Beaumont City Council
May 16, 2023

TABLE OF CONTENTS
(continued)
Page
Section 8.4 Attorney's Fees 16
Section 8.5 Notices 16
Section 8.6 Severability 17
Section 8.7 Successors and Assigns 17
Section 8.8 Other Agreements 18
Section 8.9 Waiver 18
Section 8.10 Merger 18
Section 8.11 Parties in Interest 18
Section 8.12 Amendment 18
Section 8.13 Counterparts 18
Section 8.14 Termination 18
Signatures S-1
List of Exhibits
Exhibit A: Description of Facilities and Discrete Components Eligible for Acquisition from the Owner A-1
Exhibit B: Form of Payment Request (Facilities) B-1
Exhibit C: City CFD Policies C-1
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ii

THIS ACQUISITION AGREEMENT (the "Acquisition Agreement"), dated as of May 1, 2023, is by and among the CITY OF BEAUMONT, a general law city (the "City"), the CITY OF BEAUMONT COMMUNITY FACILITIES DISTRICT NO. 2023-1 (FAIRWAY CANYON), a community facilities district created pursuant to the Act (defined herein) (the "District"), and MERITAGE HOMES OF CALIFORNIA, INC., a California corporation (the "Owner").

RECITALS
A. The District. The City Council of the City has established the District under the Act for the financing of, among other things, the acquisition, construction and installation of public facilities identified in the proceedings to form the District therein, which include the facilities listed in Exhibit A hereto (the "Facilities").

B. The Development. The land within the District is currently expected to be developed with 419 dwelling units as part of a master -planned community commonly known as "Fairway Canyon," which is described as County of Riverside Assessor Parcel Nos. 413-790-067 through 413-790-073, inclusive.

C. The Facilities. As part of the District formation proceedings, the Facilities were authorized to be acquired by the District, and the District proceedings contemplated that acquisition agreements would be entered into from time to time to describe the terms of such acquisition. The Facilities are within or serve the City and the City and the Owner will benefit from a coordinated plan of design, engineering and construction of the Facilities and the development of the land within the District. The facilities that are eligible for acquisition by the City from the Owner under this Acquisition Agreement are only the Facilities listed in Exhibit A hereto, as such Exhibit may be amended and/or supplemented by any Supplement approved by the City and Owner.

D. The Financing. In order to, among other things, implement provisions of the Development Agreement, as defined below, the Owner, the District and the City wish to enter into this Acquisition Agreement to finance the acquisition of the Facilities, as defined below, and provide for the payment of the Facilities and Discrete Components thereof as shown in Exhibit A hereto (as it may be amended and supplemented by any Supplement).

E. The Bonds. The District may proceed with the authorization and issuance of the Bonds in one or more series under the Act and the Indenture, the proceeds of which Bonds shall be used, in part, to finance the Facilities.

F. No Advantage to City Construction. The City, by its approval of this Acquisition Agreement, has determined that it will obtain no advantage from undertaking the construction by the City directly of the Facilities and that the provisions of this Acquisition Agreement require that the Facilities constructed by the Owner and acquired with the funds in the Improvement Fund, as defined below, be constructed as if they had been constructed under the direction and supervision of the City.

The Owner hereby represents that it has experience in the supervision of the construction of improvements of the character of the Facilities.

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the City, the District and the Owner agree that the foregoing recitals, as applicable to each, are true and correct and further make the agreements set forth herein. 4892-6939-1454v2/022599-0032

ARTICLE I

DEFINITIONS
Section 1.1 Definitions. The following terms shall have the meanings ascribed to them in this Section 1.1 for purposes of this Acquisition Agreement. Unless otherwise indicated, any other terms, capitalized or not, when used herein shall have the meanings ascribed to them in the Indenture (as hereinafter defined).
"Acceptable Title" means title to land or interest therein, in form acceptable to the Director, free and clear of all liens, taxes, assessments, leases, easements and encumbrances, whether or not recorded, but subject to any exceptions determined by the Director as not interfering with the actual or intended use of the land or interest therein. Notwithstanding the foregoing, an irrevocable offer of dedication may constitute land with an "Acceptable Title" if: (i) such offer is necessary to satisfy a condition to a tentative or final parcel map, (ii) such offer is in a form acceptable to the Director, (iii) the Director has no reason to believe that such offer of dedication will not be accepted by the applicable public agency, and (iv) the Owner commits in writing not to allow any liens to be imposed on such property prior to its acceptance.
"Acceptance Date" means the date the City Council (or other public entity which is to own a Facility) takes final action to accept dedication of or transfer of title to a Facility. "Acquisition Agreement" means this Acquisition Agreement, together with any Supplement hereto.
"Act" means the Mello -Roos Community Facilities Act of 1982, Section 53311 et seq. of the California Government Code, as amended.
"Actual Cost" means the substantiated cost of a Facility or a Discrete Component, which costs may include: (i) the costs incurred for the construction of such Facility or Discrete Component, (ii) the costs incurred in preparing the Plans for such Facility or Discrete Component and the related costs of environmental evaluations of the Facility or Discrete Component, (iii) the fees paid to governmental agencies or utilities for obtaining permits, licenses or other governmental approvals for such Facility or Discrete Component, (iv) professional costs incurred that are associated with such Facility or Discrete Component, such as construction management and supervision (not to exceed 15% of the costs in (i) above), engineering, legal, accounting, inspection, construction staking, materials testing and similar professional services; and (v) the costs directly related to the construction and/or acquisition of a Facility or Discrete Component, such as costs of payment, performance and/or maintenance bonds, and insurance costs (including costs of any title insurance required hereunder) (but excluding the cost of real property unless paid to unrelated third parties). "Affiliate" means any entity with respect to which fifty percent (50%) or more of the ownership or voting power is held individually or collectively by any of the Owner and any other entity owned, controlled or under common ownership or control by or with, as applicable, the Owner, and includes all general partners of any entity which is a partnership. Control shall mean ownership of fifty percent (50%) or more of the voting power of or ownership interest in the respective entity. "Bonds" means the bonds to be issued by the District for an Improvement Area pursuant to the Act in one or more series.
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"City" means the City of Beaumont, a general law city.
"Conditions of Approval" means, with respect to any portion of the property within the District, the conditions of approval of all land use entitlements approved by the City and the conditions of any Development Agreement, subdivision improvement agreement or other agreement between the Owner and the City relating to such property which conditions must be satisfied in order to develop such property.
"County" means the County of Riverside, California.
"Development Agreement" means the Development Agreement between the City of Beaumont and LB/L-SunCal Oak Valley LLC, recorded as Instrument No. 2003-977700 in the Riverside County Recorder's Office on December 5, 2003, as partially assigned to and assumed by the Owner, as evidenced by Document No 2021-0396265 recorded on June 30, 2021, and by Document No 2022-0201712 recorded on April 29, 2022 in the Official Records of the County. "Director" means the Director of Public Works of the City, or his or her written designee acting as such under this Acquisition Agreement.
"Discrete Component" means a component of a Facility that the Director has agreed can be separately identified, inspected and completed, and be the subject of a Payment Request hereunder.

The Discrete Components are described in Exhibit A hereto. "District" means the City of Beaumont Community Facilities District No. 2023-1 (Fairway Canyon), created by the City under the Act.
"Facilities" means the facilities described in Exhibit A hereto which are to be acquired with the proceeds of the Special Taxes and Bonds.
"Financing Policies" means the City of Beaumont's Goals and Policies for Community Facilities Districts, as adopted May 8, 1995 by Resolution No. 1995-23, attached hereto as Exhibit C. "Improvement Area" means either of Improvement Area No. 1 or Improvement Area No. 2 of the District.
"Improvement Fund" means, (a) prior to the initial issuance of Bonds of an Improvement Area, the fund or account established by the City for such Improvement Area, howsoever denominated, into which Net Proceeds of the Special Taxes of such Improvement Area are to be deposited, and (b) from and after the initial issuance of Bonds for such Improvement Area, the fund or account established under the Indenture for such Bonds, howsoever denominated, into which Net Proceeds of Bonds and Special Taxes of such Improvement Area are to be deposited. "Indenture" means the bond indenture or similar document between the City and the Trustee for the District, providing for, among other matters, the issuance of the Bonds and the establishment of the Improvement Fund, as it may be amended from time to time. "Net Proceeds" means (a) with respect to Special Taxes, the proceeds of such Special Taxes received prior to the initial issuance of Bonds and remaining after the payment or setting aside of, or provision for, administrative expenses of the District, and (b) with respect to Bonds, the proceeds of such Bonds remaining after the payment or setting aside of, or provisions for (i) the underwriter's 3 4892-6939-1454v2/022599-0032

discount for such Bonds, (ii) the costs of issuance of such Bonds, including the costs of authorizing the Special Taxes and Bonds of the District incurred by the City and Owner, (iii) any required reserve fund deposit for such Bonds, (iv) capitalized interest on such Bonds, and (v) pre funded administrative expenses of the District.
"Owner" means Meritage Homes of California, Inc., a California corporation, and its successors or assigns to the extent permitted under Section 8.7 hereof. "Payment Request" means a document, substantially in the form of Exhibit B hereto, to be used by the Owner in requesting payment of a Purchase Price. "Plans" means the plans, specifications, schedules and related construction contracts for the Facilities and/or any Discrete Components thereof approved pursuant to the applicable standards of the City.
"Purchase Price" means the amount paid by the District for a Facility and/or any Discrete Components thereof determined in accordance with Article III hereof, being an amount equal to the Actual Cost of such Facility or Discrete Component, but subject to the limitations and reductions provided for in Article III.
"Rate and Method" means the rate and method of apportionment of the Special Taxes of an Improvement Area approved by the qualified electors of such Improvement Area. "Special Taxes" means the special taxes for facilities in the District levied in accordance with the Rate and Method.
"Supplement" means a written document amending, supplementing or otherwise modifying this Acquisition Agreement and any exhibit hereto, including any amendments to the list of Discrete Components in Exhibit A, and/or the addition to Exhibit A of additional Facilities (and Discrete Components) to be financed with the proceeds of the Bonds deposited in the Improvement Fund eligible to be financed by the District.
"Trustee" means a financial institution in its capacity as trustee or fiscal agent under the Indenture, or any successor thereto acting as trustee or fiscal agent under the Indenture.

ARTICLE II

FUNDING
Section 2.1 Issuance of Bonds. Upon the written request of the Owner or City, the Owner and the City staff shall meet regarding the amount, timing and other material aspects of each series of the Bonds. The legal proceedings for the issuance of the Bonds and the series, principal amounts, rates, terms, conditions and timing of the sale of the Bonds shall be in all respects be solely determined by the City Council of the City, acting as the governing body of the District, in accordance with this Acquisition Agreement; provided that, subject to satisfaction of the applicable Financing Policies, sound municipal financing practices and the requirements of this Acquisition Agreement, as soon as possible following the execution of this Acquisition Agreement the City shall use commercially reasonable efforts to cause the District to issue and sell the Bonds in an amount 4 4892-6939-1454v2/022599-0032

sufficient to fund the Facilities. For purposes of sizing each series of Bonds, the priority annual administrative expense shall be $30,000 for the related Improvement Area.

Prior to the Bonds being issued for an Improvement Area, the Owner will be required to provide all information regarding the development of its property within the Improvement Area, including the financing plan for such development, which is necessary to ensure that the official statement for such Bonds complies with the requirements of all applicable federal and state securities laws, including without limitation Rule 15c2-12 and Rule 10(b)-5 of the Securities and Exchange Commission (the "Commission"). Moreover, each property owner which is responsible for twenty percent (20%) or more of the maximum special tax within an Improvement Area at the time each series of Bonds for such Improvement Area are issued (each a "Major Landowner") will be required to enter into a continuing disclosure agreement to provide such continuing disclosure pertaining to the development of the land owned by such Major Landowner in the District as necessary to assist the underwriter of the series of Bonds in complying with the continuing disclosure requirements of Rule 15c2-12 of the Commission and/or in marketing the Bonds. Each Major Landowner shall be required to execute a certificate in connection with each public sale of Bonds pursuant to which the Major Landowner shall indemnify and hold harmless City from claims arising from, or based upon, any untrue statement or alleged untrue statement of a material fact or omission or alleged omission of a material fact in the above -referenced information.

Section 2.2 Special Taxes and Bonds. Prior to the issuance of the first series of Bonds for an Improvement Area, the "Assigned Special Tax" has been and shall continue to be levied in each fiscal year on parcels classified as "Developed Property" pursuant to and as defined in the Rate and Method for such Improvement Area. The Net Proceeds of such Special Taxes have been and shall continue to be deposited in the Improvement Fund. In addition, the proceeds of each full or partial prepayment of Special Taxes attributable to eligible facilities prior to the issuance of Bonds shall be deposited in the Improvement Fund. The City, the District and the Owner are entering into this Acquisition Agreement and authorized the levy of the Special Taxes for the purpose of creating and allocating certain streams of revenues that are or will be available to pay directly or reimburse the costs of acquisition and construction of the Facilities and to pay debt service on Bonds and other indebtedness of the District. The District hereby irrevocably pledges the Net Proceeds of Special Taxes to the Owner for the reimbursement of costs of the Facilities, subordinate only to the payment of debt service on Bonds issued to fund such costs. Following the issuance of the Bonds, the District shall have no obligation to levy Special Taxes to pay directly for the costs of reimbursing or paying the Owner for the Facilities. The Owner, the City and the District hereby acknowledge and agree that any reduction or termination of the Special Taxes by exercise of the initiative power or the exercise of discretion of the City or the District would constitute a substantial impairment of revenue stream of Special Taxes that the Owner, the City and the District intend to create for the purpose of providing an assured source of funding for such costs.

Section 2.3 Net Proceeds. The proceeds of the Bonds shall be deposited, held, invested, reinvested and disbursed as provided in the Indenture. The Net Proceeds of the Bonds will be set aside under the Indenture in the Improvement Fund. Moneys in the Improvement Fund shall be withdrawn therefrom in accordance with the provisions of the Indenture and the applicable provisions hereof for payment of all or a portion of the costs of construction and/or acquisition of the Facilities (including payment of the Purchase Price of Discrete Components thereof) all as herein provided. Funds in the Improvement Fund shall be reserved and disbursed in accordance with this Acquisition Agreement.
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The Owner acknowledges that any lack of availability of amounts in the Improvement Fund to pay the Purchase Price of Facilities or any Discrete Components thereof shall in no way diminish any obligation of the Owner with respect to the construction of or contributions for public facilities and mitigation measures required by the Conditions of Approval or any subdivision, development or other agreement to which the Owner is a party, or any governmental approval to which the Owner or any land within the District are subject.

Section 2.4 Funding Facilities in Other Fairway Canyon Districts. Any Facilities that are not funded by the proceeds of Bonds and Special Taxes in the District may be funded by bonds and special taxes of another existing or to -be -formed community facilities district under the Act for the Fairway Canyon project (an "Other Fairway Canyon District"). To the extent that the Purchase Price of a Facility is not fully paid by this District, the unpaid Purchase Price of a Facility may be paid by sources available in an Other Fairway Canyon District.

Section 2.5 Disclosure of Special Tax. If requested in writing by the City, copies of the executed "Notice of Special Tax" required by California Government Code Section 53341.5 provided to the purchaser of real property within the District shall be provided to the City Director of Finance. The Director of Finance's receipt of such "Notice of Special Tax" shall not be construed as City or District approval of the form of Notice or in any way make the City or District liable for deficiencies in such "Notice of Special Tax." Owner agrees to retain copies of the Notice of Special Tax it has provided to homebuyers within the District for a period of three (3) years and to provide them to the City upon City's written request.

ARTICLE III

CONSTRUCTION AND ACQUISITION OF FACILITIES
Section 3.1 Duty of Owner to Construct. All Facilities and Discrete Components thereof to be acquired hereunder shall have been constructed at the direction of the Owner in accordance with the approved Plans following the solicitation of competitive bids. The Owner shall have employed at all times adequate staff or consultants with the requisite experience necessary to bid, administer and coordinate all work related to the design, engineering, acquisition, construction and installation of the Facilities to be acquired by the City from the Owner hereunder.

Section 3.2 Inspection. No payment hereunder shall be made by the City to the Owner for a Facility or Discrete Component thereof until the Facility or Discrete Component thereof has been inspected and found to be completed in accordance with the Plans by the City or other applicable public entity or utility. However, due to the age of some of the Facilities it is understood that normal wear and tear and aging may have occurred which shall not be a basis for denial. The City shall make or cause to be made periodic site inspections of the Facilities or Discrete Components to be acquired hereunder on a timely basis; provided that in no event shall the City incur any liability for any delay in the inspection of any Facilities or Discrete Components. For Facilities to be acquired by other public entities or utilities, the Owner shall be responsible for obtaining such inspections and providing written evidence thereof to the Director. The Owner agrees to pay all inspection, permit and other similar fees of the City applicable to construction of the Facilities.

Section 3.3 Agreement to Sell and Acquire Facilities. The Owner hereby agrees to sell the Facilities and Discrete Components listed in Exhibit A hereto to the City or an applicable utility and the City hereby agrees to use amounts in the Improvement Fund to pay the Purchase Price of 6 4892-6939-1454v2/022599-0032

each of such Facilities and Discrete Components to the Owner, subject to the terms and conditions hereof. The City shall not be obligated to acquire any Facility or Discrete Component until the Facility or Discrete Component is completed and the Acceptance Date for such Facility (or the final Discrete Component) has occurred; provided that the City has agreed hereunder to make payments to the Owner for certain Discrete Components of Facilities as shown in Exhibit A hereto prior to the Acceptance Date. The Owner acknowledges that the Discrete Components have been identified for payment purposes only, and that the City shall not accept a Facility of which a Discrete Component is a part until the entire Facility has been completed. The City acknowledges that the Discrete Components do not have to be accepted by the City as a condition precedent to the payment of the Purchase Price therefor, but any such payment shall not be made until the Discrete Component has been completed in accordance with the Plans therefor, as determined by the Director. In any event, the City shall not be obligated to pay the Purchase Price for any Facility or Discrete Component except from the moneys in the Improvement Fund (subject to Section 2.4).

Section 3.4 Payment Requests. In order to receive the Purchase Price for a completed Facility or Discrete Component, inspection thereof under Section 3.2 shall have been made and the Owner shall deliver to the Director: (i) a Payment Request in the form of Exhibit B hereto for such Facility or Discrete Component, together with all attachments and exhibits required by Exhibit B and this Section 3.4 to be included therewith (including, but not limited to Attachments 1 and 2 to Exhibit B), and (ii) if payment is requested for a completed Facility, (a) if the property on which the Facility is located is not owned by the City at the time of the request, a copy of the recorded documents conveying to the City Acceptable Title to the real property on, in or over which such Facility is located, as described in Section 4.1 hereof, (b) to the extent paid for with the proceeds of the Bonds, an assignment to the District of any reimbursements that may be payable with respect to the Facility, such as public or private utility reimbursements, and (c) an assignment of warranties and guaranties for such Facility, as described in Section 4.5 hereof, in a form acceptable to the City.

Upon receipt of a Payment Request (and all accompanying documentation), the Director shall conduct a review in order to confirm that such request is complete, that such Discrete Component or Facility identified therein was constructed in accordance with the Plans therefor, and to verify and approve the Actual Cost of such Discrete Component or Facility specified in such Payment Request.

The Director shall also conduct such review as is required in his discretion to confirm the matters certified in the Payment Request. The Owner agrees to cooperate with the Director in conducting each such review and to provide the Director with such additional information and documentation as is reasonably necessary for the Director to conclude each such review. For any Facilities to be acquired by another public entity or utility, the Owner shall provide evidence acceptable to the Director that such Facilities are acceptable to such entity or utility. Within fifteen (15) business days of receipt of any Payment Request, the Director expects to review the request for completeness and notify the Owner whether such Payment Request is complete, and, if not, what additional documentation must be provided. If such Payment Request is complete, the Director expects to provide a written approval or denial (specifying the reason for any denial) of the request within thirty (30) calendar days of its submittal. However, the Facilities documentation will be delivered by Owner to City in large quantities which may be beyond the ability of City to process, in accordance with the forgoing timeframes. At the request of City or Owner, City may engage an outside contractor to review and process the Facilities documentation on behalf of the City the cost of which shall be borne by Owner subject to a written agreement executed by City and Owner. If a Payment Request seeking reimbursement for more than one Facility or Discrete Component is denied, the Director shall state whether the Payment Request is nevertheless approved and complete for any one or more Facilities or Discrete Components and any such Facilities or Discrete Components shall be 7 4892-6939-1454v2/022599-0032

processed for payment under Section 3.5 notwithstanding such partial denial. The City's and District's Costs associated with the acquisition of Facilities and processing of Payment Requests shall be reimbursed from the Improvement Fund or from amounts advanced by the Owner to the extent insufficient funds are on deposit in the Improvement Fund, which advances may be later reimbursed to the Owner out of the Improvement Fund.

Section 3.5 Payment. Upon approval of the Payment Request by the Director, the Director shall sign the Payment Request and forward the same to the City Director of Finance. Upon receipt of the reviewed and fully signed Payment Request, the City Director of Finance shall, within the then current City financial accounting payment cycle but in any event within fifteen (15) business days of receipt of the approved Payment Request, cause the same to be paid by the Trustee under the applicable provisions of the Indenture, to the extent of funds then on deposit in the Improvement Fund. Any approved Payment Request not paid due to an insufficiency of funds in the Improvement Fund, shall be paid promptly following the deposit into the Improvement Fund of proceeds of any investment earnings or other amounts transferred to the Improvement Fund under the terms of the Indenture.

Subject to Section 2.4, the Purchase Price paid hereunder for any Facility or Discrete Component shall constitute payment in full for such Facility or Discrete Component, including, without limitation, payment for all labor, materials, equipment, tools and services used or incorporated in the work, supervision, administration, overhead, expenses and any and all other things required, furnished or incurred for completion of such Facility or Discrete Component, as specified in the Plans.

The City shall withhold payment for any Discrete Component or Facility constructed on land not already owned by the City or other public entity, until Acceptable Title to such land is conveyed to the City or other public entity that will own the respective Facility, as described in Article IV hereof.

The City shall be entitled to withhold any payment hereunder for a Facility or Discrete Component that is the subject of a Payment Request until it is satisfied that any and all claims for labor and materials have been paid by the Owner for the Facility or Discrete Component that is the subject of a Payment Request, or conditional lien releases (and/or unconditional lien releases) have been provided by the Owner for such Facility or Discrete Component. The City, in its discretion, may waive this limitation upon the provision by the Owner of sureties, undertakings, securities and/or bonds of the Owner or appropriate contractors or subcontractors and deemed satisfactory by the Director to assure payment of such claims.

The City shall be entitled to withhold payment for any Facility (or final Discrete Component) hereunder to be owned by the City until: (i) the Director determines that the Facility is ready for its intended use, and (ii) the Acceptance Date for the Facility has occurred and the requirements of Section 4.1, if applicable to such Facility, have been satisfied. The City hereby agrees that the Owner shall have the right to post or cause the appropriate contractor or subcontractor to post a bond with the City to indemnify it for any losses sustained by the City because of any liens that may exist at the time of acceptance of such a Facility, so long as such bond is drawn on an obligor and is otherwise in a form acceptable to the Director. The City shall be entitled to withhold payment for any Facility (or the final Discrete Component of any such Facility) to be owned by other governmental entities, until the Owner provides the Director with evidence that the governmental entity has accepted dedication of and/or title to the Facility. If the Director determines that a Facility 8 4892-6939-1454v2/022599-0032

is not ready for intended use under (i) above, the Director shall so notify the Owner as soon as reasonably practicable in writing specifying the reason(s) therefor.

Nothing in this Acquisition Agreement shall be deemed to prohibit the Owner from contesting in good faith the validity or amount of any mechanics or materialman's lien nor limit the remedies available to the Owner with respect thereto so long as such delay in performance shall not subject the Facilities or any Discrete Component thereof to foreclosure, forfeiture or sale. In the event that any such lien is contested, the Owner shall only be required to post or cause the delivery of a bond in an amount equal to the amount in dispute with respect to any such contested lien sufficient to cause the release or such lien, so long as such bond is drawn on an obligor and is otherwise in a form acceptable to the Director.

Subject to the last paragraph of this Section 3.5, the City shall withhold in the Improvement Fund an amount equal to ten percent (10%) of the Purchase Price of each Discrete Component to be paid hereunder other than the final Discrete Component of any Facility. Any such retention will be released to the Owner upon final completion and acceptance of the related Facility.

