Rebate Account" means the account by that name created and established in the Rebate Fund pursuant to the Indenture.

Rebate Fund. The term "Rebate Fund" means the fund by that name established pursuant to the Indenture in which there are established the Accounts described therein.

Rebate Regulations. The term "Rebate Regulations" means any final, temporary or proposed Regulations promulgated under Section 148(f) of the Code.

Record Date. The term "Record Date" means the fifteenth day of the month preceding an Interest Payment Date, regardless of whether such day is a Business Day.

Redemption Account. The term "Redemption Account" means the account by that name created and established in the Special Tax Fund pursuant to the Indenture.

Regulations. The term "Regulations" means the regulations adopted or proposed by the Department of Treasury from time to time with respect to obligations issued pursuant to Section 103 of the Code.

Representation Letter. The term "Representation Letter" means the Blanket Letter of Representations from the District to the Depository as described in the Indenture.

Reserve Account. The term "Reserve Account" means the account by that name created and established in the Special Tax Fund pursuant to the Indenture.
"Reserve Policy" means a letter of credit, insurance policy, surety bond or other such funding instrument issued by a municipal bond insurance company rated least "Aa3" or higher by Moody's or "AA-" or higher by S&P, delivered to the Trustee for the purpose of providing all or a portion of the 2023 Bonds Reserve Requirement for the Bonds or all or a portion of the Reserve Requirement for a series of Parity Bonds.

Reserve Requirement. The term "Reserve Requirement" means, with respect to the Bonds, the 2023 Bonds Reserve Requirement, and with respect to a series of Parity Bonds, that amount set forth in the Supplemental Indenture executed and delivered in connection with such series of Parity Bonds.

Resolution of Formation. The term "Resolution of Formation" means Resolution No. 2017-06 adopted by the City Council on February 7, 2017, pursuant to which the City Council established the District.

RMA. The term "RMA" means the Rate and Method of Apportionment of City of Beaumont Community Facilities District No. 2016-3 (Sundance) approved by the qualified electors of the District at the February 7, 2017 election.

Sinking Fund Payment. The term "Sinking Fund Payment" means the annual payment to be deposited in the Redemption Account to redeem a portion of the Term Bonds in accordance with the schedules set forth in D-7
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the Indenture and any annual sinking fund payment schedule to retire any Parity Bonds which are designated as Tenn Bonds.

Six -Month Period. The term "Six -Month Period" means the period of time beginning on the Delivery Date of each issue of Bonds or Parity Bonds, as applicable, and ending six consecutive months thereafter, and each six-month period thereafter until the latest maturity date of the Bonds and the Parity Bonds (and any obligations that refund an issue of the Bonds or Parity Bonds).

Special Tax Administrator. The term "Special Tax Administrator" means the individual or entity appointed by the City to administer the calculation and collection of the Special Taxes.

Special Tax Fund. The term "Special Tax Fund" means the fund by that name created and established pursuant to the Indenture.

Special Taxes. The term "Special Taxes" means the taxes authorized to be levied by the District on property within the District in accordance with the Ordinance, the Resolution of Formation, the Act and the voter approval obtained at the February 7, 2017 election in the District, including any scheduled payments and any Prepayments thereof, the net proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and penalties and interest thereon; provided that any delinquent Special Tax sold to an independent third -party or to the City for 100% of the delinquent amount will no longer be pledged under the Indenture to the payment of the Bonds or Parity Bonds.

S&P. The term "S&P" means S&P Global Ratings, a Standard & Poor's Financial Services LLC business, its successors and assigns.

State. The term "State" means the State of California.

Subaccount. The term "Subaccount" means any subaccount created pursuant to the Indenture.

Supplemental Indenture. The term "Supplemental Indenture" means any supplemental indenture amending or supplementing the Indenture.

Surplus Fund. The term "Surplus Fund" means the fund by that name created and established pursuant to the Indenture.

Tax Certificate. The term "Tax Certificate" means the certificate by that name to be executed by the District on a Delivery Date to establish certain facts and expectations and which contains certain covenants relevant to compliance with the Code.

Tax -Exempt. The term "Tax -Exempt" means, with reference to an Authorized Investment, an Authorized Investment the interest earnings on which are excludable from gross income for federal income tax purposes pursuant to Section 103(a) of the Code, other than one described in Section 57(a)(5)(C) of the Code.

Taxable Property. The term "Taxable Property" has the meaning ascribed to it in the RMA.

Term Bonds. The term "Term Bonds" means the Bonds maturing on September 1, 20 , September 1, 20 and September 1, 20 and any term maturities of an issue of Parity Bonds as specified in a Supplemental Indenture.

Treasurer. The term "Treasurer" means the Treasurer -Tax Collector of the County of Riverside, or his or her written designee.

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Trustee. The term "Trustee" means Wilmington Trust, National Association, a national banking association duly organized and existing under the laws of the United States, at its designated corporate trust office in Costa Mesa, California, and its successors or assigns, or any other bank or trust company which may at any time be substituted in its place as provided in the Indenture, and any successor thereto. 2023 Bonds Reserve Subaccount. The term "2023 Bonds Reserve Subaccount" means the Subaccount by that name created and established in the Reserve Account pursuant to the Indenture. 2023 Bonds Reserve Requirement. The term "2023 Bonds Reserve Requirement" means that amount as of any date of calculation equal to the lesser of: (i) 10% of the initial principal amount of the Bonds; (ii) Maximum Annual Debt Service on the then Outstanding Bonds; (iii) 125% of average Annual Debt Service on the then Outstanding Bonds; provided, however, that the 2023 Bonds Reserve Requirement will not exceed $
Underwriter. The term "Underwriter" means, with respect to the Bonds, Stifel Nicolaus & Company, Incorporated, and with respect to each issue of Parity Bonds, the institution or institutions, if any, with whom the District enters into a purchase contract for the sale of such issue.

Value of District Property. The term "Value of District Property" means for all parcels of property in the District which are subject to the levy of the Special Taxes, either (i) the fair market value, as of the date of the appraisal provided for below of such parcels, including with respect to such parcels the value of the then existing improvements thereon, as estimated by an appraiser, who will be a State of California certified general real estate appraiser selected and employed by the District, in an appraisal performed within ninety (90) days preceding the date of such determination based upon a methodology of valuation consistent with the City's policy for appraisals, provided that a mass appraisal methodology may be applied when valuing Developed Property (as defined in the RMA); (ii) the full cash value of any or all of such parcels, including with respect to such parcels the value of the improvements thereon, as set forth on the last equalized assessment roll of the County Assessor of the County of Riverside; or (iii) a combination of the value derived from the foregoing paragraphs (i) and (ii).

