appointment by the successor Trustee and notice being sent by the successor Trustee to the Bondowners of the successor Trustee's identity and address.
Section 7.3. Resignation of Trustee. The Trustee may at any time resign and be discharged from its duties and obligations hereunder by giving written notice to the District and by giving to the Owners notice of such resignation, which notice shall be mailed to the Owners at their addresses appearing in the registration books in the office of the Trustee. Upon receiving such notice of resignation, the District shall promptly appoint a successor Trustee satisfying the criteria in Section 7.2 above by an instrument in writing. Any resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon acceptance of appointment by the successor Trustee. In the event the District shall for any reason whatsoever fail to appoint a successor Trustee within thirty (30) calendar days following the receipt of notice by the District, the Trustee may apply to a court of competent jurisdiction for the appointment of a successor Trustee meeting the requirements of Section 7.2 hereof. Any such successor Trustee appointed by such court shall become the successor Trustee hereunder notwithstanding any action by the District purporting to appoint a successor Trustee following the expiration of such 90 -day period.
Section 7.4. Liability of Trustee. The recitals of fact and all promises, covenants and agreements contained herein and in the Bonds and any Parity Bonds shall be taken as statements, promises, covenants and agreements of the District, and the Trustee assumes no responsibility for the correctness of the same and makes no representations as to the validity or sufficiency of this Indenture, the Bonds or any Parity Bonds, and shall incur no responsibility in respect thereof, other than in connection with its duties or obligations specifically set forth herein, in the Bonds and any Parity Bonds, or in the certificate of authentication assigned to or imposed upon the Trustee. The Trustee shall be under no responsibility or duty with respect to the issuance of the Bonds or any Parity Bonds for value. The Trustee shall not be liable in connection with the performance of its duties hereunder, or for any action taken, or errors in judgment made, in good faith by it or any of its officers, employees or agents, except for its own negligence or willful misconduct. The permissive rights of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and, with respect to such permissive rights, the Trustee shall not be answerable for other than its negligence or willful misconduct. In no event shall the Trustee be responsible or liable for special, indirect, punitive, incidental or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
The Trustee may execute any of the trusts or powers hereof and perform any of its duties by or through attorneys, agents or receivers and shall not be answerable for the conduct of the same if appointed with due care hereunder. The Trustee shall not be accountable for the use or application by the District of any of the Bonds or the proceeds thereof or for the use or application of any money paid over by the Trustee in accordance with the provisions of this Indenture or for the use and application of money received by any paying agent. The Trustee shall be protected in acting upon any notice, resolution, request, consent, order, judgment, decree, certificate, report, Bond, Parity Bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties, not only as to due execution, validity and effectiveness, but also as to the truth and accuracy of any information contained therein. The Trustee shall be entitled to rely on and shall not be liable for any action taken or omitted to be taken by the Trustee in accordance with the advice of counsel or other professionals retained or consulted by the Trustee. The Trustee may consult with counsel, who may be counsel to the District, with regard to legal questions, and the 43 4886-8639-8608v3/022599-0026
opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered hereunder in good faith and in accordance therewith.
The Trustee shall not be bound to recognize any person as the Owner of a Bond or Parity Bond unless and until such Bond or Parity Bond is submitted for inspection, if required, and his or her title thereto satisfactorily established, if disputed.
Whenever in the administration of its duties under this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a written certificate of the District, and such certificate shall be full warrant to the Trustee for any action taken or suffered under the provisions of this Indenture upon the faith thereof, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable.
Neither the Trustee nor any of its directors, officers, employees, agents or affiliates shall be responsible for nor have any duty to monitor the performance or any action of the District or any of their directors, members, officers, agents, affiliates or employee, nor shall it have any liability in connection with the malfeasance or nonfeasance by such party. The Trustee may assume performance by all such Persons of their respective obligations. The Trustee shall have no enforcement or notification obligations relating to breaches of representations or warranties of any other Person.
The Trustee shall have no duty or obligation whatsoever to enforce the collection of Special Taxes or other funds to be deposited with it hereunder, or as to the correctness of any amounts received, but its liability shall be limited to the proper accounting for such funds as it shall actually receive. No provision in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of its rights or powers.
The Trustee shall not be deemed to have knowledge of any default or Event of Default until an officer at the Trustee's Principal Office of the Trustee responsible for the administration of its duties hereunder shall have actual knowledge thereof or the Trustee shall have received written notice thereof at the Principal Office of the Trustee.
The Trustee shall be under no responsibility or duty with respect to (i) the issuance of the Bonds for value, (ii) the application of the proceeds thereof except to the extent that such proceeds are received by it in its capacity as Trustee, or (iii) the application of any moneys paid to the District or others in accordance with this Indenture except as to the application of any moneys paid to it in its capacity as Trustee. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. The Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture. The Trustee and its officers and employees may become the Owner of Bonds with the same rights it would have if it were not Trustee, and, to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Bond Owners, whether or not such committee shall represent the Owners of a majority in aggregate principal amount of the Bonds then Outstanding. 44 4886-8639-8608v3/022599-0026
The Trustee shall not be liable for any error of judgment made in good faith by a responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts.
The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in accordance with the direction of the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture.
The Trustee shall not be considered in breach of or in default in its obligations hereunder and will not incur any liability for not performing any act or fulfilling any duty, obligation or responsibility hereunder, or progress in respect thereto in the event of enforced delay ("unavoidable delay") in the performance of such obligations due to unforeseeable causes beyond its control, including, but not limited to, natural catastrophes, epidemics, quarantine restrictions, civil or military disturbances, loss or malfunctions of utilities, computer (hardware or software) or communications service; accidents; labor disputes, any act of God or war, terrorism or the unavailability of the Federal Reserve Bank or other wire or communication facility, or any similar event and/or occurrences beyond the control of the Trustee; provided, that in the event of any such unavoidable delay, the Trustee shall notify the District in writing within five (5) Business Days after (i) the occurrence of the event giving rise to such unavoidable delay, (ii) the Trustee's actual knowledge of the impending unavoidable delay, or (iii) the Trustee's knowledge of sufficient facts under which a reasonable person would conclude the unavoidable delay will occur.
Section 7.5. Electronic Instructions. The Trustee shall be entitled to request and receive written direction hereunder and shall have no responsibility or liability for accepting, acting upon, not acting any such direction, or for any losses or damages of any nature that may arise from any action taken or not taken by the Trustee in accordance with such written direction, including, without limitation, funds transfer instructions ("Instructions") given pursuant to this Indenture and delivered using Electronic Means ("Electronic Means" means the following communications methods: e-mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Trustee, or another method or system specified by the Trustee as available for use in connection with its services hereunder); provided, however, that the District shall provide to the Trustee an incumbency certificate listing officers with the authority to provide such Instructions ("Authorized Officers") and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended by the District, whenever a person is to be added or deleted from the listing. If the District elects to give the Trustee Instructions using Electronic Means and the Trustee in its discretion elects to act upon such Instructions, the Trustee's understanding of such Instructions shall be deemed controlling. The District understands and agrees that the Trustee cannot determine the identity of the actual sender of such Instructions and that the Trustee shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Trustee have been sent by such Authorized Officer. The District shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Trustee and that the District and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the District. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee's reliance upon and compliance with such Instructions notwithstanding such directions conflict or are inconsistent with a subsequent written instruction. The District agrees: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Trustee, including without limitation the risk of the 45 4886-8639-8608v3/022599-0026
Trustee acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Trustee and that there may be more secure methods of transmitting Instructions than the method(s) selected by the District; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Trustee immediately upon learning of any compromise or unauthorized use of the security procedures.
Section 7.6. Merger or Consolidation. Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, shall be the successor to the Trustee without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding; provided, however, such successor shall provide the District with a notice of merger or conversion as soon as practicable.
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.1. Events of Default. Any one or more of the following events shall constitute an "Event of Default":
(a) default in the due and punctual payment of the principal of or redemption premium, if any, on any Bond or Parity Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by declaration or otherwise; (b) default in the due and punctual payment of the interest on any Bond or Parity Bond when and as the same shall become due and payable; or
(c) except as described in subsections (a) or (b), default by the District in the observance of any of the agreements, conditions or covenants on its part contained in this Indenture, the Bonds or any Parity Bonds, which default continues for a period of 30 days after the District has been given notice in writing of such default by the Trustee or the Owners of twenty-five percent (25%) in aggregate principal amount of the Outstanding Bonds and Parity Bonds.
The Trustee agrees to give notice to the Owners as soon as practicable upon the occurrence of an Event of Default under subsections (a) or (b) above and within 10 days of the Trustee's actual knowledge of an Event of Default under subsection (c) above.
Section 8.2. Remedies of Owners. Upon the occurrence of an Event of Default, the Trustee may pursue any available remedy at law or in equity to enforce the payment of the principal of, premium, if any, and interest on the Outstanding Bonds and Parity Bonds, and to enforce any rights of the Trustee under or with respect to this Indenture, including:
(a) by mandamus or other suit or proceeding at law or in equity to enforce his or her rights against the District and any of the members, officers and employees of the District, and to compel the District or any such members, officers or employees to perform and carry out their duties under the Act and their agreements with the Owners as provided in this Indenture; 46 4886-8639-8608v3/022599-0026
(b) by suit in equity to enjoin any actions or things which are unlawful or violate the rights of the Owners; or
(c) by a suit in equity to require the District and its members, officers and employees to account as the trustee of an express trust.
If an Event of Default shall have occurred and be continuing and if requested and directed so to do by the Owners of at least twenty-five percent (25%) in aggregate principal amount of Outstanding Bonds and Parity Bonds and if indemnified to its satisfaction, the Trustee shall be obligated to exercise such one or more of the rights and powers conferred by this Article VIII, as the Trustee, being advised by counsel, shall deem most expedient in the interests of the Owners of the Bonds and Parity Bonds. In the event the Trustee receives inconsistent or conflicting requests and indemnity from two or more groups of Owners of the Bonds or Parity Bonds, each representing less than a majority in aggregate principal amount of the Bonds or Parity Bonds outstanding, the Trustee, in its sole discretion, may, and shall be fully indemnified for refraining from acting in the absence of such written direction, determine what action, if any shall be taken and the Trustee may, in its sole discretion, take other actions.
No remedy herein conferred upon or reserved to the Owners is intended to be exclusive of any other remedy. Every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise, and may be exercised without exhausting and without regard to any other remedy conferred by the Act or any other law.
Section 8.3. Application of Revenues and Other Funds After Default. All amounts received by the Trustee pursuant to any right given or action taken by the Trustee under the provisions of this Indenture relating to the Bonds and Parity Bonds shall be applied by the Trustee in the following order upon presentation of the several Bonds and Parity Bonds:
First, to the payment of the fees, costs and expenses of the Trustee in declaring such Event of Default and in carrying out the provisions of this Article VIII, including reasonable compensation to its agents, attorneys and counsel, and to the payment of all other outstanding fees and expenses of the Trustee; and
Second, to the payment of the whole amount of interest on and principal of the Bonds and Parity Bonds then due and unpaid, with interest on overdue installments of principal and interest to the extent permitted by law at the net effective rate of interest then borne by the Outstanding Bonds and Parity Bonds; provided, however, that in the event that such amounts shall be insufficient to pay the full amount of such interest and principal, then such amounts shall be applied in the following order of priority:
(a) first to the payment of all installments of interest on the Bonds and Parity Bonds then due and unpaid on a pro rata basis based on the total amount then due and owing; (b) second, to the payment of all installments of principal, including Sinking Fund Payments, of the Bonds and Parity Bonds then due and unpaid on a pro rata basis based on the total amount then due and owing; and
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(c) third, to the payment of interest on overdue installments of principal and interest on the Bonds and Parity Bonds on a pro rata basis based on the total amount then due and owing.
Section 8.4. Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its obligations hereunder, whether upon its own discretion or upon the request of the Owners of twenty-five percent (25%) in aggregate principal amount of the Bonds and Parity Bonds then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Owners of the Bonds and Parity Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the Owners of a majority in aggregate principal amount of the Outstanding Bonds and Parity Bonds hereunder opposing such discontinuance, withdrawal, compromise, settlement or other such litigation. Any suit, action or proceeding which any Owner of Bonds or Parity Bonds shall have the right to bring to enforce any right or remedy hereunder may be brought by the Trustee for the equal benefit and protection of all Owners of Bonds and Parity Bonds similarly situated and the Trustee is hereby appointed (and the successive respective Owners of the Bonds and Parity Bonds issued hereunder, by taking and holding the same, shall be conclusively deemed so to have appointed it) the true and lawful attorney in fact of the respective Owners of the Bonds and Parity Bonds for the purposes of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the respective Owners of the Bonds and Parity Bonds as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney -in -fact.
Section 8.5. Appointment of Receivers. Upon the occurrence of an Event of Default hereunder, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights and of the Owners of the Bonds and Parity Bonds under this Indenture, the Trustee shall be entitled, as a matter of right to which the District expressly agrees, to the appointment of a receiver or receivers of the Net Taxes and other amounts pledged hereunder, pending such proceedings, with such powers as the court making such appointment shall confer.
Section 8.6. Non -Waiver. Nothing in this Article VIII or in any other provision of this Indenture, or in the Bonds or the Parity Bonds, shall affect or impair the obligation of the District, which is absolute and unconditional, to pay the interest on and principal of the Bonds and Parity Bonds to the respective Owners of the Bonds and Parity Bonds at the respective dates of maturity, as herein provided, or to pay the Trustee its fees and expenses as provided in Section 8.3 hereof, out of the Net Taxes and other moneys herein pledged for such payment.
A waiver of any default or breach of duty or contract by the Trustee or any Owners shall not affect any subsequent default or breach of duty or contract, or impair any rights or remedies on any such subsequent default or breach. No delay or omission of the Trustee or any Owner of any of the Bonds or Parity Bonds to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy conferred upon the Trustee or the Owners by the Act or by this Article VIII may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee or the Owners, as the case may be. 48 4886-8639-8608v3/022599-0026
Section 8.7. Limitations on Rights and Remedies of Owners. No Owner of any Bond or Parity Bond issued hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Indenture, unless: (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority in aggregate principal amount of all the Bonds and Parity Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said Owners shall have tendered to the Trustee indemnity and security acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity and security shall have been made to, the Trustee.
Such notification, request, tender of indemnity and security and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds and Parity Bonds of any remedy hereunder; it being understood and intended that no one or more Owners of Bonds and Parity Bonds shall have any right in any manner whatever by his or her or their action to enforce any right under this Indenture, except in the manner herein provided, and that all proceedings at law or in equity to enforce any provision of this Indenture shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners of the Outstanding Bonds and Parity Bonds.
The right of any Owner of any Bond and Parity Bond to receive payment of the principal of and interest and premium (if any) on such Bond and Parity Bond as herein provided or to institute suit for the enforcement of any such payment, shall not be impaired or affected without the written consent of such Owner, notwithstanding the foregoing provisions of this Section or any other provision of this Indenture.
Section 8.8. Termination of Proceedings. In case any Trustee shall have proceeded to enforce any right under this Indenture by the appointment of a receiver or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely, then and in every such case, the District, the Trustee and the Owners shall be restored to their former positions and rights hereunder, respectively, with regard to the property subject to this Indenture, and all rights, remedies and powers of the Trustee shall continue as if no such proceedings had been taken.
ARTICLE IX
DEFEASANCE AND PARITY BONDS
Section 9.1. Defeasance. If the District shall pay or cause to be paid, or there shall otherwise be paid, to the Owner of an Outstanding Bond or Parity Bond the interest due thereon and the principal thereof, at the times and in the manner stipulated in this Indenture or any Supplemental Indenture, then the Owner of such Bond or Parity Bond shall cease to be entitled to the pledge of Net Taxes, and, other than as set forth below, all covenants, agreements and other obligations of the District to the Owner of such Bond or Parity Bond under this Indenture or any Supplemental Indenture relating to such Parity Bond shall thereupon cease, terminate and become void and be discharged and satisfied. In the event of a defeasance of all Outstanding Bonds and Parity Bonds pursuant to this Section, the Trustee shall execute and deliver to the District all such instruments as 49 4886-8639-8608v3/022599-0026
may be desirable to evidence such discharge and satisfaction, and the Trustee shall pay over or deliver to the District all money or securities held by it pursuant to this Indenture which are not required for the payment of the principal of, premium, if any, and interest due on such Bonds and Parity Bonds.
Any Outstanding Bond or Parity Bond shall be deemed to have been paid within the meaning expressed in the first paragraph of this Section if such Bond or Parity Bond is paid in any one or more of the following ways:
(a) by paying or causing to be paid the principal of, premium, if any, and interest on such Bond or Parity Bond, as and when the same become due and payable; (b) by depositing with the Trustee, in trust, at or before maturity, cash which, together with the amounts then on deposit in the Special Tax Fund (exclusive of the Administrative Expense Account) and available for such purpose, is fully sufficient to pay the principal of, premium, if any, and interest on such Bond or Parity Bond, as and when the same shall become due and payable; or (c) by depositing with the Trustee or another escrow bank appointed by the District, in trust, federal securities described in subparagraph (1) of the definition of Authorized Investments, in which the District may lawfully invest its money, in such amount as will be sufficient, together with the interest to accrue thereon and moneys then on deposit in the Special Tax Fund (exclusive of the Administrative Expense Account) and available for such purpose, together with the interest to accrue thereon, to pay and discharge the principal of, premium, if any, and interest on such Bond or Parity Bond, as and when the same shall become due and payable.
If paid as provided above, then, at the election of the District, and notwithstanding that any Outstanding Bonds and Parity Bonds shall not have been surrendered for payment, all obligations of the District under this Indenture and any Supplemental Indenture with respect to such Bond or Parity Bond shall cease and terminate, except for the obligation of the Trustee to pay or cause to be paid to the Owners of any such Bond or Parity Bond not so surrendered and paid all sums due thereon, and except for the covenants of the District contained in Section 5.2(f) or any covenants in a Supplemental Indenture relating to compliance with the Code. Notice of such election shall be filed with the Trustee not less than ten days prior to the proposed defeasance date, or such shorter period of time as may be acceptable to the Trustee. In connection with a defeasance under (c) above, there shall be provided to the District a verification report from an independent nationally recognized certified public accountant stating its opinion as to the sufficiency of the moneys or securities deposited with the Trustee or the escrow bank to pay and discharge the principal of, premium, if any, and interest on all Outstanding Bonds and Parity Bonds to be defeased in accordance with this Section, as and when the same shall become due and payable, and an opinion of Bond Counsel (which may rely upon the opinion of the certified public accountant) to the effect that the Bonds or Parity Bonds being defeased have been legally defeased in accordance with this Indenture and any applicable Supplemental Indenture.
Upon a defeasance, the Trustee, upon request of the District, shall release the rights of the Owners of such Bonds and Parity Bonds which have been defeased under this Indenture and any Supplemental Indenture and execute and deliver to the District all such instruments as may be desirable to evidence such release, discharge and satisfaction. In the case of a defeasance hereunder of all Outstanding Bonds and Parity Bonds, the Trustee shall pay over or deliver to the District any funds held by the Trustee at the time of a defeasance, which are not required for the purpose of 50 4886-8639-8608v3/022599-0026
paying and discharging the principal of or interest on the Bonds and Parity Bonds when due. The Trustee shall, at the written direction and sole expense of the District, mail, first class, postage prepaid, a notice to the Owners whose Bonds or Parity Bonds have been defeased, in the form directed by the District, stating that the defeasance has occurred.
Section 9.2. Conditions for the Issuance of Parity Bonds and Other Additional Indebtedness. The District may at any time after the issuance and delivery of the Bonds hereunder issue Parity Bonds payable from the Net Taxes and other amounts deposited in the Special Tax Fund (other than in the Administrative Expense Account therein) and secured by a lien and charge upon such amounts equal to the lien and charge securing the Outstanding Bonds and any other Parity Bonds theretofore issued hereunder or under any Supplemental Indenture; provided, however, Parity Bonds may only be issued for the purpose of refunding all or a portion of the Bonds or any Parity Bonds then Outstanding. Parity Bonds may be issued subject to the following additional specific conditions, which are hereby made conditions precedent to the issuance of any such Parity Bonds:
(a) The District shall be in compliance with all covenants set forth in this Indenture and any Supplemental Indenture then in effect and a certificate of the District to that effect shall have been filed with the Trustee; provided, however, that Parity Bonds may be issued notwithstanding that the District is not in compliance with all such covenants so long as immediately following the issuance of such Parity Bonds the District will be in compliance with all such covenants. (b) The issuance of such Parity Bonds shall have been duly authorized pursuant to the Act and all applicable laws, and the issuance of such Parity Bonds shall have been provided for by a Supplemental Indenture duly authorized, executed and delivered by the District which shall specify the following:
(1) the purpose for which such Parity Bonds are to be issued and the fund or funds into which the proceeds thereof are to be deposited; (2) the authorized principal amount of such Parity Bonds; (3) the date and the maturity date or dates of such Parity Bonds; provided that:
(i) each maturity date shall fall on a September 1; (ii) all such Parity Bonds of like maturity shall be identical in all respects, except as to number; (iii) fixed serial maturities or Sinking Fund Payments, or any combination thereof, shall be established to provide for the retirement of all such Parity Bonds on or before their respective maturity dates; and (iv) the maturity of the Parity Bonds to be issued shall not exceed the maturity of the Bonds and Parity being refunded; (4) the description of the Parity Bonds, the place of payment thereof and the procedure for execution and authentication;
(5) the denominations and method of numbering of such Parity Bonds; (6) the amount and due date of each mandatory Sinking Fund Payment, if any, for such Parity Bonds;
(7) the amount, if any, to be deposited from the proceeds of such Parity Bonds in the Subaccount of the Reserve Account established for such Parity Bonds to fund the applicable Reserve Requirement;
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(8) the form of such Parity Bonds; and
(9) such other provisions as are necessary or appropriate and not inconsistent with this Indenture.