Notwithstanding the foregoing, the Owner shall be entitled to payment of any such retention upon the completion and acceptance of a Discrete Component, if securities meeting the requirements of the California Public Contracts Code are deposited in lieu thereof. Payment of any retention shall also be contingent upon the availability of monies in the Improvement Fund therefore. No retention shall apply if the Owner proves to the Director's satisfaction that the Owner's contracts for the Discrete Components provide for the same retention as herein provided, so that the Purchase Price paid for the Discrete Component is at all times net of the required retention.

Section 3.6 Defective or Nonconforming Work. If any of the work done or materials furnished for a Facility or Discrete Component are found by the Director to be defective or not in accordance with the applicable Plans: (i) and such finding is made prior to payment for the Purchase Price of such Facility or Discrete Component hereunder, the City may withhold payment therefor until such defect or nonconformance is corrected to the satisfaction of the Director, or (ii) and such finding is made after payment of the Purchase Price of such Facility or Discrete Component, the City and the Owner shall act in accordance with the City's standard specification for public works construction.

ARTICLE IV

OWNERSHIP AND TRANSFER OF FACILITIES
Section 4.1 Facilities to be Owned by the City; Conveyance of Land and Easements to City. Acceptable Title to all property on, in or over which each Facility to be acquired by the City will be located, shall be deeded over to the City by way of grant deed, or dedication of such property, or easement thereon, if such conveyance of interest is approved by the City as being a sufficient interest therein to permit the City to properly own, operate and maintain such Facility located therein, thereon or thereover, and to permit the Owner to perform its obligations as set forth in this Acquisition Agreement. The Owner agrees to assist the City in obtaining such documents as are required to obtain Acceptable Title. Completion of the transfer of title to land shall be accomplished prior to the payment of the Purchase Price for a Facility (or the last Discrete Component thereof) and shall be evidenced by recordation of the acceptance thereof by the City Council or the designee thereof.
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Section 4.2 Facilities to be Owned by the City; Title Evidence. The Owner shall furnish to the City a preliminary title report for land with respect to Facilities to be acquired by the City and not previously dedicated or otherwise conveyed to the City, for review and approval at least thirty (30) business days prior to the transfer of the Acceptable Title to a Facility to the City. The City shall approve the preliminary title report unless it reveals a matter which, in the judgment of the City, could materially affect the City's use and enjoyment of any part of the property or easement covered by the preliminary title report. In the event the City does not approve the preliminary title report, the City shall not be obligated to accept title to the land with respect to such Facility or pay the Purchase Price for such Facility (or the last Discrete Component thereof) until the Owner has cured such objections to title to the reasonable satisfaction of the City and caused a standard title insurance policy to be issued to the City with respect to such land in the amount of the Purchase Price. In the event the Owner cannot cure such objections to title, City agrees to consider the use of eminent domain pursuant to Section 4.3 hereof for such purpose.

Section 4.3 Facilities Constructed on Private Lands. If any Facilities to be acquired are located on privately -owned land, the owner thereof shall retain title to the land and the completed Facilities until acquisition of the Facilities under Article III hereof. Pending the completion of such transfer, the Owner shall not be entitled to receive any payment for any such Facility or the last Discrete Component thereof. The Owner shall, however, be entitled to receive payment for Discrete Components (other than the last Discrete Component) upon making an irrevocable offer of dedication of such land in form and substance acceptable to the Director. Notwithstanding the foregoing, upon written request of the City before payment for any Discrete Component of such a Facility, the Owner shall convey or cause to be conveyed Acceptable Title thereto in the manner described in Sections 4.1 and 4.2 hereof.

It shall be the responsibility of the Owner to acquire all property rights on property which is not owned by the City or the Owner which is necessary for the construction of any of the Facilities.

In the event, despite its exercise of best efforts to do so, the Owner is unable to acquire such property rights, the City shall in good faith consider the undertaking of proceedings to acquire such property rights through its exercise of the power of eminent domain, and the costs of such proceedings and acquisition shall be the responsibility of the Owner and shall comprise part of the Purchase Price of the related Facility.

Section 4.4 Facilities Constructed on City Land. If the Facilities to be acquired are on land owned by the City, including land as to which the City has acquired sufficient property rights in the manner described in Section 4.3 or otherwise, the City hereby grants to the Owner a license to enter upon such land for purposes related to the construction (and maintenance pending acquisition) of the Facilities. The provisions for inspection and acceptance of such Facilities otherwise provided herein shall apply.

Section 4.5 Maintenance and Warranties. The Owner shall maintain or cause to be maintained each Discrete Component in good and safe condition until the Acceptance Date of the Facility of which such Discrete Component is a part. Prior to the Acceptance Date, the Owner shall be responsible for performing any required maintenance on any completed Discrete Component or Facility. On or before the Acceptance Date of the Facility, the Owner shall assign to the City all of the Owner's rights in any warranties, guarantees, maintenance obligations or other evidence of contingent obligations of third persons with respect to such Facility. For each Facility to be owned by the City, the Owner shall provide a warranty bond reasonably acceptable in form and substance to the Director to remain in effect for a period of one year from the date of acceptance of each Facility. 10 4892-6939-1454v2/022599-0032

The City shall be responsible for maintenance of each Facility from and after the Acceptance Date thereof, except that with respect to landscaping improvements, the Owner shall maintain or cause to be maintained such landscape improvements for a period of one year following the Acceptance Date thereof or shall provide a bond reasonably acceptable in form and substance to the Director for such period and for such purpose (for landscaping improvements only, and for the posting of a warranty bond to remain in effect for one year as to other Facilities), to insure that defects, which appear within said period will be repaired, replaced, or corrected by the Owner, at its own cost and expense, to the satisfaction of the Director. The Owner shall commence to repair, replace or correct any such defects within thirty (30) days after written notice thereof by the City to the Owner, and shall complete such repairs, replacement or correction as soon as practicable. Any warranties, guarantees or other evidences of contingent obligations of third persons with respect to the Facilities to be acquired by the City shall be delivered to the Director as part of the transfer of title.

Section 4.6 Allocation of Costs. If Owner incurs costs that (1) apply to more than one Facility or Discrete Component (e.g., soft costs) or (2) apply to both Facilities or Discrete Components and improvements other than the Facilities or Discrete Components (e.g., grading), Owner shall allocate, or cause the contractor to reasonably allocate, such costs between the Facilities or Discrete Components (in the case of clause (1)) or between the Facilities or Discrete Components and the improvements other than the Facilities or Discrete Components (in the case of clause (2)) (the "Owner Allocation"). The Owner Allocation shall be presumed to be reasonable and shall be accepted for all purposes of this Acquisition Agreement unless the City notifies Owner of its good - faith reasonable disapproval of the allocation as part of the City's written response to the applicable Payment Request. If the City has properly disapproved the Owner Allocation, then the City and Owner shall promptly allocate such costs, on a reasonable basis, between the Facilities or Discrete Components (in the case of clause (1)) or between the Facilities or Discrete Components and the improvements other than the Facilities or Discrete Components (in the case of clause (2)) (the "Agreed -Upon Allocation"). Based on the Owner Allocation or the Agreed -Upon Allocation, as applicable, the City shall include the costs allocated to a specific Facility or Discrete Component as part of the Actual Costs of such Facility or Discrete Component when such Facility or Discrete Component is subject to a Payment Request.

Section 4.7 Expectations of the Parties. The City understands and agrees that (i) Owner will be constructing Facilities or Discrete Components prior to the availability of sources that will be used to pay for such Facilities or Discrete Components, (ii) the City or the other public agencies that will own and operate such Facilities or Discrete Components may be inspecting such Facilities or Discrete Components and processing and completing payment requests for the payment on such Facilities or Discrete Components with knowledge that there may be insufficient sources available at such time, (iii) the Facilities or Discrete Components may be conveyed to and accepted by the City or other local agency that will own and operate such Facilities or Discrete Components when there are insufficient sources to pay the Purchase Prices of such Facilities or Discrete Components, and (iv) in any such case, the payment of any approved payment requests for the Purchase Prices of such Facilities or Discrete Components will be deferred until there are sufficient sources available to pay the Purchase Prices of such Facilities or Discrete Components, at which time the City will make such payments in accordance with this Acquisition Agreement. At all times, Owner will be constructing such Facilities or Discrete Components with the expectation that the Purchase Prices for such Facilities or Discrete Components will be paid solely from the sources. The conveyance of Facilities or Discrete Components to the City or a local agency that will own and operate such Facilities or Discrete Components prior to receipt of the Purchase Prices for such Facilities or Discrete 11 4892-6939-1454v2/022599-0032

Components shall not be construed as a dedication or gift, or a waiver of the payment of the Purchase Prices, or any part thereof, for such Facilities or Discrete Components.

ARTICLE V

INSURANCE
Section 5.1 Insurance Requirements. The Owner shall, at all times prior to the final Acceptance Date of all Facilities, maintain and deliver to the City evidence of and keep in full force and effect, not less than the following coverage and limits of insurance, which shall be maintained with insurers and under forms of policies satisfactory to the Director: (i) Workers Compensation and Employer's Liability - Workers' Compensation - coverage as required by law; Employer's Liability - limits of at least $1,000,000.00 per occurrence; (ii) Comprehensive General Liability - Combined Single Limit - $2,000,000.00; (iii) Automobile Liability - Combined Single Limit - $1,000,000.00; and (iv) Errors and Omissions Insurance - Combined Single Limit - $2,000,000.00.

All of the Owner's insurance policies shall contain an endorsement providing that written notice shall be given to the City at least 30 calendar days prior to termination or cancellation of coverage of the policy.

The Comprehensive General Liability and Bodily Injury and Property Damage Liability policies shall contain the following:
(a) An endorsement extending coverage to the City and its agents as an additional insured, as respects liabilities arising out of the performance of any work related to the Facilities. Which insurance shall be primary insurance as respects the interest of the City, and any other insurance maintained by the City shall be excess and not contributing insurance with the insurance required hereunder.
(b) Severability of interest clause.
(c) Provision or endorsement stating that such insurance, subject to all of its other terms and conditions, applies to contractual liability assumed by the Owner.

Promptly on execution of this Acquisition Agreement by the Owner, the Owner shall deliver to the Director copies of all required certificates of insurance and endorsements thereto on forms which are acceptable to the Director and the City Attorney.

The Owner shall require and verify similar insurance on the part of its contractors and subcontractors.

The foregoing requirements as to the types, limits and City approval of insurance coverage to be maintained by the Owner are not intended to and shall not in any manner limit or qualify the liabilities and obligations assumed by the Owner under this Acquisition Agreement.

Any policy or policies of insurance that the Owner or its contractors or subcontractors elect to carry as insurance (i) against loss or damage to their construction equipment and tools or other personal property used in fulfillment of this Acquisition Agreement or a contract related to the Facilities shall include a provision waiving the insurer's right of subrogation against the City, and (ii) in fulfillment of this Acquisition Agreement involving a dual obligee bond may contain a clause 12 4892-6939-1454v2/022599-0032

to the effect that: "provided that Principal and Surety shall not be liable to the Obligees or any of them unless the Obligees or any of them have performed the obligations to the Principal in accordance with the terms of said contract; and provided, further, that Principal and Surety shall not be liable to all Obligees in the aggregate in excess of the penal sum above stated." Section 5.2 Standards Applicable. The Owner may effect such coverage under blanket insurance policies, provided, however, that (i) such policies are written on a per occurrence basis, (ii) such policies comply in all other respects with the provisions of Section 5.1, and (iii) the protection afforded the City under any such policy shall be no less than that which would be available under a separate, policy relating only to this Acquisition Agreement. All policies of insurance shall be with companies licensed or approved by the State of California Insurance Commissioner and rated (i) A or better with respect to primary levels of coverage, and (ii) B+12 or better with respect to excess levels of coverage, in the most recent edition of Best's Insurance Guide and shall be issued and delivered in accordance with State law and regulations.

Section 5.3 Evidence of Insurance. Prior to the Acceptance Date, the Owner shall furnish to the City, from time to time upon request of the Director, a certificate of insurance regarding each insurance policy required to be maintained by the Owner hereunder.

ARTICLE VI

REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.1 Representations, Covenants and Warranties of the Owner. The Owner represents and warrants for the benefit of the City, as follows:
(a) Organization. Owner is a California corporation and is validly doing business and in good standing in the State of California, is in compliance with all applicable laws of the State, and has the power and authority to own its properties and assets and to carry on its business as now being conducted and as now contemplated.
(b) Authority. The Owner has the power and authority to enter into this Acquisition Agreement, and has taken all action necessary to cause this Acquisition Agreement to be executed and delivered, and this Acquisition Agreement has been duly and validly executed and delivered by the Owner.
(c) Binding Obligation. This Acquisition Agreement is a legal, valid and binding obligation of the Owner, enforceable against the Owner in accordance with its terms, subject to bankruptcy and other equitable principles.
(d) Compliance with Laws. The Owner shall not with knowledge commit, suffer or permit any act to be done in, upon or to the lands of the Owner in the District or the Facilities in violation of any law, ordinance, rule, regulation or order of any governmental authority or any covenant, condition or restriction now or hereafter affecting the lands in the District or the Facilities. (e) Requests for Payment. The Owner represents and warrants that (i) it will not request payment from the City for the acquisition of any improvements that are not part of the Facilities, and (ii) it will diligently follow all procedures set forth in this Acquisition Agreement with respect to the Payment Requests.
13 4892-6939-1454v2/022599-0032

(f) Financial Records. Until the final acceptance of the Facilities, the Owner covenants to maintain proper books of record and account for the construction of the Facilities and all costs related thereto. Which accounting books shall be maintained in accordance with generally accepted accounting principles, and shall be available for inspection by the City or its agent at any reasonable time during regular business hours on reasonable notice. (g) Prevailing Wages. The Owner covenants that, with respect to any contracts or subcontracts for the construction of the Facilities to be acquired from the Owner hereunder, it has assured complete compliance with any applicable law or regulation for the payment of prevailing wages for such construction.
(h) Plans. The Owner represents that it has obtained or will obtain approval of the Plans for the Facilities to be acquired from the Owner hereunder from all appropriate departments of the City and from any other public entity or public utility from which such approval must be obtained. The Owner further agrees that the Facilities to be acquired from the Owner hereunder have been or will be constructed in full compliance with such approved plans and specifications and any supplemental agreements (change orders) thereto, as approved in the same manner.

Section 6.2 Indemnification and Hold Harmless. The Owner shall assume the defense of, indemnify and save harmless the City, members of the City Council, their officers, officials, employees and agents and each of them, from and against all actions, damages, claims, losses or expense of every type and description to which they may be subjected or put, by reason of, or resulting from the breach of any provision of this Acquisition Agreement by the Owner, the Owner's or any other entity's negligent design, engineering and/or construction of any of the Facilities acquired from the Owner hereunder, the Owner's non-payment under contracts between the Owner and its consultants, engineer's, advisors, contractors, subcontractors and suppliers in the provision of the Facilities, any claims of persons employed by the Owner or its agents to construct the Facilities, claims for damages to persons or property related to the actions of Owner contemplated by this Acquisition Agreement or any claims arising out of any alleged misstatement of a material fact or omission of a material fact with respect to provisions in any Official Statement for the Bonds for which the Owner certifies in a customary certificate executed in connection with the printing of the Official Statement for such Bonds. Notwithstanding the foregoing, no indemnification is given hereunder for any action, damage, claim, loss or expense directly attributable solely to the intentional acts or negligence of the City, or its officers, directors, employees or agents hereunder.

No provision of this Acquisition Agreement shall in any way limit the Owner's responsibility for payment of damages resulting from the operations of the Owner, its agents, employees or its contractors.

ARTICLE VII

TERMINATION
Section 7.1 Mutual Consent. This Acquisition Agreement may be terminated by the mutual, written consent of the City and the Owner, in which event the City may let contracts for any remaining work related to the Facilities not theretofore acquired from the Owner hereunder, and use all or any portion of the monies in the Improvement Fund to pay for same, and the Owner shall have no claim or right to the Purchase Price of Facilities or Discrete Components hereunder, except as otherwise may be provided in such written consent. In any event, this Acquisition Agreement shall 14 4892-6939-1454v2/022599-0032

terminate upon the earlier of (i) ten (10) years following the issuance of building permits for all dwelling units expected to be built within the District or (ii) the funding of all Facilities pursuant to this Acquisition Agreement.

Section 7.2 City Election to Terminate for Cause. The following events shall constitute grounds for the City, at its option and in its sole discretion, to terminate this Acquisition Agreement, without the consent of the Owner:
(a) The Owner shall voluntarily file for reorganization or other relief under any Federal or State bankruptcy or insolvency law.
(b) The Owner shall have any involuntary bankruptcy or insolvency action filed against it, or shall suffer a trustee in bankruptcy or insolvency or receiver to take possession of the assets of Owner, or shall suffer an attachment or levy of execution to be made against the property it owns within the District unless, in any of such cases, such circumstance shall have been terminated or released within ninety (90) days thereafter.
(c) The Owner shall abandon construction of the Facilities. Failure for a period of six consecutive months to undertake substantial work related to the construction of Facilities that are required to be constructed at that time pursuant to the Conditions of Approval, other than for a reason specified in Section 7.3 hereof, shall constitute a non -inclusive example of such abandonment. (d) The Owner shall breach any material covenant or default in the performance of any material obligation hereunder.
(e) The Owner shall transfer any of its rights or obligations under this Acquisition Agreement without the prior written consent of the City or as otherwise permitted hereunder.
(f) The Owner shall have made any material misrepresentation or omission of any written materials furnished in connection with any preliminary official statement, official statement or bond purchase contract used in connection with the sale of any series of the Bonds.

If any such event occurs, the City shall give written notice of its knowledge thereof to the Owner, and the Owner agrees to meet and confer with the Director and other appropriate City staff and consultants as to options available to assure timely completion of the Facilities. Such options may include, but not be limited to the termination of this Acquisition Agreement by the City. If the City elects to terminate this Acquisition Agreement, the City shall first notify the Owner (and any mortgagee or trust deed beneficiary specified in writing by the Owner to the City to receive such notice) of the grounds for such termination and allow the Owner a reasonable period (minimum of thirty (30) days) to eliminate or mitigate to the satisfaction of the Director the grounds for such termination. Such period may be extended, at the sole discretion of the City, if the Owner, to the satisfaction of the City, is proceeding with diligence to eliminate or mitigate such grounds for termination. If at the end of such period (and any extension thereof, as determined solely by the City), the Owner has not eliminated or completely mitigated such grounds, to the satisfaction of the City, the City may then terminate this Acquisition Agreement.

Notwithstanding the foregoing, so long as any event listed in any of clauses (a) through and including (f) above has occurred, notice of which has been given by the City to the Owner, and such 15 4892-6939-1454v2/022599-0032

event has not been cured or otherwise eliminated by the Owner, the City may in its sole discretion cease making payments for the Purchase Price of Facilities or Discrete Components under Article III hereof.

Section 7.3 Force Majeure. Whenever performance is required of a party hereunder, that party shall use all due diligence and take all necessary measures in good faith to perform, but if completion of performance is delayed by reasons of floods, earthquakes, inclement weather or other acts of God, war, civil commotion, riots, strikes, acts of terrorism, pandemic, picketing, other labor disputes, damage to work in progress by casualty, government shutdowns, moratoria or other restrictive laws or regulations, or the acts, omissions or breach of agreement by the other party to this Acquisition Agreement or its agents, contractors or subcontractors, or by other cause beyond the reasonable control of the party (financial inability excepted), then the specified time for performance shall be extended by the amount of the delay actually so caused.

ARTICLE VIII

MISCELLANEOUS
Section 8.1 Limited Liability of City. The Owner agrees that any and all obligations of the City arising out of or related to this Acquisition Agreement are special and limited obligations of the District and City and the City's obligations to make any payments hereunder are restricted entirely to the moneys, if any, in the Improvement Fund and from no other source. No member of the City Council, or City staff member, employee or agent shall incur any liability hereunder to the Owner or any other party in their individual capacities by reason of their actions hereunder or execution hereof.

Section 8.2 Excess Costs. Subject to the limitations of this Acquisition Agreement, the Owner agrees to pay all costs of the Facilities that it is obligated to construct in excess of the monies available therefor in the Improvement Fund.

Section 8.3 Review of Records. The Director and/or the Finance Manager or other finance officer of the City shall have the right, during normal business hours and upon the giving of two (2) business days prior written notice to the Owner, to review all books and records of the Owner pertaining to the Actual Cost incurred by the Owner in or to any of the Facilities, and any bids taken or received for the construction thereof or materials therefor. Owner shall have the right, during normal business hours and upon the giving of two (2) business days prior written notice to the Finance Manager, to review all books and records of the City and District pertaining to the Special Taxes and Bonds.

Section 8.4 Attorney's Fees. In the event that any action or suit is instituted by either party against the other arising out of this Acquisition Agreement, the party in whose favor final judgment shall be entered shall be entitled to recover from the other party all costs and expenses of suit, including reasonable attorneys' fees.

Section 8.5 Notices. Any notice, payment or instrument required or permitted by this Acquisition Agreement to be given or delivered to either party shall be deemed to have been received when personally delivered, or transmitted by telecopy or facsimile transmission (which shall be immediately confirmed by telephone and shall be followed by overnight delivery an original of the same within twenty-four hours after such transmission), addressed as follows:
16 4892-6939-1454v2/022599-0032

City and District:

With a copy to:

Owner:

With a copy to:
and a copy to:

City of Beaumont
550 East 6th Street
Beaumont, CA 92223
Attention: City Manager, City Clerk
John Pinkney
Slovak Baron Empey Murphy & Pinkney, LLP
1800 E. Tahquitz Canyon Way
Palm Springs, CA 92262
Meritage Homes of California, Inc.
5 Peters Canyon Road, Suite 310
Irvine, CA 92606
Attention: Efrem Joelson, Forward Planning Manager
David Hendryx Consulting
3407 S Main Street, Unit A
Santa Ana, CA 92707
Attention: David Hendryx
John Yeager
O'Neil LLP
19900 MacArthur Blvd., Suite 1050
Irvine, CA 92612
Each party may change its address or addresses for delivery of notice by delivering written notice of such change of address to the other party.

Section 8.6 Severability. If any part of this Acquisition Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Acquisition Agreement shall be given effect to the fullest extent possible.

Section 8.7 Successors and Assigns. This Acquisition Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. This Acquisition Agreement shall not be assigned by the Owner, except in whole to an Affiliate, or to any other entity of which the Owner and/or its members or partners will be managing members or general partners which assume all of the Owner's obligations hereunder (which transfer is expressly authorized hereunder, upon prior written notice to the City without further act of the City), without the prior written consent of the City, which consent shall not be unreasonably withheld or delayed. In connection with any required consent of the City, the City may condition its consent upon the acceptability of the financial condition of the proposed assignee, the assignee's express assumption of all obligations of the Owner hereunder, and/or upon any other factor which the City deems relevant in the circumstances. In any event, any such assignment shall be in writing, shall clearly identify the scope of the rights and/or obligations assigned, and shall not be effective until approved by the City. Without the City's written consent (except in whole to an Affiliate, or to any other entity of which the Owner and/or its members or partners will be managing members or general partners which assume all of the Owner's obligations hereunder), no assignment shall release the Owner from its obligations and liabilities under this Acquisition Agreement. 17 4892-6939-1454v2/022599-0032

Section 8.8 Other Agreements. The obligations of the Owner hereunder shall be those of a party hereto and not as an owner of property in the District. Nothing herein shall be construed as affecting the City's or the Owner's rights, or duties to perform their respective obligations, under other agreements, if any, use regulations or subdivision requirements relating to the development of the lands in the District. This Acquisition Agreement shall not confer any additional rights, or waive any rights given, by either party hereto under any development or other agreement to which they are a party.

Section 8.9 Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Acquisition Agreement by the other party, or the failure by a party to exercise its rights upon the default of the other party, shall not constitute a waiver of such party's right to insist and demand strict compliance by the other party with the terms of this Acquisition Agreement thereafter.

Section 8.10 Merger. No other agreement, statement or promise made by any party or any employee, officer or agent of any party with respect to any matters covered hereby that is not in writing and signed by all the parties to this Acquisition Agreement shall be binding.

Section 8.11 Parties in Interest. Nothing in this Acquisition Agreement, expressed or implied, is intended to or shall be construed to confer upon or to give to any person or entity other than the City, the District and the Owner any rights, remedies or claims under or by reason of this Acquisition Agreement or any covenants, conditions or stipulations hereof; and all covenants, conditions, promises, and agreements in this Acquisition Agreement contained by or on behalf of the City, the District or the Owner shall be for the sole and exclusive benefit of the City, the District and the Owner.