GENERAL AUTHORIZATION AND BOND TERMS
Type and Nature of Bonds and Parity Bonds. Neither the faith and credit nor the taxing power of the City, the State of California, or any political subdivision thereof other than the District is pledged to the payment of the Bonds or any Parity Bonds. Except for the Net Taxes, no other taxes are pledged to the payment of the Bonds or any Parity Bonds. The Bonds and any Parity Bonds are not general or special obligations of the City nor general obligations of the District, but are limited obligations of the District payable solely from certain amounts deposited by the District in the Special Tax Fund (exclusive of the Administrative Expense Account), as more fully described in the Indenture. The District's limited obligation to pay the principal of, premium, if any, and interest on the Bonds and any Parity Bonds from amounts in the Special Tax Fund (exclusive of the Administrative Expense Account) is absolute and unconditional, free of deductions and without any abatement, offset, recoupment, diminution or set-off whatsoever. No Owner of the Bonds or any Parity Bonds may compel the exercise of the taxing power by the District (except as pertains to the Special Taxes) or the City or the forfeiture of any of their property. The principal of and interest on the Bonds and any Parity Bonds and premiums upon the redemption thereof, if any, are not a debt of the City, the State of California or any of its political subdivisions within the meaning of any constitutional or statutory limitation or restriction. The Bonds and any Parity Bonds are not a legal or equitable pledge, charge, lien, or encumbrance upon any of the District's property, or upon any of its income, receipts or revenues, except the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expense Account) which are, under the terms of the Indenture and the Act, set aside for the payment of the Bonds, any Parity Bonds and interest thereon, and neither the members of the legislative body of the District or the members of the City Council nor any persons executing the Bonds or any Parity Bonds are liable personally on the Bonds or any Parity Bonds, by reason of their issuance.

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Notwithstanding anything to the contrary contained in the Indenture, the District is not required to advance any money derived from any source of income other than the Net Taxes for the payment of the interest on or the principal of the Bonds or any Parity Bonds, or for the performance of any covenants contained in the Indenture. The District may, however, advance funds for any such purpose, provided that such funds are derived from a source legally available for such purpose.

Equality of Bonds and Parity Bonds and Pledge of Net Taxes. Pursuant to the Act and the Indenture, the Bonds and any Parity Bonds will be equally payable from and secured by a first pledge of and lien on the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expense Account), without priority for number, date of the Bonds or Parity Bonds, date of sale, date of execution, or date of delivery, and the payment of the interest on and principal of the Bonds and any Parity Bonds and any premiums upon the redemption thereof, will be exclusively paid from the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expense Account) which are set aside for the payment of the Bonds and any Parity Bonds; provided that any delinquent Special Tax sold to an independent third -party or to the City for 100% of the delinquent amount will no longer be pledged under the Indenture to the payment of the Bonds or Parity Bonds. Amounts in the Special Tax Fund (other than the Administrative Expense Account therein) constitute a trust fund held for the benefit of the Owners to be applied to the payment of the interest on and principal of the Bonds and any Parity Bonds and, so long as any of the Bonds and any Parity Bonds or interest thereon remain Outstanding, will not be used for any other purpose, except as permitted by the Indenture or any Supplemental Indenture. Notwithstanding any provision contained in the Indenture to the contrary, Net Taxes deposited in the Rebate Fund and the Surplus Fund will no longer be considered to be pledged to the Bonds or any Parity Bonds, and none of the Rebate Fund, the Surplus Fund, the Acquisition and Construction Fund or the Administrative Expense Account of the Special Tax Fund will be construed as a trust fund held for the benefit of the Owners.

Notwithstanding anything to the contrary contained in the Indenture, amounts in the 2023 Bonds Reserve Subaccount will only secure and be available to pay the principal of, redemption premium, if any, and interest on the Bonds, and amounts in the Subaccount of the Reserve Account established for a series of Parity Bonds will secure only and be available to pay the principal of, redemption premium, if any, and interest on, only such series of Parity Bonds.

Nothing in the Indenture or any Supplemental Indenture precludes: (i) subject to the limitations contained under the Indenture, the redemption prior to maturity of any Bonds or Parity Bonds subject to call and redemption and payment of said Bonds or Parity Bonds from proceeds of refunding bonds issued under the Act as the same now exists or as later amended, or under any other law of the State of California; or (ii) the issuance, subject to the limitations contained in the Indenture, of Parity Bonds which are payable from Net Taxes.

Bond Register. The Trustee will keep or cause to be kept, at its office, sufficient books for the registration and transfer of the Bonds and any Parity Bonds which will upon reasonable prior notice be open to inspection by the District during all regular business hours, and, subject to the limitations set forth in the Indenture, upon presentation for such purpose, the Trustee will, under such reasonable regulations as it may prescribe, register or transfer or cause to be transferred on said Bond Register, Bonds and any Parity Bonds as provided in the Indenture.

The District and the Trustee may treat the Owner of any Bond or Parity Bond whose name appears on the Bond Register as the absolute Owner of that Bond or Parity Bond for any and all purposes and the District and the Trustee will not be affected by any notice to the contrary. The District and the Trustee may rely on the address of the Owner as it appears in the Bond Register for any and all purposes. It is the duty of the Owner to give prompt written notice to the Trustee of any change in the Owner's address so that the Bond Register may be revised accordingly.

Registration of Exchange or Transfer. Subject to the limitations set forth in the following paragraph, the registration of any Bond or Parity Bond may, in accordance with its terms, be transferred upon the Bond D-10
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Register by the person in whose name it is registered, in person or by his or her duly authorized attorney, upon surrender of such Bond or Parity Bond for cancellation at the office of the Trustee, accompanied by delivery of written instrument of transfer in a form acceptable to the Trustee and duly executed by the Owner or his or her duly authorized attorney.

Bonds or Parity Bonds may be exchanged at the office of the Trustee for a like aggregate principal amount of Bonds or Parity Bonds for other authorized denominations of the same maturity and issue. The Trustee will not collect from the Owner any charge for any new Bond or Parity Bond issued upon any exchange or transfer, but will require the Owner requesting such exchange or transfer to pay any tax or other governmental charge required to be paid with respect to such exchange or transfer. Whenever any Bonds or Parity Bonds are surrendered for registration of transfer or exchange, the District will execute and the Trustee will authenticate and deliver a new Bond or Bonds or a new Parity Bond or Parity Bonds, as applicable, of the same issue and maturity, for a like aggregate principal amount; provided that the Trustee is not required to register transfers or make exchanges of: (i) Bonds or Parity Bonds for a period of 15 days next preceding any selection of the Bonds or Parity Bonds to be redeemed; or (ii) any Bonds or Parity Bonds chosen for redemption.

The Trustee has no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer or exchange imposed under the Indenture or under applicable law with respect to any transfer of any interest in any Bond or Parity Bond other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, the Indenture, and to examine the same to determine substantial compliance as to form with the express requirements thereof.