(c) The District shall have received the following documents or money or securities, all of such documents dated or certified, as the case may be, as of the date of delivery of such Parity Bonds by the Trustee (unless the Trustee shall be directed by the District to accept any of such documents bearing a prior date):
(1) a certified resolution of the City Council, acting as the legislative body of the District, authorizing the issuance of such Parity Bonds; (2) a written request of the District as to the delivery of such Parity Bonds; (3) an opinion of Bond Counsel and/or general counsel to the District to the effect that: (i) the District has the right and power under the Act to execute and deliver the Supplemental Indenture relating to such Parity Bonds, and such Supplemental Indenture has been duly and lawfully executed by the District, and this Indenture and such Supplemental Indenture are in full force and effect and are valid and binding upon the District and enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors' rights); (ii) this Indenture creates the valid pledge which it purports to create of the Net Taxes and other amounts as provided in this Indenture, subject to the application thereof to the purposes and on the conditions permitted by this Indenture; and (iii) such Parity Bonds are valid and binding limited obligations of the District, enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors' rights) and the terms of this Indenture and the Supplemental Indenture executed and delivered in connection with such Parity Bonds and are entitled to the benefits of this Indenture and such Supplemental Indenture, and such Parity Bonds have been duly and validly authorized and issued in accordance with the Act (or other applicable laws) and this Indenture and such Supplemental Indenture; (4) a certificate of the District containing such statements as may be reasonably necessary to show compliance with the requirements of this Indenture; (5) a certificate of an Independent Financial Consultant certifying that in each Bond Year the Annual Debt Service on the Bonds and Parity Bonds to remain Outstanding following the issuance of the Parity Bonds proposed to be issued is less than the Annual Debt Service on the Bonds and Parity Bonds Outstanding prior to the issuance of such Parity Bonds; and (6) such further documents, money and securities as are required by the provisions of this Indenture and the Supplemental Indenture providing for the issuance of such Parity Bonds.
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ARTICLE X
MISCELLANEOUS
Section 10.1. Cancellation of Bonds and Parity Bonds. All Bonds and Parity Bonds surrendered to the Trustee for payment upon maturity or for redemption shall be upon payment therefor, and any Bond or Parity Bond purchased by the District as authorized herein and delivered to the Trustee for such purpose shall be, cancelled forthwith and shall not be reissued. The Trustee shall dispose of such Bonds and Parity Bonds in accordance with its then -customary procedures, as provided by law, and, upon request of the District, furnish to the District a certificate of such destruction.
Section 10.2. Execution of Documents and Proof of Ownership. Any request, direction, consent, revocation of consent, or other instrument in writing required or permitted by this Indenture to be signed or executed by Owners may be in any number of concurrent instruments of similar tenor and may be signed or executed by such Owners in person or by their attorneys appointed by an instrument in writing for that purpose, or by the bank, trust company or other depository for such Bonds, and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the District. Proof of the execution of any such instrument, or of any instrument appointing any such attorney, and of the ownership of Bonds or Parity Bonds shall be sufficient for the purposes of this Indenture (except as otherwise herein provided), if made in the following manner:
(a) The fact and date of the execution by any Owner or his or her attorney of any such instrument, and of any instrument appointing any such attorney, may be proved by a signature guarantee of any bank or trust company located within the United States of America. Where any such instrument is executed by an officer of a corporation or association or a member of a partnership on behalf of such corporation, association or partnership, such signature guarantee shall also constitute sufficient proof of his or her authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient.
(b) As to any Bond or Parity Bond, the person in whose name the same shall be registered in the Bond Register shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the principal of any such Bond or Parity Bond, and the interest thereon, shall be made only to or upon the order of the registered Owner thereof or his or her legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond or Parity Bond and the interest thereon to the extent of the sum or sums to be paid. Neither the District nor the Trustee shall be affected by any notice to the contrary.
Nothing contained in this Indenture shall be construed as limiting the Trustee or the District to such proof, it being intended that the Trustee or the District may accept any other evidence of the matters herein stated which the Trustee or the District may deem sufficient. Any request or consent of the Owner of any Bond or Parity Bond shall bind every future Owner of the same Bond or Parity Bond in respect of anything done or suffered to be done by the Trustee or the District in pursuance of such request or consent.
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Section 10.3. Unclaimed Moneys. Anything in this Indenture to the contrary notwithstanding, any money held by the Trustee in trust for the payment and discharge of any of the Outstanding Bonds and Parity Bonds which remain unclaimed for two years after the date when such Outstanding Bonds or Parity Bonds have become due and payable, if such money was held by the Trustee at such date, or for two years after the date of deposit of such money if deposited with the Trustee after the date when such Outstanding Bonds or Parity Bonds become due and payable, shall be repaid by the Trustee to the District, as its absolute property and free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look only to the District for the payment of such Outstanding Bonds or Parity Bonds; provided, however, that, before being required to make any such payment to the District, the Trustee, at the sole expense of the District, shall cause to be mailed by first-class mail, postage prepaid, to the registered Owners of such Outstanding Bonds or Parity Bonds at their addresses as they appear on the registration books of the Trustee a notice that said money remains unclaimed and that, after a date named in said notice, which date shall not be less than 30 days after the date of the mailing of such notice, the balance of such money then unclaimed will be returned to the District.
Section 10.4. Provisions Constitute Contract; Governing Law; Venue. The provisions of this Indenture shall constitute a contract between the District and the Owners and the provisions hereof shall be governed by and construed in accordance with the laws of the State of California.
The parties hereby (i) irrevocably submit to the exclusive jurisdiction of any federal or state court sitting in the State of California, (ii) waive any objection to laying of venue in any such action or proceeding in such courts, and (iii) waive any objection that such courts are in inconvenient forum or do not have jurisdiction over any party.
In case any suit, action or proceeding to enforce any right or exercise any remedy shall be brought or taken and, should said suit, action or proceeding be abandoned, or be determined adversely to the Owners or the Trustee, then the District, the Trustee and the Owners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken.
After the issuance and delivery of the Bonds, this Indenture shall be irrepealable, but shall be subject to modifications to the extent and in the manner provided in this Indenture, but to no greater extent and in no other manner.
Section 10.5. Future Contracts. Nothing herein contained shall be deemed to restrict or prohibit the District from making contracts or creating bonded or other indebtedness payable from a pledge of the Net Taxes which is subordinate to the pledge hereunder, or which is payable from the general fund of the District or from taxes or any source other than the Net Taxes and other amounts pledged hereunder.
Section 10.6. Further Assurances. The District will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture, and for the better assuring and confirming unto the Owners of the Bonds or any Parity Bonds the rights and benefits provided in this Indenture.
Section 10.7. Entire Agreement; Severability. This Indenture and the exhibits hereto set forth the entire agreement and understanding of the parties related to this transaction and supersedes all prior agreements and understandings, oral or written. If any covenant, agreement or provision, or 54 4886-8639-8608v3/022599-0026
any portion thereof, contained in this Indenture, or the application thereof to any person or circumstance, is held to be unconstitutional, invalid or unenforceable, the remainder of this Indenture and the application of any such covenant, agreement or provision, or portion thereof, to other persons or circumstances, shall be deemed severable and shall not be affected thereby, and this Indenture, the Bonds and any Parity Bonds issued pursuant hereto shall remain valid and the Owners shall retain all valid rights and benefits accorded to them under the laws of the State of California.
Section 10.8. Notices. Any notices required to be given to the District with respect to the Bonds or this Indenture shall be mailed, first class, postage prepaid, or personally delivered to the City Manager of the City of Beaumont at 55 East Sixth Street, Beaumont, California 92223, and all notices to the Trustee in its capacity as Trustee shall be mailed, first class, postage prepaid, personally delivered or sent via facsimile or electronic (email) transmission (with a portable document format or similar attachment) to the Trustee, Zions Bancorporation, National Association, 650 Town Center Drive, Suite 800, Costa Mesa, California 92626, Attention: Corporate Trust Services.
Section 10.9. Execution in Counterparts. This Indenture may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same agreement. The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture and signature pages for all purposes.
Section 10.10. U.S.A. Patriot Act. The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to this Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the U.S.A.
Patriot Act.
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IN WITNESS WHEREOF, CITY OF BEAUMONT COMMUNITY FACILITIES DISTRICT NO. 2021-1 (Fairway Canyon) has caused this Indenture to be signed by an Authorized Representative of the District and Zions Bancorporation, National Association in token of its acceptance of the trust created hereunder, has caused this Indenture to be signed in its corporate name by its officers identified below, all as of the day and year first above written.
CITY OF BEAUMONT COMMUNITY FACILITIES
DISTRICT NO. 2021-1 (FAIRWAY CANYON)
By:
Mayor of the City of Beaumont, acting as the
legislative body of City of Beaumont
Community Facilities District No. 2021-1
(Fairway Canyon)
ATTEST:
Deputy City Clerk of the City of
Beaumont, acting as the legislative body
of City of Beaumont Community Facilities
District No. 2021-1 (Fairway Canyon)
ZIONS BANCORPORATION, NATIONAL
ASSOCIATION, as Trustee
By:
Authorized Signatory
S-1
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EXHIBIT A
FORM OF SPECIAL TAX BOND
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE DISTRICT OR TRUSTEE FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
R- $
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2021-1 (FAIRWAY CANYON) 2024 SPECIAL TAX BONDS
INTEREST RATE: MATURITY DATE: DATED DATE:
% September 1, 20_ January _, 2024
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: DOLLARS
CUSIP:
CITY OF BEAUMONT COMMUNITY FACILITIES DISTRICT NO. 2021-1 (FAIRWAY CANYON) (the "District") which was formed by the City of Beaumont (the "City") and is situated in the County of Riverside, State of California, FOR VALUE RECEIVED, hereby promises to pay, solely from certain amounts held under the Indenture (as hereinafter defined), to the Owner named above, or registered assigns, on the Maturity Date set forth above, unless redeemed prior thereto as hereinafter provided, the Principal Amount set forth above, and to pay interest on such Principal Amount from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication hereof, unless: (i) the date of authentication is an Interest Payment Date, in which event interest shall be payable from such date of authentication; (ii) the date of authentication is after a Record Date (as hereinafter defined) but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication; or (iii) the date of authentication is prior to the close of business on the first Record Date, in which event interest shall be payable from the Dated Date set 4886-8639-8608v3/022599-0026
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forth above. Notwithstanding the foregoing, if at the time of authentication of this Bond interest is in default, interest on this Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment, interest on this Bond shall be payable from the Dated Date set forth above.
Interest will be paid semiannually on September 1, 2024 and each March 1 and September 1 thereafter (each an "Interest Payment Date"), at the Interest Rate set forth above, until the Principal Amount hereof is paid or made available for payment.
The principal of and premium, if any, on this Bond are payable to the Owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at the Principal Office of the Trustee (as such term is defined in the Indenture), initially Zions Bancorporation, National Association, (the "Trustee"). Interest on this Bond shall be paid by check of the Trustee mailed, by first class mail, postage prepaid, or in certain circumstances described in the Indenture by wire transfer to an account within the United States of America, to the Owner hereof as of the close of business on the fifteenth day of the month preceding the month in which the Interest Payment Date occurs (the "Record Date") at such Owner's address as it appears on the registration books maintained by the Trustee.
This Bond is one of a duly authorized issue of "City of Beaumont Community Facilities District No. 2021-1 (Fairway Canyon) 2024 Special Tax Bonds" (the "Bonds") issued in the aggregate principal amount of $ pursuant to the Mello -Roos Community Facilities Act of 1982, as amended, being Section 53311 et seq. of the California Government Code (the "Act") for the purpose of financing public improvements, funding a reserve subaccount account and paying certain costs related to the issuance of the Bonds. The issuance of the Bonds and the terms and conditions thereof are provided for by a resolution adopted by the City Council of the City, acting in its capacity as the legislative body of the District (the "Legislative Body"), on December 19, 2023, and a Bond Indenture executed in connection therewith dated as of January 1, 2024 (the "Indenture"), by and between the District and the Trustee, and this reference incorporates the Indenture herein, and by acceptance hereof the Owner of this Bond assents to said terms and conditions. The Indenture is adopted under and this Bond is issued under, and both are to be construed in accordance with, the laws of the State of California.
Pursuant to the Act and the Indenture, the principal of, premium, if any, and interest on this Bond are payable solely from the portion of the annual Special Taxes (as defined in the Indenture) authorized under the Act to be levied and collected within the District and certain other amounts pledged to the repayment of the Bonds as set forth in the Indenture. Any amounts for the payment hereof shall be limited to the Net Taxes pledged and collected or foreclosure proceeds received following a default in payment of the Special Taxes and other amounts deposited to the Special Tax Fund (other than the Administrative Expense Account therein) established under the Indenture, except to the extent that other provision for payment has been made by the Legislative Body, as may be permitted by law. The District has covenanted for the benefit of the owners of the Bonds that under certain circumstances described in the Indenture it will commence and diligently pursue to completion appropriate foreclosure proceedings in the event of delinquencies of Special Tax installments levied for payment of principal and interest on the Bonds.
Notwithstanding anything to the contrary contained in herein or in the Indenture, amounts in the 2024 Bonds Reserve Subaccount shall only secure and be available to pay the principal of, redemption premium, if any, and interest on the Bonds, and amounts in the Subaccount of the A-2
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Reserve Account established for a series of Parity Bonds shall secure only and be available to pay the principal of, redemption premium, if any, and interest on, only such series of Parity Bonds.
The Bonds may be redeemed at the option of the District from any source of funds on any Interest Payment Date on or after September 1, 20_, in whole or in part, from such maturities as are selected by the District and by lot within a maturity, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the date of redemption:
Redemption Date
Redemption Price
The Bonds maturing on September 1, 20_ (the "20_ Term Bonds") shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account established under the Indenture, on September 1, 20_, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20 Term Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption price for each redeemed 20 Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:
Term Bonds Maturing September 1, 20_
Sinking Fund Redemption Date
(September 1)
*
* Maturity.
Sinking Fund Payments
$
The Bonds maturing on September 1, 20_ (the "20_ Term Bonds") shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account established under the Indenture, on September 1, 20_, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20_ Term Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption price for each redeemed 20_ Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:
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Term Bonds Maturing September 1, 20_
Sinking Fund Redemption Date
(September 1)
* Maturity.
Sinking Fund Payments
The Bonds maturing on September 1, 20 (the "20 Term Bonds") shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account established under the Indenture, on September 1, 20 , and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20 Term Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption price for each redeemed 20_ Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:
Term Bonds Maturing September 1, 20_
Sinking Fund Redemption Date
(September 1)
*
* Maturity.
Sinking Fund Payments
The Bonds are subject to extraordinary redemption as a whole, or in part on a pro rata basis among maturities and by lot within a maturity, on any Interest Payment Date on or after September 1, 2024, and shall be redeemed by the Trustee, from Prepayments deposited to the Redemption Account plus amounts transferred from the 2024 Bonds Reserve Subaccount in connection with such transfers, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date:
Redemption Date
Redemption Price
Notice of redemption with respect to the Bonds to be redeemed shall be mailed to the registered owners thereof not less than 30 nor more than 45 days prior to the redemption date by first class mail, postage prepaid, to the addresses set forth in the registration books; provided, however, so A-4
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long as the Bonds are registered in the name of the Nominee, such notice shall be given in such manner as complies with the requirements of the Depository. Neither a failure of the Owner hereof to receive such notice nor any defect therein will affect the validity of the proceedings for redemption. All Bonds or portions thereof so called for redemption will cease to accrue interest on the specified redemption date, provided that funds for the redemption are on deposit with the Trustee on the redemption date. Thereafter, the registered owners of such Bonds shall have no rights except to receive payment of the redemption price upon the surrender of the Bonds.
This Bond shall be registered in the name of the Owner hereof, as to both principal and interest, and the District and the Trustee may treat the Owner hereof as the absolute owner for all purposes and shall not be affected by any notice to the contrary.
The Bonds are issuable only in fully registered form in the denomination of $5,000 or any integral multiple thereof and may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations of the same issue and maturity, all as more fully set forth in the Indenture. This Bond is transferable by the Owner hereof, in person or by his or her attorney duly authorized in writing, at the Principal Office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, upon surrender and cancellation of this Bond. Upon such transfer, a new registered Bond of authorized denomination or denominations for the same aggregate principal amount of the same issue and maturity will be issued to the transferee in exchange therefor.
The Trustee shall not be required to register transfers or make exchanges of: (i) any Bonds for a period of 15 days next preceding any selection of the Bonds to be redeemed; or (ii) any Bonds chosen for redemption.
The rights and obligations of the District and of the registered owners of the Bonds may be amended at any time, and in certain cases without notice to or the consent of the registered owners, to the extent and upon the terms provided in the Indenture.
THE BONDS DO NOT CONSTITUTE GENERAL OBLIGATIONS OF THE CITY OR OF THE DISTRICT. NEITHER THE CITY NOR THE DISTRICT IS OBLIGATED TO LEVY OR
PLEDGE, OR HAS LEVIED OR PLEDGED, GENERAL OR SPECIAL TAXES, OTHER THAN THE SPECIAL TAXES REFERENCED HEREIN. THE BONDS ARE LIMITED OBLIGATIONS
OF THE DISTRICT PAYABLE FROM THE PORTION OF THE SPECIAL TAXES AND OTHER
AMOUNTS PLEDGED UNDER THE INDENTURE BUT ARE NOT A DEBT OF THE CITY,
THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR RESTRICTION.
This Bond shall not become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the Trustee.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by law, and that the amount of this Bond, together with all other indebtedness of the District, does not exceed any debt limit prescribed by the laws or Constitution of the State of California.
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IN WITNESS WHEREOF, the District has caused this Bond to be dated the Dated Date, to be signed on behalf of the District by the Mayor of the City by his facsimile signature and attested by the facsimile signature of the Deputy City Clerk of the City.
Mayor of the City of Beaumont, acting as the
legislative body of City of Beaumont Community
Facilities District No. 2021-1 (Fairway Canyon)
ATTEST:
Deputy City Clerk of the City of Beaumont,
acting as the legislative body of City of
Beaumont Community Facilities District
No. 2021-1 (Fairway Canyon)
[FORM OF TRUSTEE'S CERTIFICATE
OF AUTHENTICATION AND REGISTRATION]
This is one of the Bonds described in the within -defined Indenture.
Dated:
, 2024 ZIONS BANCORPORATION, NATIONAL
ASSOCIATION, as Trustee
By:
Authorized Signatory
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[FORM OF LEGAL OPINION]
The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth, a Professional Corporation, in connection with the issuance of, and dated as of the date of the original delivery of, the Bonds. A signed copy is on file in my office.
Deputy City Clerk of the City
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[FORM OF ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto whose tax identification number is
the within -mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s) attorney to transfer the same on the books of the Trustee with full power of substitution in the premises.
Dated:
Signature guaranteed:
NOTE: Signature(s) must be guaranteed by an NOTE: The signatures(s) on this Assignment eligible guarantor institution. must correspond with the name(s) as written on the face of the within Bond in every particular
without alteration or enlargement or any change
whatsoever.
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EXHIBIT B-1
FORM OF REQUISITION FOR DISBURSEMENT OF PROJECT COSTS
CITY OF BEAUMONT COMMUNITY FACILITIES DISTRICT NO. 2021-1 (FAIRWAY CANYON) 2024 SPECIAL TAX BONDS
Zions Bancorporation, National Association (the "Trustee"), is hereby requested to pay from the City Facilities Account of the City of Beaumont Community Facilities District No. 2021-1 (Fairway Canyon) Acquisition and Construction Fund, established by the Bond Indenture, dated as of January 1, 2024, by and between the Trustee and City of Beaumont Community Facilities District No. 2021-1 (Fairway Canyon) (the "District"), the amount specified to the payee named below for payment of the Project Costs set forth in Attachment No. 1 hereto.
Payee:
Address:
Purpose:
Amount: $
The amount is due and payable under purchase order, contract or other authorization and has not formed the basis of any prior request for payment. The conditions for the release of this amount from the City Facilities Account, including those conditions in Section 3.9(b) of the Indenture have been satisfied.
With respect to this Requisition, the District (i) certifies that it has reviewed any wire instructions set forth in such Requisition to confirm such wire instructions are accurate, (ii) agrees to indemnify and hold harmless the Trustee from and against any and all claim, demand, loss, liability, or expense sustained, including but not limited to attorneys' fees and expenses, resulting directly or indirectly as a result of making the requested disbursement, and (iii) agrees that it will not seek recourse from the Trustee as a result of losses incurred by it for making the disbursement in accordance with this Requisition.
There has not been filed with nor served upon the District notice of any lien, right to lien or attachment upon, or stop notice or claim affecting the right to receive payment of the amount specified above which has not been released or will not be released simultaneously with the payment of such amount, other than materialmen's or mechanic's liens accruing by mere operation of law.
Dated: CITY OF BEAUMONT COMMUNITY FACILITIES
DISTRICT NO. 2021-1 (FAIRWAY CANYON)
By:
Name:
Title:
B-1
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Stradling Yocca Carlson & Rauth
Draft dated 12/5/23
DISTRICT CONTINUING DISCLOSURE CERTIFICATE
This Continuing Disclosure Certificate dated January 1, 2024 (the "Disclosure Certificate") is executed and delivered by City of Beaumont Community Facilities District No. 2021-1 (Fairway Canyon) (the "District") in connection with the issuance and delivery by the District of its $ 2024 Special Tax Bonds (the "Bonds"). The Bonds are being issued pursuant to a resolution adopted on December 19, 2023, by the City Council of the City of Beaumont, acting as the legislative body of the District, and the Bond Indenture dated as of January 1, 2024, by and between the District and Zions Bancorporation, National Association, as trustee. The District covenants as follows:
Section 1. Purpose of the Disclosure Agreement. This Disclosure Certificate is being executed and delivered by the District for the benefit of the Owners and Beneficial Owners of the Bonds and in order to assist the Underwriter in complying with Rule 15c2 -12(b)(5) of the Securities and Exchange Commission.
Section 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the District pursuant to, and as described in, Section 3 and 4 of this Disclosure Certificate. "Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income purposes.