Section 8.12 Amendment. This Acquisition Agreement may be amended, from time to time, by written Supplement hereto and executed by the City, the District and the Owner; provided, further, that Exhibit A may be modified to add additional authorized facilities or make adjustments to the existing Facilities only with the written approval of the Director and the Owner.

Section 8.13 Counterparts. This Acquisition Agreement may be executed in counterparts, each of which shall be deemed an original.

Section 8.14 Termination. This Acquisition Agreement shall terminate and be of no further force as provided in Section 7.1, unless extended by agreement of all the parties. If the Acquisition Agreement is terminated as provided herein, none of the City, the District or the Owner shall have any further responsibility or liability pursuant to this Acquisition Agreement. Upon the termination of this Agreement, the City shall direct the use of any remaining Bond or Special Tax proceeds to complete any remaining authorized facilities, redeem Bonds or use in any way permitted by the Act.
[Signature Page Follows]
18 4892-6939-1454v2/022599-0032

IN WITNESS WHEREOF, the parties have executed this Acquisition Agreement as of the day and year first -above written.

CITY OF BEAUMONT
By:

City Manager
ATTESTED:

City Clerk

CITY OF BEAUMONT COMMUNITY FACILITIES
DISTRICT NO. 2023-1 (FAIRWAY CANYON)
By:

City Manager of the City of Beaumont
ATTESTED:

City Clerk
[SIGNATURES CONTINUED ON NEXT PAGE.]
4892-6939-1454v2/022599-0032
S-1

[SIGNATURE PAGE CONTINUED]
MERITAGE HOMES OF CALIFORNIA, INC.,
a California corporation
[NAME]
Authorized Signatory
4892-6939-1454v2/022599-0032
S-2

ACQUISITION AGREEMENT
(CFD NO. 2023-1)

EXHIBIT A

DESCRIPTION OF FACILITIES AND DISCRETE COMPONENTS ELIGIBLE FOR

ACQUISITION FROM THE OWNER
Facilityl, 2' 3
Estimated Cost
Sorenstam Road Improvement
$ 2,706,083.00
PA 21B Park Improvements
4,999,342.00
TOTAL:

S 7,705,425.00
1 The description of the above Facilities shall also include any appurtenant cost required for completion of such Facility including, but not limited to, grading, wet utility improvements, paving, dry utilities, performance bonds, design, planning, and engineering costs, etc.
2 Unless agreed to otherwise by the Owner and the City, dry utility cost reimbursements shall not exceed 5% of the proceeds of any series of Bonds.
3 The estimated costs of these Facilities represents the current estimates at the time of this Acquisition Agreement. The amount for any Facility may increase to include other costs subsequently submitted by Owner and approved by the City.
4892-6939-1454v2/022599-0032
A-1

ACQUISITION AGREEMENT

EXHIBIT B

FORM OF PAYMENT REQUEST (FACILITIES)
PAYMENT REQUEST NO.

The undersigned (the "Owner"), hereby requests payment to the Payees listed on Attachment 2 in the total amount of $ for the Facilities (as defined in the Acquisition Agreement, dated as of May 1, 2023 by and among the City of Beaumont (the "City"), the City of Beaumont Community Facilities District No. 2023-1 (Fairway Canyon) and the Owner), or Discrete Components thereof (as described in Exhibit A to that Acquisition Agreement), all as more fully described in Attachment 1 hereto. In connection with this Payment Request, the undersigned hereby represents and warrants to the City as follows:

1. He (she) is a duly authorized officer of the Owner, qualified to execute this Payment Request for payment on behalf of the Owner and is knowledgeable as to the matters set forth herein.

2. All costs of the Facilities or Discrete Components thereof for which payment is requested hereby are Actual Costs (as defined in the Acquisition Agreement referenced above) and have not been inflated or misrepresented in any respect. The amount of the payment requested has not been previously paid by the City.

3. Supporting documentation (such as third party invoices) is attached with respect to each cost for which payment is requested.

4. There has been full compliance with applicable laws relating to prevailing wages for the work to construct the Facilities or Discrete Components thereof for which payment is requested.

5. The Facilities or Discrete Components thereof for which payment is requested were constructed in accordance with all applicable City or other governmental standards, and in accordance with Plans approved by the City.

6. The Owner is in compliance with the terms and provisions of the Acquisition Agreement.

7. The Purchase Price for each Facility or Discrete Component (a detailed calculation of which is shown in Attachment 2 hereto for each such Facility or Discrete Component), has been calculated in conformance with the terms of the Acquisition Agreement. 4892-6939-1454v2/022599-0032
B-1

I hereby declare under penalty of perjury that the above representations and warranties are true and correct.

Dated:

OWNER:

MERITAGE HOMES OF CALIFORNIA, INC.,
a California corporation
By:

Name:

Title:

Dated: CITY:

Payment Request Approved for Submission to
Finance Manager
By:

Director of Public Works
4892-6939-1454v2/022599-0032
B-2

ACQUISITION AGREEMENT
ATTACHMENT 1

EXHIBIT B
[List here all Facilities or Discrete Components thereafter which payment is requested, and attach support documentation.]
4892-6939-1454v2/022599-0032
B-3

ACQUISITION AGREEMENT
ATTACHMENT 2

EXHIBIT B

CALCULATION OF PURCHASE PRICE
[Use a separate sheet for each Facility or Discrete Component for which payment is being requested]

1. Description (by reference to Exhibit A to the Acquisition Agreement) $ of the Facility or Discrete Component

2. Actual Cost (list here total of supporting invoices and/or other $ documentation supporting determination of Actual Cost):

3. Subtractions from Purchase Price:
$
A. Holdback for Lien releases (if any, see Section 3.4 of the $ Acquisition Agreement)
B. Retention (if any, see Section 3.4 of the Acquisition $ Agreement)

4. Total disbursement requested (Amount listed in 2, less amounts, if any, $ listed in 3)
Payment shall be directed to following payee(s):
4892-6939-1454v2/022599-0032
B-4

I hereby declare under penalty of perjury that the above representations and warranties are true and correct.

OWNER:

Dated:

By:

Name:

Title:

By:

Name:

Title:

CITY:

Payment Request Approved for Submission to
Finance Manager
Dated: By:

Director of Public Works
4892-6939-1454v2/022599-0032
B-5

ACQUISITION AGREEMENT

EXHIBIT C

CITY CFD POLICIES
4892-6939-1454v2/022599-0032
C-1

REBECCA SPENCER
Registrar of Voters \ \""_ % / Assistant Registrar of Voters State of California )
) ss
County of Riverside )

REGISTRAR OF VOTERS

COUNTY OF RIVERSIDE

ART TINOCO
1, Rebecca Spencer, Registrar of Voters of said County, hereby certify that:
(A) I have been furnished a map describing the proposed boundary of Community Facilities District No. 2023-1 (Fairway Canyon), of the City of Beaumont, of the County of Riverside, State of California.
(B) On March 30, 2023, I conducted, or caused to be conducted, a review of the voter registration records of the County of Riverside for the purpose of determining the number of voters registered to vote within the proposed boundary of Community Facilities District No. 2023-1 (Fairway Canyon), of the City of Beaumont, of the County of Riverside. (C) There are 0 registered voters residing within the proposed boundary of Community Facilities District No. 2023-1 (Fairway Canyon), of the City of Beaumont, of the County of Riverside.

IN WITNESS WHEREOF, I have executed this Certificate on this 30th day of March 2023.

Rebecca Spencer
Registrar rs
By:

A inoco
Assistant Reg istrhr of Voters
2720 Gateway Drivel Riverside, CA 92507-0921
Mailing address: 2724 Gateway Drive 1 Riverside, CA 92507-0918 (951) 486-72001 FAX (951486-7M 1,gaji r1ia Relay Service (Dial 711) vv. V l o.

CITY OF BEAUMONT
CFD Public Hearing Report
MAY 2023
OPN

BEAUMONT
-CALIFORNIA-
anciarik
COMMUNITY FACILITIES DISTRICT NO. 2023-1
(FAIRWAY CANYON)

SPICER CONSULTING
GROUP

Table of Contents
Sections
1 Introduction 1
2 Description of Facilities 2
3 Cost Estimate 4
4 Proposed Development 6
5 Rate and Method of Apportionment 7
6 Certifications 9
Tables
3-1 Cost Estimate for Facilities — Special Tax A 4
3-1 Cost Estimate for Maintenance Services — Special Tax B 4 3-1 Cost Estimate for Maintenance Services — Special Tax C (Contingent) 5 3-1 Cost Estimate for Public Services — Special Tax D 5 Appendices
A Rate and Method of Apportionment for Improvement Area 1 B Rate and Method of Apportionment for Improvement Area 2 C Proposed Boundary Map
D Resolution of Intention

SPICER CONSULTING
GROUP

1 Introduction I 1
Background
On April 4, 2023, the City Council (the "City Council") of the City of Beaumont (the "City"), adopted a Resolution of Intention to form Community Facilities District No. 2023-1 (Fairway Canyon) Improvement Areas 1 and 2 of the City of Beaumont ("CFD No. 2023-1" or "District"), Resolution No. 2023-06, pursuant to the provisions of the "Mello -Roos Community Facilities Act of 1982", being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California, ("Act").

The District is currently comprised of 7 parcels and approximately 111 gross acres to include a total of 419 residential properties at buildout. There are two separate Improvement Areas included within the boundaries of CFD No. 2023-1.

Improvement Area 1 includes two separate Tax Zones, Tax Zones 1 (55 Lots) and 2 (77 Lots) inclusive of Tract Maps TR 31462-23 and TR 31462-26 to include a total of 132 proposed detached residential properties at build -out. Improvement Area 2 includes three separate Tax Zones, Tax Zones 1 (111 Lots), 2 (109 Lots), and 3 (67 Lots) inclusive of Tract Maps TR 31462-16, TR 31462-24, TR 31462-25, and TR 31462-20 to include a total of 287 proposed detached residential properties at build -out. The property is located in the northwestern part of the City, west of Cherry Valley Blvd, and north of San Timoteo Canyon Rd.

For a map showing the boundaries of CFD No. 2023-1 please see Appendix C.

Purpose of Public Hearing Report
WHEREAS, this Community Facilities District Report ("Report") is being provided to the City Council and generally contains the following:

1. A brief description of CFD No. 2023-1;

2. A brief description of the Facilities and Services required at the time of formation to meet the needs of CFD No. 2023-1.

3. A brief description of the Boundaries of CFD No. 2023-1; and

4. An estimate of the cost of financing the bonds used to pay for the Facilities, including all costs associated with formation of the District, issuance of bonds, costs to provide maintenance services, costs associated with public safety services, determination of the amount of any special taxes, collection of any special taxes, or costs otherwise incurred in order to carry out the authorized purposes of the City with respect to the District, and any other incidental expenses to be paid through the proposed financing.

For particulars, reference is made to the Resolution of Intention as previously approved and adopted and is included in Appendix D.

City of Beaumont
CFD No. 2023-1 (Fairway Canyon)
Public Hearing Report

SPICER CONSULTING
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2 Description of Facilities 12
NOW, THEREFORE, the undersigned, authorized representative of Spicer Consulting Group, LLC, the appointed responsible officer, or person directed to prepare this Report, does hereby submit the following data:

Types of Facilities
A Community Facilities District may pay for facilities which may include all amounts necessary to eliminate any fixed special assessment liens or to pay, repay, or defease any obligation to pay for any indebtedness secured by any tax, fee, charge, or assessment levied, provide for the purchase, construction, expansion, or rehabilitation for any real or other tangible property with an estimated useful life of five (5) years or longer, including all furnishings, equipment and supplies related thereto (collectively, the "Facilities") which is necessary to meet increased demands placed upon local agencies as a result of development and/or rehabilitation occurring within the District.

The types of facilities that are proposed by CFD No. 2023-1 and financed with the proceeds of special taxes and bonds issued by CFD No. 2023-1 consist of the construction, purchase, modification, rehabilitation, expansion and/or improvement of roadway, bridge, sewer, domestic and reclaimed water, dry utilities, storm drain, curb and gutter, medians, traffic signals and any other facilities permitted pursuant to the Act, parks, trails, police facilities, fire facilities, library facilities, public community facilities, and appurtenances and appurtenant work, and development impact fees that are used by the City to construct infrastructure including design, engineering and planning costs associated therewith. The Facilities include, but are not limited to:

PA 21 B Park Improvements
Sorenstam Road Improvement
Water Facilities of Beaumont Cherry Valley Water District Types of Maintenance Services
The types of Maintenance Services that are proposed to be provided by the Community Facilities District and funded with the proceeds of special taxes levied by the Community Facilities District consist of services permitted to be financed under the Act including, without limitation, street sweeping, traffic signal maintenance, the maintenance of 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. All of the Maintenance Services to be financed must be in addition to those provided within the boundaries of the Community Facilities District before the Community Facilities District is created, and shall not supplant services already available within that territory when the Community Facilities District is created.

Types of Public Services
The types of Public Services that are proposed to be provided by the Community Facilities District and funded with the proceeds of special taxes levied by the Community Facilities District consist of services permitted to be financed under the Act, including, without limitation, police and fire protection and ambulance and paramedic services. All of the Public Services to be financed must be in addition to those provided within the boundaries of the Community Facilities District before The Community Facilities District is created, and shall not supplant services already available within that territory when the Community Facilities District is created.

Types of Incidental Expenses
The Incidental Expenses to be paid from bond proceeds and/or special taxes include:
a) The cost of engineering, planning and designing the Facilities; and b) All costs, including costs of the property owner petitioning to form the District, associated with the creation of the District, the issuance of the bonds, the determination of the amount of special taxes to be levied and costs otherwise incurred in order to carry out the authorized purposes of the District; and c) Any other expenses incidental to the construction, acquisition, modification, rehabilitation, completion and inspection of the Facilities.

Capitalized terms used and not defined herein shall have the meaning set forth in the Rate and Method of Apportionment of Special Taxes for the District.

City of Beaumont
CFD No. 2023-1 (Fairway Canyon)
Public Hearing Report

SPICER CONSULTING
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2 Description of Facilities 1 3
All costs associated with the creation of CFD No. 2023-1, the issuance of bonds, the determination of the amount of special taxes to be levied, costs incurred in order to carry out the authorized purposes of CFD No. 2023-1, including legal fees, fees of consultants, engineering, planning, designing and the annual costs to administer CFD No. 2023-1 and any obligations.

The description of the eligible public facilities, services and incidental expenses above are preliminary and general in nature.

The final plans and specifications approved by the applicable public agency may show substitutes or modifications in order to accomplish the work or serve the new development and any such substitution or modification shall not constitute a change or modification in the proceedings relating to CFD No. 2023-1.

City of Beaumont
CFD No. 2023-1 (Fairway Canyon)
Public Hearing Report

SPICER CONSULTING
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3 Cost Estimate
I4
Below is the estimated cost of facilities to be provided to the District. a) The cost estimate of facilities, including incidental expenses, to be financed through the issuance of CFD No. 2023- 1 Bonds is estimated to be $1,990,000 for Improvement Area 1 and $6,895,000 for Improvement Area 2 based upon current dollars (Fiscal Year 2022-23).
b) For further particulars please reference Table 3-1 below and incorporated herein by reference. c) Pursuant to Section 53340 of the Act, the proceeds of any special tax levied and collected by CFD No. 2023-1 may be used only to pay for the cost of providing public facilities, services, and incidental expenses. As defined by the Act, incidental expenses include, but are not limited to, the annual costs associated with determination of the amount of special taxes, collection of special taxes, payment of special taxes, or costs otherwise incurred in order to carry out the authorized purposes of the District. The incidental expenses associated with the annual administration of CFD No. 2023-1 are estimated to be $30,000 per Improvement Area in the initial Fiscal Year. However, it is anticipated that the incidental expenses will vary due to inflation and other factors that may not be foreseen today, and the actual incidental expenses may exceed these amounts accordingly.

Table 3-1
Cost Estimate for Facilities — Special Tax A
City Facilities
Total Cost
IA 1
Bond Allocationo)
IA 2
Bond Allocationo)
Total
Allocation
Sorenstam Road Improvements
$2,706,083
$1,605,900
$1,100,183
$2,706,083
PA 21B Park Improvements
$5,621,764
$0
$4,999,342
$4,999,342
Total City Facilities
$8,327,847
, ,
$6,099,525
$7,705,425
Beaumont Cherry Valley Water District
Total Cost
IA 1
Bond Allocationo)
IA 2
Bond Allocationo)
Total
Allocation
Water Improvements
$3,365,413
$0
$0
$0
Total BCVWD Fees
$3,365,413
$0
$0
$0
Total Eligible Fees/Improvements
$11,693,260
$1,605,900
$6,099,525
$7,705,425
Incidental Financing Costs
$384,100
$795,475
$1,179,575
Total Funded by Bond Proceeds
$1,990,000
$6,895,000
$8,885,000
Total Funded by Developer
$3,987,835
(1) Amounts are allocated based upon estimated bond sizing and may change based upon market conditions at the time of bond issuance. Allocation of bond proceeds between facility types to be determined at the time of bond issuance.

Table 3-2
Cost Estimate for Maintenance Services — Special Tax B
111$em
Description
Estimated Cost
1 Streetlighting
$13,320
2 Street Maintenance
$60,997
3 Drainage
$14,650
4 Parks
$67,040
5 Graffiti
$1,432
6 Administration
$15,879
7 Reserves
$4,589
Total
$177,907
Table 3-3

City of Beaumont
CFD No. 2023-1 (Fairway Canyon)
Public Hearing Report

SPICER CONSULTING
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3 Cost Estimate
15 Table 3-3
Cost Estimate for Maintenance Services — Special Tax C (Contingent) Item
escription
Estimated Cost
1 Sidewalk
$30,657
2 Drainage
_ $59,672
3 Trails
$96
4 Administration
$4,656
5 Reserves
$9,042
Total
$104,123
Table 3-4
Cost Estimate for Public Services — Special Tax D
Item
Description
Estimated Cost
1 2
Police and Fire Services
$191,944
Administration
$21,327
Total
$213,271

City of Beaumont
CFD No. 2023-1 (Fairway Canyon)
Public Hearing Report

SPICER CONSULTING
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4 Proposed Development 16
The CFD No. 2023-1 includes approximately 111 gross acres to include a total of 419 residential properties at buildout.

There are two separate Improvement Areas included within the boundaries of CFD No. 2023-1. Improvement Area 1 includes two separate Tax Zones, Tax Zones 1 (55 Lots) and 2 (77 Lots) inclusive of Tract Maps TR 31462-23 and TR 31462-26 to include a total of 132 proposed detached residential properties at build -out. Improvement Area 2 includes three separate Tax Zones, Tax Zones 1 (111 Lots), 2 (109 Lots), and 3 (67 Lots) inclusive of Tract Maps TR 31462-16, TR 31462- 24, TR 31462-25, and TR 31462-20 to include a total of 287 proposed detached residential properties at build -out. The property is located west of Cherry Valley Blvd, and north of San Timoteo Canyon Rd.

As of Fiscal Year 2022-23 the proposed CFD No. 2023-1 includes the following Assessor's Parcel Numbers:

Assessor's Parcel
Number
413-790-067
413-790-068
413-790-069
413-790-070
413-790-071
413-790-072
413-790-073
A map showing the boundaries of CFD No. 2023-1 is included in Appendix C.

City of Beaumont
CFD No. 2023-1 (Fairway Canyon)
Public Hearing Report

SPICER CONSULTING
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5 Rate and Method of Apportionment PagF 1 7
The Rate and Method of Apportionment allows each property owner within CFD No. 2023-1 Improvement Area 1 and Improvement Area 2 to estimate the annual Special Tax amount that would be required for payment. The Rate and Method of Apportionment of the Special Taxes established pursuant to these proceedings, is attached hereto as Appendix A and Appendix B (the "Rate and Methods"). The Special Tax will be collected in the same manner and at the same time as ordinary ad valorem property taxes and shall be subject to the same penalties, the same procedure, sale and lien priority in the case of delinquency; provided, however, that the CFD Administrator may directly bill the Special Taxes, may collect Special Taxes at a different time or in a different manner if necessary to meet the financial obligations of CFD No. 2023-1, and provided further that CFD No. 2023-1 may covenant to foreclose and may actually foreclose on parcels having delinquent Special Taxes as permitted by the Act.

All of the property located within CFD No. 2023-1, unless exempted by law or by the Rate and Methods proposed for CFD No. 2023-1, shall be taxed for the purpose of providing necessary facilities and services to serve the District. The Boundary Map for CFD No. 2023-1 is attached hereto as Appendix C. Pursuant to Section 53325.3 of the Act, the tax imposed "is a Special Tax and not a special assessment, and there is no requirement that the tax be apportioned on the basis of benefit to any property." The Special Tax may be based on the benefit received by property, the cost of making facilities or authorized services available or other reasonable basis as determined by the City, although the Special Tax may not be apportioned on an ad valorem basis pursuant to Article XIIIA of the California Constitution. A property owner within the District may choose to prepay in whole or in part the Special Tax A. The available method for so doing is described in Section G of the Rate and Methods ("Prepayment of Special Tax").

For each year that any Bonds are outstanding the Special Tax A shall be levied on all parcels subject to Special Tax A. If any delinquent Special Tax A remains uncollected prior to or after all Bonds are retired, the Special Tax A may be levied to the extent necessary to reimburse CFD No. 2023-1 for uncollected Special Tax A associated with the levy of such Special Tax A, but the Special Tax A shall not be levied after 2063-64 Fiscal Year.

Special Tax B pays for certain costs as required to meet the needs of CFD No. 2023-1 for Maintenance Services. 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 CFD Administrator, and (iii) Administrative Expenses applicable to the Special Tax B, less (iv) a credit in an amount equal to the Operating Fund Balance. Under no circumstances shall the Special Tax B Requirement include funds for bonds.

On each July 1, commencing July 1, 2024, the Maximum Special Tax B for the prior Fiscal Year shall be adjusted by the greater of (i) an amount equal to the percentage change in the Consumer Price Index for the twelve-month period ending in January of the prior Fiscal Year or (ii) two percent (2%). The Special Tax B shall be levied in perpetuity to fund Special Tax B Requirement, unless no longer required as determined at the sole discretion of the City Council.

The City Council may levy the Special Tax C (Contingent), applicable to all Zones, commencing in the first Fiscal Year following the occurrence of any of the following events (each such event, a "Failure to Perform"):
a. the Property Owner Association files a voluntary petition in bankruptcy or the approval by a court of competent jurisdiction of a petition applicable to the Property Owner Association of any proceedings instituted under the Federal Bankruptcy Code, as amended;
b. the Property Owner Association is dissolved;
c. the Property Owner Association fails to levy annual assessments sufficient to fund (i) the maintenance for the then Property Owner Association owned and/or Property Owner Association maintained Maintenance Services (Contingent) or (ii) the replacement of such facilities related to the Maintenance Services (Contingent) in accordance with (A) the requirements of the then current reserve funding plan of the Property Owner Association performed pursuant to California Civil Code Section 5550 or (B) if California Civil Code 5550 is no longer applicable, the requirements of the then applicable law and/or regulations governing the Property Owner Association's requirements to budget for and finance such replacement; or

City of Beaumont
CFD No. 2023-1 (Fairway Canyon)
Public Hearing Report

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5 Rate and Method of Apportionment 1 8
d. the Property Owner Association fails to maintain the Maintenance Services (Contingent) at the same level as defined within the Property Owner Association maintenance specifications. In the event the Property Owner Association maintenance specifications do not meet either the City or County maintenance requirements, the City Council will have sole discretion to determine the required level of maintenance required for purposes of this section.

In the event of the occurrence of a Failure to Perform described in "c." or "d." above, the City shall give the Property Owner Association written notice of such event. If such Failure to Perform is reasonably capable of being cured within sixty (60) days from the date of such notice, the Property Owner Association shall have such period of time to cure such Failure to Perform prior to the levy by the City Council of Special Tax C (Contingent). If such Failure to Perform is such that it is reasonably capable of being cured, but not within such sixty (60) day period and the Property Owner Association (i) initiates corrective action within such sixty (60) day period, and (ii) diligently, continually, and in good faith works to effect a cure of such Failure to Perform as soon as possible, then the Property Owner Association shall have such additional time, as is reasonably necessary, to cure such Failure to Perform prior to the levy by the City Council of Special Tax C (Contingent).