Mutilated, Lost, Destroyed or Stolen Bonds or Parity Bonds. If any Bond or Parity Bond becomes mutilated, the District will execute, and the Trustee will authenticate and deliver, a new Bond or Parity Bond of like tenor, date, issue and maturity in exchange and substitution for the Bond or Parity Bond so mutilated, but only upon surrender to the Trustee of the Bond or Parity Bond so mutilated. Every mutilated Bond or Parity Bond so surrendered to the Trustee will be cancelled by the Trustee as described under the caption "MISCELLANEOUS —Cancellation of Bonds and Parity Bonds." If any Bond or Parity Bond is lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence is satisfactory to the Trustee and, if any indemnity satisfactory to the Trustee is be given, the District will execute and the Trustee will authenticate and deliver a new Bond or Parity Bond, as applicable, of like tenor, maturity and issue, numbered and dated as the Trustee will determine in lieu of and in substitution for the Bond or Parity Bond so lost, destroyed or stolen. Any Bond or Parity Bond issued in lieu of any Bond or Parity Bond alleged to be mutilated, lost, destroyed or stolen will be equally and proportionately entitled to the benefits of the Indenture with all other Bonds and Parity Bonds issued under the Indenture. The Trustee will not treat both the original Bond or Parity Bond and any replacement Bond or replacement Parity Bond as being Outstanding for the purpose of determining the principal amount of Bonds or Parity Bonds which may be executed, authenticated and delivered under the Indenture or for the purpose of determining any percentage of Bonds or Parity Bonds Outstanding thereunder, but both the original and replacement Bond or Parity Bond will be treated as one and the same. Notwithstanding any other provision of the Indenture, in lieu of delivering a new Bond or Parity Bond which has been mutilated, lost, destroyed or stolen, and which has matured, the Trustee may make payment with respect to such Bonds or Parity Bonds.

Validity of Bonds and Parity Bonds. The validity of the authorization and issuance of the Bonds and any Parity Bonds will not be affected in any way by any defect in any proceedings taken by the District for the financing of the Project, or by the invalidity, in whole or in part, of any contracts made by the District in connection therewith, and will not be dependent upon the completion of the financing of the Project or upon the performance by any Person of his or her obligation with respect to the Project, and the recital contained in the Bonds or any Parity Bonds that the same are issued pursuant to the Act and other applicable laws of the State is conclusive evidence of their validity and of the regularity of their issuance.

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Book -Entry System. The Bonds will be initially delivered in the form of a separate single fully registered Bond (which may be typewritten) for each maturity of the Bonds. Upon initial delivery, the ownership of each such Bond will be registered in the registration books kept by the Trustee in the name of the Nominee as nominee of the Depository. Except as described under the caption "—Transfers Outside Book -Entry System" below, all of the Outstanding Bonds will be registered in the registration books kept by the Trustee in the name of the Nominee. At the election of the District, any Parity Bonds may also be issued as book -entry bonds registered in the name of the Nominee as provided in the Indenture, in which case the references under the captions "—Book-Entry System," "—Representation Letter," "—Transfers Outside Book -Entry System" and "—Payments to the Nominee" to "Bonds" will be applicable to such Parity Bonds.

With respect to Bonds registered in the Bond Register kept by the Trustee in the name of the Nominee, the District and the Trustee have no responsibility or obligation to any such Participant or to any Person on behalf of which such a Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, the District and the Trustee have no responsibility or obligation with respect to: (i) the accuracy of the records of the Depository, the Nominee, or any Participant with respect to any ownership interest in the Bonds; (ii) the delivery to any Participant or any other Person, other than an Owner as shown in the registration books kept by the Trustee, of any notice with respect to the Bonds, including any notice of redemption; (iii) the selection by the Depository and its Participants of the beneficial interests in the Bonds to be redeemed in the event that the Bonds are redeemed in part; or (iv) the payment to any Participant or any other Person, other than an Owner as shown in the registration books kept by the Trustee, of any amount with respect to principal of, premium, if any, or interest due with respect to the Bonds. The District and the Trustee may treat and consider the Person in whose name each Bond is registered in the registration books kept by the Trustee as the holder and absolute owner of such Bond for the purpose of payment of the principal of, premium, if any, and interest on such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond and for all other purposes whatsoever. The Trustee will pay all principal of, premium, if any, and interest due on the Bonds only to or upon the order of the respective Owner, as shown in the registration books kept by the Trustee, or their respective attorneys duly authorized in writing, and all such payments will be valid and effective to satisfy and discharge fully the District's obligations with respect to payment of the principal, premium, if any, and interest due on the Bonds to the extent of the sum or sums so paid. No Person other than an Owner, as shown in the registration books kept by the Trustee, will receive a Bond evidencing the obligation of the District to make payments of principal, premium, if any, and interest pursuant to the Indenture. Upon delivery by the Depository to the Trustee and the District of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions in the Indenture with respect to Record Dates, the word Nominee in the Indenture will refer to such new nominee of the Depository.

Representation Letter. In order to qualify the Bonds and any Parity Bonds which the District elects to register in the name of the Nominee for the Depository's book -entry system, an Authorized Representative of the District is authorized to execute from time to time and deliver to such Depository the Representation Letter.

The execution and delivery of the Representation Letter does not in any way limit the provisions of the Indenture described under the caption "—Book-Entry System" above or in any other way impose upon the District or the Trustee any obligation whatsoever with respect to persons having interests in the Bonds other than the Owners, as shown on the registration books kept by the Trustee. The District agrees to take all action necessary to continuously comply with all representations made by it in the Representation Letter. In addition to the execution and delivery of the Representation Letter, the Authorized Representatives of the District are authorized to take any other actions, not inconsistent with the Indenture, to qualify the Bonds for the Depository's book -entry program.

Transfers Outside Book -Entry System. In the event that: (i) the Depository determines not to continue to act as securities depository for the Bonds; or (ii) the District determines that the Depository will no longer so act, then the District will discontinue the book -entry system with the Depository. If the District fails to identify another qualified securities depository to replace the Depository then the Bonds so designated will no longer be restricted to being registered in the registration books kept by the Trustee in the name of the Nominee, but will D-12
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be registered in whatever name or names Persons transferring or exchanging Bonds designate as described under the caption "—Registration of Exchange or Transfer."
Payments to the Nominee. Notwithstanding any other provisions of the Indenture to the contrary, so long as any Bond is registered in the name of the Nominee, all payments with respect to principal, premium, if any, and interest due with respect to such Bond and all notices with respect to such Bond will be made and given, respectively, as provided in the Representation Letter or as otherwise instructed by the Depository.

Initial Depository and Nominee. The initial Depository under the Indenture will be The Depository Trust Company, New York, New York. The initial Nominee will be Cede & Co., as Nominee of The Depository Trust Company, New York, New York.

CUSIP Numbers. The District in issuing Bonds or Parity Bonds, as applicable, may use "CUSIP" numbers, and, if so, the Trustee will use "CUSIP" numbers in notices of redemption as a convenience to Owners; provided that the Trustee will have no liability for any defect in the "CUSIP" numbers as they appear on any Bond, Parity Bond, notice or elsewhere, and, provided further that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Bonds or Parity Bonds, as applicable, or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Bonds or Parity Bonds, as applicable, and any such redemption will not be affected by any defect in or omission of such numbers. The District will promptly notify the Trustee in writing of any change in the "CUSIP" numbers.