"City" means the City of Beaumont.
"Disclosure Representative" shall mean the City Manager, or his or her designee, or such other officer or employee as the District shall designate in writing to the Dissemination Agent from time to time.
"Dissemination Agent" shall mean, initially, Spicer Consulting Group, LLC, or any successor Dissemination Agent designated in writing by the District and which has filed with the then current Dissemination Agent a written acceptance of such designation. "District" shall mean City of Beaumont Community Facilities District No. 2021-1 (Fairway Canyon).
"EMMA" shall mean the Electronic Municipal Market Access system of the MSRB. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate.
"MSRB" shall mean the Municipal Securities Rulemaking Board and any successor entity designated under the Rule as the repository for filings made pursuant to the Rule. 4876-9759-1696v31022599-0026
"Official Statement" shall mean that certain Official Statement for the Bonds dated January , 2024.
"Owners" shall mean the registered owners of the Bonds as set forth in the registration books maintained by the Trustee.
"Repository" shall mean the MSRB or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Unless otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the EMMA website of the MSRB, currently located at http://emma.msrb.org . "Rule" shall mean Rule 15c2 -12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State" shall mean the State of California.
"Trustee" means Zions Bancorporation, National Association or such other entity appointed by the District pursuant to the Indenture to act as the trustee under the Indenture. "Underwriter" shall mean any underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds.
Section 3. Provision of Annual Reports.
(a) The District shall, or, if the Dissemination Agent is other than the District, upon written direction shall cause the Dissemination Agent to, not later than February 10 after the end of the District's Fiscal Year (June 30) commencing with the report due by February 10, 2024, provide to the Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City, if any exist, may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the District's fiscal year changes, the District shall give notice of such change in the same manner as for a Listed Event under Section 5(d).
(b) In the event that the Dissemination Agent is an entity other than the District, then the provisions of this Section 3(b) shall apply. Not later than fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report, the District shall provide the Annual Report to the Dissemination Agent. If by fifteen (15) Business Days prior to the due date for an Annual Report the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the District to determine if the District will be filing the Annual Report in compliance with subsection (a). The District shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the District and shall have no duty or obligation to review such Annual Report.
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(c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to EMMA by the date required in subsection (a), the Dissemination Agent shall send, in a timely manner, a notice to EMMA, in the form required by EMMA. (d) If the Dissemination Agent is other than the District, the Dissemination Agent shall:
(i) determine each year prior to the date for providing the Annual Report the name and address of the repository if other than the MSRB through EMMA; and (ii) promptly after receipt of the Annual Report, file a report with the District certifying that the Annual Report has been provided to EMMA and the date it was provided. (e) Notwithstanding any other provision of this Disclosure Certificate, all filings shall be made in accordance with the MSRB's EMMA system or in another manner approved under the Rule.
Section 4. Content of Annual Reports. The first Annual Report due on February 10, 2024 shall consist of the Official Statement and the audited financial statements of the City for the prior fiscal year. Thereafter, the Annual Report shall contain or include by reference the following:
(a) Financial Statements. The audited financial statements of the City for the prior fiscal year, if any have been prepared and which, if prepared, shall be prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board; provided, however, that the City may, from time to time, if required by federal or state legal requirements, modify the basis upon which its financial statements are prepared. In the event that the City shall modify the basis upon which its financial statements are prepared, the District shall provide the information referenced in Section 8 below regarding such modification. If the City is preparing audited financial statements and such audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) Financial and Operating Data. The Annual Report shall contain or incorporate by reference the following:
(i) the principal amount of the Bonds outstanding as of the September 2 preceding the filing of the Annual Report;
(ii) the balance in each fund under the Indenture and the Reserve Requirement as of the September 30 preceding the filing of the Annual Report; (iii) any changes to the Rate and Method of Apportionment of the Special Taxes approved or submitted to the qualified electors of the District for approval prior to the filing of the Annual Report;
(iv) an update of the value -to -lien ratio for the District substantially in the form of Table 2 in the Official Statement based upon the most recent Special Tax levy preceding the date of the Annual Report and on the assessed values of property for the current fiscal year; (v) the status of any foreclosure actions being pursued by the District with respect to delinquent Special Taxes;
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(vi) a statement whether the District has been included in the County of Riverside's Teeter Plan;
(vii) a description of the collection and delinquency rate of Special Taxes in the District for the Fiscal Year then ended; and
(viii) any information not already included under (i) through (vii) above that the District is required to file in its annual report pursuant to the provisions of the Mello -Roos Community Facilities Act of 1982, as amended, with the California Debt and Investment Advisory Commission.
Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the District or related public entities, which have been submitted to EMMA or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB through EMMA. The District shall clearly identify each such other document so included by reference.
Section 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the District shall give, or cause the Dissemination Agent to give, notice filed with the Repository of the occurrence of any of the following events with respect to the Bonds in a timely manner not more than ten (10) business days after the event:
1. principal and interest payment delinquencies;
2. unscheduled draws on debt service reserves reflecting financial difficulties;
3. unscheduled draws on credit enhancements reflecting financial difficulties;
4. substitution of credit or liquidity providers, or their failure to perform;
5. adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability or of a Notice of Proposed Issue (IRS Form 5701-TEB);
6. tender offers;
7. defeasances;
8. ratings changes;
9. bankruptcy, insolvency, receivership or similar proceedings; and Note: for the purposes of the event identified in subparagraph (9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S.
Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving 4 4876-9759-1696v31022599-0026
the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person.
10. default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the obligated person, any of which reflect financial difficulties.
(b) Pursuant to the provisions of this Section 5, the District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material:
1. unless described in paragraph 5(a)(5) above, notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds;
2. the consummation of a merger, consolidation or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms;
3. appointment of a successor or additional paying agent or the change of the name of a paying agent;
4. nonpayment related defaults;
5. modifications to the rights of Owners of the Bonds;
6. bond calls
7. release, substitution or sale of property securing repayment of the Bonds; and
8. incurrence of a financial obligation of the obligated person, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the obligated person, any of which affect security holders.
(c) Upon the occurrence of a Listed Event under Section 5(b) above, the District shall as soon as possible determine if such event would be material under applicable federal securities laws. (d) If the District determines that knowledge of the occurrence of a Listed Event under Section 5(b) would be material under applicable federal securities laws, the District shall file a notice of such occurrence with the Repository in a timely manner not more than 10 business days after the event.
(e) The District hereby agrees that the undertaking set forth in this Disclosure Certificate is the responsibility of the District and that the Dissemination Agent, if other than the District, shall 5 4876-9759-1696v31022599-0026
not be responsible for determining whether the District's instructions to the Dissemination Agent under this Section 5 comply with the requirements of the Rule. (0 For purposes of the events identified in subparagraphs (a)(10) and (b)(8) under this Section 5, the term "financial obligation" means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term financial obligation shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule and a continuing disclosure undertaking has been entered into.
Section 6. Termination of Reporting Obligation. The District's obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds.
Section 7. Dissemination Agent. The District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be Spicer Consulting Group, LLC. The Dissemination Agent, if other than the District, shall not be responsible in any manner for the content of any notice or report prepared by the District pursuant to this Disclosure Certificate. If at any time there is not any other designated Dissemination Agent, the Trustee shall be the Dissemination Agent. The initial Dissemination Agent shall be the District. The Dissemination Agent may resign by providing thirty (30) days written notice to the District and the Trustee.
Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the District may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) If the amendment or waiver is related to the provisions of Sections 3(a), 4, or 5, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted; (b) The undertaking hereunder, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) The amendment or waiver either (i) is approved by the Owners of the Bonds in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Owners or Beneficial Owners of the Bonds.
In the event of any amendment or waiver of a provision of this Disclosure Certificate, the District shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the District. In addition, if the amendment related to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same 6 4876-9759-1696v31022599-0026
manner as for a Listed Event under Section 5(a), and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the formed accounting principles.
Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the District from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the District chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the District shall have no obligation under this Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
Section 10. Default. In the event of a failure of the District to comply with any provision of this Disclosure Certificate, the Trustee at the written direction of any Underwriter or the Owners of at least 25% aggregate principal amount of Outstanding Bonds, shall, or any Owner or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the District to comply with its obligations under this Disclosure Certificate, but only to the extent funds have been provided to it or it has been otherwise indemnified to its satisfaction from any cost, liability, expense or additional charges of the Trustee whatsoever, including, without limitation, fees and expenses of its attorney. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate shall be an action to compel performance.
Section 11. Duties, Immunities and Liabilities of Dissemination Agent. Where an entity other than the District is acting as the Dissemination Agent, the Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the District agrees to indemnify and save the Dissemination Agent and its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of their powers and duties hereunder, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the District under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.
Section 12. Notices. Any notices or communications to or among any of the parties to this Disclosure Certificate may be given as follows:
District:
City of Beaumont
Community Facilities District No. 2021-1
55 East Sixth Street
Beaumont, CA 92223
Attn: City Manager
Underwriter: Stifel, Nicolaus & Company, Incorporated
2121 Avenue of the Stars, Suite 2150
7 4876-9759-1696v31022599-0026
Los Angeles, CA 90067
Attn: Thomas Jacob
Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s) to which subsequent notice or communications should be sent.
Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the District, the Trustee, the Dissemination Agent, the Underwriter and Owners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.
This Disclosure Certificate is executed as of the date and year first set forth above.
CITY OF BEAUMONT COMMUNITY FACILITIES
DISTRICT NO. 2021-1 (FAIRWAY CANYON)
By:
Disclosure Representative
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$
CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2021-1 (FAIRWAY CANYON) 2024 SPECIAL TAX BONDS
BOND PURCHASE AGREEMENT
, 2024
City of Beaumont
Community Facilities District No. 2021-1 (Fairway
Canyon)
550 East 6th Street
Beaumont, California 92223
Ladies and Gentlemen:
Stifel, Nicolaus & Company, Incorporated, as underwriter (the "Underwriter"), acting not as a fiduciary or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Agreement (this "Purchase Agreement") with the City of Beaumont Community Facilities District No. 2021-1 (Fairway Canyon) (the "Community Facilities District"), which upon acceptance will be binding upon the Underwriter and the Community Facilities District. The agreement of the Underwriter to purchase the Bonds (as hereinafter defined) is contingent upon the Community Facilities District satisfying all of the obligations imposed upon them under this Purchase Agreement. This offer is made subject to the Community Facilities District's acceptance by the execution of this Purchase Agreement and its delivery to the Underwriter at or before 11:59 P.M., local time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the Community Facilities District at any time prior to the acceptance hereof by the Community Facilities District. All capitalized terms used herein, which are not otherwise defined, shall have the meaning provided for such terms in the Bond Indenture, dated as of January 1, 2024 (the "Indenture"), between the Community Facilities District and Zions Bancorporation, National Association, as trustee (the "Trustee").
1. Purchase, Sale and Delivery of the Bonds.
Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein: the Underwriter hereby agrees to purchase from the Community Facilities District and the Community Facilities District hereby agrees to sell to the Underwriter all (but not less than all) of the $ aggregate principal amount of the City of Beaumont Community Facilities District No. 2021-1 (Fairway Canyon) 2024 Special Tax Bonds (the "Bonds"), dated the Closing Date (as hereinafter defined), bearing interest at the rates and maturing on the dates and in the principal amounts set forth in Exhibit A hereto. The purchase price for the Bonds shall be $ (being 100% of the aggregate principal amount thereof, plus an original issue premium of $ and less an Underwriter's discount of $ ).
The Underwriter agrees to make a bona fide public offering of all of the Bonds initially at the public offering prices (or yields) set forth in Exhibit A attached hereto and incorporated herein by
reference. Subsequent to the initial public offering, the Underwriter reserves the right to change the public offering prices (or yields) as it deems necessary in connection with the marketing of the Bonds, provided that the Underwriter shall not change the interest rates set forth in Exhibit A. The Bonds may be offered and sold to certain dealers at prices lower than such initial offering prices.
The Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of, and shall be payable from the Net Taxes as provided in the Indenture, the Preliminary Official Statement (as hereinafter defined), and the Mello -Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the Government Code of the State of California) (the "Community Facilities District Act"). The issuance of the Bonds has been duly authorized by the City Council of the City of Beaumont (the "City"), as the legislative body for the Community Facilities District pursuant to a resolution (the "Community Facilities District Resolution of Issuance") adopted on December 19, 2023.
The proceeds of the Bonds will be used to: (i) pay the cost and expense of certain public facilities; (ii) fund a reserve account securing the Bonds; and (iii) pay costs of issuance of the Bonds.
The Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of, and shall be payable from special taxes pledged thereto as provided in the Indenture.
A. The Community Facilities District hereby acknowledges that the Underwriter is entering into this Purchase Agreement in reliance on the representations, warranties and agreements made by the Community Facilities District herein, and the Community Facilities District shall take all action necessary to enforce its rights hereunder for the benefit of the Underwriter and shall immediately notify the Underwriter if it becomes aware that any representation, warranty or agreement made by the Community Facilities District herein is incorrect in any material respect.
The Community Facilities District acknowledges and agrees that (i) the purchase and sale of the Bonds pursuant to this Purchase Agreement is an arm's -length commercial transaction between the Community Facilities District and the Underwriter, (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as principal and not as the agent or fiduciary of the Community Facilities District, (iii) the Underwriter has not assumed an advisory or fiduciary responsibility in favor of the Community Facilities District with respect to (a) the offering of the Bonds or the process leading thereto (whether or not the Underwriter, or any affiliate of the Underwriter, has advised or is currently advising the Community Facilities District on other matters) or (b) any other obligations to the Community Facilities District with respect to the offering contemplated hereby, except the obligations expressly set forth in this Purchase Agreement or otherwise imposed by law, (iv) the Underwriter has financial interests that differ from those of the Community Facilities District and (v) the Community Facilities District has consulted their own legal, financial and other advisors to the extent they have deemed appropriate in connection with this transaction. The Community Facilities District acknowledges that it has previously provided the Underwriter with an acknowledgement of receipt of the required Underwriter disclosure under Rule G-17 of the Municipal Securities Rulemaking Board ("MSRB"). The Community Facilities District acknowledges and represents that it has engaged Urban Futures, Inc. (the "Municipal Advisor") as its municipal advisor (as defined in Securities and Exchange Commission Rule 15Bal) and will rely solely on the financial advice of the Municipal Advisor with respect to the Bonds. 2
B. Pursuant to the authorization of the Community Facilities District, the Underwriter has distributed copies of the Preliminary Official Statement dated January , 2024, relating to the Bonds, which, together with the cover page, inside cover page and appendices thereto is herein called the "Preliminary Official Statement." By its acceptance of this Purchase Agreement, the Community Facilities District hereby ratifies the use by the Underwriter of the Preliminary Official Statement, and the Community Facilities District agrees to execute a final official statement relating to the Bonds (the "Official Statement") which will consist of the Preliminary Official Statement with such changes as may be made thereto, with the approval of Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel ("Bond Counsel"), Stradling Yocca Carlson & Rauth, a Professional Corporation, Disclosure Counsel ("Disclosure Counsel"), and the Underwriter, and to provide copies thereof to the Underwriter as set forth herein. The Community Facilities District hereby authorizes and requires the Underwriter to use and promptly distribute, in connection with the offer and sale of the Bonds, the Preliminary Official Statement, the Official Statement and any supplement or amendment thereto. The Community Facilities District further authorizes the Underwriter to use and distribute, in connection with the offer and sale of the Bonds, the Indenture, the Continuing Disclosure Certificate executed by the Community Facilities District in connection with the Bonds (the "Continuing Disclosure Certificate"), this Purchase Agreement and all information contained herein, and all other documents, certificates and statements furnished by or on behalf of the Community Facilities District to the Underwriter in connection with the transactions contemplated by this Purchase Agreement.
C. To assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2 -12(b)(5) (the "Rule"), the Community Facilities District will undertake pursuant to the Continuing Disclosure Certificate, in the form attached to the Official Statement as an appendix, to provide annual reports and notices of certain enumerated events. A description of this undertaking is set forth in the Preliminary Official Statement and will also be set forth in the Official Statement.
D. Except as the Underwriter and the Community Facilities District may otherwise agree, the Community Facilities District will deliver to the Underwriter, at the offices of Bond Counsel in Newport Beach, California, or at such other location as may be mutually agreed upon by the Underwriter and the Community Facilities District, the documents hereinafter mentioned; and the Community Facilities District will deliver to the Underwriter through the facilities of The Depository Trust Company ("DTC"), the Bonds, in definitive form (all Bonds bearing CUSIP numbers), duly executed by the Community Facilities District and authenticated by the Trustee in the manner provided for in the Indenture and the Community Facilities District Act at 8:00 a.m. California time, on January , 2024 (the "Closing Date"), and the Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in paragraph (A) of this Section by wire transfer, payable in federal or other immediately available funds (such delivery and payment being herein referred to as the "Closing"). The Bonds shall be in fully registered book -entry form (which may be typewritten) and shall be registered in the name of Cede & Co., as nominee of DTC.
2. Representations, Warranties and Covenants of the Community Facilities District.
The Community Facilities District represents, warrants and covenants to the Underwriter on behalf of itself and the City that:
A. The City is duly organized and validly existing as a general law city under the Constitution and laws of the State of California (the "State") and has duly authorized the formation 3
of the Community Facilities District pursuant to resolutions duly adopted by the City Council (the "Community Facilities District Formation Resolution" and, together with the Community Facilities District Resolution of Issuance, the "Community Facilities District Resolutions") and the Community Facilities District Act. The City Council, as the legislative body of the City and the Community Facilities District, has duly adopted the Community Facilities District Formation Resolution, and has caused to be recorded in the real property records of the County of Riverside, a notice of special tax lien (the "Notice of Special Tax Lien") (the Community Facilities District Formation Resolution and Notice of Special Tax Lien being collectively referred to herein as the "Formation Documents"), and has duly adopted a Community Facilities District Resolution of Issuance. Each of the Formation Documents remains in full force and effect as of the date hereof and has not been amended. The Community Facilities District is duly organized and validly existing as a Community Facilities District under the laws of the State. The Community Facilities District has, and at the Closing Date will have, as the case may be, full legal right, power and authority: (i) to execute, deliver and perform its obligations under this Purchase Agreement, the Continuing Disclosure Certificate and the Indenture, and to carry out all transactions contemplated by each of such agreements; (ii) to issue, sell and deliver the Bonds as provided herein; and (iii) to carry out, give effect to and consummate the transactions contemplated by the Formation Documents, the Community Facilities District Resolution of Issuance, the Indenture, the Bonds, the Continuing Disclosure Certificate, this Purchase Agreement and the Official Statement.
This Purchase Agreement, the Indenture, the Bonds and the Continuing Disclosure Certificate are collectively referred to herein as the "Community Facilities District Documents." B. The Community Facilities District and the City, as applicable, have each complied, and will at the Closing Date be in compliance in all material respects, with the Formation Documents, the Community Facilities District Resolution of Issuance and the Community Facilities District Documents, and any immaterial noncompliance by the Community Facilities District and the City, if any, will not impair the ability of the Community Facilities District and the City, as applicable, to carry out, give effect to or consummate the transactions contemplated by the foregoing.
From and after the date of issuance of the Bonds, the Community Facilities District will continue to comply with the covenants of the Community Facilities District contained in the Community Facilities District Documents.
C. The information in the Preliminary Official Statement and in the Official Statement relating to the Community Facilities District and the Bonds (other than statements pertaining to the book entry system, as to which no view is expressed), is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and, upon delivery and up to and including 25 days after the End of the Underwriting Period (as defined in paragraph (D) below), the Official Statement will be amended and supplemented so as to contain no misstatement of any material fact or omission of any statement necessary to make the statements contained therein, in the light of the circumstances in which such statements were made, not misleading.
D. Up to and including 25 days after the End of the Underwriting Period (as defined below), the Community Facilities District will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter, which consent will not be unreasonably withheld. The Community Facilities District will advise the Underwriter promptly of 4
the institution of any proceedings known to it by any governmental agency prohibiting or otherwise materially affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds. As used herein, the term "End of the Underwriting Period" means the later of such time as: (i) the Bonds are delivered to the Underwriter; or (ii) the Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Unless the Underwriter gives notice to the contrary, the End of the Underwriting Period shall be deemed to be the Closing Date. Any notice delivered pursuant to this provision shall be written notice delivered to the Community Facilities District at or prior to the Closing Date and shall specify a date (other than the Closing Date) to be deemed the "End of the Underwriting Period." E. Except as described in the Preliminary Official Statement, the Community Facilities District is not, in any respect material to the transactions referred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a party or is otherwise subject or bound, and the performance of its obligations under the Community Facilities District Documents and compliance with the provisions of each thereof, or the performance of the conditions precedent to be performed by the Community Facilities District pursuant to this Purchase Agreement, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a party or is otherwise subject or bound, in any manner which would materially and adversely affect the performance by the Community Facilities District of its obligations under the Community Facilities District Documents or the performance of the conditions precedent to be performed by the Community Facilities District pursuant to this Purchase Agreement.
F. Except as may be required under the "blue sky" or other securities laws of any jurisdiction, all approvals, consents, authorizations, elections and orders of, or filings or registrations with, any governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the Community Facilities District of its obligations under the Community Facilities District Documents, and the performance of the conditions precedent to be performed by the Community Facilities District pursuant to this Purchase Agreement, have been or will be obtained at the Closing Date and are or will be in full force and effect at the Closing Date.
G. The Community Facilities District Documents conform as to form and tenor to the descriptions thereof contained in the Official Statement.
H. The Bonds are payable from the Special Tax of the Community Facilities District to be levied within the Community Facilities District, as set forth in the Indenture, which levy has been duly and validly authorized pursuant to the Community Facilities District Act and the Special Taxes to be levied within the Community Facilities District will be fixed and levied in an amount which, together with other available funds, is required for the payment of the principal of, and interest on, the Bonds when due and payable, all as provided in the Indenture. The Community Facilities District has covenanted to cause the Special Taxes to be levied as set forth in the Indenture. 5
I. The Indenture creates a valid pledge of, first lien upon and security interest in, the Net Taxes, and in the moneys in the Special Tax Fund (other than the Administrative Expense Fund) established pursuant to the Indenture, on the terms and conditions set forth in the Indenture.