The City Council may suspend the levy of Special Tax C (Contingent) if the Property Owner Association has cured the Failure to Perform to the satisfaction of the City Council and the Property Owner Association has agreed to such conditions as the City Council may find necessary to minimize the occurrence of such Failure to Perform in the future. In the event the City Council initiates the Special Tax C (Contingent), it will apply to all Assessor's Parcels of Taxable Property in addition to, and not in lieu of, the Special Tax B.

On each July 1, commencing July 1, 2024, the Maximum Special Tax C (Contingent) for the prior Fiscal Year shall be adjusted by the greater of (i) an amount equal to the percentage change in the Consumer Price Index for the twelve-month period ending in January of the prior Fiscal Year or (ii) two percent (2%). The Special Tax C (Contingent) shall be levied in perpetuity to fund the Special Tax C (Contingent) Requirement, unless no longer required as determined at the sole discretion of the City Council.

Special Tax D pays for certain costs as required to meet the needs of CFD No. 2023-1 for Public Services. The Public Services are the services permitted under the Act including, without limitation, police and fire protection, ambulance and paramedic services provided within the boundaries of CFD No. 2023-1 and the City. 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 CFD Administrator, and (iii) Administrative Expenses applicable to the Special Tax D, less (iv) a credit in an amount equal to the Operating Fund Balance. Under no circumstances shall the Special Tax D include funds for bonds.

On each July 1, commencing July 1, 2024, the Maximum Special Tax D for the prior Fiscal Year shall be adjusted by the greater of (i) an amount equal to the percentage change in the Consumer Price Index for the twelve-month period ending in January of the prior Fiscal Year or (ii) five percent (5%). The Special Tax D shall be levied in perpetuity to fund the Special Tax D Requirement, unless no longer required as determined at the sole discretion of the City Council.

For particulars as to the Rate and Methods for CFD No. 2023-1, see the attached and incorporated in Appendix A and B.

City of Beaumont
CFD No. 2023-1 (Fairway Canyon)
Public Hearing Report

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6 Certifications 1 9
Based on the information provided herein, it is my opinion that the described services herein are those that are necessary to meet increased demands placed upon the City of Beaumont as a result of development occurring within the CFD No. 2023-1 and benefits the lands within said CFD No. 2023-1. Further, it is my opinion that the special tax rates and method of apportionment, as set forth herein, are fair and equitable, uniformly applied and not discriminating or arbitrary.

Date: May 16, 2023 SPICER CONSULTING GROUP, LLC
HA `SPICER

SPECIAL TAX CONSULTANT FOR

CITY OF BEAUMONT

RIVERSIDE COUNTY

STATE OF CALIFORNIA

City of Beaumont
CFD No. 2023-1 (Fairway Canyon)
Public Hearing Report

SPICER CONSULTING
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APPENDIX A
Rate and Method of Apportionment
For Improvement Area 1

SPICER CONSULTING
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RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR
COMMUNITY FACILITIES DISTRICT NO. 2023-1 (FAIRWAY CANYON)

OF THE CITY OF BEAUMONT
IMPROVEMENT AREA NO. 1
Special Taxes (all capitalized terms are defined in Section A, "Definitions", below) shall be applicable to each Assessor's Parcel of Taxable Property located within the boundaries of Improvement Area No. 1 ("IA No. 1") of Community Facilities District No. 2023 1 (Fairway Canyon) of the City of Beaumont ("CFD No. 2023 1"). The amount of Special Taxes to be levied in each Fiscal Year on an Assessor's Parcel, shall be determined by the City Council of the City of Beaumont, acting in its capacity as the legislative body of CFD No. 2023 1 by applying the appropriate Special Tax for Developed Property, Final Map Property, Undeveloped Property, and Provisional Undeveloped Property that is not Exempt Property as set forth below. All of the real property, unless exempted by law or by the provisions hereof, shall be taxed to the extent and in the manner herein provided.

A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
"Accessory Dwelling Unit" means a residential unit of limited size including a smaller second unit that shares an Assessor's Parcel with a stand alone Dwelling Unit.
"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 Community Facilities Act of 1982, as amended, being Chapter 2.5 of Part 1, 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 IA No. 1: the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the City, 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, or any designee thereof complying with arbitrage rebate requirements; the costs to the City, CFD, or any designee thereof complying with City or major property owner 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; and the costs associated with the issuance of Bonds, the City's annual administration fees, and third party expenses. Administrative Expenses shall also include amounts estimated or advanced by the City or The CFD 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 the CFD and Improvement Area No.1. "Assessor's Parcel Map" means an official map of the Assessor of the County designating parcels by Assessor's Parcel Number.

City of Beaumont Page 433 of 1311
Improvement Area No. 1 of Community Facilities District No. 2023 1 (Fairway Canyon) Page 1

"Assigned Special Tax A" means the Special Tax of that name described in Section D below. "Backup Special Tax A" means the Special Tax of that name described in Section D 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 A of IA No. 1 have been pledged.
"Boundary Map" means a recorded map of the CFD which indicates the boundaries of the CFD and Improvement Area No. 1.
"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 A Requirement, the Special Tax B Requirement, the Special Tax C (Contingent) Requirement, the Special Tax D Requirement, and providing for the levy and collection of the Special Taxes. "CFD No. 2023-1" or "CFD" means City of Beaumont Community Facilities District No. 2023 1 (Fairway Canyon) 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. 2023 1, or its designee. "Consumer Price Index" or "CPI" means the Consumer Price Index published by the U.S. Bureau of Labor Statistics for "All Items for All Urban Consumers: in the Riverside San Bernardino Ontario area." In the event this index ceases to be published, the Consumer Price Index shall be another index as determined by the CFD Administrator that is reasonably comparable to the Consumer Price Index for the Riverside San Bernardino Ontario area.
"County" means the County of Riverside.
"Developed Property" means all Assessor's Parcels of Taxable Property that are included in a Final Map that was recorded prior to January 1st preceding the Fiscal Year in which the Special Tax is being levied and for which a Building Permit for new construction has been issued on or prior to March 1st preceding the Fiscal Year in which the Special Tax is being levied, as determined by the CFD Administrator. "Dwelling Unit" or "DU" means each separate residential dwelling unit that comprises an independent facility capable of conveyance or rental separate from adjacent residential dwelling units. The Building Square Footage of an Accessory Dwelling Unit shall be included when classifying the property for Special Tax A, but an Accessory City of Beaumont Page 434 of 1311
Improvement Area No. 1 of Community Facilities District No. 2023 1 (Fairway Canyon) Page 2

Dwelling Unit shall not be considered a Dwelling Unit for purposes of Special Tax B, Special Tax C (Contingent) or Special Tax D.
"Exempt Property" means all Assessor's Parcels designated as being exempt from Special Taxes as provided for in Section F, 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 4285 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 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. "Improvement Area No. 1" or "IA No. 1" means the property in the CFD designated as Improvement Area 1 on the Boundary Map.
"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 Table 1 and Table 2 of Section D, Table 4 of Section M, Table 6 of Section S, and Table 8 of Section Y. "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 of 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. 2023 1 and the City. "Maintenance Services (Contingent)" means the Maintenance Services described above and permitted under the Act, contained within CFD No. 2023 1 and the City, which are proposed to be maintained and paid for through the Property Owner Association, and all to which the City has been granted an easement allowing such maintenance in any Fiscal Year following a Failure to Perform as defined in Section Q hereof. "Maximum Special Tax" means the Maximum Special Tax A, the Maximum Special Tax B, the Maximum Special Tax C (Contingent), or the Maximum Special Tax D, as applicable. "Maximum Special Tax A" means the maximum Special Tax A, determined in accordance with Section D, which can be levied by IA No. 1 of CFD No. 2023 1.
"Maximum Special Tax B" means the maximum Special Tax B, determined in accordance with Section M, which can be levied by IA No. 1 of CFD No. 2023 1.
"Maximum Special Tax C (Contingent)" means the maximum Special Tax C (Contingent), determined in accordance with Section S, which can be levied by IA No. 1 of CFD No. 2023 1 following the Fiscal Year in which City of Beaumont Page 435 of 1311
Improvement Area No. 1 of Community Facilities District No. 2023 1 (Fairway Canyon) Page 3

there is a Failure to Perform as defined in Section Q hereof. The Maximum Special Tax C (Contingent), if levied, will be levied on all Assessor's Parcels in addition to, and not in lieu of, the Maximum Special Tax B. "Maximum Special Tax D" means the maximum Special Tax D, determined in accordance with Section Y, which can be levied by IA No. 1 of CFD No. 2023 1.
"Minimum Taxable Acreage" means the smallest allowable amount of Acreage of Taxable Property. For IA No. 1 of CFD No. 2023 1, it shall not be less than shown in Table 3 of Section F. "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 IA No. 1 of CFD No. 2023 1 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 Maintenance Services (Contingent)" means a fund that shall be maintained for IA No. 1 of CFD No. 2023 1 for any Fiscal Year to pay for the actual costs of providing the Maintenance Services (Contingent) and the Administrative Expenses attributable to providing such Maintenance Services (Contingent). "Operating Fund for Public Services" means a fund that shall be maintained for IA No. 1 of CFD No. 2023 1 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 A obligation for an Assessor's Parcel, as described in Section H.
"Prepayment Amount" means the amount required to prepay the Special Tax A obligation in full for an Assessor's Parcel, as described in Section G.
"Property Owner Association" means the Fairway Canyon Community Association, or its successors, which was formed for the purpose of marketing, selling, and managing the common interests of the homes and lots within IA No. 1 of CFD No. 2023 1.
"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 the Property Owner Association, including any master or sub association. "Proportionately" means for Taxable Property for Special Tax A that is (i) Developed Property, that the ratio of the actual Special Tax A levy to the Assigned Special Tax A is the same for all Assessor's Parcels of Developed Property, (ii) Final Map Property, that the ratio of the actual Special Tax A levy to the Maximum Special Tax A is the same for all Assessor's Parcels of Final Map Property, and (iii) Undeveloped Property and Provisional Undeveloped Property, that the ratio of the actual Special Tax A levy per Acre to the Maximum Special Tax A per Acre is the same for all Assessor's Parcels of Undeveloped Property and Provisional Undeveloped Property.

For Special Tax B that is (i) Developed Property, that the ratio of the actual Special Tax B levy to the Maximum Special Tax B is the same for all Assessor's Parcels of Developed Property, including Developed Property with City of Beaumont Page 436 of 1311
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attached Dwelling Units and (ii) Final Map Property, that the ratio of the actual Special Tax B levy to the Maximum Special Tax B is the same for all Assessor's Parcels of Final Map Property.

For Special Tax C (Contingent) that is (i) Developed Property, that the ratio of the actual Special Tax C (Contingent) levy to the Maximum Special Tax C (Contingent) is the same for all Assessor's Parcels of Developed Property, including Developed Property with attached Dwelling Units and (ii) Final Map Property, that the ratio of the actual Special Tax C (Contingent) levy to the Maximum Special Tax C (Contingent) is the same for all Assessor's Parcels of Final Map Property.

For Special Tax D, that the ratio of the actual Special Tax D levy to the Maximum Special Tax D is the same for all Assessor's Parcels of Developed Property, including Developed Property with attached Dwelling Units. "Provisional Undeveloped Property" means Public Property or Property Owner Association Property that is not Exempt Property pursuant to Section F.
"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. 2023 1 and the City. "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 A, the Special Tax B, the Special Tax C (Contingent), and the Special Tax D.
"Special Tax A" means any of the Special Taxes authorized to be levied within IA No. 1 of CFD No. 2023 1 pursuant to the Act to fund the Special Tax A Requirement. "Special Tax A Requirement" 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 applicable to the Special Tax A, (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 IA No. 1 of CFD No. 2023 1 provided that the inclusion of such amount does not cause an increase in the levy of Special Tax A 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.
"Special Tax B" means any of the Special Taxes authorized to be levied by IA No. 1 of CFD No. 2023 1 pursuant to the Act to fund the Special Tax B Requirement. Under no circumstances shall this Special Tax be eligible for prepayment of any kind.

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"Special Tax B Requirement" means the amount required in any Fiscal Year to pay for certain costs as required to meet the needs of CFD No. 2023 1 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 CFD Administrator, and (iii) Administrative Expenses applicable to the Special Tax B, less (iv) a credit in an amount equal to the Operating Fund Balance. Under no circumstances shall the Special Tax 6 Requirement include funds for bonds. "Special Tax C (Contingent)" means any of the Special Taxes authorized to be levied by IA No. 1 of CFD No. 2023 1 pursuant to the Act to fund the Special Tax C (Contingent) Requirement. Under no circumstances shall this Special Tax be eligible for prepayment of any kind. The Special Tax C (Contingent), if levied, will be levied on all Assessor's Parcels of Taxable Property in addition to, and not in lieu of, the Special Tax B. "Special Tax C (Contingent) Requirement" means that amount required in any Fiscal Year to pay for certain costs as required to meet the needs of CFD No. 2023 1 for Maintenance Services (Contingent) 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 (Contingent), (ii) amount necessary to fund an operating reserve for the costs of Maintenance Services (Contingent) as determined by the CFD Administrator, and (iii) Administrative Expenses applicable to the Special Tax C (Contingent), less (iv) a credit in an amount equal to the Operating Fund Balance. Under no circumstances shall the Special Tax C (Contingent) Requirement include funds for bonds. The Special Tax C (Contingent) Requirement, if initiated, will be applied to all Assessor's Parcels in addition to, and not in lieu of, the Special Tax B Requirement.
"Special Tax D" means any of the Special Taxes authorized to be levied by IA No. 1 of CFD No. 2023 1 pursuant to the Act to fund the Special Tax D Requirement. Under no circumstances shall this Special Tax be eligible for prepayment of any kind.
"Special Tax D Requirement" means the amount required in any Fiscal Year to pay for certain costs as required to meet the needs of CFD No. 2023 1 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 CFD Administrator, and (iii) Administrative Expenses applicable to the Special Tax D, less (iv) a credit in an amount equal to the Operating Fund Balance. Under no circumstances shall the Special Tax D Requirement include funds for bonds. "Taxable Property" means all Assessor's Parcels within IA No. 1 of CFD No. 2023 1, which are not Exempt Property, as determined by the CFD Administrator.
"Taxable Unit" means either a Dwelling Unit or an Acre. "Trustee" means the firm that holds and administers assets on behalf of IA No. 1 of CFD No. 2023 1 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. "Zone(s)" means Zone 1 or 2 as geographically identified on the Boundary Map. "Zone 1" means the specific geographic area depicted as Improvement Area No. 1, Zone 1 on the Boundary Map. "Zone 2" means the specific geographic area depicted as Improvement Area No. 1, Zone 2 on the Boundary Map.

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B. SPECIAL TAX A
Commencing Fiscal Year 2023 2024 and for each subsequent Fiscal Year, the City Council shall levy Special Tax A on all Taxable Property pursuant to Section E, to fund the Special Tax A Requirement.

C. CLASSIFICATION OF ASSESSOR'S PARCELS
Each Fiscal Year, beginning with Fiscal Year 2023 2024, each Assessor's Parcel shall be classified as Taxable Property or Exempt Property. In addition, each Assessor's Parcel of Taxable Property shall be assigned to one of the Zones based upon its geographic location and further classified as Developed Property, Final Map Property, Undeveloped Property, or Provisional Undeveloped Property. In addition, each Assessor's Parcel of Developed Property shall further be classified as Residential Property or Non Residential Property. Lastly, Assessor's Parcels of Residential Property shall be further categorized into Land Use Categories based on the Building Square Footage for such Assessor's Parcel.

D. MAXIMUM SPECIAL TAX A

1. Developed Property
The Maximum Special Tax A 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 A in Tables 1 and 2 included in Section D below or (ii) the application of the Backup Special Tax A. The Maximum Special Tax A 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 A in the tables below.
a. Assigned Special Tax A
Each Fiscal Year, beginning with Fiscal Year 2023 2024, each Assessor's Parcel of Developed Property shall be subject to an Assigned Special Tax A. The Assigned Special Tax A applicable to an Assessor's Parcel of Developed Property for any Fiscal Year shall be determined pursuant to Tables 1 and 2 below based upon the Zone in which the Assessor's Parcel is located.

TABLE 1

ASSIGNED SPECIAL TAX A RATES
FOR DEVELOPED PROPERTY WITHIN ZONE 1
Land Use Category
Taxable
Unit
Building Square
Footage
Assigned Special Tax A
Per Taxable Unit

1. Residential Property
DU
Less than 2,100
$1,328

2. Residential Property
DU
2,100-2,400
$1,376

3. Residential Property
DU
Greater than 2,400
$1,414

4. Non Residential Property
Acre
N/A
$8,204
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TABLE 2

ASSIGNED SPECIAL TAX A RATES
FOR DEVELOPED PROPERTY WITHIN ZONE 2
Land Use Category
Taxable
Unit
Building Square
Footage
Assigned Special Tax A
Per Taxable Unit

1. Residential Property
DU
Less than 1,600
$1,106

2. Residential Property
DU
1,600 —1,800
$1,215

3. Residential Property
DU
1,801— 2,000
$1,325

4. Residential Property
DU
Greater than 2,000
$1,414

5. Non Residential Property
Acre
N/A
$8,456
b. Backup Special Tax A
When a Final Map is recorded, the CFD Administrator shall determine which Zone the Final Map area lies within and the Backup Special Tax A for an Assessor's Parcel classified or to be classified as Residential Property within such Final Map shall be determined by multiplying the Undeveloped Property Maximum Special Tax A rate per Acre for the applicable Zone by the total Acreage of Taxable Property within such Final Map, excluding the Acreage associated with Non Residential Property, Public Property and/or Property Owners' Association Property that is not Exempt Property pursuant to Section F and dividing such amount by the number of Assessor's Parcels within such Final Map classified as either (i) Residential Property or (ii) Final Map Property for which a Building Permit is expected to be issued for Residential Property (i.e., the number of residential lots).

Notwithstanding the forgoing, if Assessor's Parcels 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 shall be recalculated for the area that has been changed or modified using the methodology described in the preceding paragraph.

The Backup Special Tax shall not apply to Non Residential Property, Public Property, Property Owners' Association Property, or Provisional Undeveloped Property.

2. Final Map Property
The Maximum Special Tax A for each Assessor's Parcel of Final Map Property expected to be classified as Residential Property shall be the Backup Special Tax A computed pursuant to Section D.1.b above.

The Maximum Special Tax A for each Assessor's Parcel of Final Map Property expected to be classified as Non Residential Property shall be determined pursuant to the rate per Acre below for the Zone in which the Assessor's Parcel is located:

1. Zone 1 rate per Acre $8,204

2. Zone 2 rate per Acre $8,456
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3. Undeveloped Property and/or Provisional Undeveloped Property The Maximum Special Tax A for each Assessor's Parcel classified as Undeveloped Property or Provisional Undeveloped Property shall be determined pursuant to the rate per Acre below for the Zone in which the Assessor's Parcel is located:

1. Zone 1 rate per Acre $8,204

2. Zone 2 rate per Acre $8,456
E. METHOD OF APPORTIONMENT OF THE SPECIAL TAX A

1. Commencing with Fiscal Year 2023 2024 and for each subsequent Fiscal Year, the City Council shall levy Special Taxes A on all Taxable Property until the amount of Special Tax A equals the Special Tax A Requirement in accordance with the following steps:

Step One:

Step Two:

Step Three:

Step Four:

Step Five:

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

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

If additional moneys are needed to satisfy the Special Tax A Requirement after the first two steps have been completed, the Special Tax A shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property, at up to 100% of the Maximum Special Tax A applicable to each such Assessor's Parcel as needed to satisfy the Special Tax A Requirement.

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

If additional moneys are needed to satisfy the Special Tax A Requirement after the first four steps have been completed, the Special Tax A shall be levied Proportionately on each Assessor's Parcel of Provisional Undeveloped Property, at up to 100% of the Maximum Special Tax A applicable to each such Assessor's Parcel as needed to satisfy the Special Tax A Requirement.

Under no circumstances will Special Tax A be 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 A 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. 2023 1.

F. EXEMPTIONS
The City shall classify as Exempt Property, in the following order of priority, (i) Assessor's Parcels which are owned by, irrevocably offered for dedication, encumbered by or restricted in use by the State of California, City of Beaumont Page 441 of 1311
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Federal or other local governments, including school districts, (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 which are owned by, irrevocably offered for dedication, encumbered by or restricted in use by a homeowners' association, (iv) Assessor's Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement, (v) Assessor's Parcels which are privately owned and are encumbered by or restricted solely for public uses, or (vi) Assessor's Parcels restricted to other types of public uses determined by the City Council, provided that no such classification would reduce the total Acreage of all Taxable Property to less than the amounts shown in Table 3 below.

TABLE 3

MINIMUM TAXABLE ACRES
Tax Zone
Acres
1 9.20
2 11.69
Notwithstanding the above, the City Council shall not classify an Assessor's Parcel as Exempt Property if such classification would reduce the total Acreage of all Taxable Property to less than the Acres shown in Table 3 per Tax Zone. Assessor's Parcels which cannot be classified as Exempt Property because such classification would reduce the Acreage of all Taxable Property to less than the Acres shown in Table 3 per Tax Zone will be classified as Provisional Undeveloped Property, and will be subject to Special Tax pursuant to Step Five in Section E.

G. PREPAYMENT OF SPECIAL TAX A
The following additional definitions apply to this Section G:
"CFD Public Facilities" means $2,500,000, expressed in 2023 dollars, which shall increase by the Construction Inflation Index on January 1, 2024, and on each January 1 thereafter, or such lower amount as (i) determined by the City as sufficient to provide the public facilities under the authorized bonding program for CFD No. 2023 1, 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 IA No. 1 of CFD No. 2023 1.
"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 A 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 A.

The Special Tax A obligation of an Assessor's Parcel of Developed Property, an Assessor's Parcel of Final Map Property, Undeveloped Property for which a building permit has been issued, or an Assessor's Parcel of Undeveloped Property 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 A 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 A obligation shall provide the City with written notice of intent to prepay, and within five (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 IA No. 1 of CFD No. 2023 1 in calculating the proper Prepayment Amount. Within fifteen (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 A and the Backup Special Tax A applicable to the Assessor's Parcel. For Assessor's Parcels of Final Map Property or Undeveloped Property, compute the Assigned Special Tax A and the Backup Special Tax A as though it was already designated as Developed Property based upon the building permit issued or to be issued 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 A computed pursuant to paragraph 1 for such Assessor's Parcel by the sum of the estimated Assigned Special Tax A applicable to all Assessor's Parcels of Taxable Property at buildout of IA No. 1, as reasonably determined by the CFD Administrator, and (b) divide the Backup Special Tax A computed pursuant to paragraph 1 for such Assessor's Parcel by the sum of the estimated Backup Special Tax A applicable to all Assessor's Parcels of Taxable Property at buildout of IA No. 1, 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"). Notwithstanding the foregoing, the Future Facilities Amount shall in no event be less than 0.

7. Compute the amount needed to pay interest on the Bond Redemption Amount, the Redemption Premium, less 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 A obligation that is prepaid pursuant to this Section G, the City Council shall indicate in the records of IA No. 1 of CFD No. 2023 1 that there has been a prepayment of the Special Tax A 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 A obligation and the release of the Special Tax A lien on such Assessor's Parcel and the obligation of such Assessor's Parcel to pay such Special Taxes A shall cease.

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Notwithstanding the foregoing, no prepayment will be allowed unless the amount of Special Tax A 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.

H. PARTIAL PREPAYMENT OF SPECIAL TAX A
The Special Tax A 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 A obligation would be prepaid.

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

PP = PH x F
The terms above have the following meanings:

PP = the Partial Prepayment Amount.

PH = 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 A obligation.

With respect to any Assessor's Parcel that is partially prepaid, the City Council shall indicate in the record of IA No. 1 of CFD No. 2023 1 that there has been a partial prepayment of the Special Tax A 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 A obligation, to indicate the partial prepayment of the Special Tax A obligation and the partial release of the Special Tax A lien on such Assessor's Parcel, and the obligation of the owner of such Assessor's Parcel to pay such prepaid portion of the Special Tax A shall cease.

Notwithstanding the foregoing, no partial prepayment will be allowed unless the amount of Special Tax A 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.

I. TERMINATION OF SPECIAL TAX A
For each Fiscal Year that any Bonds are outstanding the Special Tax A shall be levied on all Assessor's Parcels subject to the Special Tax A as necessary to satisfy the Special Tax A Requirement. The Special Tax A shall cease not later than the 2063 2064 Fiscal Year, however, Special Tax A will cease to be levied in an earlier Fiscal Year if the CFD Administrator has determined (i) that all required interest and principal payments on the IA No. 1 Bonds have been paid; (ii) all authorized facilities of IA No. 1 have been acquired and all reimbursements have been paid pursuant to the acquisition agreement related to IA No. 1, (iii) no delinquent Special Tax A remain uncollected and (iv) all other obligations of IA No. 1 Special Tax A have been satisfied.