CREATION OF FUNDS AND APPLICATION OF PROCEEDS
Creation of Funds; Application of Proceeds. There have been created and established and will be maintained by the Trustee the following funds and accounts:
(1) The City of Beaumont Community Facilities District No. 2016-3 (Sundance) Special Tax Fund (the "Special Tax Fund") (in which there will be established and created an Interest Account, a Principal Account, a Redemption Account, a Reserve Account (and within the Reserve Account, the 2023 Bonds Reserve Subaccount), and an Administrative Expense Account). (2) The City of Beaumont Community Facilities District No. 2016-3 (Sundance) Rebate Fund (the "Rebate Fund") (in which there will be established a Rebate Account and an Alternate Penalty Account).
(3) The City of Beaumont Community Facilities District No. 2016-3 (Sundance) Acquisition and Construction Fund (the "Acquisition and Construction Fund") (m which there will be established a City Facilities Account and a Costs of Issuance Account). (4) The City of Beaumont Community Facilities District No. 2016-3 (Sundance) Surplus Fund (the "Surplus Fund").

The amounts on deposit in the foregoing Funds, Accounts and Subaccounts will be held by the Trustee.

The Trustee will invest and disburse the amounts in such Funds, Accounts and Subaccounts as described under the caption CREATION OF FUNDS AND APPLICATION OF PROCEEDS" and will disburse investment earnings thereon as described under the caption "—Investments" below.

In connection with the issuance of any Parity Bonds as described under the caption "DEFEASANCE AND PARITY BONDS —Conditions for the Issuance of Parity Bonds and Other Additional Indebtedness," the Trustee, at the written direction of an Authorized Representative of the District, may create new Funds, Accounts and Subaccounts, or may create additional Accounts and Subaccounts within any of the foregoing Funds and Accounts for the purpose of separately accounting for the proceeds of the Bonds and any Parity Bonds.

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Deposits to and Disbursements from Special Tax Fund.
(a) Except for Prepayments, which will be deposited to the Redemption Account of the Special Tax Fund, the Trustee will, on each date on which the Special Taxes are received from the District, deposit the Special Taxes in the Special Tax Fund to be held in trust for the Owners. The Trustee will transfer the Special Taxes on deposit in the Special Tax Fund on the dates and in the amounts set forth in the Indenture, in the following order of priority, to:
(1) the Administrative Expense Account of the Special Tax Fund up to the Administrative Expenses Cap;
(2) the Interest Account of the Special Tax Fund;
(3) the Principal Account of the Special Tax Fund;
(4) the Redemption Account of the Special Tax Fund;
(5) the Subaccounts of the Reserve Account of the Special Tax Fund, on a proportionate basis based on the outstanding principal amount of the Bonds and any Parity Bonds; (6) the Administrative Expense Account of the Special Tax Fund to the extent that Administrative Expenses exceed or are expected to exceed the Administrative Expense Cap; (7)
(8)
the Rebate Fund; and
the Surplus Fund.
(b) At maturity of all of the Bonds and Parity Bonds and, after all principal and interest then due on the Bonds and Parity Bonds then Outstanding have been paid or provided for and any amounts owed to the Trustee have been paid in full, moneys in the Special Tax Fund and any accounts therein may be used by the District for any lawful purpose.

Administrative Expense Account of the Special Tax Fund. The Trustee will transfer from the Special Tax Fund and deposit in the Administrative Expense Account of the Special Tax Fund from time to time amounts necessary to make timely payment of Administrative Expenses as set forth in a Certificate of an Authorized Representative of the District; provided, however, that, except as set forth in the following sentence, the total amount transferred with respect to a Bond Year may not exceed the Administrative Expenses Cap until such time as there has been deposited to the Interest Account and the Principal Account an amount, together with any amounts already on deposit therein, that is sufficient to pay the interest and principal on all Bonds and Parity Bonds due in such Bond Year and to restore the 2023 Bonds Reserve Subaccount to the 2023 Bonds Reserve Requirement and any other Subaccount of the Reserve Account to the applicable Reserve Requirement.

Notwithstanding the foregoing, amounts in excess of the Administrative Expenses Cap may be transferred to the Administrative Expense Account to the extent necessary to collect delinquent Special Taxes. Subject to the Indenture, as described under the caption "—Investments" below, moneys in the Administrative Expense Account of the Special Tax Fund may be invested in any Authorized Investments as directed in writing by an Authorized Representative of the District and will be disbursed as directed in a Certificate of an Authorized Representative.

Interest Account and Principal Account of the Special Tax Fund. The principal of and interest due on the Bonds and any Parity Bonds until maturity, other than principal due upon redemption, will be paid by the Trustee from the Principal Account and the Interest Account of the Special Tax Fund, respectively. 4877-5532-3965v8/022599-0033
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For the purpose of assuring that the payment of principal of and interest on the Bonds and any Parity Bonds will be made when due, after making the transfer required by the Indenture, as described under the caption "—Administrative Expense Account of the Special Tax Fund," at least one Business Day prior to each March 1 and September 1, the Trustee will make the following transfers from the Special Tax Fund first to the Interest Account and then to the Principal Account; provided, however, that to the extent that deposits have been made in the Interest Account or the Principal Account from the proceeds of the sale of an issue of the Bonds or any Parity Bonds, or otherwise, the transfer from the Special Tax Fund need not be made; and provided, further, that, if amounts in the Special Tax Fund (exclusive of the Reserve Account and the Administrative Expense Account) are inadequate to make the foregoing transfers, then any deficiency will be made up by transfers from the Subaccounts of the Reserve Account:
(a) To the Interest Account, an amount such that the balance in the Interest Account one Business Day prior to each Interest Payment Date is be equal to the installment of interest due on the Bonds and any Parity Bonds on said Interest Payment Date and any installment of interest due on a previous Interest Payment Date which remains unpaid. Moneys in the Interest Account will be used for the payment of interest on the Bonds and any Parity Bonds as the same become due.
(b) To the Principal Account, an amount such that the balance in the Principal Account one Business Day prior to September 1 of each year, commencing September 1, 2023, equals the principal payment due on the Bonds and any Parity Bonds maturing on such September 1 and any principal payment due on a previous September 1 which remains unpaid. Moneys in the Principal Account will be used for the payment of the principal of such Bonds and any Parity Bonds as the same become due at maturity.