J. Except as disclosed in the Preliminary Official Statement and Official Statement, there are, to the best of the Community Facilities District's knowledge, no entities with outstanding assessment liens against any of the properties within the Community Facilities District or which are senior to or on a parity with the pledge of the Special Taxes of the Community Facilities District referred to in paragraph (H) hereof
K. The Official Statement as of the date hereof, does not, and as of the Closing Date, will not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (excluding statements therein pertaining to the DTC and its book -entry system and any information provided by the Special Tax Consultant (as such term is defined below) and the Underwriter, as to which no view is expressed).
L. The Preliminary Official Statement was deemed final by a duly authorized officer of the Community Facilities District prior to its delivery to the Underwriter, except for the omission of such information as is permitted to be omitted in accordance with paragraph (b)(1) of the Rule. The Community Facilities District hereby covenants and agrees that, within seven (7) business days from the date hereof, or upon reasonable written notice from the Underwriter within sufficient time to accompany any confirmation requesting payment from any customers of the Underwriter, the Community Facilities District shall cause a final printed form of the Official Statement to be delivered to the Underwriter in sufficient quantity to comply with paragraph (b)(4) of the Rule and Rules G-12, G-15, G-32 and G-36 of the Municipal Securities Rulemaking Board.
M. At the time of acceptance hereof there is and as of the Closing there will be no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body (collectively and individually, an "Action") pending (notice of which has been served on the Community Facilities District) or to the best knowledge of the Community Facilities District or the City threatened, in which any such Action: (i) in any way questions the existence of the Community Facilities District or the titles of the officers of the Community Facilities District to their respective offices; (ii) affects, contests or seeks to prohibit, restrain or enjoin the issuance or delivery of the Bonds or the payment or collection of Special Taxes or any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contests or affects the validity of the Community Facilities District Documents or the consummation of the transactions on the part of the Community Facilities District contemplated thereby; (iii) contests the exemption of interest on the Bonds from federal or State income taxation or contests the powers of the Community Facilities District which may result in any material adverse change relating to the financial condition of the Community Facilities District; or (iv) contests the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserts that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and as of the time of acceptance hereof there is and, as of the Closing Date, there will be no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) of this sentence. 6
N. Any certificate signed on behalf of the Community Facilities District by any officer or employee of the Community Facilities District authorized to do so shall be deemed a representation and warranty by the Community Facilities District to the Underwriter on behalf of itself and the Community Facilities District as to the statements made therein.
O. At or prior to the Closing, the Community Facilities District will have duly authorized, executed and delivered the Continuing Disclosure Certificate in substantially the form attached as an appendix to the Official Statement. Based upon a review of its previous undertakings, and except as disclosed in the Preliminary Official Statement and the Official Statement, the Community Facilities District has not failed to comply in all respects with any previous undertakings with regard to the Rule to provide annual reports or notices of enumerated events in the last five years.
P. The Community Facilities District will apply the proceeds of the Bonds in accordance with the Indenture and as described in the Preliminary Official Statement and Official Statement.
Q. Until such time as moneys have been set aside in an amount sufficient to pay all then outstanding Bonds at maturity or to the date of redemption if redeemed prior to maturity, plus unpaid interest thereon and premium, if any, to maturity or to the date of redemption if redeemed prior to maturity, the Community Facilities District will faithfully perform and abide by all of the covenants, undertakings and provisions contained in the Indenture.
R. Between the date of this Purchase Agreement and the date of Closing, the Community Facilities District will not offer or issue any bonds, notes or other obligations for borrowed money not previously disclosed to the Underwriter.
The Community Facilities District hereby approves the preparation and distribution of the Official Statement, consisting of the Preliminary Official Statement with such changes as are noted thereon and as may be made thereto, with the approval of Bond Counsel, Disclosure Counsel and the Underwriter, from time to time prior to the Closing Date.
The Community Facilities District hereby ratifies any prior use of and authorizes the future use by the Underwriter, in connection with the offering and sale of the Bonds, of the Preliminary Official Statement, the Official Statement, this Purchase Agreement and all information contained herein, and all other documents, certificates and written statements furnished by the Community Facilities District to the Underwriter in connection with the transactions contemplated by this Purchase Agreement.
The execution and delivery of this Purchase Agreement by the Community Facilities District shall constitute a representation by the Community Facilities District to the Underwriter that the representations and warranties contained in this Section 2 with respect to the Community Facilities District are true as of the date hereof.
3. Conditions to the Obligations of the Underwriter. The obligation of the Underwriter to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the representations and warranties on the part of the Community Facilities District contained herein, to the accuracy in all material respects of the statements of the officers and other officials of the Community Facilities District made in any 7
certificates or other documents furnished pursuant to the provisions hereof, to the performance by the Community Facilities District of their obligations to be performed hereunder at or prior to the Closing Date and to the following additional conditions:
A. At the Closing Date, the Community Facilities District Resolutions and the Community Facilities District Documents shall be in full force and effect, and shall not have been amended, modified or supplemented, except as may have been agreed to in writing by the Underwriter, and there shall have been taken in connection therewith, with the issuance of the Bonds, and with the transactions contemplated thereby, all such actions as, in the opinion of Bond Counsel, shall be necessary and appropriate.
B. At the Closing Date, except as described in the Preliminary Official Statement, the City shall not be, in any respect material to the transactions referred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound, and the performance of the conditions precedent to be performed hereunder will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound, in any manner which would materially and adversely affect the performance of the conditions precedent to be performed by the City hereunder.
C. At the Closing Date, except as described in the Preliminary Official Statement, the Community Facilities District shall not be, in any respect material to the transactions referred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a party or is otherwise subject or bound, and the performance by the Community Facilities District of its obligations under the Bonds, the Community Facilities District Resolutions, the Indenture, and any other instruments contemplated by any of such documents, and compliance with the provisions of each thereof, or the performance of the conditions precedent to be performed hereunder, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a party or is otherwise subject or bound, in any manner which would materially and adversely affect the performance by the Community Facilities District of its obligations under the Indenture, the Bonds or the performance of the conditions precedent to be performed by the Community Facilities District hereunder.
D. The information contained in the Official Statement is, as of the Closing Date and as of the date of any supplement or amendment thereto pursuant hereto, true and correct in all material respects and does not, as of the Closing Date or as of the date of any supplement or amendment thereto, contain any untrue statement of a material fact or omit to state a material fact 8
required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
E. Between the date hereof and the Closing Date, the market price or marketability, at the initial offering prices set forth on the cover page of the Official Statement, of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds, shall not have been materially adversely affected, in the judgment of the Underwriter (evidenced by a written notice to the Community Facilities District terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds), by reason of any of the following:
1. Legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America or recommended to the Congress by the President of the United States, the Department of the Treasury, the Internal Revenue Service, or any member of Congress, or favorably reported for passage to either House of Congress by any committee of such House to which such legislation had been referred for consideration, or a decision rendered by a court established under Article III of the Constitution of the United States of America or by the Tax Court of the United States of America, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Treasury Department of the United States of America or the Internal Revenue Service, with the purpose or effect, directly or indirectly, of imposing federal income taxation upon such interest as would be received by any owners of the Bonds beyond the extent to which such interest is subject to taxation as of the date hereof; or
2. Legislation introduced in or enacted (or resolution passed) by the Congress or an order, decree or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission (the "SEC"), or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds, including any or all underlying arrangements, are not exempt from registration under or other requirements of the Securities Act of 1933, as amended (the "Securities Act"), or that the Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), or that the issuance, offering or sale of obligations of the general character of the Bonds, including any or all underlying arrangements, as contemplated hereby or by the Official Statement or otherwise is or would be in violation of the federal securities laws as amended and then in effect; or
3. A general suspension of trading on the New York Stock Exchange or other major exchange shall be in force, or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on any such exchange, whether by virtue of determination by that exchange or by order of the SEC or any other governmental authority having jurisdiction; or
4. The introduction, proposal or enactment of any amendment to the federal or State Constitution or any action by any federal or State court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the Community Facilities District, its property, income, securities (or interest thereon), the validity or enforceability of Special Taxes, or the ability of the Community Facilities District to issue the Bonds as contemplated by the Indenture and the Official Statement; or
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5. Any event occurring, or information becoming known which, in the judgment of the Underwriter, makes untrue in any material respect any statement or information contained in the Preliminary Official Statement or in the Official Statement, or has the effect that the Preliminary Official Statement or the Official Statement contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; or
6. Any national securities exchange, the Comptroller of the Currency, or any other governmental authority, shall impose as to the Bonds, or obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, the Underwriter; or
7. There shall have occurred (1) an outbreak or escalation of hostilities or the declaration by the United States of a national emergency or war or (2) any other calamity or crisis in the financial markets of the United States or elsewhere or the escalation of such calamity or crisis; or
8. Except as disclosed in or contemplated by the Official Statement, any material adverse change in the affairs of the City or Community Facilities District shall have occurred; or
9. Any event or circumstance shall exist that either makes untrue or incorrect in any material respect any statement or information in the Official Statement (other than any statement provided by the Underwriter) or is not reflected in the Official Statement but should be reflected therein in order to make the statements therein, in the light of the circumstances under which they were made, not misleading and, in either such event, the Community Facilities District refuses to permit the Official Statement to be supplemented to supply such statement or information, or the effect of the Official Statement as so supplemented is to materially adversely affect the market price or marketability of the Bonds or the ability of the Underwriters to enforce contracts for the sale of the Bonds; or
10. A general banking moratorium shall have been declared by federal or State authorities having jurisdiction and be in force; or
11. A material disruption in securities settlement, payment or clearance services affecting the Bonds shall have occurred; or
12. Any new restriction on transactions in securities materially affecting the market for securities (including the imposition of any limitation on interest rates) or the extension of credit by, or a charge to the net capital requirements of, underwriters shall have been established by the New York Stock Exchange, the SEC, any other federal or State agency or the Congress of the United States, or by Executive Order; or
13. A decision by a court of the United States shall be rendered, or a stop order, release, regulation or no -action letter by or on behalf of the SEC or any other governmental agency having jurisdiction of the subject matter shall have been issued or made, to the effect that the issuance, offering or sale of the Bonds, including the underlying obligations as contemplated by this Purchase Agreement or by the Official Statement, or any document relating to the issuance, offering 10
or sale of the Bonds, is or would be in violation of any provision of the federal securities laws at the Closing Date, including the Securities Act, the Securities Exchange Act of 1934, as amended and the Trust Indenture Act; or
14. Any proceeding shall have been commenced or be threatened in writing by the SEC against the City or the Community Facilities District; or
15. The commencement of any Action as described in items (i) through (iv) of Section 2(M) hereof.
F. At or prior to the Closing Date, the Underwriter shall have received a counterpart original or certified copy of the following documents, in each case satisfactory in form and substance to the Underwriter:
1. The Official Statement, executed on behalf of the Community Facilities District by an authorized officer;
2. The Indenture, duly executed and delivered by the Community Facilities District and the Trustee;
3. The Community Facilities District Resolutions and the Community Facilities District Documents and the Formation Documents, together with a certificate dated as of the Closing Date of the City Clerk to the effect that the Community Facilities District Resolutions are true, correct and complete copies of the ones duly adopted by the City Council;
4. The Continuing Disclosure Certificate executed and delivered by the Community Facilities District;
5. An unqualified approving opinion of Bond Counsel for the Bonds, dated the Closing Date and addressed to the Community Facilities District, to the effect that the Bonds are the valid, legal and binding obligations of the Community Facilities District and that the interest thereon is excluded from gross income for federal income tax purposes and exempt from personal income taxes of the State, in substantially the form included as an appendix to the Official Statement, together with a letter of Bond Counsel, dated the Closing Date and addressed to the Underwriter, to the effect that such opinion addressed to the Community Facilities District may be relied upon by the Underwriter to the same extent as if such opinion was addressed to it;
6. A supplemental opinion or opinions of Bond Counsel, dated the Closing Date and addressed to the Underwriter, to the effect that:
(i) this Purchase Agreement and the Continuing Disclosure Certificate have been duly authorized, executed and delivered by the Community Facilities District and, assuming due authorization, execution and delivery by the other parties thereto, as applicable, constitute the legal, valid and binding agreement of the Community Facilities District and are enforceable in accordance with their terms, except to the extent that enforceability may be limited by moratorium, bankruptcy, reorganization, insolvency or other similar laws affecting creditors' rights generally or by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases and by limitations on legal remedies against public agencies in the State;
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(ii) the Bonds are not subject to the registration requirements of the Securities Act, and the Indenture is exempt from qualification under the Trust Indenture Act; (iii) the information contained in the Official Statement on the cover and under the captions "THE BONDS" (other than the caption "Debt Service Schedule"), "SOURCES OF PAYMENT FOR THE BONDS," "TAX MATTERS" and "LEGAL MATTERS" and in Appendices B and D to the Official Statement, are accurate insofar as such statements purport to summarize certain provisions of the Bonds, the Indenture and Bond Counsel's final approving opinion.
7. The letter of Disclosure Counsel, dated the Closing Date and addressed to the Community Facilities District and to the Underwriter, to the effect that, without having undertaken to determine independently the accuracy or completeness of the statements contained in the Official Statement, but on the basis of their participation in conferences with representatives of the Community Facilities District, the Special Tax Consultant and others, and their examination of certain documents, nothing has come to their attention which has led them to believe that the Preliminary Official Statement as of its date and the Official Statement as of its date and as of the Closing Date contained or contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except that no opinion or belief need be expressed as to any financial statements or other financial, statistical or engineering data or forecasts, numbers, charts, estimates, projections, assumptions, or expressions of opinion, any information about valuation, appraisals, absorption, archeological or environmental matters, or any information with respect to the City, or about DTC or the book -entry -only system);
8. A certificate dated the Closing Date and signed by an authorized representative of the Community Facilities District or an authorized designee, on behalf of the Community Facilities District to the effect that: (i) the representations and warranties made by the Community Facilities District contained herein are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date; (ii) to the best knowledge of such officer, no event has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purpose for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; and (iii) the Community Facilities District has complied with all the agreements and satisfied all the conditions on its part to be satisfied under this Purchase Agreement, the Community Facilities District Resolutions, the Community Facilities District Documents and the Official Statement at or prior to the Closing Date;
9. An opinion of the City Attorney of the City, dated the date of Closing and addressed to the Underwriter and the City, to the effect that:
(i) The City is a municipal corporation and general law city, duly organized and existing under the Constitution and laws of the State of California; (ii) The Community Facilities District Resolutions have been duly adopted at meetings of the City Council, which were called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the Community Facilities District Resolutions are in full force and effect and have not been modified, amended, rescinded or repealed since the respective dates of their adoption; 12
(iii) The Community Facilities District Documents and the Official Statement have been duly authorized, executed and delivered by the City and the Community Facilities District Documents constitute the legal, valid and binding obligations of the Community Facilities District enforceable against the Community Facilities District in accordance with their terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights, to the application of equitable principles where equitable remedies are sought and to the exercise of judicial discretion in appropriate cases; (iv) Except as may be stated in the Official Statement, there is no action, suit, proceeding or investigation before or by any court, public board or body pending (notice of which has been served on the City or the Community Facilities District) or, to such counsel's knowledge, threatened wherein an unfavorable decision, ruling or finding would: (a) affect the creation, organization, existence or powers of the City, or the titles of its members and officers to their respective offices; or (b) affect the validity of the Community Facilities District Documents or restrain or enjoin the repayment of the Bonds or in any way contest or affect the validity of the Community Facilities District Documents or contest the authority of the Community Facilities District or the City to enter into or perform its obligations under any of the Community Facilities District Documents, questions the right of the Community Facilities District to use Special Taxes levied within the Community Facilities District for the repayment of the Bonds or affects in any manner the right or ability of the Community Facilities District to collect or pledge the Special Taxes levied within the Community Facilities District for the repayment of the Bonds;
10. A certificate dated the Closing Date from Spicer Consulting Group, LLC (the "Special Tax Consultant") addressed to the Community Facilities District and the Underwriter to the effect that: (i) the Special Tax if collected in the maximum amounts permitted pursuant to the Rate and Method of Apportionment of Special Taxes of the Community Facilities District as of the Closing Date would generate at least 110% of the annual debt service payable with respect to the Bonds plus budgeted administrative expenses in each year, based on such assumptions and qualifications as shall be acceptable to the Underwriter; and (ii) the statements in the Official Statement provided by the Special Tax Consultant concerning Special Taxes in the Community Facilities District and all information supplied by it for use in the Official Statement were as of the date of the Official Statement and are as of the Closing Date true and correct, and do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;
11. Certified copies of the general resolution of the Trustee authorizing the execution and delivery of certain documents by certain officers of the Trustee, which resolution authorizes the execution of the Indenture and the authentication of the Bonds;
12. A certificate of the Trustee, addressed to the Underwriter, and the Community Facilities District dated the Closing Date, to the effect that: (i) the Trustee is authorized to carry out corporate trust powers, and have full power and authority to perform its duties under the Indenture; (ii) the Trustee is duly authorized to execute and deliver the Indenture, to accept the obligations created by the Indenture and to authenticate the Bonds pursuant to the terms of the Indenture; (iii) no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Trustee that has not been obtained is or will be required for the authentication of the Bonds or the consummation by the Trustee of the other transactions contemplated to be performed by the Trustee in connection with the authentication of the Bonds and the acceptance and performance of the obligations created by the Indenture; and (iv) to the best of its 13
knowledge, compliance with the terms of the Indenture will not conflict with, or result in a violation or breach of, or constitute a default under, any loan agreement, indenture, bond, note, resolution or any other agreement or instrument to which the Trustee is a party or by which it is bound, or any law or any rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over the Trustee or any of its activities or properties;
13. An opinion of counsel to the Trustee dated the Closing Date, addressed to the Underwriter, and the Community Facilities District to the effect that the Trustee is a national banking association duly organized and validly existing under the laws of the United States having full power and being qualified to enter into, accept and agree to the provisions of the Indenture, and that such documents have been duly authorized, executed and delivered by the Trustee, and, assuming due execution and delivery by the other parties thereto, constitutes the legal, valid and binding obligation of the Trustee, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors' rights in general and except as such enforceability may be limited by the application of equitable principles if equitable remedies are sought;
14. A certificate of the Community Facilities District dated the Closing Date, in a form acceptable to Bond Counsel and the Underwriter, that the Bonds are not arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended;
15. A Letter of Representations of Woodside 05S, LP, a California limited partnership ("Woodside") in connection with the printing of the Preliminary Official Statement dated the date of the Preliminary Official Statement, substantially in the form attached as part of Exhibit D hereto or as such Letter of Representations may be modified with the approval of the Underwriter and Bond Counsel, and a Closing Certificate of Woodside dated the Closing Date, substantially in the form attached as part of Exhibit D hereto;
16. A Letter of Representations of D.R. Horton Los Angeles Holding Company, Inc., a California corporation ("D.R. Horton") in connection with the printing of the Preliminary Official Statement dated the date of the Preliminary Official Statement, substantially in the form attached as part of Exhibit D hereto or as such Letter of Representations may be modified with the approval of the Underwriter and Bond Counsel, and a Closing Certificate of D.R. Horton dated the Closing Date, substantially in the form attached as part of Exhibit D hereto;
17. A Letter of Representations of Richmond American Homes of Maryland, Inc., a Maryland corporation ("Richmond American") in connection with the printing of the Preliminary Official Statement dated the date of the Preliminary Official Statement, substantially in the form attached as part of Exhibit D hereto or as such Letter of Representations may be modified with the approval of the Underwriter and Bond Counsel, and a Closing Certificate of Richmond American dated the Closing Date, substantially in the form attached as part of Exhibit D hereto;
18. An opinion or opinions of counsel to each of Woodside, D.R. Horton, and Richmond American, each dated the date of the Closing addressed to the Community Facilities and the Underwriter, in form and substance acceptable to the Underwriter and Bond Counsel.
19. An opinion of Kutak Rock LLP, counsel to the Underwriter ("Underwriter's Counsel"), dated the date of Closing and addressed to the Underwriter in form and substance acceptable to the Underwriter; and
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20. A certificate in form and substance as set forth in Exhibit C hereto of Integra Realty Resources, Rocklin, California, the appraiser of the property within the Community Facilities District, dated as of the Closing Date.
21. Such additional legal opinions, certificates, instruments and other documents as the Underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the Closing Date, of the material representations and warranties of the Community Facilities District contained herein, and of the statements and information contained in the Official Statement and the due performance or satisfaction by the Community Facilities District at or prior to the Closing of all agreements then to be performed and all conditions then to be satisfied by the Community Facilities District in connection with the transactions contemplated hereby and by the Indenture and the Official Statement.
If the Community Facilities District shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds contained in this Purchase Agreement, or if the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds shall be terminated for any reason permitted by this Purchase Agreement, this Purchase Agreement shall terminate and neither the Community Facilities District nor the Underwriter shall be under any further obligation hereunder, except that the respective obligations of the Underwriter and the Community Facilities District set forth in Section 5 hereof shall continue in full force and effect.
4. Establishment of Issue Price.
A. The Underwriter agrees to assist the Community Facilities District in establishing the issue price of the Bonds and shall execute and deliver to the Community Facilities District at Closing an "issue price" or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit B, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Community Facilities District and Bond Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds.
B. Except as otherwise set forth in Exhibit A attached hereto, the Community Facilities District will treat the first price at which 10% of each maturity of the Bonds (the "10% test") is sold to the public as the issue price of that maturity (if different interest rates apply within a maturity, each separate CUSIP number within that maturity will be subject to the 10% test). At or promptly after the execution of this Purchase Agreement, the Underwriter shall report to the Community Facilities District the price or prices at which it has sold to the public each maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the Community Facilities District the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until the 10% test has been satisfied as to the Bonds of that maturity or until all Bonds of that maturity have been sold to the public.