J. MANNER OF COLLECTION
The Special Tax A shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that IA No. 1 may collect Special Tax A at a different time or in a different manner if City of Beaumont Page 445 of 1311
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necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on delinquent Assessor's Parcels as permitted by the Act.

K. SPECIAL TAX B
Commencing Fiscal Year 2023 2024 and for each subsequent Fiscal Year, the City Council shall levy Special Tax B on Taxable Property pursuant to Section N, up to the applicable Maximum Special Tax B to fund the Special Tax B Requirement.

L. ASSIGNMENT TO LAND USE CATEGORY FOR SPECIAL TAX B
For each Fiscal Year, all Assessor's Parcels of Taxable Property within IA No. 1 shall be classified as Developed Property or Final Map Property and shall be subject to the levy of Special Tax B as determined pursuant to Sections M and N below for all Zones. Assessor's Parcels of Developed Property and Final Map Property shall be classified as either Residential Property or Non Residential Property. For Residential Property with attached Dwelling Units, the number of Dwelling Units shall be determined by the CFD Administrator.

Undeveloped Property shall not be subject to Maximum Special Tax B.

M. MAXIMUM SPECIAL TAX B
For purposes of determining the applicable Maximum Special Tax B for Assessor's Parcels of Developed Property which are classified as Residential Property all such Assessor's Parcels shall be assigned the number of Dwelling Unit(s) constructed thereon, or approved to be constructed thereon, as specified in or shown on the Building Permit(s) issued or Final Map as determined by the CFD Administrator. If a single family attached building or buildings have been built on an Assessor's Parcel, the CFD Administrator shall determine the actual number of Dwelling Units contained within the building or buildings, and the Special Tax B levied against the Assessor's Parcel in the next Fiscal Year shall be calculated by multiplying the actual number of Dwelling Units by the Maximum Special Tax B per Dwelling Unit.

For purposes of determining the applicable Maximum Special Tax B for Assessor's Parcels of Developed Property and Final Map Property which are classified as Non Residential Property, all such Assessor's Parcels shall be assigned the number of Acres as shown on the Final Map as determined by the CFD Administrator. Once the CFD Administrator determines the actual number of Acres for an Assessor's Parcel, the Special Tax B levied against the Assessor's Parcel in the next Fiscal Year shall be calculated by multiplying the number of Acres by the Maximum Special Tax B per Acre.

1. Developed Property
a. Maximum Special Tax B
The Maximum Special Tax B for each Assessor's Parcel of Taxable Property for Fiscal Year 2023 2024 is identified in Table 4 below:

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TABLE 4

MAXIMUM SPECIAL TAX B FOR DEVELOPED PROPERTY
Land Use Category
Taxable
Unit
Maximum Special Tax B
Per Taxable Unit

1. Residential Property
DU
$425

2. Non Residential Property
Acre
$2,544
On each July 1, commencing July 1, 2024, the Maximum Special Tax B for the prior Fiscal Year shall be adjusted by the greater of (i) an amount equal to the percentage change in the Consumer Price Index for the twelve month period ending in January of the prior Fiscal Year or (ii) two percent (2%). b. Multiple Land Use Categories
In some instances an Assessor's Parcel of Developed Property may contain more than one Land Use Category. The Maximum Special Tax B that can be levied on an Assessor's Parcel shall be the sum of the Maximum Special Tax B that can be levied for each Land Use Category located on that Assessor's Parcel. For an Assessor's Parcel that contains more than one land use, the Acreage of such Assessor's Parcel shall be allocated to each type of property based on the amount of Acreage designated for each land use as determined by reference to the site plan approved by the City for such Assessor's Parcel. The CFD Administrator's allocation to each type of property shall be final.

2. Final Map Property
The Maximum Special Tax B for each Assessor's Parcel of Final Map Property for Fiscal Year 2023 2024 is identified in Table 5 below:

TABLE 5

MAXIMUM SPECIAL TAX B RATES

FOR FINAL MAP PROPERTY
Maximum Special Tax B
Per Assessor's Parcel
$425
On each July 1, commencing July 1, 2024, the Maximum Special Tax B for the prior Fiscal Year shall be adjusted by the greater of (i) an amount equal to the percentage change in the Consumer Price Index for the twelve month period ending in January of the prior Fiscal Year or (ii) two percent (2%).

N. METHOD OF APPORTIONMENT OF ANNUAL SPECIAL TAX B
Commencing with Fiscal Year 2023 2024 and for each subsequent Fiscal Year, the City Council shall levy Special Tax B on Taxable Property until the amount of Special Tax B equals the Special Tax B Requirement in accordance with the following steps:

Step One:

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

Step Two: If additional moneys are needed to satisfy the Special Tax B Requirement after the first step has been completed, the Special Tax B shall be levied Proportionately on each Assessor's Parcel of City of Beaumont Page 447 of 1311
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Final Map Property, at up to 100% of the Maximum Special Tax B applicable to each such Assessor's Parcel as needed to satisfy the Special Tax B Requirement.

O. DURATION OF SPECIAL TAX B
The Special Tax B shall be levied in perpetuity to fund the Special Tax B Requirement, unless no longer required as determined at the sole discretion of the City Council.

P. MANNER OF COLLECTION
The Special Tax B shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that IA No. 1 may collect the Special Tax B at a different time or in a different manner if necessary to meet its funding requirements.

Q. SPECIAL TAX C (CONTINGENT)
The City Council may levy the Special Tax C (Contingent), applicable to all Zones, commencing in the first Fiscal Year following the occurrence of any of the following events (each such event, a "Failure to Perform"):
a. the Property Owner Association files a voluntary petition in bankruptcy or the approval by a court of competent jurisdiction of a petition applicable to the Property Owner Association of any proceedings instituted under the Federal Bankruptcy Code, as amended; b. the Property Owner Association is dissolved;
c. the Property Owner Association fails to levy annual assessments sufficient to fund (i) the maintenance for the then Property Owner Association owned and/or Property Owner Association maintained Maintenance Services (Contingent) or (ii) the replacement of such facilities related to the Maintenance Services (Contingent) in accordance with (A) the requirements of the then current reserve funding plan of the Property Owner Association performed pursuant to California Civil Code Section 5550 or (B) if California Civil Code 5550 is no longer applicable, the requirements of the then applicable law and/or regulations governing the Property Owner Association's requirements to budget for and finance such replacement; or
d. the Property Owner Association fails to maintain the Maintenance Services (Contingent) at the same level as defined within the Property Owner Association maintenance specifications. In the event the Property Owner Association maintenance specifications do not meet either the City or County maintenance requirements, the City Council will have sole discretion to determine the required level of maintenance required for purposes of this section.

In the event of the occurrence of a Failure to Perform described in "c." or "d." above, the City shall give the Property Owner Association written notice of such event. If such Failure to Perform is reasonably capable of being cured within sixty (60) days from the date of such notice, the Property Owner Association shall have such period of time to cure such Failure to Perform prior to the levy by the City Council of Special Tax C (Contingent).

If such Failure to Perform is such that it is reasonably capable of being cured, but not within such sixty (60) day period and the Property Owner Association (i) initiates corrective action within such sixty (60) day period, and (ii) diligently, continually, and in good faith works to effect a cure of such Failure to Perform as soon as possible, then the Property Owner Association shall have such additional time, as is reasonably necessary, to cure such Failure to Perform prior to the levy by the City Council of Special Tax C (Contingent).

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The City Council may suspend the levy of Special Tax C (Contingent) if the Property Owner Association has cured the Failure to Perform to the satisfaction of the City Council and the Property Owner Association has agreed to such conditions as the City Council may find necessary to minimize the occurrence of such Failure to Perform in the future. In the event the City Council initiates the Special Tax C (Contingent), it will apply to all Assessor's Parcels of Taxable Property in addition to, and not in lieu of, the Special Tax B.

R. ASSIGNMENT TO LAND USE CATEGORY FOR SPECIAL TAX C (CONTINGENT) For each Fiscal Year that Special Tax C (Contingent) is authorized to be levied, all Assessor's Parcels classified as Developed Property or Final Map Property and shall be subject to the levy of Special Tax C as determined pursuant to Sections S and T below for all Zones. Assessor's Parcels of Developed Property and Final Map Property shall be classified as either Residential Property or Non Residential Property. For Residential Property the number of Dwelling Units shall be determined by the CFD Administrator.

Undeveloped Property shall not be subject to Maximum Special Tax C (Contingent).

S. MAXIMUM SPECIAL TAX C (CONTINGENT)
For purposes of determining the applicable Maximum Special Tax C (Contingent) for Assessor's Parcels of Developed Property which are classified as Residential Property, all such Assessor's Parcels shall be assigned the number of Dwelling Unit(s) constructed thereon, or approved to be constructed thereon, as specified in or shown on the Building Permits) issued or Final Map as determined by the CFD Administrator. If a single family attached building or buildings have been built on an Assessor's Parcel, the CFD Administrator shall determine the actual number of Dwelling Units contained within the building or buildings, and the Special Tax C (Contingent) levied against the Assessor's Parcel in the next Fiscal Year shall be calculated by multiplying the actual number of Residential Units by the Maximum Special Tax C (Contingent) per Dwelling Unit identified for the Assessor's Parcel.

For purposes of determining the applicable Maximum Special Tax C (Contingent) for Assessor's Parcels of Developed Property and Final Map Property which are classified as Non Residential Property, all such Assessor's Parcels shall be assigned the number of Acres as shown on the Final Map as determined by the CFD Administrator. Once the CFD Administrator determines the actual number of Acres for an Assessor's Parcel, the Special Tax C (Contingent) levied against an Assessor's Parcel in the next Fiscal Year shall be calculated by multiplying the number of Acres by the Maximum Special Tax C (Contingent) per Acre.

1. Developed Property
a. Maximum Special Tax C (Contingent)
The Maximum Special Tax C (Contingent) for each Assessor's Parcel of Taxable Property for Fiscal Year 2023 2024 is identified in Table 6 below for all Zones:

TABLE 6

MAXIMUM SPECIAL TAX C (CONTINGENT) FOR DEVELOPED PROPERTY Land Use Category
Taxable
Unit
Maximum Special Tax C (Contingent)
Per Taxable Unit

1. Residential Property
DU
$249

2. Non Residential Property
Acre
$1,487
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On each July 1, commencing July 1, 2024, the Maximum Special Tax C (Contingent) for the prior Fiscal Year shall be adjusted by the greater of (i) an amount equal to the percentage change in the Consumer Price Index for the twelve month period ending in January of the prior Fiscal Year or (ii) two percent (2%). b. Multiple Land Use Categories
In some instances an Assessor's Parcel of Developed Property may contain more than one Land Use Category. The Maximum Special Tax C (Contingent) that can be levied on an Assessor's Parcel shall be the sum of the Maximum Special Tax C (Contingent) that can be levied for each Land Use Category located on that Assessor's Parcel. For an Assessor's Parcel that contains more than one land use, the Acreage of such Assessor's Parcel shall be allocated to each type of property based on the amount of Acreage designated for each land use as determined by reference to the site plan approved for such Assessor's Parcel. The CFD Administrator's allocation to each type of property shall be final.

2. Final Map Property
The Maximum Special Tax C (Contingent) for each Assessor's Parcel of Final Map Property for Fiscal Year 2023 2024 is identified in Table 7 below:

TABLE 7

MAXIMUM SPECIAL TAX C (CONTINGENT) FOR

FINAL MAP PROPERTY
Maximum Special Tax C
(Contingent)
Per Assessor's Parcel
$249
On each July 1, commencing July 1, 2024, the Maximum Special Tax C (Contingent) for the prior Fiscal Year shall be adjusted by the greater of (i) an amount equal to the percentage change in the Consumer Price Index for the twelve month period ending in January of the prior Fiscal Year or (ii) two percent (2%).

T. METHOD OF APPORTIONMENT OF ANNUAL SPECIAL TAX C (CONTINGENT) Commencing with the first Fiscal Year in which Special Tax C (Contingent) is authorized to be levied and for each following Fiscal Year, the Council shall determine the Special Tax C (Contingent) Requirement and shall levy the Special Tax C (Contingent) on all Assessor's Parcels of Taxable Property until the aggregate amount of Special Tax C (Contingent) equals the Special Tax C (Contingent) Requirement. The Special Tax C (Contingent) shall be levied for each Fiscal Year as follows:

Step One:

Step Two:

The Special Tax C (Contingent) shall be levied Proportionately on all Assessor's Parcels of Developed Property at up to 100% of the applicable Maximum Special Tax C (Contingent) to satisfy the Special Tax C (Contingent) Requirement;
If additional moneys are needed to satisfy the Special Tax C (Contingent) Requirement after the first step has been completed, the Special Tax C (Contingent) shall be levied Proportionately on each Assessor's Parcel of Final Map Property at up to 100% of the Maximum Special Tax C (Contingent) for Final Map Property.

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U. DURATION OF SPECIAL TAX C (CONTINGENT)
The Special Tax C (Contingent) shall be levied in perpetuity to fund the Special Tax C (Contingent) Requirement, unless no longer required as determined at the sole discretion of the City Council.

V. MANNER OF COLLECTION OF SPECIAL TAX C (CONTINGENT)
The Special Tax C (Contingent) shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that IA No. 1 may collect the Special Tax C (Contingent) at a different time or in a different manner if necessary to meet its funding requirements.

W. SPECIAL TAX D
Commencing Fiscal Year 2023 2024 and for each subsequent Fiscal Year, the City Council shall levy Special Tax D on all Taxable Property, up to the applicable Maximum Special Tax D to fund the Special Tax D Requirement.

X. ASSIGNMENT TO LAND USE CATEGORY FOR SPECIAL TAX D
For each Fiscal Year, all Assessor's Parcels of Taxable Property within IA No. 1 classified as Residential Property shall be subject to the levy of Special Tax D as determined pursuant to Sections Y and Z below for all Zones. For Residential Property with attached Dwelling Units, the number of Dwelling Units shall be determined by the CFD Administrator.

Final Map Property, Non Residential Property, and Undeveloped Property shall not be subject to Maximum Special Tax D.

Y. MAXIMUM SPECIAL TAX D

1. Developed Property
a. Maximum Special Tax D
The Maximum Special Tax D for each Assessor's Parcel of Residential Property for Fiscal Year 2023 2024 is identified in Table 8 below:

TABLE 8

MAXIMUM SPECIAL TAX D FOR RESIDENTIAL PROPERTY
Land Use Category
Taxable
Unit
Maximum Special Tax B
Per Taxable Unit

1. Residential Property
DU
$509
On each July 1, commencing July 1, 2023, the Maximum Special Tax D for the prior Fiscal Year shall be adjusted by the greater of (i) an amount equal to the percentage change in the Consumer Price Index for the twelve month period ending in January of the prior Fiscal Year or (ii) five percent (5%).

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Z. METHOD OF APPORTIONMENT OF ANNUAL SPECIAL TAX D
Commencing with Fiscal Year 2023 2024 and for each subsequent Fiscal Year, the City Council shall levy Special Tax D until the amount of Special Tax D equals the Special Tax D Requirement in accordance with the following steps:

Step One:

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

AA. DURATION OF SPECIAL TAX D
The Special Tax D shall be levied in perpetuity to fund the Special Tax D Requirement, unless no longer required as determined at the sole discretion of the City Council.

BB. MANNER OF COLLECTION
The Special Tax D shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that IA No. 1 may collect the Special Tax D at a different time or in a different manner if necessary to meet its funding requirements.

CC. 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 available funds of IA No. 1 of CFD No. 2023 1; or
(iii) grant a credit against, eliminate or reduce the future Special Taxes levied on the taxpayer's property within IA No. 1 of CFD No. 2023 1 in the amount of the overpayment.

DD. 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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APPENDIX B
Rate and Method of Apportionment
For Improvement Area 2

SPICER CONSULTING
GROUP

RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR
COMMUNITY FACILITIES DISTRICT NO. 2023-1 (FAIRWAY CANYON)

OF THE CITY OF BEAUMONT
IMPROVEMENT AREA NO. 2
Special Taxes (all capitalized terms are defined in Section A, "Definitions", below) shall be applicable to each Assessor's Parcel of Taxable Property located within the boundaries of Improvement Area No. 2 ("IA No. 2") of Community Facilities District No. 2023 1 (Fairway Canyon) of the City of Beaumont ("CFD No. 2023 1"). The amount of Special Taxes to be levied in each Fiscal Year on an Assessor's Parcel, shall be determined by the City Council of the City of Beaumont, acting in its capacity as the legislative body of CFD No. 2023 1 by applying the appropriate Special Tax for Developed Property, Final Map Property, Undeveloped Property, and Provisional Undeveloped Property that is not Exempt Property as set forth below. All of the real property, unless exempted by law or by the provisions hereof, shall be taxed to the extent and in the manner herein provided.

A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
"Accessory Dwelling Unit" means a residential unit of limited size including a smaller second unit that shares an Assessor's Parcel with a stand alone Dwelling Unit.
"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 Community Facilities Act of 1982, as amended, being Chapter 2.5 of Part 1, 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 IA No. 2: the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the City, 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, or any designee thereof complying with arbitrage rebate requirements; the costs to the City, CFD, or any designee thereof complying with City or major property owner 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; and the costs associated with the issuance of Bonds, the City's annual administration fees, and third party expenses. Administrative Expenses shall also include amounts estimated or advanced by the City or The CFD 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 the CFD and Improvement Area No.1. "Assessor's Parcel Map" means an official map of the Assessor of the County designating parcels by Assessor's Parcel Number.

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"Assigned Special Tax A" means the Special Tax of that name described in Section D below. "Backup Special Tax A" means the Special Tax of that name described in Section D 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 A of IA No. 2 have been pledged.
"Boundary Map" means a recorded map of the CFD which indicates the boundaries of the CFD and Improvement Area No. 2.
"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 A Requirement, the Special Tax B Requirement, the Special Tax C (Contingent) Requirement, the Special Tax D Requirement, and providing for the levy and collection of the Special Taxes. "CFD No. 2023-1" or "CFD" means City of Beaumont Community Facilities District No. 2023 1 (Fairway Canyon) 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. 2023 1, or its designee. "Consumer Price Index" or "CPI" means the Consumer Price Index published by the U.S. Bureau of Labor Statistics for "All Items for All Urban Consumers: in the Riverside San Bernardino Ontario area." In the event this index ceases to be published, the Consumer Price Index shall be another index as determined by the CFD Administrator that is reasonably comparable to the Consumer Price Index for the Riverside San Bernardino Ontario area.
"County" means the County of Riverside.
"Developed Property" means all Assessor's Parcels of Taxable Property that are included in a Final Map that was recorded prior to January 1st preceding the Fiscal Year in which the Special Tax is being levied and for which a Building Permit for new construction has been issued on or prior to March 1st preceding the Fiscal Year in which the Special Tax is being levied, as determined by the CFD Administrator. "Dwelling Unit" or "DU" means each separate residential dwelling unit that comprises an independent facility capable of conveyance or rental separate from adjacent residential dwelling units. The Building Square Footage of an Accessory Dwelling Unit shall be included when classifying the property for Special Tax A, but an Accessory City of Beaumont Page 455 of 1311
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Dwelling Unit shall not be considered a Dwelling Unit for purposes of Special Tax B, Special Tax C (Contingent) or Special Tax D.
"Exempt Property" means all Assessor's Parcels designated as being exempt from Special Taxes as provided for in Section F, 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 4285 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 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. "Improvement Area No. 2" or "IA No. 2" means the property in the CFD designated as Improvement Area 1 on the Boundary Map.
"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 Table 1, Table 2, and Table 3 of Section D, Table 5 of Section M, Table 7 of Section S, and Table 9 of Section Y. "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 of 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. 2023 1 and the City. "Maintenance Services (Contingent)" means the Maintenance Services described above and permitted under the Act, contained within CFD No. 2023 1 and the City, which are proposed to be maintained and paid for through the Property Owner Association, and all to which the City has been granted an easement allowing such maintenance in any Fiscal Year following a Failure to Perform as defined in Section Q hereof. "Maximum Special Tax" means the Maximum Special Tax A, the Maximum Special Tax B, the Maximum Special Tax C (Contingent), or the Maximum Special Tax D, as applicable. "Maximum Special Tax A" means the maximum Special Tax A, determined in accordance with Section D, which can be levied by IA No. 2 of CFD No. 2023 1.
"Maximum Special Tax B" means the maximum Special Tax B, determined in accordance with Section M, which can be levied by IA No. 2 of CFD No. 2023 1.
"Maximum Special Tax C (Contingent)" means the maximum Special Tax C (Contingent), determined in accordance with Section S, which can be levied by IA No. 2 of CFD No. 2023 1 following the Fiscal Year in which City of Beaumont Page 456 of 1311
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there is a Failure to Perform as defined in Section Q hereof. The Maximum Special Tax C (Contingent), if levied, will be levied on all Assessor's Parcels in addition to, and not in lieu of, the Maximum Special Tax B. "Maximum Special Tax D" means the maximum Special Tax D, determined in accordance with Section Y, which can be levied by IA No. 2 of CFD No. 2023 1.
"Minimum Taxable Acreage" means the smallest allowable amount of Acreage of Taxable Property. For IA No. 2 of CFD No. 2023 1, it shall not be less than shown in Table 4 of Section F. "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 IA No. 2 of CFD No. 2023 1 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 Maintenance Services (Contingent)" means a fund that shall be maintained for IA No. 2 of CFD No. 2023 1 for any Fiscal Year to pay for the actual costs of providing the Maintenance Services (Contingent) and the Administrative Expenses attributable to providing such Maintenance Services (Contingent). "Operating Fund for Public Services" means a fund that shall be maintained for IA No. 2 of CFD No. 2023 1 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 A obligation for an Assessor's Parcel, as described in Section H.
"Prepayment Amount" means the amount required to prepay the Special Tax A obligation in full for an Assessor's Parcel, as described in Section G.
"Property Owner Association" means the Fairway Canyon Community Association, or its successors, which was formed for the purpose of marketing, selling, and managing the common interests of the homes and lots within IA No. 2 of CFD No. 2023 1.
"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 the Property Owner Association, including any master or sub association. "Proportionately" means for Taxable Property for Special Tax A that is (i) Developed Property, that the ratio of the actual Special Tax A levy to the Assigned Special Tax A is the same for all Assessor's Parcels of Developed Property, (ii) Final Map Property, that the ratio of the actual Special Tax A levy to the Maximum Special Tax A is the same for all Assessor's Parcels of Final Map Property, and (iii) Undeveloped Property and Provisional Undeveloped Property, that the ratio of the actual Special Tax A levy per Acre to the Maximum Special Tax A per Acre is the same for all Assessor's Parcels of Undeveloped Property and Provisional Undeveloped Property.

For Special Tax B that is (i) Developed Property, that the ratio of the actual Special Tax B levy to the Maximum Special Tax B is the same for all Assessor's Parcels of Developed Property, including Developed Property with City of Beaumont Page 457 of 1311
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attached Dwelling Units and (ii) Final Map Property, that the ratio of the actual Special Tax B levy to the Maximum Special Tax B is the same for all Assessor's Parcels of Final Map Property.

For Special Tax C (Contingent) that is (i) Developed Property, that the ratio of the actual Special Tax C (Contingent) levy to the Maximum Special Tax C (Contingent) is the same for all Assessor's Parcels of Developed Property, including Developed Property with attached Dwelling Units and (ii) Final Map Property, that the ratio of the actual Special Tax C (Contingent) levy to the Maximum Special Tax C (Contingent) is the same for all Assessor's Parcels of Final Map Property.

For Special Tax D, that the ratio of the actual Special Tax D levy to the Maximum Special Tax D is the same for all Assessor's Parcels of Developed Property, including Developed Property with attached Dwelling Units. "Provisional Undeveloped Property" means Public Property or Property Owner Association Property that is not Exempt Property pursuant to Section F.
"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. 2023 1 and the City. "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 A, the Special Tax B, the Special Tax C (Contingent), and the Special Tax D.
"Special Tax A" means any of the Special Taxes authorized to be levied within IA No. 2 of CFD No. 2023 1 pursuant to the Act to fund the Special Tax A Requirement. "Special Tax A Requirement" 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 applicable to the Special Tax A, (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 IA No. 2 of CFD No. 2023 1 provided that the inclusion of such amount does not cause an increase in the levy of Special Tax A 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.
"Special Tax B" means any of the Special Taxes authorized to be levied by IA No. 2 of CFD No. 2023 1 pursuant to the Act to fund the Special Tax B Requirement. Under no circumstances shall this Special Tax be eligible for prepayment of any kind.