Redemption Account of the Special Tax Fund.
(a) With respect to each September 1 on which a Sinking Fund Payment is due, after the deposits have been made to the Administrative Expense Account, the Interest Account and the Principal Account of the Special Tax Fund as required by the Indenture, as described under the captions "—Administrative Expense Account of the Special Tax Fund" and "Interest Account and Principal Account of the Special Tax Fund" above, the Trustee will next transfer into the Redemption Account of the Special Tax Fund from the Special Tax Fund the amount needed to make the balance in the Redemption Account one Business Day prior to each September 1 on which a Sinking Fund Payment is due equal to the Sinking Fund Payment due on any Outstanding Bonds and Parity Bonds on such September 1; provided, however, that, if amounts in the Special Tax Fund are inadequate to make the foregoing transfers, then any deficiency with respect to the Bonds will be made up by an immediate transfer from the 2023 Bonds Reserve Subaccount and any deficiency with respect to a series of Parity Bonds will be made up by an immediate transfer from the Subaccount of the Reserve Account for such series of Parity Bonds, if funded, as described under the caption "—Reserve Account of the Special Tax Fund" below. Moneys so deposited in the Redemption Account will be used and applied by the Trustee to call and redeem Term Bonds in accordance with the Sinking Fund Payment schedules set forth in the Indenture, and to redeem Parity Bonds in accordance with any Sinking Fund Payment schedule in the Supplemental Indenture for such Parity Bonds. (b) After making the deposits to the Administrative Expense Account, the Interest Account and the Principal Account of the Special Tax Fund as described under the captions "—Administrative Expense Account of the Special Tax Fund" and "Interest Account and Principal Account of the Special Tax Fund" above, and to the Redemption Account for Sinking Fund Payments then due pursuant to paragraph (a) above, and in accordance with the District's election to call Bonds for optional redemption as set forth in the Indenture, or to call Parity Bonds for optional redemption as set forth in any Supplemental Indenture for Parity Bonds, the Trustee will transfer from the Special Tax Fund and deposit in the Redemption Account moneys available for the purpose and sufficient to pay the principal and the premiums, if any, payable on the Bonds or Parity Bonds called for optional redemption; provided, however, that amounts in the Special Tax Fund (other than the Administrative Expense Account therein) may be applied to optionally redeem Bonds and Parity Bonds only if immediately following such redemption the amount in the 2023 Bonds Reserve Subaccount will equal the 2023 Bonds D-15
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Reserve Requirement and the amount in each other Subaccount of the Reserve Account will equal the related Reserve Requirement.
(c) Prepayments deposited to the Redemption Account will be applied on the redemption date established pursuant to the Indenture to the payment of the principal of, premium, if any, and interest on the Bonds and Parity Bonds to be redeemed with such Prepayments. (d) Moneys set aside in the Redemption Account will be used solely for the purpose of redeeming Bonds and Parity Bonds and will be applied on or after the redemption date to the payment of principal of and premium, if any, on the Bonds or Parity Bonds to be redeemed upon presentation and surrender of such Bonds or Parity Bonds, and, in the case of an optional redemption or an extraordinary redemption from Prepayments, to pay the interest thereon; provided, however, that in lieu or partially in lieu of such call and redemption, moneys deposited in the Redemption Account may be used to purchase Outstanding Bonds or Parity Bonds in the manner provided in the Indenture. Purchases of Outstanding Bonds or Parity Bonds may be made by the District at public or private sale as and when and at such prices as the District may in its discretion determine but only at prices (including brokerage or other expenses) not more than par plus accrued interest, plus, in the case of moneys set aside for an optional redemption or an extraordinary redemption, the premium applicable at the next following call date according to the premium schedule established pursuant to the Indenture, as applicable, or in the case of Parity Bonds the premium established in any Supplemental Indenture. Any accrued interest payable upon the purchase of Bonds or Parity Bonds may be paid from the amount reserved in the Interest Account of the Special Tax Fund for the payment of interest on the next following Interest Payment Date.

Reserve Account of the Special Tax Fund. There will be maintained in the 2023 Bonds Reserve Subaccount an amount equal to the 2023 Bonds Reserve Requirement and in each other Subaccount of the Reserve Account established for a series of Parity Bonds, an amount equal to the Reserve Requirement for such series of Parity Bonds. The 2023 Reserve Requirement and the Reserve Requirement established for a series of Parity Bonds may be satisfied in whole or in part by cash, a Reserve Policy, or a combination thereof. The amounts in a Subaccount of the Reserve Account will be applied as follows:
(a) Moneys in the 2023 Bonds Reserve Subaccount will be used solely for the purpose of paying the principal of, including Sinking Fund Payments, and interest on the Bonds when due in the event that the moneys in the Interest Account and the Principal Account of the Special Tax Fund are insufficient therefor or moneys in the Redemption Account of the Special Tax Fund are insufficient to make a Sinking Fund Payment when due and for the purpose of making any required transfer to the Rebate Fund with respect to the Bonds as described under the caption "—Rebate Fund" below, upon written direction from the District. Moneys in any other Subaccount of the Reserve Account established for a series of Parity Bonds will be used solely for the purpose of paying the principal of, including Sinking Fund Payments, and interest on such series of Parity Bonds when due in the event that the moneys in the Interest Account and the Principal Account of the Special Tax Fund are insufficient therefor or moneys in the Redemption Account of the Special Tax Fund are insufficient to make a Sinking Fund Payment when due and for the purpose of making any required transfer to the Rebate Fund with respect to such series of Parity Bonds as described under the caption "—Rebate Fund" below, upon written direction from the District.

If the amounts in the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund are insufficient to pay the principal of, including Sinking Fund Payments, or interest on any Bonds or Parity Bonds when due, or amounts in the Special Tax Fund are insufficient to make transfers to the Rebate Fund when required, the Trustee will withdraw from the applicable Subaccount of the Reserve Account, first from the cash on deposit therein, and second from a draw on the Reserve Policy, if any, for deposit in the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund or the Rebate Fund, as applicable, moneys necessary for such purposes.
(b) Whenever moneys are withdrawn from a Subaccount of the Reserve Account, after making the required transfers referred to under the captions "—Administrative Expense Account of the Special Tax Fund," D-16
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"Interest Account and Principal Account of the Special Tax Fund," and "—Redemption Account of the Special Tax Fund" above, the Trustee will transfer to each Subaccount of the Reserve Account from available moneys in the Special Tax Fund, or from any other legally available funds which the District elects to apply to such purpose, on a proportionate basis based on the outstanding principal amount of the Bonds and any Parity Bonds, the amount needed to restore the amount of each Subaccount of the Reserve Account to, with respect to the Bonds, the 2023 Bonds Reserve Requirement and, with respect to each series of Parity Bonds, the applicable Reserve Requirement for such series, by first, repaying any amounts due under each Reserve Policy, and second, to fund each Subaccount of the Reserve Account to, with respect to the Bonds, the 2023 Bonds Reserve Requirement and, with respect to each series of Parity Bonds, the applicable Reserve Requirement for such series. Moneys in the Special Tax Fund will be deemed available for transfer to the Subaccounts of the Reserve Account only if the District certifies to the Trustee that such amounts will not be needed to make the deposits required to be made to the Administrative Expense Account, the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund on or before the next September 1. If amounts in the Special Tax Fund together with any other amounts transferred to replenish the Subaccounts of the Reserve Account are inadequate to restore the Subaccounts of the Reserve Account to, with respect to the Bonds, the 2023 Bonds Reserve Requirement and, with respect to each series of Parity Bonds, the applicable Reserve Requirement for such series, including any amounts necessary to pay costs related to each Reserve Policy, if any, then the District will include the amount necessary to restore the Subaccounts of the Reserve Account to, with respect to the Bonds, the 2023 Bonds Reserve Requirement and, with respect to each series of Parity Bonds, the applicable Reserve Requirement for such series, in the next annual Special Tax levy to the extent of the maximum permitted Special Tax rates.
(c) In connection with a redemption of Bonds pursuant to the Indenture, or a partial defeasance of Bonds as described under the caption "DEFEASANCE AND PARITY BONDS—Defeasance,", amounts in the 2023 Bonds Reserve Subaccount may be applied to such redemption or partial defeasance so long as the amount on deposit in the 2023 Bonds Reserve Subaccount following such redemption or partial defeasance equals the 2023 Bonds Reserve Requirement. The District will set forth in a Certificate of an Authorized Representative the amount in the 2023 Bonds Reserve Subaccount to be transferred to the Redemption Account on a redemption date or to be transferred pursuant to the Indenture to partially defease Bonds, and the Trustee will make such transfer on the applicable redemption or defeasance date, subject to the limitation in the preceding sentence.