C. The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Agreement at the offering price or prices (the "initial offering price"), or at the corresponding yield or yields, set forth in Exhibit A attached hereto, except as otherwise set forth therein. Exhibit A also sets forth, as of the date of this Purchase Agreement, the maturities, if any, of the Bonds for which the Underwriter represents that (i) the 10% test has been satisfied (assuming orders are confirmed by the close of the business day immediately following the 15
date of this Purchase Agreement) and (ii) the 10% test has not been satisfied and for which the Community Facilities District and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Community Facilities District to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the "hold -the -offering -price rule"). So long as the hold -the -offering -price rule remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following:
(1) the close of the fifth (5th) business day after the sale date; or (2) the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.
The Underwriter shall promptly advise the Community Facilities District when it has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public, if that occurs prior to the close of the fifth (5th) business day after the sale date.
D. The Underwriter confirms that:
(i) any selling group agreement and any third -party distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker -dealer that is a party to such third -party distribution agreement, as applicable:
(A)(i) to report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be reasonable periodic intervals or otherwise upon request of the Underwriter and (ii) to comply with the hold -the -offering -price rule, if applicable, if and for so long as directed by the Underwriter,
(B) to promptly notify the Underwriter of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below), and (C) to acknowledge that, unless otherwise advised by the dealer or broker - dealer, the Underwriter shall assume that each order submitted by the dealer or broker -dealer is a sale to the public.
(ii) any selling group agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer that is a party to a third -party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker -dealer that is a party to such third -party distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% 16
test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the hold -the -offering -price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires.
E. The Community Facilities District acknowledges that, in making the representation set forth in this section, the Underwriter will rely on (i) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold -the -offering - price rule, if applicable to the Bonds, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a third -party distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker -dealer that is a party to such agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold -the -offering -price rule, if applicable to the Bonds, as set forth in the third -party distribution agreement and the related pricing wires.
F. The Underwriter acknowledges that sales of any Bonds to any person that is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below) shall not constitute sales to the public for purposes of this section.
Further, for purposes of this section:
(i) "public" means any person other than an underwriter or a related party; (ii) "underwriter" means (A) any person that agrees pursuant to a written contract with the Community Facilities District (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a third -party distribution agreement participating in the initial sale of the Bonds to the public);
(iii) a purchaser of any of the Bonds is a "related party" to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (A) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (B) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (C) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other); and
(iv) "sale date" means the date of execution of this Purchase Agreement by all parties.
5. Expenses. Whether or not the transactions contemplated by this Purchase Agreement are consummated, the Underwriter shall be under no obligation to pay, and the Community Facilities District shall pay only from the proceeds of the Bonds, or any other legally available funds of the 17
City, or the Community Facilities District, but only as the Community Facilities District and such other party providing such services may agree, all expenses and costs of the Community Facilities District incident to the performance of its obligations in connection with the authorization, execution, sale and delivery of the Bonds to the Underwriter, including, without limitation, printing costs, initial fees of the Trustee, including fees and disbursements of their counsel, if any, fees and disbursements of Bond Counsel, Disclosure Counsel and other professional advisors employed by the City, costs of preparation, printing, signing, transportation, delivery and safekeeping of the Bonds and for expenses (included in the expense component of the spread) incurred by the Underwriter on behalf of the City's employees which are incidental to implementing this Purchase Agreement, including, but not limited to, meals, transportation, lodging, and entertainment of those employees. The Underwriter shall pay all out-of-pocket expenses of the Underwriter, including, without limitation, advertising expenses, the California Debt and Investment Advisory Commission fee, CUSIP Services Bureau charges, regulatory fees imposed on new securities issuers and any and all other expenses incurred by the Underwriter in connection with the public offering and distribution of the Bonds, including fees and disbursements of Underwriter's Counsel. Any meals in connection with or adjacent to meetings, rating agency presentations, pricing activities or other transaction -related activities shall be considered an expense of the transaction and included in the expense component of the Underwriter's discount.
6. Notices. Any notice of other communication to be given to the Community Facilities District under this Purchase Agreement may be given by delivering the same in writing to the City of Beaumont, 550 East 6th Street, Beaumont, California 92223, Attention: City Manager; any notice or other communication to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in writing to Stifel, Nicolaus & Company, Incorporated, 2121 Avenue of the Stars, Suite 2150, Los Angeles, California 90067, Attention: Public Finance.
7. Parties In Interest. This Purchase Agreement is made solely for the benefit of the Community Facilities District and Underwriter (including any successors or assignees of the Underwriter) and no other person shall acquire or have any right hereunder or by virtue hereof.
8. Survival of Representations and Warranties. The representations and warranties of the Community Facilities District under this Purchase Agreement shall remain operative and in full force and effect, regardless of any investigations made by or on behalf of the Underwriter, and shall survive the delivery and payment for the Bonds and the termination of this Purchase Agreement.
9. Execution in Counterparts. This Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.
10. Effective. This Purchase Agreement shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the Community Facilities District and shall be valid and enforceable as of the time of such acceptance.
11. No Prior Agreements. This Purchase Agreement supersedes and replaces all prior negotiations, agreements and understanding among the parties hereto in relation to the sale of the Bonds by the Community Facilities District.
12. Governing Law. This Purchase Agreement shall be governed by the laws of the State of California.
18
13. Effective Date. This Purchase Agreement shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the Community Facilities District and shall be valid and enforceable as of the time of such acceptance.
Very truly yours,
STIFEL, NICOLAUS & COMPANY,
INCORPORATED, as Underwriter
By:
Managing Director
The foregoing is hereby agreed to and
accepted as of the date first above written:
CITY OF BEAUMONT COMMUNITY
FACILITIES DISTRICT NO. 2021-1
(FAIRWAY CANYON)
By:
Authorized Officer
Time of Execution: p.m. California time
[EXECUTION PAGE OF BOND PURCHASE AGREEMENT]
S-1
EXHIBIT A
CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2021-1 (FAIRWAY CANYON) 2024 SPECIAL TAX BONDS
Subject to
Hold -The -
10% Test Offering -
Maturity Principal Interest 10% Test Not Price Rule
(September 1) Amount Rate Yield Price Satisfied* Satisfied 2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
20 (T)
20 (T)
20 (T)
20 (T)
(T) Term Bond.
(C) Priced to optional call at [par] on September 1, 20_. *At the time of execution of this Purchase Agreement and assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement.
A-1
EXHIBIT B
FORM OF ISSUE PRICE CERTIFICATE
CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2021-1 (FAIRWAY CANYON) 2024 SPECIAL TAX BONDS
The undersigned, on behalf of Stifel, Nicolaus & Company, Incorporated ("Stifel") hereby certifies as set forth below with respect to the sale and issuance of the above -captioned bonds (the "Bonds").
1. Sale of the General Rule Maturities. As of the date of this certificate, for each Maturity of the General Rule Maturities, the first price at which at least 10% of such Maturity was sold to the Public is the respective price listed in Schedule A.
2. Defined Terms.
(a) General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the "General Rule Maturities."
(b) Issuer means the City of Beaumont Community Facilities District No. 2021-1 (Fairway Canyon).
(c) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate maturities.
(d) Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter.
The term "related party" for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (e) Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).
The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Stifel's interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder.
The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by Stradling Yocca Carlson & Rauth, a Professional Corporation in connection with rendering its opinion that the interest on the B-1
Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.
STIFEL, NICOLAUS & COMPANY,
INCORPORATED
By:
Name:
By:
Name:
Dated: [Closing Date]
B-2
SCHEDULE A
SALE PRICES OF THE GENERAL RULE MATURITIES
(To be attached)
B-3
EXHIBIT C
CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2021-1 (FAIRWAY CANYON) 2024 SPECIAL TAX BONDS
CERTIFICATE OF APPRAISER
The undersigned hereby states and certifies:
1. That he or she is an authorized principal of Integra Realty Resources, Rocklin, California (the "Appraiser") and as such is familiar with the facts herein certified and is authorized and qualified to certify the same.
2. That the Appraiser has prepared an appraisal report dated , 2023, with an appraisal date of , 2023 (the "Appraisal Report"), on behalf of the City of Beaumont Community Facilities District No. 2021-1 (Fairway Canyon) (the "Community Facilities District") and in connection with the Official Statement dated [BPA Date] ("Official Statement"), concerning the City of Beaumont Community Facilities District No. 2021-1 (Fairway Canyon) 2024 Special Tax Bonds (the "Bonds").
3. That the Appraiser hereby consents to the reproduction and use of the Appraisal Report and the Bring Forward Letter appended to the Preliminary Official Statement and the Official Statement. The Appraiser also consents to the references to the Appraiser, the Appraisal and Bring Forward Letter made in the Preliminary Official Statement and the Official Statement.
4. In the opinion of the Appraiser the assumptions made in the Appraisal Report and Bring Forward Letter are reasonable.
5. That the Official Statement has been reviewed on behalf of the Appraiser and to the best knowledge of the Appraiser the statements concerning the Appraisal Report and the value of the property contained under the captions "INTRODUCTION — Appraisal Report," "THE COMMUNITY FACILITIES DISTRICT — Property Values and the Appraisal," and "APPENDIX H — APPRAISAL REPORT" are true, correct and complete in all material respects and do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
6. Each of the parcels appraised by the Appraiser is encompassed within the Community Facilities District as set forth in the boundary map of the Community Facilities District.
7. That, as of the date of the Official Statement and as of the date hereof, the Appraisal Report appended to the Official Statement, to the best of my knowledge and belief, and subject to all of the Limiting Conditions and Major Assumptions set forth in the Appraisal Report, does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, in the light of the circumstances under which they were made, not misleading, and no events or occurrences have been ascertained by us or have come to our attention that would substantially change the estimated values stated in the Appraisal Report.
However, we have not performed any procedures since the date of value set forth in the Appraisal Report to obtain knowledge of such events or occurrences nor are we obligated to do so in the future.
8. The Community Facilities District and Stifel, Nicolaus & Company, Incorporated, as underwriter, are entitled to rely on the Certificate.
Dated: [Closing Date]
INTEGRA REALTY RESOURCES
By:
EXHIBIT D
CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2021-1 (FAIRWAY CANYON) 2024 SPECIAL TAX BONDS
FORM OF LETTER OF REPRESENTATIONS AND CLOSING CERTIFICATE LETTER OF REPRESENTATIONS OF [WOODSIDE 05S, LP] [ D.R. HORTON LOS ANGELES HOLDING COMPANY, INC.] [RICHMOND AMERICAN HOMES OF MARYLAND, INC.]
[POS Date]
City of Beaumont Community Facilities District No. 2021-1 (Fairway Canyon) Beaumont, California
Stifel, Nicolaus & Company, Incorporated
Los Angeles, California
Ladies and Gentlemen:
Reference is made to the City of Beaumont Community Facilities District No. 2021-1 (Fairway Canyon) 2024 Special Tax Bonds (the "Bonds") and to the Bond Purchase Agreement to be entered into by and between the City of Beaumont Community Facilities District No. 2021-1 (Fairway Canyon) (the "Community Facilities District"), and Stifel, Nicolaus & Company, Incorporated, as Underwriter (the "Purchase Agreement"). This Letter of Representations of [Woodside 05S, LP] [D.R. Horton Los Angeles Holding Company, Inc.] [Richmond American Homes of Maryland, Inc.] (the "Letter of Representations") is delivered pursuant to and in satisfaction of the Purchase Agreement. Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Purchase Agreement.
The undersigned certifies that he is familiar with the facts herein certified and is authorized and qualified to certify the same as an authorized officer or representative of [Woodside 05S, LP] [D.R. Horton Los Angeles Holding Company, Inc.] [Richmond American Homes of Maryland, Inc.] (the "Developer"), and the undersigned, on behalf of the Developer, further certifies as follows:
1. The Developer is duly organized and validly existing under the laws of the State of [California] [Maryland], is in good standing under the laws of the State of [California] [Maryland], [has the requisite authority to transact business in California] and has all requisite [corporate] [limited partnership] right, power and authority: (i) to execute and deliver this Letter of Representations; and (ii) to undertake all of the transactions on its part described in the Preliminary Official Statement.
2. As set forth in the Preliminary Official Statement, title to a certain portion of the property within the Community Facilities District is held in the name of the Developer.
The undersigned, on behalf of the Developer, makes the representations herein with respect
to all such property to which it holds title in the Community Facilities District as of the date hereof (the "Property"). Except as otherwise described in the Preliminary Official Statement, the Developer is, and the Developer's current expectations are that the Developer shall remain, the party responsible for the development of the Property. The Developer has not entered into an agreement for development or management of the Property by any other entity, except such subcontracts, consultant agreements, and similar agreements for land development activities associated with the Developer's development plan as are entered into in the ordinary course of business.
3. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, the Developer and its Relevant Entities have not violated any applicable law or administrative regulation of the State of California or the United States of America, or any agency or instrumentality of either, which violation could reasonably be expected to materially and adversely affect the Developer's ability to pay Special Taxes due at any time with respect to the portion of the Property then owned by the Developer (to the extent the responsibility of the Developer) prior to delinquency.
4. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, (a) the Developer and its Relevant Entities are not in breach of or in default under any applicable judgment or decree or any loan agreement, line of credit, option agreement, development agreement (including mitigation agreements or joint community facilities agreements), indenture, fiscal agent agreement, bond, or note (collectively, the "Material Agreements") to which the Developer or its Relevant Entities are a party or otherwise subject, which breach or default could reasonably be expected to materially and adversely affect the ability of the Developer to develop the Property as described in the Preliminary Official Statement or to pay the Special Taxes due at any time with respect to the portion of the Property then owned by the Developer (to the extent the responsibility of the Developer) prior to delinquency and (b) no event has occurred and is continuing that with the passage of time or giving of notice, or both, would constitute such a breach or default under any Material Agreement which could reasonably be expected to materially and adversely affect the ability of the Developer to develop the Property as described in the Preliminary Official Statement, or to pay the Special Taxes due at any time with respect to the portion of the Property then owned by the Developer (to the extent the responsibility of the Developer) prior to delinquency.
5. Except as described in the Preliminary Official Statement, there are no material loans outstanding and unpaid and no material lines of credit of the Developer or its Relevant Entities that are secured by an interest in the Property.
6. Except as set forth in the Preliminary Official Statement, no action, suit, proceeding, inquiry or investigation at law or in equity, before or by any court, regulatory agency, public board or body is pending against the Developer (with proper service of process to the Developer having been accomplished) or, to the Actual Knowledge of the Undersigned, is pending against any current Relevant Entity (with proper service of process to such Relevant Entity having been accomplished) or, to the Actual Knowledge of the Undersigned, is threatened in writing against the Developer or any such Relevant Entity (a) to restrain or enjoin the collection of Special Taxes or other sums pledged or to be pledged to pay the principal of and interest on the Bonds (e.g., the Bonds Reserve Subaccount in the Reserve Account established under the Indenture), (b) to restrain or enjoin the development
of the Property as described in the Preliminary Official Statement, (c) in any way contesting or affecting the validity of the Special Taxes, or (d) which if successful, is reasonably likely to materially and adversely affect the Developer's ability to complete the development and sale of the Property as described in the Preliminary Official Statement or to pay Special Taxes due at any time with respect to the portion of the Property then owned by the Developer (to the extent the responsibility of the Developer) prior to delinquency.
7. As of the date of the Preliminary Official Statement, the information contained therein solely with respect to the Developer, its Relevant Entities, the proposed development of the Property, ownership of the Property, the Developer's development plan, the Developer's financing plan, the Developer's lenders (if any), and contractual arrangements of the Developer or any Relevant Entities (including, if material to the Developer's development plan or the Developer's financing plan, other loans of the Developer or such Relevant Entities) as set forth under the sections of the Preliminary Official Statement captioned "PROPERTY OWNERSHIP AND THE DEVELOPMENT — [D.R. Horton Development and Financing Plan]" [Woodside Development and Financing Plan]" [Richmond American Development and Financing Plan]" (excluding therefrom in all cases information regarding the Appraisal, market value ratio and annual special tax ratio, and information which is identified as having been provided by a source other than the Developer), is true and correct in all material respects and did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
8. The Developer covenants that, while the Bonds or any refunding obligations related thereto are outstanding, the Developer and its Relevant Entities which it controls will not bring any action, suit, proceeding, inquiry, or investigation at law or in equity, before any court, regulatory agency, public board or body, that in any way seeks to challenge or overturn the formation of the Community Facilities District, to challenge the adoption of the ordinance related to the Community Facilities District, levying Special Taxes within the Community Facilities District, to invalidate the Community Facilities District, or any of the Bonds or any refunding bonds, or to invalidate the special tax liens imposed under Section 3115.5 of the Streets and Highways Code based on recordation of the notices of special tax lien relating thereto. The foregoing covenant shall not prevent the Developer or any Relevant Entity in any way from bringing any other action, suit, proceeding, inquiry, or investigation at law or in equity, before any court, regulatory agency, public board or body including, without limitation, (a) an action or suit contending that the Special Tax has not been levied in accordance with the methodologies contained in the Rate and Method of Apportionment of Special Taxes for the Community Facilities District pursuant to which the Special Taxes are levied, (b) an action or suit with respect to the application or use of the Special Taxes levied and collected, or (c) an action or suit to enforce the obligations of the City of Beaumont and/or the Community Facilities District under resolutions which established the Community Facilities District, authorized the levy of a special tax within the Community Facilities District, determined the necessity to incur bonded indebtedness within the Community Facilities District, and called an election within the Community Facilities District on the proposition of incurring bonded indebtedness, levying a special tax and setting an appropriations limit within the Community Facilities District, the Resolution, the Indenture, or any other agreements among the Developer, a Relevant Entity, the City, and/or the Community Facilities District or to which the Developer or a Relevant Entity is a party or beneficiary.
9. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, the Developer is not aware that any other public debt secured by a tax or assessment on the Property exists or is in the process of being authorized or any assessment districts or community facilities districts have been or are in the process of being formed that include any portion of the Property.
10. The Developer has been developing or has been involved in the development of numerous projects over an extended period of time. It is likely that the Developer and some of its Relevant Entities have been delinquent at one time or another in the payment of ad valorem property taxes, special assessments or special taxes. However, to the Actual Knowledge of the Undersigned, neither the Developer nor any Relevant Entity has been delinquent in any material extent in the last five years in the payment of special assessments or special taxes on property in California owned by the Developer or by any such Relevant Entity during the period of its ownership included within the boundaries of a community facilities district or an assessment district within California that (a) caused a draw on a reserve fund relating to such assessment district or community facilities district financing or (b) resulted in a foreclosure action being filed against the delinquent Developer or Relevant Entity in a court of law.
11. The Developer consents to the issuance of the Bonds. The Developer expects that the proceeds of the Bonds will be used as described in the Preliminary Official Statement.
12. The Developer is aware of the requirement to comply with the provision of the Mello -Roos Community Facilities Act of 1982, as amended relating to the Notice of Special Tax described in Government Code Section 53341.5 in connection with the sale of the Property, or portions thereof.
13. To the Actual Knowledge of the Undersigned, the Developer is able to pay its bills as they become due and no legal proceedings are pending against the Developer (with proper service of process to the Developer having been accomplished) or, to the Actual Knowledge of the Undersigned, threatened in writing in which the Developer may be adjudicated as bankrupt or discharged from any and all of its debts or obligations, or granted an extension of time to pay its debts or obligations, or be allowed to reorganize or readjust its debts or obligations, or be subject to control or supervision of the Federal Deposit Insurance Corporation.
14. To the Actual Knowledge of the Undersigned, Relevant Entities of the Developer are able to pay their bills as they become due and no legal proceedings are pending against any Relevant Entity of the Developer (with proper service of process to the applicable Relevant Entity having been accomplished) or, to the Actual Knowledge of the Undersigned, threatened in writing in which the Relevant Entities of the Developer may be adjudicated as bankrupt or discharged from any or all of their debts or obligations, or granted an extension of time to pay their debts or obligations, or be allowed to reorganize or readjust their debts or obligations, or be subject to control or supervision of the Federal Deposit Insurance Corporation.
15. The Developer has not filed for, nor is the Developer aware of, current proceedings for the reassessment of the assessed value of portions of the Property, other than in connection with the sale of homes to individual homebuyers.
16. Based upon its current development plans, including, without limitation, its current budget and subject to economic conditions and risks generally inherent in the development of real property, including, but not limited to, the risks described in the Preliminary Official Statement under the sections "SPECIAL RISK FACTORS" and "PROPERTY OWNERSHIP AND THE DEVELOPMENT— [D.R. Horton Development and Financing Plan]" [Woodside Development and Financing Plan]" [Richmond American Development and Financing Plan]" the Developer anticipates that it will have sufficient funds to complete the development of the Property as described in the Preliminary Official Statement, and to pay Special Taxes due at any time with respect to the portion of the Property then owned by the Developer (to the extent the responsibility of the Developer) prior to delinquency, and the Developer does not anticipate that the City or the Community Facilities District will be required to resort to a draw on the Bonds Reserve Subaccount in the Reserve Account for payment of principal of or interest on the Bonds due to the Developer's nonpayment of Special Taxes. However, neither the Developer nor its Relevant Entities are obligated to make any additional capital contribution or loan to the Developer at any time, and the Developer reserves the right to change its development plan and financing plan for the Property at any time without notice, and there is no recourse against the Developer for failure to pay Special Taxes other than the filing of a foreclosure action against the delinquent Property.
17. To the Actual Knowledge of the Undersigned, there are no claims, disputes, suits, actions, or contingent liabilities by and among the Developer, its Relevant Entities, or any contractors working on the development of the Property which are reasonably likely to materially and adversely affect the development of the Property as described in the Preliminary Official Statement or the payment of the Special Taxes due at any time with respect to the portion of the Property then owned by the Developer (to the extent the responsibility of the Developer) prior to delinquency.