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"Special Tax B Requirement" means the amount required in any Fiscal Year to pay for certain costs as required to meet the needs of CFD No. 2023 1 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 CFD Administrator, and (iii) Administrative Expenses applicable to the Special Tax B, less (iv) a credit in an amount equal to the Operating Fund Balance. Under no circumstances shall the Special Tax 6 Requirement include funds for bonds. "Special Tax C (Contingent)" means any of the Special Taxes authorized to be levied by IA No. 2 of CFD No. 2023 1 pursuant to the Act to fund the Special Tax C (Contingent) Requirement. Under no circumstances shall this Special Tax be eligible for prepayment of any kind. The Special Tax C (Contingent), if levied, will be levied on all Assessor's Parcels of Taxable Property in addition to, and not in lieu of, the Special Tax B. "Special Tax C (Contingent) Requirement" means that amount required in any Fiscal Year to pay for certain costs as required to meet the needs of CFD No. 2023 1 for Maintenance Services (Contingent) 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 (Contingent), (ii) amount necessary to fund an operating reserve for the costs of Maintenance Services (Contingent) as determined by the CFD Administrator, and (iii) Administrative Expenses applicable to the Special Tax C (Contingent), less (iv) a credit in an amount equal to the Operating Fund Balance. Under no circumstances shall the Special Tax C (Contingent) Requirement include funds for bonds. The Special Tax C (Contingent) Requirement, if initiated, will be applied to all Assessor's Parcels in addition to, and not in lieu of, the Special Tax B Requirement.
"Special Tax D" means any of the Special Taxes authorized to be levied by IA No. 2 of CFD No. 2023 1 pursuant to the Act to fund the Special Tax D Requirement. Under no circumstances shall this Special Tax be eligible for prepayment of any kind.
"Special Tax D Requirement" means the amount required in any Fiscal Year to pay for certain costs as required to meet the needs of CFD No. 2023 1 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 CFD Administrator, and (iii) Administrative Expenses applicable to the Special Tax D, less (iv) a credit in an amount equal to the Operating Fund Balance. Under no circumstances shall the Special Tax D Requirement include funds for bonds. "Taxable Property" means all Assessor's Parcels within IA No. 2 of CFD No. 2023 1, which are not Exempt Property, as determined by the CFD Administrator.
"Taxable Unit" means either a Dwelling Unit or an Acre. "Trustee" means the firm that holds and administers assets on behalf of IA No. 2 of CFD No. 2023 1 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. "Zone(s)" means Zone 1, 2, or 3 as geographically identified on the Boundary Map. "Zone 1" means the specific geographic area depicted as Improvement Area No. 2, Zone 1 on the Boundary Map. "Zone 2" means the specific geographic area depicted as Improvement Area No. 2, Zone 2 on the Boundary Map.

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"Zone 3" means the specific geographic area depicted as Improvement Area No. 2, Zone 3 on the Boundary Map.

B. SPECIAL TAX A
Commencing Fiscal Year 2023 2024 and for each subsequent Fiscal Year, the City Council shall levy Special Tax A on all Taxable Property pursuant to Section E, to fund the Special Tax A Requirement.

C. CLASSIFICATION OF ASSESSOR'S PARCELS
Each Fiscal Year, beginning with Fiscal Year 2023 2024, each Assessor's Parcel shall be classified as Taxable Property or Exempt Property. In addition, each Assessor's Parcel of Taxable Property shall be assigned to one of the Zones based upon its geographic location and further classified as Developed Property, Final Map Property, Undeveloped Property, or Provisional Undeveloped Property. In addition, each Assessor's Parcel of Developed Property shall further be classified as Residential Property or Non Residential Property. Lastly, Assessor's Parcels of Residential Property shall be further categorized into Land Use Categories based on the Building Square Footage for such Assessor's Parcel.

D. MAXIMUM SPECIAL TAX A

1. Developed Property
The Maximum Special Tax A 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 A in Tables 1, 2, and 3 included in Section D below or (ii) the application of the Backup Special Tax A. The Maximum Special Tax A 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 A in the tables below.
a. Assigned Special Tax A
Each Fiscal Year, beginning with Fiscal Year 2023 2024, each Assessor's Parcel of Developed Property shall be subject to an Assigned Special Tax A. The Assigned Special Tax A applicable to an Assessor's Parcel of Developed Property for any Fiscal Year shall be determined pursuant to Tables 1, 2, and 3 below based upon the Zone in which the Assessor's Parcel is located.

TABLE 1

ASSIGNED SPECIAL TAX A RATES
FOR DEVELOPED PROPERTY WITHIN ZONE 1
Land Use Category
Taxable
Unit
Building Square
Footage
Assigned Special Tax A
Per Taxable Unit

1. Residential Property
DU
Less than 1,900
$1,481

2. Residential Property
DU
1,900-2,100
$1,574

3. Residential Property
DU
2,101— 2,300
$1,609

4. Residential Property
DU
2,301— 2,500
$1,732

5. Residential Property
DU
2,501— 2,700
$1,809

6. Residential Property
DU
2,701— 2,900
$1,895

7. Residential Property
DU
Greater than 2,900
$1,954

8. Non Residential Property
Acre
N/A
$12,985
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TABLE 2

ASSIGNED SPECIAL TAX A RATES
FOR DEVELOPED PROPERTY WITHIN ZONE 2
Land Use Category
Taxable
Unit
Building Square
Footage
Assigned Special Tax A
Per Taxable Unit

1. Residential Property
DU
Less than 2,200
$1,736

2. Residential Property
DU
2,200 — 2,500
$1,837

3. Residential Property
DU
2,501— 2,800
$1,938

4. Residential Property
DU
2,801— 3,100
$1,969

5. Residential Property
DU
Greater than 3,100
$2,067

6. Non Residential Property
Acre
N/A
$12,615
TABLE 3

ASSIGNED SPECIAL TAX A RATES
FOR DEVELOPED PROPERTY WITHIN ZONE 3
Land Use Category
Taxable
Unit
Building Square
Footage
Assigned Special Tax A
Per Taxable Unit

1. Residential Property
DU
Less than 2,600
$1,884

2. Residential Property
DU
2,600 — 2,850
$1,960

3. Residential Property
DU
2,851— 3,100
$2,061

4. Residential Property
DU
Greater than 3,100
$2,135

5. Non Residential Property
Acre
N/A
$12,276
b. Backup Special Tax A
When a Final Map is recorded, the CFD Administrator shall determine which Zone the Final Map area lies within and the Backup Special Tax A for an Assessor's Parcel classified or to be classified as Residential Property within such Final Map shall be determined by multiplying the Undeveloped Property Maximum Special Tax A rate per Acre for the applicable Zone by the total Acreage of Taxable Property within such Final Map, excluding the Acreage associated with Non Residential Property, Public Property and/or Property Owners' Association Property that is not Exempt Property pursuant to Section F and dividing such amount by the number of Assessor's Parcels within such Final Map classified as either (i) Residential Property or (ii) Final Map Property for which a Building Permit is expected to be issued for Residential Property (i.e., the number of residential lots).

Notwithstanding the forgoing, if Assessor's Parcels 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 shall be recalculated for the area that has been changed or modified using the methodology described in the preceding paragraph.

The Backup Special Tax shall not apply to Non Residential Property, Public Property, Property Owners' Association Property, or Provisional Undeveloped Property.

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2. Final Map Property
The Maximum Special Tax A for each Assessor's Parcel of Final Map Property expected to be classified as Residential Property shall be the Backup Special Tax A computed pursuant to Section D.1.b above.

The Maximum Special Tax A for each Assessor's Parcel of Final Map Property expected to be classified as Non Residential Property shall be determined pursuant to the rate per Acre below for the Zone in which the Assessor's Parcel is located:

1. Zone 1 rate per Acre $12,985

2. Zone 2 rate per Acre $12,615

3. Zone 3 rate per Acre $12,276

3. Undeveloped Property and/or Provisional Undeveloped Property The Maximum Special Tax A for each Assessor's Parcel classified as Undeveloped Property or Provisional Undeveloped Property shall be determined pursuant to the rate per Acre below for the Zone in which the Assessor's Parcel is located:

1. Zone 1 rate per Acre $12,985

2. Zone 2 rate per Acre $12,615

3. Zone 3 rate per Acre $12,276
E. METHOD OF APPORTIONMENT OF THE SPECIAL TAX A

1. Commencing with Fiscal Year 2023 2024 and for each subsequent Fiscal Year, the City Council shall levy Special Taxes A on all Taxable Property until the amount of Special Tax A equals the Special Tax A Requirement in accordance with the following steps:

Step One:

Step Two:

Step Three:

Step Four:

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

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

If additional moneys are needed to satisfy the Special Tax A Requirement after the first two steps have been completed, the Special Tax A shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property, at up to 100% of the Maximum Special Tax A applicable to each such Assessor's Parcel as needed to satisfy the Special Tax A Requirement.

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

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Step Five:

If additional moneys are needed to satisfy the Special Tax A Requirement after the first four steps have been completed, the Special Tax A shall be levied Proportionately on each Assessor's Parcel of Provisional Undeveloped Property, at up to 100% of the Maximum Special Tax A applicable to each such Assessor's Parcel as needed to satisfy the Special Tax A Requirement.

Under no circumstances will Special Tax A be 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 A 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. 2023 1.

F. EXEMPTIONS
The City shall classify as Exempt Property, in the following order of priority, (i) Assessor's Parcels which are owned by, irrevocably offered for dedication, encumbered by or restricted in use by the State of California, Federal or other local governments, including school districts, (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 which are owned by, irrevocably offered for dedication, encumbered by or restricted in use by a homeowners' association, (iv) Assessor's Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement, (v) Assessor's Parcels which are privately owned and are encumbered by or restricted solely for public uses, or (vi) Assessor's Parcels restricted to other types of public uses determined by the City Council, provided that no such classification would reduce the total Acreage of all Taxable Property to less than the amounts shown in Table 4 below.

TABLE 4

MINIMUM TAXABLE ACRES
Tax Zone
Acres
1 14.83
2 16.34
3 10.96
Notwithstanding the above, the City Council shall not classify an Assessor's Parcel as Exempt Property if such classification would reduce the total Acreage of all Taxable Property to less than the Acres shown in Table 4 per Tax Zone. Assessor's Parcels which cannot be classified as Exempt Property because such classification would reduce the Acreage of all Taxable Property to less than the Acres shown in Table 4 per Tax Zone will be classified as Provisional Undeveloped Property, and will be subject to Special Tax pursuant to Step Five in Section E.

G. PREPAYMENT OF SPECIAL TAX A
The following additional definitions apply to this Section G:
"CFD Public Facilities" means $7,500,000, expressed in 2023 dollars, which shall increase by the Construction Inflation Index on January 1, 2024, and on each January 1 thereafter, or such lower amount as (i) determined by the City as sufficient to provide the public facilities under the authorized bonding program for CFD No. 2023 1, 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.

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"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 IA No. 2 of CFD No. 2023 1.
"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.
"Outstanding Bonds" means all previously issued Bonds issued and secured by the levy of Special Taxes A 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 A.

The Special Tax A obligation of an Assessor's Parcel of Developed Property, an Assessor's Parcel of Final Map Property, Undeveloped Property for which a building permit has been issued, or an Assessor's Parcel of Undeveloped Property 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 A 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 A obligation shall provide the City with written notice of intent to prepay, and within five (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 IA No. 2 of CFD No. 2023 1 in calculating the proper Prepayment Amount. Within fifteen (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 A and the Backup Special Tax A applicable to the Assessor's Parcel. For Assessor's Parcels of Final Map Property or Undeveloped Property, compute the Assigned Special Tax A and the Backup Special City of Beaumont Page 464 of 1311
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Tax A as though it was already designated as Developed Property based upon the building permit issued or to be issued 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 A computed pursuant to paragraph 1 for such Assessor's Parcel by the sum of the estimated Assigned Special Tax A applicable to all Assessor's Parcels of Taxable Property at buildout of IA No. 2, as reasonably determined by the CFD Administrator, and (b) divide the Backup Special Tax A computed pursuant to paragraph 1 for such Assessor's Parcel by the sum of the estimated Backup Special Tax A applicable to all Assessor's Parcels of Taxable Property at buildout of IA No. 2, 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".

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"). Notwithstanding the foregoing, the Future Facilities Amount shall in no event be less than 0.

7. Compute the amount needed to pay interest on the Bond Redemption Amount, the Redemption Premium, less 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 City of Beaumont Page 465 of 1311
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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 A obligation that is prepaid pursuant to this Section G, the City Council shall indicate in the records of IA No. 2 of CFD No. 2023 1 that there has been a prepayment of the Special Tax A 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 A obligation and the release of the Special Tax A lien on such Assessor's Parcel and the obligation of such Assessor's Parcel to pay such Special Taxes A shall cease.

Notwithstanding the foregoing, no prepayment will be allowed unless the amount of Special Tax A 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.

H. PARTIAL PREPAYMENT OF SPECIAL TAX A
The Special Tax A 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 A obligation would be prepaid.

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

PP = PH x F
The terms above have the following meanings:

PP = the Partial Prepayment Amount.

PH = 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 A obligation.

With respect to any Assessor's Parcel that is partially prepaid, the City Council shall indicate in the record of IA No. 2 of CFD No. 2023 1 that there has been a partial prepayment of the Special Tax A 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 A obligation, to indicate the partial prepayment of the Special Tax A obligation and the partial release of the Special Tax A lien on such Assessor's Parcel, and the obligation of the owner of such Assessor's Parcel to pay such prepaid portion of the Special Tax A shall cease.

Notwithstanding the foregoing, no partial prepayment will be allowed unless the amount of Special Tax A 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.

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I. TERMINATION OF SPECIAL TAX A
For each Fiscal Year that any Bonds are outstanding the Special Tax A shall be levied on all Assessor's Parcels subject to the Special Tax A as necessary to satisfy the Special Tax A Requirement. The Special Tax A shall cease not later than the 2063 2064 Fiscal Year, however, Special Tax A will cease to be levied in an earlier Fiscal Year if the CFD Administrator has determined (i) that all required interest and principal payments on the IA No. 2 Bonds have been paid; (ii) all authorized facilities of IA No. 2 have been acquired and all reimbursements have been paid pursuant to the acquisition agreement related to IA No. 2, (iii) no delinquent Special Tax A remain uncollected and (iv) all other obligations of IA No. 2 Special Tax A have been satisfied.

J. MANNER OF COLLECTION
The Special Tax A shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that IA No. 2 may collect Special Tax A at a different time or in a different manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on delinquent Assessor's Parcels as permitted by the Act.

K. SPECIAL TAX B
Commencing Fiscal Year 2023 2024 and for each subsequent Fiscal Year, the City Council shall levy Special Tax B on Taxable Property pursuant to Section N, up to the applicable Maximum Special Tax B to fund the Special Tax B Requirement.

L. ASSIGNMENT TO LAND USE CATEGORY FOR SPECIAL TAX B
For each Fiscal Year, all Assessor's Parcels of Taxable Property within IA No. 2 shall be classified as Developed Property or Final Map Property and shall be subject to the levy of Special Tax B as determined pursuant to Sections M and N below for all Zones. Assessor's Parcels of Developed Property and Final Map Property with attached Dwelling Units, shall be classified as either Residential Property or Non Residential Property. For Residential Property the number of Dwelling Units shall be determined by the CFD Administrator.

Undeveloped Property shall not be subject to Maximum Special Tax B.

M. MAXIMUM SPECIAL TAX B
For purposes of determining the applicable Maximum Special Tax B for Assessor's Parcels of Developed Property which are classified as Residential Property all such Assessor's Parcels shall be assigned the number of Dwelling Unit(s) constructed thereon, or approved to be constructed thereon, as specified in or shown on the Building Permit(s) issued or Final Map as determined by the CFD Administrator. If a single family attached building or buildings have been built on an Assessor's Parcel, the CFD Administrator shall determine the actual number of Dwelling Units contained within the building or buildings, and the Special Tax B levied against the Assessor's Parcel in the next Fiscal Year shall be calculated by multiplying the actual number of Dwelling Units by the Maximum Special Tax B per Dwelling Unit.

For purposes of determining the applicable Maximum Special Tax B for Assessor's Parcels of Developed Property and Final Map Property which are classified as Non Residential Property, all such Assessor's Parcels shall be assigned the number of Acres as shown on the Final Map as determined by the CFD Administrator. Once the CFD Administrator determines the actual number of Acres for an Assessor's Parcel, the Special Tax B levied against the Assessor's Parcel in the next Fiscal Year shall be calculated by multiplying the number of Acres by the Maximum Special Tax B per Acre.

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1. Developed Property
a. Maximum Special Tax B
The Maximum Special Tax B for each Assessor's Parcel of Taxable Property for Fiscal Year 2023 2024 is identified in Table 5 below:

TABLE 5

MAXIMUM SPECIAL TAX B FOR DEVELOPED PROPERTY
Land Use Category
Taxable
Unit
Maximum Special Tax B
Per Assessor's Parcel

1. Residential Property
DU
$425

2. Non Residential Property
Acre
$2,544
On each July 1, commencing July 1, 2024, the Maximum Special Tax B for the prior Fiscal Year shall be adjusted by the greater of (i) an amount equal to the percentage change in the Consumer Price Index for the twelve month period ending in January of the prior Fiscal Year or (ii) two percent (2%). b. Multiple Land Use Categories
In some instances an Assessor's Parcel of Developed Property may contain more than one Land Use Category. The Maximum Special Tax B that can be levied on an Assessor's Parcel shall be the sum of the Maximum Special Tax B that can be levied for each Land Use Category located on that Assessor's Parcel. For an Assessor's Parcel that contains more than one land use, the Acreage of such Assessor's Parcel shall be allocated to each type of property based on the amount of Acreage designated for each land use as determined by reference to the site plan approved by the City for such Assessor's Parcel. The CFD Administrator's allocation to each type of property shall be final.

2. Final Map Property
The Maximum Special Tax B for each Assessor's Parcel of Final Map Property for Fiscal Year 2023 2024 is identified in Table 6 below:

TABLE 6

MAXIMUM SPECIAL TAX B RATES

FOR FINAL MAP PROPERTY
Maximum Special Tax B
Per Assessor's Parcel
$425
On each July 1, commencing July 1, 2024, the Maximum Special Tax B for the prior Fiscal Year shall be adjusted by the greater of (i) an amount equal to the percentage change in the Consumer Price Index for the twelve month period ending in January of the prior Fiscal Year or (ii) two percent (2%).

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N. METHOD OF APPORTIONMENT OF ANNUAL SPECIAL TAX B
Commencing with Fiscal Year 2023 2024 and for each subsequent Fiscal Year, the City Council shall levy Special Tax B on Taxable Property until the amount of Special Tax B equals the Special Tax B Requirement in accordance with the following steps:

Step One:

Step Two:

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

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

O. DURATION OF SPECIAL TAX B
The Special Tax B shall be levied in perpetuity to fund the Special Tax B Requirement, unless no longer required as determined at the sole discretion of the City Council.

P. MANNER OF COLLECTION
The Special Tax B shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that IA No. 2 may collect the Special Tax B at a different time or in a different manner if necessary to meet its funding requirements.

Q. SPECIAL TAX C (CONTINGENT)
The City Council may levy the Special Tax C (Contingent), applicable to all Zones, commencing in the first Fiscal Year following the occurrence of any of the following events (each such event, a "Failure to Perform"):
a. the Property Owner Association files a voluntary petition in bankruptcy or the approval by a court of competent jurisdiction of a petition applicable to the Property Owner Association of any proceedings instituted under the Federal Bankruptcy Code, as amended; b. the Property Owner Association is dissolved;
c. the Property Owner Association fails to levy annual assessments sufficient to fund (i) the maintenance for the then Property Owner Association owned and/or Property Owner Association maintained Maintenance Services (Contingent) or (ii) the replacement of such facilities related to the Maintenance Services (Contingent) in accordance with (A) the requirements of the then current reserve funding plan of the Property Owner Association performed pursuant to California Civil Code Section 5550 or (B) if California Civil Code 5550 is no longer applicable, the requirements of the then applicable law and/or regulations governing the Property Owner Association's requirements to budget for and finance such replacement; or
d. the Property Owner Association fails to maintain the Maintenance Services (Contingent) at the same level as defined within the Property Owner Association maintenance specifications. In the event the Property Owner Association maintenance specifications do not meet either the City or County City of Beaumont Page 469 of 1311
Improvement Area No. 2 of Community Facilities District No. 2023 1 (Fairway Canyon) Page 16

maintenance requirements, the City Council will have sole discretion to determine the required level of maintenance required for purposes of this section.

In the event of the occurrence of a Failure to Perform described in "c." or "d." above, the City shall give the Property Owner Association written notice of such event. If such Failure to Perform is reasonably capable of being cured within sixty (60) days from the date of such notice, the Property Owner Association shall have such period of time to cure such Failure to Perform prior to the levy by the City Council of Special Tax C (Contingent).

If such Failure to Perform is such that it is reasonably capable of being cured, but not within such sixty (60) day period and the Property Owner Association (i) initiates corrective action within such sixty (60) day period, and (ii) diligently, continually, and in good faith works to effect a cure of such Failure to Perform as soon as possible, then the Property Owner Association shall have such additional time, as is reasonably necessary, to cure such Failure to Perform prior to the levy by the City Council of Special Tax C (Contingent).

The City Council may suspend the levy of Special Tax C (Contingent) if the Property Owner Association has cured the Failure to Perform to the satisfaction of the City Council and the Property Owner Association has agreed to such conditions as the City Council may find necessary to minimize the occurrence of such Failure to Perform in the future. In the event the City Council initiates the Special Tax C (Contingent), it will apply to all Assessor's Parcels of Taxable Property in addition to, and not in lieu of, the Special Tax B.

R. ASSIGNMENT TO LAND USE CATEGORY FOR SPECIAL TAX C (CONTINGENT) For each Fiscal Year that Special Tax C (Contingent) is authorized to be levied, all Assessor's Parcels classified as Developed Property or Final Map Property and shall be subject to the levy of Special Tax C as determined pursuant to Sections S and T below for all Zones. Assessor's Parcels of Developed Property and Final Map Property shall be classified as either Residential Property or Non Residential Property. For Residential Property the number of Dwelling Units shall be determined by the CFD Administrator.

Undeveloped Property shall not be subject to Maximum Special Tax C (Contingent).

S. MAXIMUM SPECIAL TAX C (CONTINGENT)
For purposes of determining the applicable Maximum Special Tax C (Contingent) for Assessor's Parcels of Developed Property which are classified as Residential Property, all such Assessor's Parcels shall be assigned the number of Dwelling Unit(s) constructed thereon, or approved to be constructed thereon, as specified in or shown on the Building Permit(s) issued or Final Map as determined by the CFD Administrator. If a single family attached building or buildings have been built on an Assessor's Parcel, the CFD Administrator shall determine the actual number of Dwelling Units contained within the building or buildings, and the Special Tax C (Contingent) levied against the Assessor's Parcel in the next Fiscal Year shall be calculated by multiplying the actual number of Residential Units by the Maximum Special Tax C (Contingent) per Dwelling Unit identified for the Assessor's Parcel.

For purposes of determining the applicable Maximum Special Tax C (Contingent) for Assessor's Parcels of Developed Property and Final Map Property which are classified as Non Residential Property, all such Assessor's Parcels shall be assigned the number of Acres as shown on the Final Map as determined by the CFD Administrator. Once the CFD Administrator determines the actual number of Acres for an Assessor's Parcel, the Special Tax C (Contingent) levied against an Assessor's Parcel in the next Fiscal Year shall be calculated by multiplying the number of Acres by the Maximum Special Tax C (Contingent) per Acre.