In connection with a redemption of a series of Parity Bonds in accordance with any Supplemental Indenture, or a partial defeasance of such series of Parity Bonds as described under the caption "DEFEASANCE AND PARITY BONDS—Defeasance," amounts in the related Subaccount of the Reserve Account may be applied to such redemption or partial defeasance so long as the amount on deposit in such Subaccount of the Reserve Account following such redemption or partial defeasance equals the Reserve Requirement for such series of Parity Bonds. The District will set forth in a Certificate of an Authorized Representative the amount in the Subaccount of the Reserve Account to be transferred to the Redemption Account on a redemption date or to be transferred pursuant to the Indenture to partially defease such Parity Bonds, and the Trustee will make such transfer on the applicable redemption or defeasance date, subject to the limitation in the preceding sentence. (d) To the extent that the 2023 Bonds Reserve Subaccount is at the 2023 Bonds Reserve Requirement as of the first day of the final Bond Year for the Bonds, amounts in the 2023 Bonds Reserve Subaccount may be applied to pay the principal of and interest due on the Bonds in the final Bond Year for the Bonds. Moneys in the 2023 Bonds Reserve Subaccount in excess of the 2023 Bonds Reserve Requirement not transferred in accordance with the preceding provisions described above will be withdrawn from the 2023 Bonds Reserve Subaccount on the Business Day before each March 1 and September 1 and will be transferred to the Acquisition and Construction Fund or an Account therein, as directed by a Certificate of an Authorized Representative, until all amounts have been disbursed from the Acquisition and Construction Fund (or such fund is closed) and thereafter to the Interest Account of the Special Tax Fund. (e) To the extent that the Subaccount of the Reserve Account for a series of Parity Bonds is at the Reserve Requirement for such series as of the first day of the final Bond Year for such series of Parity Bonds, D-17
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amounts in such Subaccount of the Reserve Account may be applied to pay the principal of and interest due on such series of Parity Bonds in the final Bond Year for such issue. Moneys in the Subaccount of the Reserve Account for a series of Parity Bonds in excess of the Reserve Requirement for such series not transferred in accordance with the paragraphs above will be withdrawn from such Subaccount of the Reserve Account on the Business Day before each March 1 and September 1 and will be transferred to the Acquisition and Construction Fund or an Account therein, as directed by a Certificate of an Authorized Representative, until all amounts have been disbursed from the Acquisition and Construction Fund (or such fund is closed) and thereafter to the Interest Account of the Special Tax Fund.

Rebate Fund.
(a) The Trustee will establish and maintain a fund separate from any other fund established and maintained under the Indenture designated as the Rebate Fund and will establish a separate Rebate Account and Alternate Penalty Account therein. All money at any time deposited in the Rebate Account or the Alternate Penalty Account of the Rebate Fund will be held by the Trustee in trust, for payment to the United States Treasury. A separate subaccount of the Rebate Account and the Alternate Penalty Account will be established for the Bonds and each issue of Parity Bonds the interest on which is excluded from gross income for federal income tax purposes. All amounts on deposit in the Rebate Fund with respect to the Bonds or an issue of Parity Bonds will be governed by the Rebate Fund provisions of the Indenture described below and the Tax Certificate for such issue, unless the District obtains an opinion of Bond Counsel that the exclusion from gross income for federal income tax purposes of interest payments on the Bonds and Parity Bonds will not be adversely affected if such requirements are not satisfied.
(1) Rebate Account. The following requirements will be satisfied with respect to each subaccount of the Rebate Account:
(i) Annual Computation. Within 55 days of the end of each Bond Year, the District will calculate or cause to be calculated the amount of rebatable arbitrage for the Bonds and each issue of Parity Bonds to which the Rebate Fund provisions of the Indenture are applicable, in accordance with Section 148(0(2) of the Code and Section 1.148-3 of the Rebate Regulations (taking into account any applicable exceptions with respect to the computation of the rebatable arbitrage described in the Tax Certificate for each issue (e.g., the temporary investments exceptions of Section 148(0(4)(B) and (C) of the Code), and taking into account whether the election pursuant to Section 148(0(4)(C)(vii) of the Code (the "1'/2% Penalty") has been made), for this purpose treating the last day of the applicable Bond Year as a computation date, within the meaning of Section 1.148-1(b) of the Rebate Regulations (the "Rebatable Arbitrage"). The District will obtain expert advice as to the amount of the Rebatable Arbitrage to comply with the foregoing requirements. (ii) Annual Transfer. Within 55 days of the end of each fifth Bond Year for which Rebatable Arbitrage must be calculated as required by the Tax Certificate for each issue, upon the written direction of an Authorized Representative of the District, an amount will be deposited to each subaccount of the Rebate Account by the Trustee from any funds so designated by the District if and to the extent required, so that the balance in the Rebate Account equals the amount of Rebatable Arbitrage so calculated by or on behalf of the District in accordance paragraph (i) above with respect to the Bonds and each issue of Parity Bonds to which the Rebate Fund provisions of the Indenture are applicable. In the event that immediately following any transfer required by the previous sentence, or the date on which the District determines that no transfer is required for such Bond Year, the amount then on deposit to the credit of the applicable subaccount of the Rebate Account exceeds the amount required to be on deposit therein, upon written instructions from an Authorized Representative of the District, the Trustee will withdraw the excess from the appropriate subaccount of the Rebate Account and then credit the excess to the Special Tax Fund.

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(iii) Payment to the Treasury. The Trustee will pay, as directed in writing by an Authorized Representative of the District, to the United States Treasury, out of amounts in each subaccount of the Rebate Account:
(X) not later than 60 days after the end of: (A) the fifth Bond Year for the Bonds and each issue of Parity Bonds to which the Rebate Fund provisions of the Indenture are applicable; and (B) each applicable fifth Bond Year thereafter, an amount equal to at least 90% of the Rebatable Arbitrage calculated as of the end of such Bond Year for the Bonds and each issue of Parity Bonds, as applicable; and (Y) not later than 60 days after the payment or redemption of all of the Bonds or an issue of Parity Bonds, as applicable, an amount equal to 100% of the Rebatable Arbitrage calculated as of the end of such applicable Bond Year, and any income attributable to the Rebatable Arbitrage, computed in accordance with Section 148(f) of the Code.