18. An appraisal of the taxable properties within the Community Facilities District, dated , 2023 (the "Appraisal Report"), was prepared by Integra Realty Resources (the "Appraiser"). The Appraisal Report estimates the market value of the taxable properties within the Community Facilities District as of November 1, 2023 (the "Date of Value"). To Actual Knowledge of the Undersigned, all information submitted by, or on behalf of and authorized by, the Developer to the Appraiser and contained in the sections of the Appraisal Report highlighted in yellow or circled in Exhibit B attached hereto, was true and correct in all material respects as of the Date of Value.
19. Solely as to the limited information described in the sections of the Preliminary Official Statement indicated in Paragraph 7 above, the Developer agrees to indemnify and hold harmless, to the extent permitted by law, the City, the Community Facilities District, and their officials and employees, and each Person, if any, who controls any of the foregoing within the meaning of Section 15 of the Securities Act of 1933, as amended, or of Section 20 of the Securities Exchange Act of 1934, as amended, against any and all losses, claims, damages or liabilities, joint or several, to which such indemnified party may become subject under any statute or at law or in equity or otherwise and shall reimburse
any such indemnified party for any reasonable legal or other expense incurred by it in connection with investigating any such claim against it and defending any such action, insofar and to the extent such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement by the Developer of a material fact or the omission or alleged omission of a material fact in the above -referenced information in the Preliminary Official Statement as of its date, necessary to make the statements made by the Developer contained therein, in light of the circumstances under which they were made not misleading.
This indemnity provision shall not be construed as a limitation on any other liability which the Developer may otherwise have to any indemnified party, provided that in no event shall the Developer be obligated for double indemnification, or for the negligence or willful misconduct of an indemnified party.
20. If between the date hereof and the Closing Date any event relating to or affecting the Developer, its Relevant Entities, the proposed development of the Property, ownership of the Property, the Developer's development plan, the Developer's financing plan, the Developer's lenders, if any, and contractual arrangements of the Developer or any Relevant Entities (including, if material to the Developer's development plan or the Developer's financing plan, other loans of such Relevant Entities) shall occur of which the undersigned has actual knowledge and which the undersigned believes would cause the information under the sections of the Preliminary Official Statement indicated in Paragraph 7 hereof, to contain an untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Developer shall notify the City, the Community Facilities District and the Underwriter and if in the opinion of counsel to the City, the Community Facilities District or the Underwriter such event requires the preparation and publication of a supplement or amendment to the Preliminary Official Statement, the Developer shall reasonably cooperate with the City and the Community Facilities District in the preparation of an amendment or supplement to the Preliminary Official Statement in form and substance satisfactory to counsel to the City and to the Underwriter.
21. The Developer agrees to deliver a Closing Certificate dated the date of issuance of the Bonds at the time of issuance of the Bonds in substantially the form attached as Exhibit A. If any event related to or affecting the Developer, its Relevant Entities, or the ownership, development, or sale of the Property occurs, as a result of which it is necessary to modify the Closing Certificate, the Developer agrees to deliver a new Closing Certificate revised to reflect such event.
22. The Developer acknowledges and agrees that: (i) in connection with the purchase and sale of the Bonds under the Purchase Agreement, and with the discussions, undertakings and procedures leading up to the consummation of the purchase and sale of the Bonds under the Purchase Agreement, the Underwriter is and has been acting solely as principal and is not acting as the agent or fiduciary of the Developer; (ii) the Underwriter has not assumed a fiduciary responsibility in favor of the Developer with respect to (a) the offering of the Bonds or the process leading thereto (whether or not the Underwriter, or any affiliate of the Underwriter, has advised or is currently advising the Developer on other matters), or (b) any other obligation to the Developer with respect to the offering contemplated by the Purchase Agreement; and (iii) the Developer has consulted its own legal, financial and other advisors to the extent it has deemed appropriate in connection with the offering contemplated by the Purchase Agreement.
23. On behalf of the Developer, the undersigned has reviewed the contents of this Letter of Representations and has had the opportunity to discuss with counsel to the Developer the meaning of its contents. The undersigned acknowledges and understands that a variety of state and federal securities laws, including but not limited to the Securities Act of 1933 and Rule 10b-5 promulgated under the Securities Exchange Act of 1934, may apply to the Developer and that under some circumstances certification as to the matters set forth in this Letter of Representations, without additional disclosures or other action, may not fully discharge all duties and obligations of the Developer under such securities laws. [Signature Page Follows]
The undersigned has executed this Letter of Representations solely in his or her capacity as an authorized representative of Developer and he or she will have no personal liability arising from or relating to this Letter of Representations. Any liability arising from or relating to this Letter of Representations may only be asserted against the Developer. [WOODSIDE 05S, LP] [ D.R. HORTON LOS
ANGELES HOLDING COMPANY, INC.]
[RICHMOND AMERICAN HOMES OF
MARYLAND, INC.]
By:
EXHIBIT A
CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2021-1 (FAIRWAY CANYON) 2024 SPECIAL TAX BONDS
FORM OF CLOSING CERTIFICATE OF
[WOODSIDE 05S, LP] [ D.R. HORTON LOS ANGELES HOLDING COMPANY, INC.] [RICHMOND AMERICAN HOMES OF MARYLAND, INC.]
[Closing Date]
City of Beaumont Community Facilities District No. 2021-1 (Fairway Canyon) Beaumont, California
Stifel, Nicolaus & Company, Incorporated
Los Angeles, California
Ladies and Gentlemen:
Reference is made to the City of Beaumont Community Facilities District No. 2021-1 (Fairway Canyon) (the "Community Facilities District") and the City of Beaumont Community Facilities District No. 2021-1 (Fairway Canyon) 2024 Special Tax Bonds (the "Bonds") and to the Bond Purchase Agreement, dated [BPA Date] (the "Purchase Agreement"), entered into in connection therewith. This Closing Certificate of [Woodside 05S, LP] [D.R. Horton Los Angeles Holding Company, Inc.] [Richmond American Homes of Maryland, Inc.] (the "Closing Certificate") is delivered by [Woodside 05S, LP] [D.R. Horton Los Angeles Holding Company, Inc.] [Richmond American Homes of Maryland, Inc.] (the "Developer") pursuant to the Purchase Agreement.
Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Letter of Representations of [Woodside 05S, LP] [D.R. Horton Los Angeles Holding Company, Inc.] [Richmond American Homes of Maryland, Inc.] (the "Letter of Representations"), dated [POS Date] delivered by the Developer, a copy of which is attached hereto as Exhibit A.
The undersigned certifies that he is familiar with the facts herein certified and is authorized and qualified to certify the same as an authorized officer or representative of the Developer, and the undersigned, on behalf of the Developer, further certifies as follows:
1. The Developer has received the final Official Statement relating to the Bonds (the "Official Statement"). Each statement, representation and warranty made in the Letter of Representations is true and correct in all material respects on and as of the date hereof with the same effect as if made on the date hereof, except that all references therein to the Preliminary Official Statement shall be deemed to be references to the final Official Statement.
2. To the Actual Knowledge of the Undersigned, no event has occurred since the date of the Preliminary Official Statement affecting the statements and information described in Paragraph 7 of the Letter of Representations relating to the Developer, and its Relevant Entities, the proposed development of the Property, ownership of the Property, the Developer's development plan, the Developer's financing plan, the Developer's lenders, if any, and contractual arrangements of the Developer or any Relevant Entities (including, if material to the Developer's development plan or the D-9
Developer's financing plan other loans of such Relevant Entities) which should be disclosed in the Official Statement for the purposes for which it is to be used in order to make such statements and information contained in the Official Statement not misleading in any material respect.
3. For the period through 25 days after the "End of the Underwriting Period" as defined in the Purchase Agreement (provided the Developer may assume the End of the Underwriting Period is the Closing Date (as defined in the Purchase Agreement), unless it receives written notice from the Underwriter that the End of the Underwriting Period is later than the Closing Date), if any event relating to or affecting the Developer, its Relevant Entities or the development of the Property shall occur as a result of which the information referred to in Paragraph 7 of the Letter of Representations contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Developer shall notify the City, the Community Facilities District and the Underwriter, and if, in the opinion of counsel to the City, the Community Facilities District or the Underwriter, such event requires the preparation and publication of a supplement or amendment to the information described in the sections of the Official Statement referenced in Paragraph 7 of the Letter of Representations, the Developer shall reasonably cooperate with the City, the Community Facilities District and the Underwriter in the preparation of an amendment or supplement by the Community Facilities District to the Official Statement in form and substance satisfactory to counsel to the City, the Community Facilities District and the Underwriter which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances existing as of the date of the amendment or supplement to the Official Statement, not misleading. [Signature Page Follows]
D-10
The undersigned has executed this Closing Certificate solely in his or her capacity as an authorized representative of Developer and he or she will have no personal liability arising from or relating to this Closing Certificate. Any liability arising from or relating to this Closing Certificate may only be asserted against the Developer.
[WOODSIDE 05S, LP] [ D.R. HORTON LOS
ANGELES HOLDING COMPANY, INC.]
[RICHMOND AMERICAN HOMES OF
MARYLAND, INC.]
By:
D-11
EXHIBIT B
CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2021-1 (FAIRWAY CANYON) 2024 SPECIAL TAX BONDS
DEVELOPER PROVIDED INFORMATION IN APPRAISAL REPORT
See attached.
D-12
Integra Realty Resources
Los Angeles
Appraisal of Real Property
Fairway Canyon (Phase 4)
Residential Subdivision
Tukwet Canyon Pky.
Beaumont, Riverside County, California 92223
Prepared For:
City of Beaumont
Date of the Report:
December 1, 2023
Report Format:
Appraisal Report
IRR - Los Angeles
File Number: 193-2023-0477
Subject Photographs
Fairway Canyon (Phase 4)
Tukwet Canyon Pky.
Beaumont, California
Aerial Photograph
Integra Realty Resources
Los Angeles
December 1, 2023
Ms. Elizabeth Gibbs
City Manager
City of Beaumont
550 E. 6th St.
Beaumont, CA 92223
12100 Wilshire Blvd.
Suite 800
Los Angeles, CA 90025
T 213.984.4425
F 916.435.4774
www.irr.com
SUBJECT: Market Value Appraisal
Fairway Canyon (Phase 4)
Tukwet Canyon Pky.
Beaumont, Riverside County, California 92223
IRR - Los Angeles File No. 193-2023-0477
Dear Ms. Gibbs:
Integra Realty Resources — Los Angeles is pleased to submit the accompanying appraisal of the referenced property. The purpose of the appraisal is to develop an opinion of the market value by ownership, and cumulative, or aggregate, value, pertaining to the fee simple interest in the property. The client for the assignment is the City of Beaumont and the intended use of the report is for bond underwriting purposes.
City of Beaumont Community Facilities District No. 2021-1 (Fairway Canyon) ("CFD No. 2021- 1") includes 529 residential lots comprising a portion (Planning Areas 25 and 26) of the Fairway Canyon master planned community located west of Interstate 10, north of Oak Valley Parkway, within the City of Beaumont, Riverside County, California. The Fairway Canyon master planned community surrounds the Morongo Golf Club at Tukwet Canyon golf course, which meanders throughout the community. CFD No. 2021-1 comprises three neighborhoods (in two planning areas) developed by three merchant builders: DR Horton, Woodside Homes and Richmond American. Of the 529 Assessor's parcels within the boundaries of CFD No. 2021-1, 413 parcels are improved with a completed single-family home, of which 296 have transferred to individual homeowners, or represent model homes, and have a complete assessed value for both land and improvements and are not the subject of this Appraisal.
Ms. Elizabeth Gibbs
City of Beaumont
December 1, 2023
The appraised properties consist of 9 finished residential lots, 91 homes under construction, and 133 completed single-family homes within the boundaries of CFD No. 2021-1 not currently assessed for an improvement value by the Riverside County Assessor.
As such, a not -less -than estimate of market value for the smallest floor plan constructed within each subdivision was appraised and assigned to each respective Assessor's parcel.
Along with the aforementioned, there are also 296 existing single-family homes with a complete assessed value for both land and improvements that are not appraised herein. The aggregate assessed value is combined with the aggregate value of the appraised properties to provide a total aggregate value of the CFD.
We have been requested to provide a market value of the appraised properties by ownership, as well as the cumulative, or aggregate, value of the appraised properties, as of the date of value, November 1, 2023. The estimate of market value accounts for the impact of the lien of the Special Taxes securing the Bonds.
The appraisal conforms to the Uniform Standards of Professional Appraisal Practice (USPAP), the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute, and applicable state appraisal regulations. The Appraisal Report is also prepared in accordance with the Appraisal Standards for Land Secured Financing published by the California Debt and Investment Advisory Commission (CDIAC) (2004).
Standards Rule 2-2 (Content of a Real Property Appraisal Report) contained in the Uniform Standards of Professional Appraisal Practice (USPAP) requires each written real property appraisal report to be prepared as either an Appraisal Report or a Restricted Appraisal Report. This report is prepared as an Appraisal Report as defined by USPAP under Standards Rule 2-2(a), and incorporates practical explanation of the data, reasoning, and analysis that were used to develop the opinion of value.
Based on the valuation analysis in the accompanying report, and subject to the definitions, assumptions, and limiting conditions expressed in the report, the concluded opinions of value, as of November 1, 2023, are as follows:
Value Conclusions
Value Premise
No. of
Parcels
Aggregate Value
Aggregate Value of Appraised Properties
Aggregate Value of Existing Homes based on Assessed Value Total Aggregate Value of Appraised and Assessed Properties in the District 233
296
529
$84,530,000
$156,232,396
$240,762,396
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Ms. Elizabeth Gibbs
City of Beaumont
December 1, 2023
Extraordinary Assumptions and Hypothetical Conditions
The value conclusions are subject to the following extraordinary assumptions. An extraordinary assumption is an assignment -specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser's opinions or conclusions.
None
The value conclusions are based on the following hypothetical conditions. A hypothetical condition is a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis.
1. It is a hypothetical condition of this Appraisal Report that certain proceeds from the Bonds will be available to reimburse for certain public infrastructure already completed. The estimates of market value account for the impact of the Lien of the Special Taxes securing the Bonds.
The use of any extraordinary assumption or hypothetical condition may have affected the assignment results.
If you have any questions or comments, please contact the undersigned. Thank you for the opportunity to be of service.
Respectfully submitted,
Integra Realty Resources - Los Angeles
Eric Segal, MAI
Certified General Real Estate Appraiser
California Certificate #AG026558
Telephone: 213.984.4425
Email: [email protected]
Kari Tatton
Certified General Real Estate Appraiser
California Certificate # 3002218
Telephone: 916.435.3883, ext. 229
Email: [email protected]
Kevin Ziegenmeyer, MAI
Certified General Real Estate Appraiser
California Certificate #AG013567
Telephone: 916.435.3883, ext. 224
Email: [email protected]
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Table of Contents
Executive Summary 2
Identification of the Appraisal Problem
Subject Description
Sale History
Appraisal Purpose
Value Type Definitions
Property Rights Definitions
Client and Intended User(s)
Intended Use
Applicable Requirements
Report Format
Prior Services
Appraiser Competency
3 3
5 6
6 6
6 7
7 7
7 7
Scope of Work 8
Economic Analysis
Area Analysis — Riverside County
Introduction
Population
Employment & Economy
Household Income
Transportation
Recreation & Culture
Conclusion
Surrounding Area Analysis
Residential Market Analysis
Property Analysis
Land Description and Analysis
Site Plans
Proposed Improvements Description
Real Estate Taxes
Highest and Best Use
10 10
10 10
11 12
13 13
14 16
21 29
29 36
39 61
63 Valuation
Valuation Methodology
Market Valuation — Floor Plans
Land Residual Analysis
Market Valuation by Ownership
Final Opinion of Value
Exposure Time
Marketing Period
Certification
66 66
67 78
90 92
92 92
93 Assumptions and Limiting Conditions 95
Addenda
A. Appraiser Qualifications
B. IRR Quality Assurance Survey
C. Definitions
D. Value by APN
E. Comparable Data
Fairway Canyon (Phase 4)
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Subject Description 2
Executive Summary
Property Name Fairway Canyon (Phase 4)
Address Tukwet Canyon Pky.
Beaumont, Riverside County, California 92223
Property Type Land - Finished SFR Lots
Owner of Record Richmond American Homes of California Inc., DR Horton Los Angeles Holding Co Inc., Woodside 05s, LP., and individual Homeowners
Tax ID See Value by APN list in Addenda
Land Area
Zoning Designation
Highest and Best Use
Exposure Time; Marketing Period
Effective Date of the Appraisal
Date of the Report
Property Interest Appraised
105.50 acres; 4,595,580 SF
SPA, Specific Plan Area
Single-family residential
12 months; 12 months
November 1, 2023
December 1, 2023
Fee Simple
Value Conclusion
Value Type & Appraisal Premise Interest Appraised Date of Value Value Conclusion Aggregate Value of Appraised Properties Fee Simple November 1, 2023 $84,530,000 Aggregate Value of Existing Homes based on Assessed Value Fee Simple November 1, 2023 $156,232,396 Total Aggregate Value of Appraised and Assessed Properties Fee Simple November 1, 2023 $240,762,396 The values reported above are subject to the definitions, assumptions, and limiting conditions set forth in the accompanying report of which this summary is a part. No party other than City of Beaumont and its associated finance team may use or rely on the information, opinions, and conclusions contained in the report. It is assumed that the users of the report have read the entire report, including all of the definitions, assumptions, and limiting conditions contained therein.
Extraordinary Assumptions and Hypothetical Conditions
The value conclusions are subject to the following extraordinary assumptions. An extraordinary assumption is an assignment -specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser's opinions or conclusions.
None
The value conclusions are based on the following hypothetical conditions. A hypothetical condition is a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis.
1. It is a hypothetical condition of this Appraisal Report that certain proceeds from the Bonds will be available to reimburse for certain public infrastructure already completed. The estimates of market value account for the impact of the Lien of the Special Taxes securing the Bonds.
The use of any extraordinary assumption or hypothetical condition may have affected the assignment results.
The estimates of value above represent a "not -less -than" value due to the fact we were requested to provide a market value of the smallest floor plan (by project) on each single-family residential lot improved with a completed home without a complete assessed improvement value assigned.
Please note the aggregate of the appraised values noted above is not the market value of the appraised properties in bulk. As defined by The Dictionary of Real Estate Appraisal, an aggregate value is the "total of multiple market value conclusions." For purposes of this Appraisal Report, market value is estimated by ownership.
Fairway Canyon (Phase 4)
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Subject Description 3
Identification of the Appraisal Problem
Subject Description
City of Beaumont Community Facilities District No. 2021-1 (Fairway Canyon) ("CFD No. 2021-1") includes 529 residential lots comprising a portion (Planning Areas 25 and 26) of the Fairway Canyon master planned community located west of Interstate 10, north of Oak Valley Parkway, within the City of Beaumont, Riverside County, California. The Fairway Canyon master planned community surrounds the Morongo Golf Club at Tukwet Canyon golf course, which meanders throughout the community.
CFD No. 2021-1 comprises three neighborhoods (in two planning areas) developed by three merchant builders: DR Horton, Woodside Homes and Richmond American. Of the 529 Assessor's parcels within the boundaries of CFD No. 2021-1, 413 parcels are improved with a completed single-family home, of which 296 have transferred to individual homeowners, or represent model homes, and have a complete assessed value for both land and improvements and are not the subject of this Appraisal.
The boundaries of the subject are presented as follows:
ZOOS 1
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Fairway Canyon (Phase 4)
Subject Description
4 Zane 3
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Trott N0. 31462-22 I.ots 1-53
Zone 4
Tract Nc. 31482-2L: Lois 66-97, L13-173, _7E, Lots A -N Tract No. 314W-22, Lots E4,-103, Lots A -C
LEGEND_
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PROPOSED BOUNDARYMAP
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(FAIRWAY CANYON)
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COUNTY OF RIVERSIDE, STATE OF CALIFORNIA
SEC. 3S, T.2S., R2W.
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Fairway Canyon (Phase 4)
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Sale History
5 The subject properties represent Planning Areas 25 and 26, shown in the following map.
Property Identification
Property Name
Address
Tax ID
Owner of Record
Fairway Canyon (Phase 4)
TukwetCanyon Pky.
Beaumont, California 92223
See Value byAPN list in Addenda
Richmond American Homes of California Inc., DR Horton Los Angeles Holding Co Inc., Woodside05s, LP., and individual Homeowners
Sale History
The Appraisal Report has been conducted in accordance with appraisal standards and guidelines found in the Uniform Standards of Professional Appraisal Practice (USPAP). The properties comprising the subject of this Appraisal Report have been the subject of previous and recent transactions. Based on the scope of work for this assignment, a detailed sales history was not performed on a parcel -by - parcel basis, as many parcels were, and continue to be, involved in transactions as completed single- family homes from the merchant builder to individual home buyers.
Fairway Canyon (Phase 4)
Appraisal Purpose 6
As discussed later in this Appraisal Report, three merchant builders are actively marketing new homes for sale throughout the subject property. An analysis of each pending home sale is beyond the scope of work for this analysis.
Appraisal Purpose
The purpose of this Appraisal Report is to estimate the market value (fee simple estate) of the appraised properties comprising CFD No. 2021-1, subject to the hypothetical condition certain proceeds from the Bonds will be available to reimburse for certain public improvements, as of the effective date of the appraisal, November 1, 2023. The date of the report is December 1, 2023. The appraisal is valid only as of the stated effective date or dates.
Value Type Definitions
The definitions of the value types applicable to this assignment are summarized below.
Market Value
The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:
1. Buyer and seller are typically motivated;
2. Both parties are well informed or well advised, and acting in what they consider their own best interests;
3. A reasonable time is allowed for exposure in the open market;
4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
5. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. 1 Property Rights Definitions
The property rights appraised which are applicable to this assignment are defined as follows.