City of Beaumont Page 470 of 1311
Improvement Area No. 2 of Community Facilities District No. 2023 1 (Fairway Canyon) Page 17

1. Developed Property
a. Maximum Special Tax C (Contingent)
The Maximum Special Tax C (Contingent) for each Assessor's Parcel of Taxable Property for Fiscal Year 2023 2024 is identified in Table 7 below for all Zones:

TABLE 7

MAXIMUM SPECIAL TAX C (CONTINGENT) FOR DEVELOPED PROPERTY Land Use Category
Taxable
Unit
Maximum Special Tax C (Contingent)
Per Taxable Unit

1. Residential Property
DU
$249

2. Non Residential Property
Acre
$1,487
On each July 1, commencing July 1, 2024, the Maximum Special Tax C (Contingent) for the prior Fiscal Year shall be adjusted by the greater of (i) an amount equal to the percentage change in the Consumer Price Index for the twelve month period ending in January of the prior Fiscal Year or (ii) two percent (2%). b. Multiple Land Use Categories
In some instances an Assessor's Parcel of Developed Property may contain more than one Land Use Category. The Maximum Special Tax C (Contingent) that can be levied on an Assessor's Parcel shall be the sum of the Maximum Special Tax C (Contingent) that can be levied for each Land Use Category located on that Assessor's Parcel. For an Assessor's Parcel that contains more than one land use, the Acreage of such Assessor's Parcel shall be allocated to each type of property based on the amount of Acreage designated for each land use as determined by reference to the site plan approved for such Assessor's Parcel. The CFD Administrator's allocation to each type of property shall be final.

2. Final Map Property
The Maximum Special Tax C (Contingent) for each Assessor's Parcel of Final Map Property for Fiscal Year 2023 2024 is identified in Table 8 below:

TABLE 8

MAXIMUM SPECIAL TAX C (CONTINGENT) FOR

FINAL MAP PROPERTY
Maximum Special Tax C
(Contingent)
Per Assessor's Parcel
$249
On each July 1, commencing July 1, 2024, the Maximum Special Tax C (Contingent) for the prior Fiscal Year shall be adjusted by the greater of (i) an amount equal to the percentage change in the Consumer Price Index for the twelve month period ending in January of the prior Fiscal Year or (ii) two percent (2%).

T. METHOD OF APPORTIONMENT OF ANNUAL SPECIAL TAX C (CONTINGENT) Commencing with the first Fiscal Year in which Special Tax C (Contingent) is authorized to be levied and for each following Fiscal Year, the Council shall determine the Special Tax C (Contingent) Requirement and shall levy the Special Tax C (Contingent) on all Assessor's Parcels of Taxable Property until the aggregate amount of Special City of Beaumont Page 471 of 1311
Improvement Area No. 2 of Community Facilities District No. 2023 1 (Fairway Canyon) Page 18

Tax C (Contingent) equals the Special Tax C (Contingent) Requirement. The Special Tax C (Contingent) shall be levied for each Fiscal Year as follows:

Step One:

Step Two:

The Special Tax C (Contingent) shall be levied Proportionately on all Assessor's Parcels of Developed Property at up to 100% of the applicable Maximum Special Tax C (Contingent) to satisfy the Special Tax C (Contingent) Requirement;
If additional moneys are needed to satisfy the Special Tax C (Contingent) Requirement after the first step has been completed, the Special Tax C (Contingent) shall be levied Proportionately on each Assessor's Parcel of Final Map Property at up to 100% of the Maximum Special Tax C (Contingent) for Final Map Property.

U. DURATION OF SPECIAL TAX C (CONTINGENT)
The Special Tax C (Contingent) shall be levied in perpetuity to fund the Special Tax C (Contingent) Requirement, unless no longer required as determined at the sole discretion of the City Council.

V. MANNER OF COLLECTION OF SPECIAL TAX C (CONTINGENT)
The Special Tax C (Contingent) shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that IA No. 2 may collect the Special Tax C (Contingent) at a different time or in a different manner if necessary to meet its funding requirements.

W. SPECIAL TAX D
Commencing Fiscal Year 2023 2024 and for each subsequent Fiscal Year, the City Council shall levy Special Tax D on all Taxable Property, up to the applicable Maximum Special Tax D to fund the Special Tax D Requirement.

X. ASSIGNMENT TO LAND USE CATEGORY FOR SPECIAL TAX D
For each Fiscal Year, all Assessor's Parcels of Taxable Property within IA No. 2 classified as Residential Property shall be subject to the levy of Special Tax D as determined pursuant to Sections Y and Z below for all Zones. For Residential Property with attached Dwelling Units, the number of Dwelling Units shall be determined by the CFD Administrator.

Final Map Property, Non Residential Property, and Undeveloped Property shall not be subject to Maximum Special Tax D.

Y. MAXIMUM SPECIAL TAX D

1. Developed Property
a. Maximum Special Tax D
The Maximum Special Tax D for each Assessor's Parcel of Residential Property for Fiscal Year 2023 2024 is identified in Table 9 below:

City of Beaumont Page 472 of 1311
Improvement Area No. 2 of Community Facilities District No. 2023 1 (Fairway Canyon) Page 19

TABLE 9

MAXIMUM SPECIAL TAX D FOR RESIDENTIAL PROPERTY
Land Use Category
Taxable
Unit
Maximum Special Tax B
Per Taxable Unit

1. Residential Property
DU
$509
On each July 1, commencing July 1, 2023, the Maximum Special Tax D for the prior Fiscal Year shall be adjusted by the greater of (i) an amount equal to the percentage change in the Consumer Price Index for the twelve month period ending in January of the prior Fiscal Year or (ii) five percent (5%).

Z. METHOD OF APPORTIONMENT OF ANNUAL SPECIAL TAX D
Commencing with Fiscal Year 2023 2024 and for each subsequent Fiscal Year, the City Council shall levy Special Tax D until the amount of Special Tax D equals the Special Tax D Requirement in accordance with the following steps:

Step One:

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

AA. DURATION OF SPECIAL TAX D
The Special Tax D shall be levied in perpetuity to fund the Special Tax D Requirement, unless no longer required as determined at the sole discretion of the City Council.

BB. MANNER OF COLLECTION
The Special Tax D shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that IA No. 2 may collect the Special Tax D at a different time or in a different manner if necessary to meet its funding requirements.

CC. 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 available funds of IA No. 2 of CFD No. 2023 1; or
(iii) grant a credit against, eliminate or reduce the future Special Taxes levied on the taxpayer's property within IA No. 2 of CFD No. 2023 1 in the amount of the overpayment.

City of Beaumont Page 473 of 1311
Improvement Area No. 2 of Community Facilities District No. 2023 1 (Fairway Canyon) Page 20

DD. 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.

City of Beaumont Page 474 of 1311
Improvement Area No. 2 of Community Facilities District No. 2023 1 (Fairway Canyon) Page 21

I HEREBY CERTIFY THAT THE WITHIN MAP SHOWING PROPOSED
BOUNDARIES OF COMMUNITY FACILITIES DISTRICT NO. 2023-1
(FAIRWAY CANYON), CITY OF BEAUMONT, COUNTY OF RIVERSIDE, STATE

OF CALIFORNIA, WAS APPROVED BY THE CITY COUNCIL

OF THE CITY OF BEAUMONT AT A REGULAR MEETING
THEREOF, HELD ON . DAY OF (ip1.1 , 2023 ,
BY RESOLUTION NO. 2023 -O('

CITY CLERK

CITY OF BEAUMONT

FILED IN THE OFFICE OF THE CITY
THIS 2}-", DAY OF Dpi.) , 20 2.1 .

CITY CLERK

CITY OF BEAUMONT

CLERK, CITY OF BEAUMONT,
RECORDED THIS 1P'µ` DAY OF L- , 202.0 AT
THE HOUR OF 3:0( O'CLOCK 'M IN BOOK SID
PAGE ckB OF MAPS OF ASSESSMENT AND COMMUNITY

FACILITIES DISTRICTS IN THE OFFICE OF THE COUNTY

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

FEE: kq.OD
PETER ALDANA, ASSESSOR, COUNTY CLERK, RECORDER ` BY: '[ NO.: a0Q3-no9golt2
PUTY
DEPUTY
.r
CFD 2023-1 'll

BEAUMONT
10 SPICER CONSULTING
GROUP
LEGEND

THIS BOUNDARY MAP CORRECTLY SHOWS THE BOUNDARIES
OF THE COMMUNITY FACILITIES DISTRICT. FOR DETAILS

CONCERNING THE LINES AND DIMENSIONS OF LOTS OR

PARCEL REFER TO THE COUNTY ASSESSOR'S MAPS FOR
FISCAL YEAR 2022-23.

PROPOSED BOUNDARY MAP
COMMUNITY FACILITIES DISTRICT NO. 2023-1
(FAIRWAY CANYON)

CITY OF BEAUMONT,

COUNTY OF RIVERSIDE, STATE OF CALIFORNIA
0 250 500
i I i I
413-790-073
IMPROVEMENT AREA 2
TAXZONE2
413-790-072
1,000 Feet
I I
IMPROVEMENT AREA 2
TAX ZONE 1
413-790-068
IMPROVEMENT AREA 2
TAX ZONE 3
413-790-069
SHEET 1 OF 1 SHEETS
IMPROVEMENT AREA 1
TAX ZONE 2
413-790-067

CFD BOUNDARY

IMPROVEMENT AREA BOUNDARY

TAX ZONE BOUNDARY

PARCEL LINE
�••�•� CITY BOUNDARY

XXX-XXX-XXX ASSESSOR PARCEL NUMBER
w

RESOLUTION NO. 2023-06

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

BEAUMONT, CALIFORNIA, DECLARING ITS INTENTION TO

ESTABLISH CITY OF BEAUMONT COMMUNITY FACILITIES
DISTRICT NO. 2023-1 (FAIRWAY CANYON) AND IMPROVEMENT

AREAS THEREIN, TO AUTHORIZE THE LEVY OF A SPECIAL

TAX TO PAY THE COST OF ACQUIRING OR CONSTRUCTING

CERTAIN PUBLIC FACILITIES AND PROVIDING CERTAIN

PUBLIC SERVICES, AND PAYING FOR CERTAIN INCIDENTAL

EXPENSES AND TO PAY DEBT SERVICE ON BONDED

INDEBTEDNESS
WHEREAS, the City of Beaumont (the "City") has received petitions (the "Formation Petitions") from at least 10% of the owners of the territory described in Exhibit A attached hereto (the "Property"), requesting to establish City of Beaumont Community Facilities District No. 2023-1 (Fairway Canyon) (the "Community Facilities District") and Improvement Area No. 1 ("Improvement Area No. 1") and Improvement Area No. 2 ("Improvement Area No. 2" and together with Improvement Area No. 1, the "Improvement Areas" and each an "Improvement Area") therein to finance (1) the purchase, construction, expansion, improvement or rehabilitation of the public facilities described in Exhibit B hereto (which exhibit is incorporated herein by this reference), including all furnishings, equipment and supplies related thereto (collectively, the "Facilities"), which Facilities have a useful life of five years or longer, (2) the services described in Exhibit B hereto (collectively, the "Services") and (3) the incidental expenses to be incurred in connection with financing the Facilities and/or Services and forming the Community Facilities District and administering the Community Facilities District (the "Incidental Expenses"); and WHEREAS, the City Council of the City (the "City Council") intends to approve an estimate of the costs of the Facilities, Services and the Incidental Expenses for the Community Facilities District; and
WHEREAS, it is the intention of the City Council to consider financing the Facilities and the Incidental Expenses through the formation of the Community Facilities District, and the sale of bonds in an amount not to exceed Three Million Five Hundred Thousand Dollars ($3,500,000) for Improvement Area No. 1 and in an amount not to exceed Eleven Million Dollars ($11,000,000) for Improvement Area No. 2 (the "Bonds") and the levy of a special tax in each Improvement Area to pay debt service on each Improvement Area's Bonds, provided that the bond sale and special tax levy are approved at an election to be held for the Community Facilities District; and WHEREAS, the City desires to enter into a reimbursement agreement with Meritage Homes of California, Inc., a California corporation ("Meritage"), the form of which is on file with the City Clerk (the "Reimbursement Agreement"), to provide for the reimbursement of certain amounts advanced by Meritage in connection with the formation of the Community Facilities District;

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY, DOES HEREBY RESOLVE, ORDER AND DETERMINE AS FOLLOWS:
4883-9112-9425v4/022599-0032

SECTION 1. The City Council declares its intention to conduct proceedings pursuant to said Article 3.5 of the Mello Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (the "Act") for the establishment of the Community Facilities District with two separate Improvement Areas designated pursuant to Section 53350 of the Act and with boundaries coterminous with the Property.

It is further proposed that the boundaries of the Community Facilities District and the Improvement Areas shall be the legal boundaries as described in Exhibit A hereto which boundaries shall, upon recordation of the boundary map for the Community Facilities District, include the entirety of any parcel subject to taxation by the Community Facilities District, except where indicated on the boundary map, and as depicted on the boundary map of the Community Facilities District which is on file with the City Clerk. The City Clerk is hereby directed to sign the original boundary map of the Community Facilities District and record it with all proper endorsements thereon with the County Recorder of the County of Riverside within 15 days after the adoption of this resolution, all as required by Section 3111 of the Streets and Highways Code of the State of California.

SECTION 2. The name of the proposed Community Facilities District is "City of Beaumont Community Facilities District No. 2023-1 (Fairway Canyon) and the two proposed Improvement Areas shall be designated as "Improvement Area No. 1 of City of Beaumont Community Facilities District No. 2023-1 (Fairway Canyon)" and "Improvement Area No. 2 of City of Beaumont Community Facilities District No. 2023-1 (Fairway Canyon).

SECTION 3. The Facilities and Services proposed to be provided within the Community Facilities District are public facilities and services as defined in the Act. The City Council hereby finds and determines that the description of the Facilities, Services and Incidental Expenses herein is sufficiently informative to allow taxpayers within the Community Facilities District to understand what the funds of the Community Facilities District may be used to finance. The Incidental Expenses expected to be incurred include the cost of planning and designing the Facilities and the Services the costs of forming the Community Facilities District, issuing bonds, levying and collecting a special tax within the Community Facilities District and the annual administration costs of the Community Facilities District. The City Council hereby finds that the proposed Facilities and Services are necessary to meet increased demands placed upon the City as a result of development occurring in the Community Facilities District. The Facilities may be acquired from one or more of the property owners as completed public facilities or may be constructed by or on behalf of the City and paid for with bond proceeds.

SECTION 4. Except where funds are otherwise available, it is the intention of the City Council to levy annually in accordance with the procedures contained in the Act a special tax within each Improvement Area, secured by a continuing lien against all non-exempt real property sufficient to pay for the Facilities, Services and Incidental Expenses and the principal and interest and other periodic costs on bonds or other indebtedness issued to fmance the Facilities and Incidental Expenses, including the establishment and replenishment of any reserve funds deemed necessary by the City, and any remarketing, credit enhancement and liquidity facility fees (including such fees for instruments which serve as the basis of a reserve fund in lieu of cash) attributable to the Community Facilities District.

The rate and method of apportionment and manner of collection of the special tax for Improvement Area No. 1 are described in detail in Exhibit "C" attached hereto, which Exhibit "C" is incorporated herein by this reference. Exhibit "C" allows each landowner within proposed Improvement Area No. 1 to estimate the maximum amount of the Special Tax that may be levied 2 4883-9112-9425v4/022599-0032

against each parcel. The rate and method of apportionment and manner of collection of the Special Tax for Improvement Area No. 2 are described in detail in Exhibit "D" attached hereto, which Exhibit "D" is incorporated herein by this reference. Exhibit "D" allows each landowner within proposed Improvement Area No. 2 to estimate the maximum amount of the special tax that may be levied against each parcel. In the first year in which such special tax is levied in an Improvement Area, the levy shall include an amount sufficient to repay to the Community Facilities District all amounts, if any, transferred to the Community Facilities District pursuant to Section 53314 of the Act and interest thereon.

If the special taxes of an Improvement Area are levied against any parcel used for private residential purposes, (i) the maximum special tax rate shall be specified as a dollar amount which shall be calculated and established not later than the date on which the parcel is first subject to the special tax because of its use for private residential purposes and shall not be increased over time, except to the extent permitted in the rate and method of apportionment of the special tax for such Improvement Area as set forth in Exhibit "C" and Exhibit "D" hereto, as applicable, (ii) the Special Tax A (as defined in Exhibit "C" and "Exhibit "D" hereto) shall not be levied after fiscal year 2063- 64, as described in Exhibit "C" and "Exhibit "D" hereto, as applicable, (iii) the Special Tax B, the Special Tax C (Contingent), and the Special Tax D (each as defined in Exhibit "C" and "Exhibit "D" hereto) shall be levied as long as each is needed to meet the Special Tax B Requirement, the Special Tax C (Contingent) Requirement and the Special Tax D Requirement (each as defined in Exhibit "C" and "Exhibit "D" hereto), respectively, as determined at the sole discretion of the City Council and (iv) under no circumstances will the special tax levied in an Improvement Area in any fiscal year against any such parcel used for private residential uses be increased as a consequence of delinquency or default by the owner or owners of any other parcel or parcels within such Improvement Area by more than ten percent (10%) above the amount that would have been levied in that fiscal year had there never been any such delinquencies or defaults.

The special tax within each proposed Improvement Area is based on the cost of making the Facilities and Services available to each parcel of real property within such proposed Improvement Area. The City Council hereby determines the rate and method of apportionment of the special tax for Improvement Area No. 1 and Improvement Area No. 2 set forth in Exhibit "C" and Exhibit "D" to be reasonable. The special tax is apportioned to each parcel on the foregoing basis pursuant to Section 53325.3 of the Act; and such special tax is not on or based upon the value or ownership of real property. In the event that a portion of the property within the Community Facilities District shall become for any reason exempt, wholly or partially, from the levy of the special tax specified on Attachment "C" or Attachment "D," respectively, the City Council shall, on behalf of the Community Facilities District, cause the levy to be increased, subject to the limitation of the maximum special tax for a parcel as set forth in Attachment "C" or Attachment "D," respectively, to the extent necessary upon the remaining property within the applicable Improvement Area which is not exempt in order to yield the Special Tax revenues required for the purposes described in this Section 4. The obligation to pay the Special Tax A may be prepaid only as set forth in Sections G and H of Attachment "C" or Attachment "D," as applicable. The obligation to pay the Special Tax B, the Special Tax C (Contingent), and the Special Tax D may not be prepaid.

SECTION 5. A combined public hearing (the "Hearing") on the establishment of the Community Facilities District and the Improvement Areas, the proposed rate and method of apportionment of the special tax for each Improvement Area and the proposed issuance of bonds for the each Improvement Area to finance the Facilities and the Incidental Expenses shall be held at 6:00 p.m., or as soon thereafter as practicable, on May 16, 2023, at the City Council's Chambers, 550 3 4883-9112-9425v4/022599-0032

East 6th Street, Beaumont, California. If the City Council determines to form the Community Facilities District and the Improvement Areas, a special election will be held within each Improvement Area to authorize the issuance of bonds of such Improvement Area and the levy of a special tax within such Improvement Area in accordance with the procedures contained in Government Code Section 53326. If held, the proposed voting procedure at the elections will be a landowner vote with each landowner who is the owner of record of land within an Improvement Area at the close of the Hearing, or the authorized representative thereof, having one vote for each acre or portion thereof owned within such proposed Improvement Area. Ballots for the special elections may be distributed by mail or by personal service.

At the time and place set forth above for the Hearing, the City Council will receive testimony as to whether the Community Facilities District and the proposed Improvement Areas shall be established and as to the method of apportionment of the special tax within each proposed Improvement Area and shall consider:
(a) if an ad valorem property tax is currently being levied on property within proposed the Community Facilities District for the exclusive purpose of paying principal of or interest on bonds, lease payments or other indebtedness incurred to finance construction of capital facilities; and (b) if the capital facilities to be financed and constructed by the Community Facilities District will provide the same services as were provided by the capital facilities mentioned in subsection (a); and
(c) if the City Council makes the findings specified in subsections (a) and (b) above, it will consider appropriate action to determine whether the total annual amount of ad valorem property tax revenue due from parcels within the Community Facilities District, for purposes of paying principal and interest on the debt identified in subsection (a) above, shall not be increased after the date on which the Community Facilities District is established, or after a later date determined by the City Council with the concurrence of the legislative body which levied the property tax in question.

At the time and place set forth above for the Hearing, any interested person, including all persons owning lands or registered to vote within the Community Facilities District, may appear and be heard.

SECTION 6. The City Clerk is hereby authorized and directed to publish a notice (the "Notice") of the Hearing pursuant to Section 6061 of the Government Code in a newspaper of general circulation published in the area of the Community Facilities District. The City Clerk is further authorized and directed to mail a copy of the Notice to each of the landowners or any registered voters within the boundaries of the Community Facilities District at least 15 days prior to the Hearing. The Notice shall contain the text or a summary of this Resolution, the time and place of the Hearing, a statement that the testimony of all interested persons or taxpayers will be heard, a description of the protest rights of the registered voters and landowners in the Community Facilities District and a description of the proposed voting procedure for the elections required by the Act.

Such publication shall be completed at least seven (7) days prior to the date of the Hearing.

SECTION 7. Each City officer who is or will be responsible for providing the Facilities and the Services, if it is established, is hereby directed to study the Community Facilities District and, at or before the time of the Hearing, file a report with the City Council containing a brief description of the public facilities and services by type which will in his or her opinion be required to meet 4 4883-9112-9425v4/022599-0032

adequately the needs of the Community Facilities District and an estimate of the cost of providing those public facilities and services.

SECTION 8. The City may accept advances of funds or work -in -kind from any source, including, but not limited to, private persons or private entities, for any authorized purpose, including, but not limited to, paying any cost incurred by the City in creating the Community Facilities District. The City may enter into an agreement with the person or entity advancing the funds or work -in -kind, to repay all or a portion of the funds advanced, or to reimburse the person or entity for the value, or cost, whichever is less, of the work -in -kind, as determined by the City Council, with or without interest.

SECTION 9. The reasonably expected maximum principal amount of the bonded indebtedness to be incurred by Improvement Area No. 1 for the Facilities and Incidental Expenses is Three Million Five Hundred Thousand Dollars ($3,500,000) and by Improvement Area No. 2 is Eleven Million Dollars ($11,000,000).

SECTION 10. Urban Futures, Inc. is hereby appointed to act as municipal advisor to the City and the Community Facilities District with respect to the formation of the Community Facilities District. Spicer Consulting Group, LLC, is hereby appointed to act as special tax consultant with respect to the formation of the Community Facilities District. Stradling Yocca Carlson & Rauth, a Professional Corporation, is hereby appointed to act as special counsel with respect to the formation of the Community Facilities District.

SECTION 11. Except to the extent limited in any bond resolution or trust indenture related to the issuance of bonds, the City Council hereby reserves to itself all rights and powers set forth in Section 53344.1 of the Act (relating to tenders in full or partial payment).

SECTION 12. The form of the Reimbursement Agreement by and between the City and Meritage to be utilized in connection with the formation of the Community Facilities District, substantially in the form on file with the City Clerk, is hereby approved and the City Manager of the City, or his or her written designee, is hereby authorized to execute and deliver such agreement with such changes therein, deletions therefrom and modifications thereto as the City Manager, or his or her written designee, may approve.

SECTION 13. This Resolution shall be effective upon its adoption. 5 4883-9112-9425v4/022599-0032

ADOPTED, SIGNED AND APPROVED this 4th day of April, 2023. (SEAL)
ATTEST:

Nicole lWheelwright, De t , City Clerk
of the City of Beaumont
Julio Ma ez I ',' 1 ayor of City-aBeaumont
6 4883-9112-9425v4/022599-0032

STATE OF CALIFORNIA )
) ss.

COUNTY OF RIVERSIDE )
I, Nicole Wheelwright, City Clerk of the City of Beaumont, do hereby certify that the foregoing resolution was duly adopted by the City Council of said City, at a regular meeting of said Board held on the 4th day of April, 2023, and that it was so adopted by the following vote:

AYES:

NOES:

ABSENT:

White, Voigt, Lara, Fenn, Martinez
N Wheelwright, Ddpu)v City Clerk
City of Beaumont
ico
7 4883-9112-9425v4/022599-0032

EXHIBIT A

DESCRIPTION OF THE PROPOSED COMMUNITY FACILITIES DISTRICT County of Riverside Assessor Parcel Nos. 413-790-067 through 073, inclusive.

A-1
4883-9112-9425v4/022599-0032

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I HEREBY CERTIFY THAT THE WITHIN MAP SHOWING PROP OSED
BOUNDARIES OF CO MMUNITY FACILITIES DISTRICT NO. 202 3-1 (FAIRWAY CANYON), CITY OF BEAUMONT, COUNTY OF RIVERSIDE, STATE

OF CAUFORNIA, WAS APPROVED BY THE CITY COUNCIL

OF THE CITY OF BE AUM ONT AT A REGUL AR MEETIN G
THEREOF, HELD ON DAY OF 20_
BY RESOLUTION NO.