In the event that, prior to the time of any payment required to be made from the Rebate Account, the amount in the Rebate Account is not sufficient to make such payment when such payment is due, the District will calculate or cause to be calculated the amount of such deficiency and deposit an amount received from any legally available source equal to such deficiency prior to the time such payment is due. Each payment required to be made pursuant to this paragraph will be made to the Internal Revenue Service Center, Ogden, Utah 84201 on or before the date on which such payment is due, and will be accompanied by Internal Revenue Service Form 8038-T, or will be made in such other manner as provided under the Code. (2) Alternate Penalty Account.
(i) Six -Month Computation. If the 1'h% Penalty has been elected for the Bonds or an issue of Parity Bonds, within 85 days of each particular Six -Month Period, the District will determine or cause to be determined whether the 11/2% Penalty is payable (and the amount of such penalty) as of the close of the applicable Six -Month Period. The District will obtain expert advice in making such determinations. (ii) Six -Month Transfer. Within 85 days of the close of each Six -Month Period, the Trustee, at the written direction of an Authorized Representative of the District, will deposit an amount in the appropriate subaccounts of the Alternate Penalty Account from any source of funds held by the Trustee pursuant to the Indenture and designated by the District in such written directions or provided to it by the District, if and to the extent required, so that the balance in each subaccount of the Alternate Penalty Account equals the amount of 1'/2% Penalty due and payable to the United States Treasury determined as provided in subsection (a)(2)(i) above. In the event that immediately following any transfer provided for in the previous sentence, or the date on which the District determines that no transfer is required for such Bond Year, the amount then on deposit in a subaccount of the Alternate Penalty Account exceeds the amount required to be on deposit therein to make the payments required by subsection (iii) below, the Trustee, at the written direction of an Authorized Representative of the District, may withdraw the excess from the applicable subaccount of the Alternate Penalty Account and credit the excess to the Special Tax Fund.
(iii) Payment to the Treasury. The Trustee will pay, as directed in writing by an Authorized Representative of the District, to the United States Treasury, out of amounts in a subaccount of the Alternate Penalty Account, not later than 90 days after the close of each Six -Month Period the 1'/2% Penalty, if applicable and payable, computed with respect to the Bonds and any issue of Parity Bonds in accordance with Section 148(0(4) of the Code. In the event that, prior to the time of any payment required to be made from a subaccount of the Alternate Penalty Account, the amount in such subaccount is not sufficient to make such payment when such payment is due, the District will calculate the amount of such deficiency and direct the Trustee, in writing, to deposit an amount equal to such deficiency into such subaccount of the Alternate Penalty Account from any funds held by the Trustee pursuant to the Indenture and designated by the District in such written directions prior to the time such payment is due. Each payment required to be made pursuant to this paragraph will be made to the Internal Revenue Service, Ogden, Utah 84201 on or before the date on which such D-19
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payment is due, and will be accompanied by Internal Revenue Service Form 8038-T or will be made in such other manner as provided under the Code.
(b) Disposition of Unexpended Funds. Any funds remaining in the Accounts of the Rebate Fund with respect to the Bonds or an issue of Parity Bonds after redemption and payment of such issue and after making the payments described in paragraphs (a)(1)(iii) or (a)(2)(iii) (whichever is applicable) above, may be withdrawn by the Trustee at the written direction of the District and utilized in any manner by the District. (c) Survival of Defeasance and Final Payment. Notwithstanding anything described in this paragraph or the Indenture to the contrary, the obligation to comply with the requirements of the Indenture will survive the defeasance and final payment of the Bonds and any Parity Bonds with respect to which an Account has been created in the Rebate Fund.
(d) Amendment Without Consent of Owners. The Rebate Fund provisions of the Indenture may be deleted or amended in any manner without the consent of the Owners, provided that prior to such event there is delivered to the District an opinion of Bond Counsel to the effect that such deletion or amendment will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds and any issue of Parity Bonds issued on a tax-exempt basis. (e) Trustee. The Trustee has no responsibility to monitor or calculate any amounts payable to the U.S. Treasury pursuant to the Rebate Fund requirements of the Indenture and will be deemed constructively to have complied with its obligations thereunder if it follows the written instructions of the District given pursuant to the Rebate Fund provisions of the Indenture. The Trustee is not be responsible for calculating rebate amounts or for the adequacy or correctness of any rebate report. The Trustee is be deemed conclusively to have complied with the provisions of the Indenture and any other agreement relating to the Bonds or Parity Bonds regarding calculation and payment of rebate if it follows the directions of the District, and it will have no independent duty to review or enforce the District's compliance with such rebate requirements. The Trustee may rely conclusively upon and will be fully protected from all liability in relying upon the District's opinions, calculations, determinations, directions, and certifications required by the foregoing paragraphs. Except to the extent expressly in the Indenture provided, the Trustee will in no instance be responsible or liable for the tax treatment of the Bonds or the Parity Bonds, the District's compliance with the Code, or any other tax consequences in connection with the Bonds or the Parity Bonds.

Surplus Fund. After making the transfers described under the captions "—Administrative Expense Account of the Special Tax Fund," "Interest Account and Principal Account of the Special Tax Fund," "Redemption Account of the Special Tax Fund," "Reserve Account of the Special Tax Fund" and "Rebate Fund" above, as soon as practicable after each September 1, the Trustee will transfer all remaining amounts in the Special Tax Fund to the Surplus Fund, unless on or prior to such date, it has received a Certificate of an Authorized Representative directing that certain amounts be retained in the Special Tax Fund because the District has included such amounts as being available in the Special Tax Fund in calculating the amount of the levy of Special Taxes for such Fiscal Year pursuant to the Indenture. Moneys deposited in the Surplus Fund will be transferred by the Trustee pursuant to a Certificate of an Authorized Representative: (i) to the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund to pay the principal of, including Sinking Fund Payments, premium, if any, and interest on the Bonds and any Parity Bonds when due in the event that moneys in the Special Tax Fund and the Subaccounts of the Reserve Account of the Special Tax Fund are insufficient therefor; (ii) to each Subaccount of the Reserve Account, on a proportionate basis based on the outstanding principal amount of the Bonds and any Parity Bonds, to replenish the 2023 Bonds Reserve Subaccount to the 2023 Bonds Reserve Requirement, and to each other Subaccount of the Reserve Account to the applicable Reserve Requirement; (iii) to the Administrative Expense Account of the Special Tax Fund to pay Administrative Expenses to the extent that the amounts on deposit in the Administrative Expense Account of the Special Tax Fund are insufficient to pay Administrative Expenses; (iv) to the Acquisition and Construction Fund to pay Project Costs; or (v) after all Project Costs have been paid, to the District, for any other lawful purpose of the District.

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The amounts in the Surplus Fund are not pledged to the repayment of the Bonds or the Parity Bonds and may be used by the District for any lawful purpose. In the event that the District reasonably expects to use any portion of the moneys in the Surplus Fund to pay debt service on any Outstanding Bonds or Parity Bonds, the District will notify the Trustee in a Certificate of an Authorized Representative and the Trustee will segregate such amount into a separate subaccount and the moneys on deposit in such subaccount of the Surplus Fund will be invested at the written direction of the District in Authorized Investments the interest on which is excludable from gross income under Section 103 of the Code (other than bonds the interest on which is a tax preference item for purposes of computing the alternative minimum tax of individuals under the Code) or in Authorized Investments at a yield not in excess of the yield on the issue of Bonds or Parity Bonds to which such amounts are to be applied, unless, in the opinion of Bond Counsel, investment at a higher yield will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or any Parity Bonds which were issued on a tax-exempt basis for federal income tax purposes. Such amounts will be disbursed as directed by an Authorized Representative of the District.