Fee Simple Estate
Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.' Client and Intended User(s)
The client is the City of Beaumont. The intended users are the City of Beaumont and its associated finance team. No party or parties beyond the clients associated finance team may use or rely on the 1 Code of Federal Regulations, Title 12, Chapter I, Part 34.42[h]; also Interagency Appraisal and Evaluation Guidelines, Federal Register, 75 FR 77449, December 10, 2010, page 77472 'Appraisal Institute, The Dictionary of Real Estate Appraisal, 7th ed. (Chicago: Appraisal Institute, 2022) irr
Fairway Canyon (Phase 4)
Intended Use 7
information, opinions, and conclusions contained in this report; however, this appraisal report may be included in the offering document provided in connection with the issuance and sale of the Bonds.
Intended Use
The intended use of the appraisal is for bond underwriting purposes. The appraisal is not intended for any other use.
Applicable Requirements
This appraisal report conforms to the following requirements and regulations:
• Uniform Standards of Professional Appraisal Practice (USPAP); • Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute; • Applicable state appraisal regulations;
• Interagency Appraisal and Evaluation Guidelines issued December 10, 2010; • Appraisal Standards for Land Secured Financing published by the California Debt and Investment Advisory Commission (CDIAC) (2004).
Report Format
Standards Rule 2-2 (Content of a Real Property Appraisal Report) contained in the Uniform Standards of Professional Appraisal Practice (USPAP) requires each written real property appraisal report to be prepared as either an Appraisal Report or a Restricted Appraisal Report. This report is prepared as an Appraisal Report as defined by USPAP under Standards Rule 2-2(a), and incorporates practical explanation of the data, reasoning, and analysis used to develop the opinion of value.
Prior Services
USPAP requires appraisers to disclose to the client any other services they have provided in connection with the subject property in the prior three years, including valuation, consulting, property management, brokerage, or any other services. We have performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding the agreement to perform this assignment.
Appraiser Competency
No steps were necessary to meet the competency provisions established under USPAP. The assignment participants have appraised several properties similar to the subject in physical, locational, and economic characteristics, and are familiar with market conditions and trends; therefore, appraiser competency provisions are satisfied for this assignment. Appraiser qualifications and state credentials are included in the addenda of this report.
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Fairway Canyon (Phase 4)
Appraiser Competency 8
Scope of Work
Introduction
The appraisal development and reporting processes require gathering and analyzing information about the assignment elements necessary to properly identify the appraisal problem. The scope of work decision includes the research and analyses necessary to develop credible assignment results, given the intended use of the appraisal. Sufficient information includes disclosure of research and analyses performed and might also include disclosure of research and analyses not performed.
To determine the appropriate scope of work for the assignment, the intended use of the appraisal, the needs of the user, the complexity of the property, and other pertinent factors were considered. The concluded scope of work is described below.
Research and Analysis
The type and extent of the research and analysis conducted are detailed in individual sections of the report. Although effort has been made to confirm the arms -length nature of each sale with a party to the transaction, it is sometimes necessary to rely on secondary verification from sources deemed reliable.
Subject Property Data Sources
The legal and physical features of the subject property, including size of the site, flood plain data, seismic zone designation, property zoning, existing easements and encumbrances, access and exposure, and condition of the improvements (as applicable) were confirmed and analyzed.
Inspection
Details regarding the property inspection conducted as part of this appraisal assignment are summarized as follows:
Property Inspection
Party
Inspection Type Inspection Date
Eric Segal, MAI On -site October 21, 2023
Kevin Ziegenmeyer, MAI None N/A
Kari Tatton None N/A
Valuation Methodology
Three approaches to value are typically considered when developing a market value opinion for real property. These are the cost approach, the sales comparison approach, and the income capitalization approach. Use of the approaches in this assignment is summarized as follows:
Fairway Canyon (Phase 4)
LT
Appraiser Competency 9
Approaches to Value
Approach
Applicability to Subject Use in Assignment
Cost Approach Not Applicable Not Utilized
Sales Comparison Approach Applicable Utilized
Income Capitalization Approach Not Applicable Not Utilized The valuation began by employing the sales comparison approach to estimate the not -less -than market value for the completed single-family homes, based on the smallest floor plan being marketed within the projects.
Next, due to the limited amount of transactions of similarly zoned single-family residential land throughout the subject's market area, the land residual analysis is relied upon. The land residual analysis is a discounted cash flow analysis that considers home prices and costs, leading to an estimate of residual land value. Then, to support the reasonableness of the land residual analysis conclusion, we arrayed recent transactions of similar bulk lot sales that we were able to confirm. The lot values indicated by each approach were then reconciled into an opinion of market value, subject to the hypothetical condition noted. Next, adjustments were applied to determine values for each residential planning area, based upon lot size differences that exist from the benchmark lot size.
Our analysis excluded a typical cost approach since the subject property represents land. However, costs associated with home construction were taken into consideration as part of the land residual analysis and determination of financial feasibility. Similarly, given the limited income producing potential of the land, an income capitalization approach was not utilized; though, the land residual analysis is the subdivision equivalent of the income approach.
Please note, this appraisal will utilize the term "improved lot" to denote a residential lot which has all off -sites and on -sites in place, and which includes any permits and impact fees due up until building permit. Building permits and fees due at building permit are excluded. Terminology for this type of improved lot can vary by market area, and is sometimes referred to as a "finished lot" or "loaded lot." The market values estimated herein are based on a hypothetical condition. USPAP defines a hypothetical condition as "a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of the analysis." It is a hypothetical condition of the Appraisal that certain of the proceeds from the Bonds are available to reimburse for certain infrastructure improvements completed. The estimate of market value accounts for the impact of the Lien of the Special Taxes securing the Bonds.
Fairway Canyon (Phase 4)
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Area Analysis- Riverside County 10
Economic Analysis
Area Analysis - Riverside County
Introduction
Riverside County is part of a region known as the Inland Empire of southern California, southeast of Los Angeles. The county is bordered by San Bernardino County to the north, Orange County to the west, San Diego and Imperial counties to the south, and the state of Arizona to the east. Major cities in the county include Riverside, Moreno Valley, Corona, Murrieta and Temecula. In general, Riverside County is one of California's fastest growing metropolitan areas. Many new residents locate here from the more expensive metropolitan areas of Los Angeles and San Diego.
Population
The county has a population of 2.44 million and has grown at an average rate of 0.5% per year for the past five years. The following table illustrates recent population trends for Riverside County.
Population Trends
City 2018 2019 2020 2021 2022 2023 %/Yr (5 -year)
Banning 31,014 31,068 30,621 30,592 30,856 31,250 0.2%
Beaumont 48,013 49,913 53,318 53,945 54,349 56,590 3.6% Blythe 19,772 19,530 18,586 17,376 17,417 17,265 -2.5%
Calimesa 8,959 9,015 10,028 10,588 10,950 10,962 4.5%
Canyon Lake 10,990 11,021 11,069 11,082 11,003 10,949 -0.1% Cathedral City 53,148 53,308 51,356 51,599 51,621 51,433 -0.6% Coachella 46,697 47,318 41,900 41,931 41,935 42,462 -1.8% Corona 166,299 166,937 156,637 157,182 157,139 157,005 -1.1% Desert Hot Springs 29,823 30,019 32,415 32,351 32,389 32,608 1.9% Eastvale 65,509 65,735 69,742 70,457 69,978 69,514 1.2% Hemet 84,126 84,354 89,325 89,302 89,170 89,918 1.4%
Indian Wells 5,314 5,351 4,759 4,791 4,785 4,774 -2.0%
Indio 88,984 90,112 88,795 89,422 89,789 90,837 0.4%
Jurupa Valley 104,645 106,056 104,828 105,131 105,154 104,983 0.1% Lake Elsinore 62,622 63,270 70,572 71,225 71,989 71,973 3.0% La Quinta 40,563 40,663 37,504 37,727 37,562 37,979 -1.3% Menifee 92,110 94,710 102,466 104,323 107,411 110,034 3.9% Moreno Valley 205,450 207,190 208,237 208,387 208,302 208,289 0.3% Murrieta 112,352 113,207 110,702 111,024 110,592 109,998 -0.4% Norco 26,593 26,473 26,659 24,680 25,035 25,037 -1.2%
Palm Desert 53,554 53,695 50,696 50,683 50,626 50,615 -1.1% Palm Springs 47,253 47,410 44,206 44,312 44,165 44,092 -1.3% Perris 77,649 78,095 78,614 78,867 78,474 78,948 0.3%
Rancho Mirage 18,257 18,397 16,588 16,692 16,854 17,012 -1.4% Riverside 325,916 327,076 316,307 309,598 314,818 313,676 -0.8% San Jacinto 48,536 49,655 53,835 54,186 54,303 54,103 2.3% Temecula 112,243 112,561 109,820 109,881 109,468 108,899 -0.6% Wildomar 36,436 36,878 36,720 36,713 36,438 36,336 -0.1% Unincorporated 374,835 380,040 391,880 394,680 398,404 401,693 1.4% Total
2,397,662 2,419,057 2,418,185 2,418,727 2,430,976 2,439,234 0.3% Source: California Department of Finance
Fairway Canyon (Phase 4)
irr.
Area Analysis— Riverside County 11
Riverside is the fourth most populous county in California, following Los Angeles, San Diego and Orange Counties. The majority of residents live within incorporated areas, the largest of which is the city of Riverside, with a population of just over 313,000.
Employment & Economy
The California Employment Development Department (EDD) has reported the following employment data for Riverside County over the past five years.
Employment Trends
2017 2018 2019 2020 2021 2022
Labor Force 1,070,900 1,090,100 1,108,100 1,121,100 1,133,000 1,152,100 Employment 1,014,200 1,041, 700 1,061, 500 1,008,000 1,050,000 1,104,100 Annual Employment Change 27,000 27,500 19,800 -53,500 42,000 54,100 Unemployment Rate 5.3% 4.4% 4.2% 10.1% 7.3% 4.2%
Source: California Employment Development Department
Riverside County saw declining unemployment rates in 2004-2006, increases from 2007 to 2010, declines between 2011 and 2019, a significant increase in 2020 due to the pandemic and improvement in 2021 and 2022. The California Employment Development Department reported an unemployment rate of 4.4% in Riverside County in May 2023, up from 3.4% a year ago and compared to 4.5% for California and 3.4% for the nation.
As of May 2023, it was reported 16,600 non -farm jobs were gained in the Riverside -San Bernardino - Ontario MSA year -over -year. Annual job growth has slowed in recent quarters. The greatest job growth was in the Educational/Health Services sector with 12,400 jobs gained, followed by the Government sector with 7,700 jobs gained. The following chart indicates the percentage of total employment for each sector in the metro as of May 2023.
EMPLOYMENT BY SECTOR
Trade/Transport/Utilities
Education/Health Services
Govemment
Leisure & Hospitality
Professional/Business Services
Construction/Mining
Manufacturing
Other Services
Financial Activities
Agriculture
Information
■
■
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%
Source: California Employment Development Department
Fairway Canyon (Phase 4)
Area Analysis - Riverside County 12
The region's largest employment sector, accounting for roughly 26% of total employment, is Trade/Transportation/Utilities, which includes wholesale and retail trade; followed by Education/Health Services and Government.
The region's largest employers are listed in the following table.
Top Employers - Riverside County
Employer Location Description No. of Employees
County of Riverside Countywide County Government 23,772 Amazon Countywide E -Commerce 14,500
March Air Reserve Base March ARB Military Reserve Base 9,600 University of California, Riverside Riverside University 8,593 Moreno Valley Unified School District Moreno Valley School District 6,020 Kaiser Permanente Riverside Medical Center Riverside Hospital 5,817 Corona -Norco Unified School District Corona School District 5,478 Riverside Unified School District Riverside School District 5,431 Stater Bros Countywide Retail Grocery 4,699
Mt. San Jacinto College San Jacinto Community College District 4,638 Marie Callender Wholesalers, Inc. Corona Wholesale Trade 4,454 313 Acquisitions LLC Riverside Other Services 4,208
Temecula Valley Unified School District Temecula School District 4,022 Eisenhower Medical Center Rancho Mirage Hospital 4,001
Pechanga Resort & Casino Temecula Resort/Casino 4,000
Hemet Unified School District Hemet School District 3,960 Home Depot Countywide Retail 3,576
Murrieta Valley Unified School District Murrieta School District 3,552 Starcrest of California Perris E -Commerce 3,450
McDonalds Countywide Restaurant 3,375
Palm Springs Unified School District Palm Springs School District 3,328 Lake Elsinore Unified School District Lake Elsinore School District 3,267 Jurupa Unified School District Jurupa Valley School District 2,749 City of Riverside Riverside City Government 2,700
Target Countywide Retail 2,631
Coachella Valley Unified School District Thermal School District 2,581 Walmart Countywide Retail 1,561
Albertsons/Sav-On Countywide Retail Grocery 2,231
Riverside Community College District Riverside Community College District 2,228 Hemet Valley Medical Center Hemet Hospital 2,214
Desert Regional Medical Center Palm Springs Hospital 2,200 Agua Caliente Band of Cahuilla Indians Rancho Mirage Tribal Government / Casinos 2,200 Spa Resort & Casino Palm Springs Resort & Spa 2,120
Beaumont Unified School District Beaumont School District 2,053 Kroger (Ralphs & Vons) Countywide Retail Grocery 2,035
Abbott Vascular, Inc. Temecula Medical Device Manufacturing 2,008 Alvord Unified School District Corona School District 1,936 Lowe's Home Improvement Countywide Retail 1,928
United Parcel Service Countywide Delivery Services 1,678 MSR Desert Resort, LP La Quinta Resort / Restaurant 1,500 Source: Riverside County Economic Development Agency, with source cited as "Employers Listed, Websites, and Public Records, 2022" Household Income
Median household income represents a broad statistical measure of well-being or standard of living in a community. The median income level divides households into two equal segments with one half of households earning less than the median and the other half earning more. The median income is considered to be a better indicator than the average household income as it is not dramatically affected by unusually high or low values. According to Claritas Spotlight data reporting service, the irr
Fairway Canyon (Phase 4)
Area Analysis— Riverside County 13
median household income estimated for Riverside County in 2023 is $81,520, which is lower than the state of California's median income of $89,113.
Transportation
Access to and through Riverside County is provided by several major routes, including Interstates 10, 15 and 215, as well as State Routes 60, 62, 74, 79, 86, 91, 111 and 243. Interstate 10 is the primary east -west connector while Interstates 15 and 215 are the primary north -south highways. The 91 Freeway provides travel from the Inland Empire to Orange County via the 55 Freeway.
Interstate 10 is a major east -west route in Southern California, connecting the Pacific coast (Santa Monica) with the Arizona state line before traveling further east through the southern portion of Arizona, New Mexico, Texas, Louisiana, Mississippi, Alabama, and terminating in Jacksonville, Florida.
Interstate 10 links the major California cities of Santa Monica, Los Angeles, Ontario, Beaumont, Palm Springs, Indio and Blythe.
As a primary east -west connector, Interstate 15 connects the counties of San Bernardino, Riverside and San Diego. The route extends north through Nevada, Arizona, Utah, Idaho and Montana to the Canadian border. Interstate 15 is a major thoroughfare for traffic between San Diego and the Inland Empire, as well as between Southern California and Las Vegas, Nevada. Interstate 215 comprises approximately 55 miles of interstate highway in the Inland Empire. The southern terminus of Interstate 215 is at the junction of Interstate 15 in Murrieta in south Riverside County and travels through Perris before joining the 60 Freeway in Moreno Valley. This interstate provides an alternative to Interstate 15 for travel between Phoenix, Las Vegas, San Bernardino and the San Diego area.
Public transportation is provided by various agencies. Riverside Transit Agency serves the western third of Riverside County, SunLine Transit Agency serves Palm Springs and the Coachella Valley area, Palo Verde Valley Transit Agency serves Blythe near the Arizona border, Pass Transit serves the San Gorgonio Pass communities, and Corona Cruiser serves the community of Corona. In addition, Riverside County is also served by Greyhound buses and Amtrak passenger trains.
The county's main airport is the Palm Springs International Airport. This two -runway airport is located about two miles east of downtown Palm Springs and is highly seasonal, with most flights operating during the winter.
Recreation & Culture
Riverside County offers innumerable recreational and cultural opportunities, including many public parks, schools, golf courses, museums and performing arts venues. Popular attractions include the Botanical Gardens at the University of California, Riverside; the historic Mission Inn in downtown Riverside; March Field Air Museum, an aviation museum near Moreno Valley and Riverside, adjacent to the March Air Reserve Base; Temecula Valley, a tourist destination in the southern part of the county with numerous wineries, wine tasting rooms, bed and breakfast inns and wedding venues; and Castle Park, an amusement park. Annual events in the county include the Festival of Lights in Riverside, known for its display of nearly three million Christmas lights; Ghost Walk Riverside; Temecula Valley Balloon and Wine Festival; and Harvest Wine Celebration. irr
Fairway Canyon (Phase 4)
Area Analysis— Riverside County 14
Riverside County is home to multiple higher education institutions including, but not limited to, the University of California Riverside, California Baptist University, California Southern Law School, California State University San Bernardino and Mt. San Jacinto College.
Conclusion
In general, Riverside County is one of the fastest growing areas in the state. Many new residents are relocating here from the more expensive metropolitan areas of Los Angeles and San Diego. The region offers diverse employment opportunities, numerous colleges and universities, extensive transportation routes, shopping centers, public services and recreational activities.
In recent years, market and economic conditions were strong, with unemployment rates falling to historical lows. Employment conditions declined sharply in 2020 after the onset of the pandemic and though market and economic conditions have since improved, current macroeconomic factors, specifically high inflation and rising interest rates, have reintroduced uncertainty in the market.
Recovery in the market is expected to be gradual and the long-term outlook for the region is good. irr
Fairway Canyon (Phase 4)
Area Analysis— Riverside County 15
Area Map
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Fairway Canyon (Phase 4)
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Surrounding Area Analysis 16
Surrounding Area Analysis
This section of the Appraisal Report provides an analysis of the observable data that indicate patterns of growth, structure and/or change that may enhance or detract from property values. For the purpose of this analysis, a neighborhood is defined as "a group of complementary land uses; a congruous grouping of inhabitants, buildings, or business enterprises." Boundaries
The boundaries of a neighborhood identify the physical area that influences the value of the subject property. These boundaries may coincide with observable changes in prevailing land use or occupant characteristics. Physical features such as the type of development, street patterns, terrain, vegetation and parcel size tend to identify neighborhoods. Roadways, waterways and changing elevations can also create neighborhood boundaries.
The subject property is located within the city of Beaumont, which is located in Riverside County, within the Inland Empire region of Southern California. It is bordered on the north by the unincorporated community of Cherry Valley, on the east by the City of Banning, on the south by the City of San Jacinto and on the west by the City of Calimesa. It has a land area of 30.9 square miles and an elevation of 2,500-3,000 feet above sea level. It is situated at the peak of the San Gorgonio Pass between the cities of San Bernardino and Palm Springs.
Access and Linkages
Since the San Gorgonio Pass was discovered in 1853, it has been at the center of transportation in the region, beginning with early trails, then railroads, highways and interstates. Today, Beaumont is still a transportation hub with major routes extending in every direction. Three major interstates/highways intersect at what is known as the Beaumont Avenue interchange: Interstate 10, State Route 60 and State Route 79.
Interstate 10 is the primary transportation corridor through the city, with access to Santa Monica and the Pacific Ocean to the west and eastward to the low desert cities of Palm Springs and Indio, to the Southwest regions in Arizona and New Mexico, terminating in Jacksonville Florida on the east coast.
The 60 Freeway is a major east/west transportation route linking Interstate 5 in downtown Los Angeles with Interstate 10 in Beaumont. The 60 Freeway provides direct access to most of the north/south freeways in the greater Los Angeles area, including the 215, 15, 91, 57, 605, 710 and 5 freeways. State Route 79 provides access to Hemet, Winchester and Temecula to the south. To the north, State Route 79 is Beaumont Avenue and provides access to the neighboring community of Cherry Glen and on to the scenic apple country of Oak Glen.
CFD No. 2016-1 is located north of Oak Valley Parkway, east of Tukwet Canyon Parkway, which connects the CFD with Interstate 10 less than one mile to the east. Interstate 10 links the subject neighborhood with the 60 Freeway, less than one mile to the south, and Beaumont Avenue (Highway 79). Highway 79 is a primary connector route to the cities of San Jacinto, Hemet and the unincorporated community of Winchester and the French Valley area of south Riverside County.
Fairway Canyon (Phase 4)
Surrounding Area Analysis 17
Public transit is available through the City of Beaumont Transit System, which also operates the Pass Transit System in collaboration with the City of Banning Transit. The system offers eight fixed routes and a commuter link to Calimesa, the San Bernardino Metrolink and the Loma Linda Veteran's Hospital. Additional services include Dial -A -Ride and curb -to -curb service for ADA certified and seniors 65 years and older within Beaumont and parts of Cherry Valley.
In terms of air travel, there are several proximate airports available to residents of Beaumont. Palm Springs International Airport is the nearest major airport, located approximately 30 miles to the east and the LA/Ontario International Airport is located approximately 40 miles west in Ontario. Six additional airports offering commercial international and/or domestic flights are located within 100 miles. Local airports include the Banning Municipal Airport located less than 10 miles to the east; the Redlands Municipal Airport approximately 18 miles northwest; the Hemet -Ryan Airport 18 miles to the south; and several others in San Bernardino, Riverside and Colton, all within approximately 30 miles of Beaumont.
Demographics
A demographic profile of the surrounding area, including population, households, and income data, is presented in the following table.