CITY CLERK

CITY OF BEAUM ONT
FILED IN THE OFFICE OF THE CITY CLERK. CITY OF BEAU MONT, THIS _ DAY OF . 20_

CITY CLERK

CRY OF BEAUMONT
RECORDED THIS _ DAY OF 20_ AT
THE HOUR OF _ O'CLOCK _M IN BOOK
PAGE _ OF M APS OF ASSESSMENT AND COM MUNITY

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
DEPUTY
CFD 2023-1 "'1,1Th
UM ONT

SPICEORG GO NSUPLTING
LEGEND

THIS BOUNDARY MAP CORRECTLY SHOWS THE BOUNDARIES
OF THE COMMUN ITY FA CILITIES DISTRIC T. FO R DETA ILS
CONCERNN O THE LINES AND DIMENSIONS OF LOTS 0 11

PARCEL REFER TO THE COUNTY ASSESSOR'S MAPS FOR
FISCAL YEAR 2022-9.

PROPOSED B OUNDARY MAP
COM MUNITY FACILITIES DISTRICT NO. 2023-1
(FAIRW AY C ANYON)

CITY OF BEAUMONT,

COUNTY OF RIVERSIDE, STATE OF CALIFORNIA
250 500 1. 000 Feet
I
SHEET 1 OF 1 SHEETS

CFO BOUNDARY

MPPOVEME NTAREABOUNDARY

TAX ZONE BOUNDAR Y

PARCEL LINE

CITY BOUN DARY

XAX -NXA AAAA ASSESSOR CANCEL NUMBER
w
N

EXHIBIT B

DESCRIPTION OF THE FACILITIES, SERVICES AND INCIDENTAL EXPENSES

TYPES OF FACILITIES
The proposed types of public facilities and expenses to be financed by the Community Facilities District include:

The construction, purchase, modification, rehabilitation, expansion and/or improvement of roadway, bridge, sewer, domestic and reclaimed water, dry utilities, storm drain, curb and gutter, medians, traffic signals and any other facilities permitted pursuant to the Act, parks, trails, police facilities, fire facilities, library facilities, public community facilities, and appurtenances and appurtenant work, and development impact fees that are used by the City to construct infrastructure including design, engineering and planning costs associated therewith. The Facilities include, but are not limited to:

PA 21B Park Improvements
Sorenstam Road Improvement
Water Facilities of Beaumont Cherry Valley Water District

TYPES OF MAINTENANCE SERVICES
The types of Maintenance Services that are proposed to be provided by the Community Facilities District and funded with the proceeds of special taxes levied by the Community Facilities District consist of services permitted to be financed under the Act including, without limitation, street sweeping, traffic signal maintenance, the maintenance of 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. All of the Maintenance Services to be financed must be in addition to those provided within the boundaries of the Community Facilities District before the Community Facilities District is created, and shall not supplant services already available within that territory when the Community Facilities District is created.

TYPES OF PUBLIC SERVICES
The types of Public Services that are proposed to be provided by the Community Facilities District and funded with the proceeds of special taxes levied by the Community Facilities District consist of services permitted to be financed under the Act, including, without limitation, police and fire protection and ambulance and paramedic services. All of the Public Services to be financed must be in addition to those provided within the boundaries of the Community Facilities District before The Community Facilities District is created, and shall not supplant services already available within that territory when the Community Facilities District is created.

TYPES OF INCIDENTAL EXPENSES
The Incidental Expenses to be paid from bond proceeds and/or special taxes include:
a. The cost of engineering, planning and designing the Facilities; B-1
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b. All costs, including costs of the property owner petitioning to form the Community Facilities District, associated with the creation of the Community Facilities District, the issuance of the bonds, the determination of the amount of special taxes to be levied and costs otherwise incurred in order to carry out the authorized purposes of the Community Facilities District; and c. Any other expenses incidental to the construction, acquisition, modification, rehabilitation, completion and inspection of the Facilities.

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EXHIBIT C

RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR

CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2023-1 (FAIRWAY CANYON) IMPROVEMENT AREA NO. 1
Special Taxes (all capitalized terms are defined in Section A, "Definitions", below) shall be applicable to each Assessor's Parcel of Taxable Property located within the boundaries of Improvement Area No. 1 ("IA No. 1") of Community Facilities District No. 2023-1 (Fairway Canyon) of the City of Beaumont ("CFD No. 2023-1"). The amount of Special Taxes to be levied in each Fiscal Year on an Assessor's Parcel, shall be determined by the City Council of the City of Beaumont, acting in its capacity as the legislative body of CFD No. 2023-1 by applying the appropriate Special Tax for Developed Property, Final Map Property, Undeveloped Property, and Provisional Undeveloped Property that is not Exempt Property as set forth below. All of the real property, unless exempted by law or by the provisions hereof, shall be taxed to the extent and in the manner herein provided.

A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
"Accessory Dwelling Unit" means a residential unit of limited size including a smaller second unit that shares an Assessor's Parcel with a stand-alone Dwelling Unit. "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 Community Facilities Act of 1982, as amended, being Chapter 2.5 of Part 1, 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 IA No. 1: the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the City, 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, or any designee thereof complying with arbitrage rebate requirements; the costs to the City, CFD, or any designee thereof complying with City or major property owner 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; and the costs associated with the issuance of Bonds, the City's annual administration fees, and third party expenses. Administrative Expenses shall also include amounts estimated or advanced by the City or The CFD 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.

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"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 the CFD and Improvement Area No.1. "Assessor's Parcel Map" means an official map of the Assessor of the County designating parcels by Assessor's Parcel Number.
"Assigned Special Tax A" means the Special Tax of that name described in Section D below. "Backup Special Tax A" means the Special Tax of that name described in Section D 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 A of IA No. 1 have been pledged. "Boundary Map" means a recorded map of the CFD which indicates the boundaries of the CFD and Improvement Area No. 1.
"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 A Requirement, the Special Tax B Requirement, the Special Tax C (Contingent) Requirement, the Special Tax D Requirement, and providing for the levy and collection of the Special Taxes.
"CFD No. 2023-1" or "CFD" means City of Beaumont Community Facilities District No. 2023-1 (Fairway Canyon) 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. 2023- 1, or its designee.
"Consumer Price Index" or "CPI" means the Consumer Price Index published by the U.S. Bureau of Labor Statistics for "All Items for All Urban Consumers: in the Riverside -San Bernardino -Ontario area." In the event this index ceases to be published, the Consumer Price Index shall be another index as determined by the CFD Administrator that is reasonably comparable to the Consumer Price Index for the Riverside -San Bernardino -Ontario area.

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"County" means the County of Riverside.
"Developed Property" means all Assessor's Parcels of Taxable Property that are included in a Final Map that was recorded prior to January 1st preceding the Fiscal Year in which the Special Tax is being levied and for which a Building Permit for new construction has been issued on or prior to March 1st preceding the Fiscal Year in which the Special Tax is being levied, as determined by the CFD Administrator.
"Dwelling Unit" or "DU" means each separate residential dwelling unit that comprises an independent facility capable of conveyance or rental separate from adjacent residential dwelling units. The Building Square Footage of an Accessory Dwelling Unit shall be included when classifying the property for Special Tax A, but an Accessory Dwelling Unit shall not be considered a Dwelling Unit for purposes of Special Tax B, Special Tax C (Contingent) or Special Tax D. "Exempt Property" means all Assessor's Parcels designated as being exempt from Special Taxes as provided for in Section F, 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 4285 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 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. "Improvement Area No. 1" or "IA No. 1" means the property in the CFD designated as Improvement Area 1 on the Boundary Map.
"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 Table 1 and Table 2 of Section D, Table 4 of Section M, Table 6 of Section S, and Table 8 of Section Y. "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 of 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. 2023-1 and the City.

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"Maintenance Services (Contingent)" means the Maintenance Services described above and permitted under the Act, contained within CFD No. 2023-1 and the City, which are proposed to be maintained and paid for through the Property Owner Association, and all to which the City has been granted an easement allowing such maintenance in any Fiscal Year following a Failure to Perform as defined in Section Q hereof.
"Maximum Special Tax" means the Maximum Special Tax A, the Maximum Special Tax B, the Maximum Special Tax C (Contingent), or the Maximum Special Tax D, as applicable. "Maximum Special Tax A" means the maximum Special Tax A, determined in accordance with Section D, which can be levied by IA No. 1 of CFD No. 2023-1. "Maximum Special Tax B" means the maximum Special Tax B, determined in accordance with Section M, which can be levied by IA No. 1 of CFD No. 2023-1. "Maximum Special Tax C (Contingent)" means the maximum Special Tax C (Contingent), determined in accordance with Section S, which can be levied by IA No. 1 of CFD No. 2023-1 following the Fiscal Year in which there is a Failure to Perform as defined in Section Q hereof. The Maximum Special Tax C (Contingent), if levied, will be levied on all Assessor's Parcels in addition to, and not in lieu of, the Maximum Special Tax B.
"Maximum Special Tax D" means the maximum Special Tax D, determined in accordance with Section Y, which can be levied by IA No. 1 of CFD No. 2023-1. "Minimum Taxable Acreage" means the smallest allowable amount of Acreage of Taxable Property. For IA No. 1 of CFD No. 2023-1, it shall not be less than shown in Table 3 of Section F. "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 IA No. 1 of CFD No. 2023-1 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 Maintenance Services (Contingent)" means a fund that shall be maintained for IA No. 1 of CFD No. 2023-1 for any Fiscal Year to pay for the actual costs of providing the Maintenance Services (Contingent) and the Administrative Expenses attributable to providing such Maintenance Services (Contingent).
"Operating Fund for Public Services" means a fund that shall be maintained for Lk No. 1 of CFD No. 2023-1 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 A obligation for an Assessor's Parcel, as described in Section H.

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"Prepayment Amount" means the amount required to prepay the Special Tax A obligation in full for an Assessor's Parcel, as described in Section G.
"Property Owner Association" means the Fairway Canyon Community Association, or its successors, which was formed for the purpose of marketing, selling, and managing the common interests of the homes and lots within IA No. 1 of CFD No. 2023-1. "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 the Property Owner Association, including any master or sub - association.
"Proportionately" means for Taxable Property for Special Tax A that is (i) Developed Property, that the ratio of the actual Special Tax A levy to the Assigned Special Tax A is the same for all Assessor's Parcels of Developed Property, (ii) Final Map Property, that the ratio of the actual Special Tax A levy to the Maximum Special Tax A is the same for all Assessor's Parcels of Final Map Property, and (iii) Undeveloped Property and Provisional Undeveloped Property, that the ratio of the actual Special Tax A levy per Acre to the Maximum Special Tax A per Acre is the same for all Assessor's Parcels of Undeveloped Property and Provisional Undeveloped Property.

For Special Tax B that is (i) Developed Property, that the ratio of the actual Special Tax B levy to the Maximum Special Tax B is the same for all Assessor's Parcels of Developed Property, including Developed Property with attached Dwelling Units and (ii) Final Map Property, that the ratio of the actual Special Tax B levy to the Maximum Special Tax B is the same for all Assessor's Parcels of Final Map Property.

For Special Tax C (Contingent) that is (i) Developed Property, that the ratio of the actual Special Tax C (Contingent) levy to the Maximum Special Tax C (Contingent) is the same for all Assessor's Parcels of Developed Property, including Developed Property with attached Dwelling Units and (ii) Final Map Property, that the ratio of the actual Special Tax C (Contingent) levy to the Maximum Special Tax C (Contingent) is the same for all Assessor's Parcels of Final Map Property.

For Special Tax D, that the ratio of the actual Special Tax D levy to the Maximum Special Tax D is the same for all Assessor's Parcels of Developed Property, including Developed Property with attached Dwelling Units.
"Provisional Undeveloped Property" means Public Property or Property Owner Association Property that is not Exempt Property pursuant to Section F. "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. 2023-1 and the City.

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"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 A, the Special Tax B, the Special Tax C (Contingent), and the Special Tax D.
"Special Tax A" means any of the Special Taxes authorized to be levied within IA No. 1 of CFD No. 2023-1 pursuant to the Act to fund the Special Tax A Requirement. "Special Tax A Requirement" 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 applicable to the Special Tax A, (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 IA No. 1 of CFD No. 2023-1 provided that the inclusion of such amount does not cause an increase in the levy of Special Tax A 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.
"Special Tax B" means any of the Special Taxes authorized to be levied by IA No. 1 of CFD No. 2023-1 pursuant to the Act to fund the Special Tax B Requirement. Under no circumstances shall this Special Tax be eligible for prepayment of any kind.
"Special Tax B Requirement" means the amount required in any Fiscal Year to pay for certain costs as required to meet the needs of CFD No. 2023-1 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 CFD Administrator, and (iii) Administrative Expenses applicable to the Special Tax B, less (iv) a credit in an amount equal to the Operating Fund Balance.

Under no circumstances shall the Special Tax B Requirement include funds for bonds. "Special Tax C (Contingent)" means any of the Special Taxes authorized to be levied by IA No. 1 of CFD No. 2023-1 pursuant to the Act to fund the Special Tax C (Contingent) Requirement. Under no circumstances shall this Special Tax be eligible for prepayment of any kind. The Special Tax C (Contingent), if levied, will be levied on all Assessor's Parcels of Taxable Property in addition to, and not in lieu of, the Special Tax B.
"Special Tax C (Contingent) Requirement" means that amount required in any Fiscal Year to pay for certain costs as required to meet the needs of CFD No. 2023-1 for Maintenance Services (Contingent) 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 (Contingent), (ii) amount necessary to fund an operating reserve for the costs of Maintenance Services (Contingent) as determined by the CFD Administrator, and (iii) Administrative Expenses applicable to the Special Tax C (Contingent), less (iv) a credit in an amount equal to the Operating Fund Balance. Under no circumstances shall the Special Tax C (Contingent) Requirement include funds for bonds. The Special Tax C (Contingent) Requirement, if initiated, will be applied to all Assessor's Parcels in addition to, and not in lieu of, the Special Tax B Requirement.

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"Special Tax D" means any of the Special Taxes authorized to be levied by IA No. 1 of CFD No. 2023-1 pursuant to the Act to fund the Special Tax D Requirement. Under no circumstances shall this Special Tax be eligible for prepayment of any kind.
"Special Tax D Requirement" means the amount required in any Fiscal Year to pay for certain costs as required to meet the needs of CFD No. 2023-1 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 CFD Administrator, and (iii) Administrative Expenses applicable to the Special Tax D, less (iv) a credit in an amount equal to the Operating Fund Balance. Under no circumstances shall the Special Tax D Requirement include funds for bonds. "Taxable Property" means all Assessor's Parcels within IA No. 1 of CFD No. 2023-1, which are not Exempt Property, as determined by the CFD Administrator. "Taxable Unit" means either a Dwelling Unit or an Acre. "Trustee" means the firm that holds and administers assets on behalf of IA No. 1 of CFD No. 2023- 1 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. "Zone(s)" means Zone 1 or 2 as geographically identified on the Boundary Map. "Zone 1" means the specific geographic area depicted as Improvement Area No. 1, Zone 1 on the Boundary Map.
"Zone 2" means the specific geographic area depicted as Improvement Area No. 1, Zone 2 on the Boundary Map.

B. SPECIAL TAX A
Commencing Fiscal Year 2023-2024 and for each subsequent Fiscal Year, the City Council shall levy Special Tax A on all Taxable Property pursuant to Section E, to fund the Special Tax A Requirement.

C. CLASSIFICATION OF ASSESSOR'S PARCELS
Each Fiscal Year, beginning with Fiscal Year 2023-2024, each Assessor's Parcel shall be classified as Taxable Property or Exempt Property. In addition, each Assessor's Parcel of Taxable Property shall be assigned to one of the Zones based upon its geographic location and further classified as Developed Property, Final Map Property, Undeveloped Property, or Provisional Undeveloped Property. In addition, each Assessor's Parcel of Developed Property shall further be classified as Residential Property or Non -Residential Property. Lastly, Assessor's Parcels of Residential Property shall be further categorized into Land Use Categories based on the Building Square Footage for such Assessor' s Parcel.

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D. MAXIMUM SPECIAL TAX A

1. Developed Property
The Maximum Special Tax A 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 A in Tables 1 and 2 included in Section D below or (ii) the application of the Backup Special Tax A. The Maximum Special Tax A 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 A in the tables below. a. Assigned Special Tax A
Each Fiscal Year, beginning with Fiscal Year 2023-2024, each Assessor's Parcel of Developed Property shall be subject to an Assigned Special Tax A. The Assigned Special Tax A applicable to an Assessor's Parcel of Developed Property for any Fiscal Year shall be determined pursuant to Tables 1 and 2 below based upon the Zone in which the Assessor's Parcel is located.

TABLE 1

ASSIGNED SPECIAL TAX A RATES
FOR DEVELOPED PROPERTY WITHIN ZONE 1
Land Use Category
Taxable
Unit
Building
Square
Footage
Assigned Special Tax A
Per Taxable Unit

1. Residential Property
DU
Less than 2,100
$1,328

2. Residential Property
DU
2,100 — 2,400
$1,376

3. Residential Property
DU
Greater than 2,400
$1,414

4. Non -Residential Property
Acre
N/A
$8,204
TABLE 2

ASSIGNED SPECIAL TAX A RATES
FOR DEVELOPED PROPERTY WITHIN ZONE 2
Land Use Category
Taxable
Unit
Building Square
Footage
Assigned Special Tax
A Per Taxable Unit

1. Residential Property
DU
Less than 1,600
$1,106

2. Residential Property
DU
1,600 — 1,800
$1,215

3. Residential Property
DU
1,801 — 2,000
$1,325

4. Residential Property
DU
Greater than 2,000
$1,414

5. Non -Residential Prot v
Acre
N/A
$8,456
b. Backup Special Tax A
When a Final Map is recorded, the CFD Administrator shall determine which Zone the Final Map area lies within and the Backup Special Tax A for an Assessor's Parcel classified or to be classified as Residential Property within such Final Map shall be determined by C-8
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multiplying the Undeveloped Property Maximum Special Tax A rate per Acre for the applicable Zone by the total Acreage of Taxable Property within such Final Map, excluding the Acreage associated with Non -Residential Property, Public Property and/or Property Owners' Association Property that is not Exempt Property pursuant to Section F and dividing such amount by the number of Assessor's Parcels within such Final Map classified as either (i) Residential Property or (ii) Final Map Property for which a Building Permit is expected to be issued for Residential Property (i.e., the number of residential lots).

Notwithstanding the forgoing, if Assessor's Parcels 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 shall be recalculated for the area that has been changed or modified using the methodology described in the preceding paragraph.

The Backup Special Tax shall not apply to Non -Residential Property, Public Property, Property Owners' Association Property, or Provisional Undeveloped Property.

2. Final Map Property
The Maximum Special Tax A for each Assessor's Parcel of Final Map Property expected to be classified as Residential Property shall be the Backup Special Tax A computed pursuant to Section D.1.b above.

The Maximum Special Tax A for each Assessor's Parcel of Final Map Property expected to be classified as Non -Residential Property shall be determined pursuant to the rate per Acre below for the Zone in which the Assessor's Parcel is located:

1. Zone 1 rate per Acre - $8,204

2. Zone 2 rate per Acre - $8,456

3. Undeveloped Property and/or Provisional Undeveloped Property The Maximum Special Tax A for each Assessor's Parcel classified as Undeveloped Property or Provisional Undeveloped Property shall be determined pursuant to the rate per Acre below for the Zone in which the Assessor's Parcel is located:

1. Zone 1 rate per Acre - $8,204

2. Zone 2 rate per Acre - $8,456
E. METHOD OF APPORTIONMENT OF THE SPECIAL TAX A

1. Commencing with Fiscal Year 2023-2024 and for each subsequent Fiscal Year, the City Council shall levy Special Taxes A on all Taxable Property until the amount of Special Tax A equals the Special Tax A Requirement in accordance with the following steps:

Step One:

The Special Tax A shall be levied Proportionately on each Assessor's Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax A rates in the tables included in Section D as needed to satisfy the Special Tax A Requirement. 4883-9112-9425v4/022599-0032
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Step Two:

Step Three:

Step Four:

Step Five:

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

If additional moneys are needed to satisfy the Special Tax A Requirement after the first two steps have been completed, the Special Tax A shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property, at up to 100% of the Maximum Special Tax A applicable to each such Assessor's Parcel as needed to satisfy the Special Tax A Requirement.

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

If additional moneys are needed to satisfy the Special Tax A Requirement after the first four steps have been completed, the Special Tax A shall be levied Proportionately on each Assessor's Parcel of Provisional Undeveloped Property, at up to 100% of the Maximum Special Tax A applicable to each such Assessor's Parcel as needed to satisfy the Special Tax A Requirement.

Under no circumstances will Special Tax A be 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 A 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. 2023-1.

F. EXEMPTIONS
The City shall classify as Exempt Property, in the following order of priority, (i) Assessor's Parcels which are owned by, irrevocably offered for dedication, encumbered by or restricted in use by the State of California, Federal or other local governments, including school districts, (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 which are owned by, irrevocably offered for dedication, encumbered by or restricted in use by a homeowners' association, (iv) Assessor's Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement, (v) Assessor's Parcels which are privately owned and are encumbered by or restricted solely for public uses, or (vi) Assessor's Parcels restricted to other types of public uses determined by the City Council, provided that no such classification would reduce the total Acreage of all Taxable Property to less than the amounts shown in Table 3 below. 4883-9112-9425v4/022599-0032
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TABLE 3

MINIMUM TAXABLE ACRES
Tax Zone
Acres
1 9.20
2 11.69
Notwithstanding the above, the City Council shall not classify an Assessor's Parcel as Exempt Property if such classification would reduce the total Acreage of all Taxable Property to less than the Acres shown in Table 3 per Tax Zone. Assessor's Parcels which cannot be classified as Exempt Property because such classification would reduce the Acreage of all Taxable Property to less than the Acres shown in Table 3 per Tax Zone will be classified as Provisional Undeveloped Property, and will be subject to Special Tax pursuant to Step Five in Section E.

G. PREPAYMENT OF SPECIAL TAX A
The following additional definitions apply to this Section G:
"CFD Public Facilities" means $2,500,000, expressed in 2023 dollars, which shall increase by the Construction Inflation Index on January 1, 2024, and on each January 1 thereafter, or such lower amount as (i) determined by the City as sufficient to provide the public facilities under the authorized bonding program for CFD No. 2023-1, 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 IA No. 1 of CFD No. 2023-1.
"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.
"Outstanding Bonds" means all previously issued Bonds issued and secured by the levy of Special Taxes A 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 A.

The Special Tax A obligation of an Assessor's Parcel of Developed Property, an Assessor's Parcel of Final Map Property, Undeveloped Property for which a building permit has been issued, or an Assessor's Parcel of Undeveloped Property may be prepaid in full, provided that there are no delinquent Special Taxes, penalties, or interest charges outstanding with respect to such Assessor's C-11
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Parcel at the time the Special Tax A 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 A obligation shall provide the City with written notice of intent to prepay, and within five (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 IA No. 1 of CFD No. 2023-1 in calculating the proper Prepayment Amount.

Within fifteen (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 A and the Backup Special Tax A applicable to the Assessor's Parcel. For Assessor's Parcels of Final Map Property or Undeveloped Property, compute the Assigned Special Tax A and the Backup Special Tax A as though it was already designated as Developed Property based upon the building permit issued or to be issued 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 A computed pursuant to paragraph 1 for such Assessor's Parcel by the sum of the estimated Assigned Special Tax A applicable to all Assessor's Parcels of Taxable Property at buildout of IA No. 1, as reasonably determined by the CFD Administrator, and (b) divide the Backup Special Tax A computed pursuant to paragraph 1 for such Assessor's Parcel by the sum of the estimated Backup Special Tax A applicable to all Assessor's Parcels of Taxable Property at buildout of IA No. 1, 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".

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.

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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"). Notwithstanding the foregoing, the Future Facilities Amount shall in no event be less than 0.

7. Compute the amount needed to pay interest on the Bond Redemption Amount, the Redemption Premium, less 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 A obligation that is prepaid pursuant to this Section G, the City Council shall indicate in the records of IA No. 1 of CFD No. 2023-1 that there has been a prepayment of the Special Tax A 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 A obligation and the release of the Special Tax A lien on such Assessor's Parcel and the obligation of such Assessor's Parcel to pay such Special Taxes A shall cease.

Notwithstanding the foregoing, no prepayment will be allowed unless the amount of Special Tax A 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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