Acquisition and Construction Fund.
(a) The moneys in the Costs of Issuance Account will be disbursed by the Trustee pursuant to a Certificate of an Authorized Representative, and any balance remaining therein after 180 days will be transferred by the Trustee to the City Facilities Account within the Acquisition and Construction Fund as directed in writing by an Authorized Representative of the District. Following such transfer to the Acquisition and Construction Fund, the Costs of Issuance Account will be closed.
(b) The moneys in the Acquisition and Construction Fund and the Accounts therein (other than the Costs of Issuance Account) will be applied exclusively to pay the Project Costs. Amounts for Project Costs will be disbursed by the Trustee from the Acquisition and Construction Fund or the Accounts therein (other than the Costs of Issuance Account), as specified in a Requisition for Disbursement of Project Costs, substantially in the form attached to the Indenture. A properly executed Requisition for Disbursement of Project Costs must be submitted in connection with each requested disbursement, and the Trustee may rely thereon without investigating the accuracy thereof. Amounts in an Account of the Acquisition and Construction Fund may be transferred to another Account or Accounts therein pursuant to a Certificate of an Authorized Representative of the District. For purposes of complying with the requirements described under the caption "—Acquisition and Construction Fund," the Trustee may conclusively rely and will be protected in acting or refraining from acting upon the Requisition signed by the authorized officer of the District. The Trustee will not be bound to make an investigation into the facts or matters stated in any requisition of the District. The Trustee will not be responsible for determining whether the funds on hand in the Acquisition and Construction Fund are sufficient to complete the Project. The Trustee will not be responsible to collect lien waivers. (c) Upon receipt of a Certificate of an Authorized Representative of the District stating that all or a specified portion of the amount remaining in the Acquisition and Construction Fund or the Accounts therein (other than the Costs of Issuance Account) is no longer needed to pay Project Costs, the Trustee will: (i) transfer all or such specified portion, as applicable, of the moneys remaining on deposit in the Acquisition and Construction Fund or the Accounts in the Indenture (other than the Costs of Issuance Account) to the Interest Account, the Principal Account or Redemption Account of the Special Tax Fund, to the Costs of Issuance Account or to the Surplus Fund, as directed in such certificate, provided that in connection with any direction to transfer amounts to the Surplus Fund there will be delivered to the Trustee with such certificate an opinion of Bond Counsel to the effect that such transfer to the Surplus Fund will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or any Parity Bonds which were issued on a tax-exempt basis for federal income tax purposes; and (ii) thereafter, close the Acquisition and Construction Fund.

Investments. Moneys held in any of the Funds, Accounts and Subaccounts under the Indenture will be invested at the written direction (which may include a facsimile transmission) of the District upon at least two (2) Business Days' notice in accordance with the limitations set forth below and to the extent permitted by law D-21
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only in Authorized Investments (such direction to specify the particular Authorized Investment to be made) which will be deemed at all times to be a part of such Funds, Accounts and Subaccounts. Any loss resulting from such Authorized Investments will be credited or charged to the Fund, Account or Subaccount from which such investment was made, and any investment earnings on a Fund, Account or Subaccount will be applied as follows: (i) investment earnings on all amounts deposited in the Acquisition and Construction Fund (including the Accounts therein), the Special Tax Fund, the Surplus Fund and the Rebate Fund and each Account therein (other than the Subaccounts of the Reserve Account of the Special Tax Fund) will be deposited in those respective Funds, Accounts and Subaccounts; and (ii) investment earnings on all amounts deposited in the Subaccounts of the Reserve Account will be deposited therein to be applied as described under the caption "— Reserve Account of the Special Tax Fund" above. Moneys in the Funds, Accounts and Subaccounts held under the Indenture may be invested by the Trustee as directed in writing (which may include a facsimile transmission) by the District, from time to time, in Authorized Investments (such direction to specify the particular Authorized Investment to be made) subject to the following restrictions (provided that the Trustee is not required to verify compliance with such restrictions and may rely on the District's written instructions as evidence of such compliance):
(a) Moneys in the Acquisition and Construction Fund and the Accounts therein will be invested in Authorized Investments which will by their terms mature, or in the case of an Investment Agreement are available without penalty, as close as practicable to the date the District estimates the moneys represented by the particular investment will be needed for withdrawal from the Acquisition and Construction Fund or the Accounts therein. Notwithstanding anything in the Indenture to the contrary, amounts in the Acquisition and Construction Fund or the Accounts therein three years after the Delivery Date for the Bonds and the proceeds of each issue of Parity Bonds issued on a tax-exempt basis which are remaining on deposit in the Acquisition and Construction Fund on the date which is three years following the date of issuance of such issue of Parity Bonds will be invested by the District only in Authorized Investments the interest on which is excluded from gross income under Section 103 of the Code (other than bonds the interest on which is a tax preference item for purposes of computing the alternative minimum tax of individuals under the Code) or in Authorized Investments at a yield not in excess of the yield on the issue of Bonds or Parity Bonds from which such proceeds were derived, unless in the opinion of Bond Counsel such restriction is not necessary to prevent interest on the Bonds or any Parity Bonds which were issued on a tax-exempt basis for federal income tax purposes from being included in gross income for federal income tax purposes.
(b) Moneys in the Interest Account, the Principal Account, and the Redemption Account of the Special Tax Fund will be invested only in Authorized Investments which will by their terms mature, or in the case of an Investment Agreement are available for withdrawal without penalty, on such dates so as to ensure the payment of principal of, premium, if any, and interest on the Bonds and any Parity Bonds as the same become due.
(c) Moneys in the 2023 Bonds Reserve Subaccount may be invested only in Authorized Investments (other than the Authorized Investment described in clause (2)(i) of the definition thereof) which, taken together, have a weighted average maturity not in excess of five years; provided that such amounts may be invested in an Investment Agreement to the later of the final maturity of the Bonds so long as such amounts may be withdrawn at any time, without penalty, for application in accordance with the requirements described under the caption "—Reserve Account of the Special Tax Fund" above; and provided that no such Authorized Investment of amounts in the 2023 Bonds Reserve Subaccount will mature later than the final maturity date of the Bonds.

Moneys in a Subaccount of the Reserve Account established for a series of Parity Bonds may be invested only in Authorized Investments (other than the Authorized Investment described in clause (2)(i) of the definition thereof) which, taken together, have a weighted average maturity not in excess of five years; provided that such amounts may be invested in an Investment Agreement to the later of the final maturity of such series of Parity Bonds so long as such amounts may be withdrawn at any time, without penalty, for application in accordance with the requirements described under the caption "—Reserve Account of the Special Tax Fund" D-22
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