Surrounding Area Demographics
2023 Estimates
92223 Riverside County,
1 -Mile Radius 3 -Mile Radius 5 -Mile Radius (Beaumont, CA) CA 6,203
6,555
7,086
1.9%
1.6%
Population 2020
Population 2023
Population 2028
Compound % Change 2020-2023
Compound % Change 2023-2028
22,712
23,932
25,747
1.8%
1.5%
74,971
78,403
83,514
1.5%
1.3%
58,896
62,495
67,820
2.0%
1.6%
2,418,185
2,488,669
2,586,031
1.0%
0.8%
Households 2020 2,009 7,604 25,538 19,394 763,283
Households 2023 2,107 7,948 26,686 20,523 786,429
Households 2028 2,268 8,486 28,369 22,188 818,630
Compound % Change 2020-2023 1.6% 1.5% 1.5% 1.9% 1.0%
Compound % Change 2023-2028 1.5% 1.3% 1.2% 1.6% 0.8%
Median Household Income 2023 $123,919 $111,308 $86,821 $94,688 $81,520 Average Household Size 3.1 3.0 2.9 3.0 3.1
College Graduate% 30% 29% 23% 24% 23%
Median Age 40 41 39 39 37
Owner Occupied % 92% 89% 78% 79% 67%
Renter Occupied % 8% 11% 22% 21% 33%
Median Owner Occupied Housing Value $473,900 $468,510 $452,182 $447,767 $511,440 Median Year Structure Built 2004 2004 1988 2003 1989
Average Travel Time to Work in Minutes 38 40 36 38 37
Source: Claritas
As shown above, the current population within a 1 -mile radius of the subject is 6,555, and the average household size is 3.1. Population in the area has grown slightly since the 2020 census, and this trend is projected to continue over the next five years. Compared to the subject's 92223 zip code overall, the population within a 1 -mile radius is projected to grow at a similar rate.
Fairway Canyon (Phase 4)
irr
Surrounding Area Analysis 18
Median household income is $123,919, which is higher than the household income for the 92223 zip code. Residents within a 1 -mile radius have a higher level of educational attainment than those of the 92223 zip code, while median owner occupied home values are also higher.
Recreation & Community Facilities
The City of Beaumont offers adequate recreational opportunities and community facilities, with additional services accessible within 20-30 miles (30 -40 -minute driving time) in the larger cities of San Bernardino, Riverside and Moreno Valley. Beaumont hosts a number of family -oriented events throughout the year. The largest event is the Cherry Festival, which celebrated its 100th anniversary in May/June 2018. It is a four -day community festival with food and drinks, games, music, entertainment, rides and booths.
Beaumont offers two championship golf courses: Oak Valley Golf Club and Morongo Golf Club at Tukwet Canyon, which was formerly owned and operated by the PGA. Antique shops along 6th Street have long been a well-known attraction in Beaumont, providing a unique shopping experience. The nearby Cabazon Outlet Mall provides additional shopping, featuring 65,000 square feet of shops, representing 18 specialty retailers. Adjacent to this project, is the Desert Hills Premium Outlet Center, an upscale outdoor shopping center which includes over 900,000 square feet and features 180 retailers; this center represents the largest premium outlet center in California.
The nearest hospital is the San Gorgonio Memorial Hospital located just outside the Beaumont city limits, in Banning. The Beaver Medical Group, with offices throughout the Inland Empire, offers primary care, urgent care and laboratory services at its Beaumont location.
The city is served by seven elementary schools, two middle schools, two high schools and an adult school. Secondary education is accessible within approximately five to 20 miles in nearby communities, including Mt. Jacinto Community College with the San Gorgonio Pass Campus located in Banning and the main campus located in San Jacinto; Crafton Hills College in Yucaipa; Moreno Valley College in Moreno Valley; and University of Redlands in Redlands.
The Beaumont Civic Center houses two memorials. The Veteran's Memorial honors local veterans who served from World War I through present-day operations. The Public Safety Memorial honors police officers and firefighters who died in the line of duty or served in the community during their lifetime.
In addition, the Centennial Memorial Bridge, located off Oak Valley Parkway, honors individuals who made significant contributions to the community within its first 100 years.
Land Uses
Land uses in the immediate area include primarily residential, with supporting commercial services located proximate to Interstate 10.
A neighborhood retail center anchored by Stater Bros. Market is located at the northeast corner of Oak valley Parkway and Beaumont Avenue. A Food 4 Less anchored retail center is located at the southeast corner of North Highland Springs Avenue and East 6th Street. Just south of Interstate 10 at North Highland Springs Avenue is a high concentration of retail development, including Best Buy, Ross Dress for Less, Bed Bath & Beyond, The Home Depot and Wal-Mart, among other retailers. Just east of Fairway Canyon (Phase 4)
Surrounding Area Analysis 19
Best Buy, in the city of Banning, is Sun Lakes Village Shopping Center, which is anchored by Hobby Lobby, Rite Aid and Albertsons.
Outlook and Conclusions
In conclusion, the subject's immediate neighborhood is growing in residential uses. The area is considered to be a middle -income neighborhood with adequate support facilities in proximity. The overall condition and quality of the neighborhood is rated as average. The subject property is considered to have average transportation characteristics, including proximity to major neighborhood thoroughfares and freeway access. Overall, the subject is expected to perform reasonably well over the long term.
Fairway Canyon (Phase 4)
Surrounding Area Analysis
20 Surrounding Area Map
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Fairway Canyon (Phase 4)
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Residential Market Analysis 21
Residential Market Analysis
Given prevailing land use patterns and the subject's zoning, a likely use of the property is for residential development. In the following paragraphs, we examine supply and demand indicators for residential development in the subject's area.
Submarket Overview
The subject is located in the City of Beaumont. The subject is adjacent to newer home construction and planned future development and is considered to have good transportation linkages. The neighborhood is characterized as a suburban area that appeals to both local workers and commuters.
Based on existing surrounding homes and new projects under development, the subject characteristics best support a project designed for a combination of move -up home buyers and buyers looking to downsize.
Single -Family Building Permits
Single-family building permits for the city of Beaumont as well as Riverside County totals are shown in the following table.
Single -Family Building Permits
Year City of Beaumont %Change County of Riverside %Change 2013 500 -- 4,328 --
2014 454 -9.20% 5,058 16.87%
2015 466 2.64% 4,325 -14.49%
2016 450 -3.43% 5,136 18.75%
2017 741 64.67% 5,827 13.45%
2018 684 -7.69% 7,327 25.74%
2019 535 -21.78% 6,267 -14.47%
2020 271 -49.35% 8,344 33.14%
2021 442 63.10% 7,428 -10.98%
2022 790 78.73% 8,211 10.54%
Source: SOCDS Building Permits Monthly Request
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Fairway Canyon (Phase 4)
Residential Market Analysis 22
Single -Family Building Permits: 2023 Preliminary Data
Month City of Beaumont County of Riverside
January 30 380
February 13 560
March 20 734
April 80 711
May 108 1,083
June 225 1,234
July 18 450
August 40 671
Total 534 5,823
Source: SOCDS Building Permits Monthly Request
Active New Home Projects Pricing and Absorption
The city of Beaumont is located within the North Central Riverside submarket of the Inland Empire.
The Ryness Report provides a comparison of sales activity between various regions and markets, including year-to-date totals from the same week of the previous year. Their surveys and reports include sales, traffic and financing rates on activity in major residential developments throughout California, Arizona and Nevada. The report for the Inland Empire for the week ending October 22, 2023, is included as follows.
Fairway Canyon (Phase 4)
Residential Market Analysis
23 THE RYNESS REPORT
A New Home Sales. Marketing & Researcn Company
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Inland Empire Ending- Sunday. October 22.2023
Week 42
Counties1 Groups
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Con al -North Central Riverside
51 534
46 7
39 0.76
0.91 -16%
0.83 -8%
Desert Riverside
25 335
19 1
18 0.72
0 74
-2%
0.58 25%
Mirleta - Temecula
15 449
9 2
7 0.47
0.81 -43%
0.70 -33%
Northwest Riverside
25 472
12 4
8 0.32
0.85 -62%
0.81 -60%
South Riverside
51 705
36 8
28 0.55
0.92 -40%
0.81 -32%
Central -East San Bernardi-
34 531
18 3
15 0.44
0.89 -50%
0.76 -ji2%
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17 160
13 1
12 0.71
0.75 -6%
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NW -SW San Bemardin_
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WEEKLY FINANCIAL NEWS
Financing Market Commentary
RATE APR
CONV 6.99°x. 7.35'/.
FHA 6.88'/. 6.99%
10 Yr Yield 4.86%
Sales of new homes trended holier snce late 2022. Limited inventory in the eiestrg home market has bolstered demand fa new constn,cbon, and holders have capealued on 8 e opportunity by ollaring Incentives. Building permits tor new snigie-tamely homes haw also increased to the past eight months. suggestrg that builders MI have coniklence n underlying homebuyer demand. The strength in new home demand e poised to weaken in Ate rixxlths ahead. however. The conventional 30 -year Axed mortgage rates ascent toward 8% has priced out many prospective home buyers. Sales sank 9% ha 675K -unit annual pace n August. and the National Association of Home Waders' latest Housrg market hdex pants to a deteriorating sales outlook. On a sequential bears. we look for new home sales 5 rich up 1% to a 683K -unit pace n September. Fuller out. we expect the leg higher n mortgage rates to welgfi on sales in the coming quarters. Source. We Fargo Bank Weeldy Economic & Frnnctal Commentary
Fairway Canyon (Phase 4)
L7P:
Residential Market Analysis
24 The Ryness Report has identified 26 active projects in the North Central Riverside submarket, with 14 of those within the city of Beaumont. These projects are summarized as follows:
IJe',elopemer1 Name
De`eloper
aty Code Notes Type
North Central Riverside
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Projects Partieipetirp:26
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BE
DTAU 236
3 3
21 1
0 163
53 1.06
1.26 arrow ood Rymer
Taylor Mnscn
(3E
DTMJ 275
3 3
21 1
0 212
44 1.37
1.05 Civcwood Signature
Taylor Mneon
EE
DTMJ 171
3 3
21 1
0 142
47 1.06
1.12 Arroyo at Atwd
TFi Porte TSD
eA
DTST 198
0 ISO
8 0
0 195
5 1.08
0.12 Cirterstane at Atw el
TF4 Porte TSD
BA
DTMJ 152
0 TSD
8 0
0 143
19 0.85
0.45 Crown at Tournament his
TFI Poste
BE
DTMJ 144
4 6
2 1
0 69
53 0.84
1.26 Horizon at Atw el
TFi Poirte TSD
eA
OTMJ 158
0 190
8 0
0 155
10 0.94
0.24 Lardrrerk al Atwel
TM FLir1e TSD
BA
OTMJ 133
0 190
8 0
0 130
13 0.80
0.31 Lre at Alte
TFi %rte
BE
MSF 130
0 5
4 0
0 35
20 0.44
0.48 Lmood at Alwel
TPo Porte"_.'_.
BA
DTMJ 177
0 190
8 0
0 47
47 1.85
1.85 Rasa a Ate
TF1 Porte
BE
AASF 133
0 7
5 1
0 61
42 0.76
1.00 Fasetta at Atw et
ITF4 Porte
BA
OTMJ 278
0 2
8 6
1 56
56 212
212
Sativeek a AtweI
TM Porte
BA
DTMJ 178
0 2
8 0
0 103
103
261
261
Vrtue a Tarn rrort Ills
114 Porte
BE
OIMJ 124
0 2
3 0
0 87
53 1.06
1.23 Vita a Ards
ma Porte "_:_j
BE
MSF 267
0 ISO
5 0
0 223
10 0.84
0.24 Rage view at The Farw ays
Vwoasim
BE
DTMJ 126
0 2
5 0
0 96
29 0.80
080
TOTALS: I. Reporting: 26
Ass Mos:O66
Trunk to us: 13:1
130
280
20 3
2518
966
ibt:17
Oy Godes: BA = Barr*ig. BE= Beaimrt Mr = M7eno valet'. NJ = New Projects considered most similar to the subject are further detailed in the following table.
Fairway Canyon (Phase 4)
Residential Market Analysis 25
Active Projects (as of 3Q 2023)
Project Name
Augusta at The Fairways*
Seasons at The Fairways*
Azalea at The Fairways
Holly at The Fairways
Magnolia at The Fairways
Olivewood Classic
Lina atAltis+
Rosa at Allis+
Vita atAltis+
Crown at Tournament Hills
Virtue at Tournament Hills
Ridge View at The Fairways*
Community
Beaumont
Beaumont
Beaumont
Beaumont
Beaumont
Beaumont
Beaumont
Beaumont
Beaumont
Beaumont
Beaumont
Beaumont
Developer
DR Horton
Richmond American
Meritage
Meritage
Meritage
Taylor Morrison
Tri Pointe Homes
Tri Pointe Homes
Tri Pointe Homes
Tri Pointe Homes
Tri Pointe Homes
Woodside
Avg. Home Average Units Units Avg. Avg.
Average Price Size (SF) Price/SF Planned Sold Sales/Week Sales/Month $509,833 2,016 $252.84 268 263 2.05 8.20
$611,498 2,705 $226.06 62 25 0.41 1.64
$559,900 2,288 $244.71 111 7 0.28 1.12
$619,648 2,887 $214.63 65 14 0.46 1.84
$585,500 2,665 $219.74 111 13 0.43 1.72
$588,913 2,494 $236.13 682 517 1.17 4.68
$480,796 2,060 $233.40 130 35 0.44 1.76
$369,910 1,591 $232.50 133 61 0.76 3.04
$325,000 1,578 $206.02 267 223 0.84 3.36
$475,000 1,750 $271.43 144 69 0.84 3.36
$472,500 1,968 $240.09 124 87 1.06 4.24
$543,957 2,193 $248.04 126 96 0.80 3.20
Minimum
Maximum
Average
$325,000
$619,648
$511,871
1,578
2,887
2,183
$206.02
$271.43
$235.47
1.12 8.20
3.18 Source: The Gregory Group
+Age -restricted project
Resale Pricing
The following table shows historical resale data for more recently built homes (2015 and newer) in the city of Beaumont.
Fairway Canyon (Phase 4)
irr
Residential Market Analysis 26
Resales
Living Area Last List Sales Days on Lot Size
Address Sale Date (SF) Sale Price Price Price/SF Sale/List Year Built Market (SF) 355 Scarlett Runner 10/23/2023 1,592 $425,000 $425,000 $267 100.00% 2018 14 4,356 877 Bluebell Way 10/19/2023 1,750 $460,000 $455,000 $263 101.10% 2019 2 2,579 36690 Sevilla Way 10/16/2023 1,806 $530,000 $525,000 $293 100.95% 2020 71 8,712 1541 SKYSTONE Way 10/13/2023 1,929 $405,000 $409,900 $210 98.80% 2020 136 5,596 1558 Rio Grande 10/10/2023 2,700 $655,000 $645,000 $243 101.55% 2018 130 6,970 1745 Bowles Ct 10/10/2023 3,031 $662,000 $667,000 $218 99.25% 2018 118 9,148 1531 Amethyst Ln 10/8/2023 1,868 $500,000 $475,000 $268 105.26% 2018 4 4,356 35123 Funk Way 10/2/2023 1,898 $545,000 $550,000 $287 99.09% 2021 13 5,066 1626 Alissa Flowers 9/29/2023 1,592 $415,000 $407,000 $261 101.97% 2019 110 4,792 1648 Milford Way 9/29/2023 1,764 $505,000 $499,900 $286 101.02% 2016 48 6,534 1551 Village Green Way 9/27/2023 1,522 $409,990 $409,990 $269 100.00% 2019 151 3,959 1782 Starlight Ave 9/27/2023 2,380 $648,000 $638,900 $272 101.42% 2019 7 9,583 1529 Williamson 9/18/2023 1,600 $460,000 $455,000 $288 101.10% 2017 85 4,792 14163 Ottavio Ct 9/18/2023 2,114 $520,000 $525,000 $246 99.05% 2021 31 7,405 1340 Black Diamond Dr 9/16/2023 1,975 $505,000 $529,995 $256 95.28% 2018 26 5,663 1661 Croton St 9/15/2023 2,747 $620,000 $619,900 $226 100.02% 2015 11 8,276 14253 Capezzana Cir 9/8/2023 1,967 $544,000 $549,900 $277 98.93% 2018 10 9,148 1532 Skystone Way 9/8/2023 2,420 $580,000 $584,995 $240 99.15% 2019 42 6,669 1526 Edgebrook 9/7/2023 2,482 $514,500 $535,000 $207 96.17% 2015 144 7,841 1579 Milky Way 9/7/2023 3,155 $605,000 $604,000 $192 100.17% 2018 13 6,098 1664 Capri Way 9/6/2023 1,522 $380,000 $399,900 $250 95.02% 2020 28 3,899 1308 Big Dipper Dr 9/5/2023 1,868 $530,000 $513,800 $284 103.15% 2018 15 6,970 1387 Grovel and St 8/29/2023 1,757 $515,000 $515,000 $293 100.00% 2019 36 6,534 346 Irvine 8/23/2023 2,017 $575,000 $575,000 $285 100.00% 2018 4 6,534 1583 Planet PI 8/19/2023 2,380 $560,000 $569,000 $235 98.42% 2018 57 7,841 1684 Tielo St 8/14/2023 1,971 $550,000 $545,000 $279 100.92% 2020 7 9,714 11439 Trevor Way 8/11/2023 1,557 $460,000 $460,000 $295 100.00% 2017 5 5,227 36714 Sevilla Way 8/1/2023 1,806 $525,000 $525,000 $291 100.00% 2019 18 7,841 1475 Galaxy Dr 7/31/2023 1,662 $480,000 $475,000 $289 101.05% 2018 9 5,663 1485 Begonia Way 7/31/2023 3,258 $614,000 $610,000 $188 100.66% 2015 46 6,970 338 Linnea 7/28/2023 1,592 $428,000 $443,000 $269 96.61% 2018 61 6,534 Total Sales 31 2,054 $520,177 $520,715 $259 99.87% 2018 47 6,493 (avg.) (avg.) (avg.) (avg.) (avg.) (avg.) (avg.) (avg.) Source: Local Multiple Listing Service (MLS)
Ability to Pay
Of the three active projects within the subject boundaries, new home price points are generally between $492,000 and $660,000. In this section, we will examine the ability to pay among prospective buyers for a representative price point of $545,000, based on the indicators from the competing projects. First, we will estimate the required annual household income based on typical mortgage parameters in the subject's market area. Specifically, we will employ a loan -to -value ratio of 80% (down payment of 20%), mortgage interest rate of 7.50%, 360 monthly payments, and a 40% ratio for the housing costs as a percent of monthly income (inclusive of principal, interest, all taxes and insurance). Property tax payments are accounted for in the analysis as well as homeowner's insurance. The following table shows the estimate of the annual household income that would be required to afford homes priced at the representative price point.
Fairway Canyon (Phase 4)
Residential Market Analysis 27
Income Required
Home Price $545,000
Loan % of Price (Loan to Value) 80%
Loan Amount $436,000
Interest Rate 7.50%
Mortgage Payment $3,049
Property Taxes $684 Based on 1.327970% and direct charges of $966 City of Beaumont CFD No. 2021-1 $166
Homeowner's Association Fee $155
Property Insurance $114
Total Monthly Obligation $4,167
Mortgage Payment %of Income 40%
Monthly Income $10,416
Annual Income $124,998
We have obtained income data from Esri Business Analyst Online (Esri), formerly STDB Online, for a 10 -mile radius surrounding the subject property, which is considered representative of typical buyers for the subject property. In the following table we show the income brackets within the noted area, along with estimates of the percentage of households able to afford homes priced at the representative price point within each income bracket.
Household Ability
Percent of Percent Able Households
Household Income Households Households to Pay Households Able to Pay < $15,000 5,408 6.6% 0.0% 0 0.0%
$15,000 - $24,999 4,607 5.6% 0.0% 0 0.0%
$25,000 - $34,999 5,419 6.6% 0.0% 0 0.0%
$35,000 - $49,999 7,843 9.6% 0.0% 0 0.0%
$50,000 - $74,999 11,984 14.7% 0.0% 0 0.0%
$75,000 - $99,999 10,994 13.4% 0.0% 0 0.0%
$100,000 - $124,999 9,209 11.3% 0.0% 1 0.0%
$125,000 - $149,999 7,687 9.4% 100.0% 7,688 9.4%
$150,000 - $199,999 8,713 10.7% 100.0% 8,713 10.7%
$200,000 - $249,999 4,644 5.7% 100.0% 4,644 5.7%
$250,000 - $499,999 3,668 4.5% 100.0% 3,668 4.5%
$500,000+ 1,583 1.9% 100.0% 1,583 1.9%
81,759 100.0% 26,296 32.2%
Generally, interest rates have an inverse relationship on the affordability of a home. In short, all else being equal higher interest rates lower the price point for buyers based on income. Over the past several years, interest rates have remained historically low, often at or below 3.0%. Rates are still low, from a historical perspective, but have risen above 7.00%; though, rates have begun to decrease slightly. Conversations with sales agents in multiple new home projects noted there has recently been a slowing in demand for new residential homes. The combination of historically high new home prices and rising interest rates have reportedly begun to price some buyers out of entry-level (lower priced) homes. While some projects seem to be affected more than others, predominately due to inventory irr
Fairway Canyon (Phase 4)
Residential Market Analysis 28
levels. Coastal locations and limited supply submarkets appear to be faring better than emerging sub - markets with a concentration of competing projects. Given the continued high inflation numbers, interest rates are expected to remain historically higher in the near term to try and tamper inflation.
Continued high inflation will force prospective homeowners to account for other costs like groceries, gas, etc. over buying a new home at a higher interest rate.
Information from homebuilders note they continue offering concessions in the form of buying down interest rates and discounted options, instead of decreasing their base prices. In some markets, there was enough downward pressure on the market for homebuilders to offer concessions as well as drop their base prices; though, that appears to have been short lived, as home prices resumed increasing since the First Quarter 2023.
Conclusions
Demand for homes in the subject's market area remains active as indicated by the overall trend of building permit activity, new home sales prices and activity in recent quarters as well as the absorption rate within new home projects in the subject's area. irr
Fairway Canyon (Phase 4)
Land Description and Analysis 29
Property Analysis
Land Description and Analysis
Land Description
Land Area 105.50 acres; 4,595,580 SF
Source of Land Area Public Records
Primary Street Frontage Tukwet Canyon
Shape Irregular
Corner No
Topography Generally level and at street grade
Drainage No problems reported or observed
Environmental Hazards None reported or observed
Ground Stability No problems reported or observed
Flood Area Panel Number 06065C0785G
Date August 28, 2008
Zone X
Description Outside of 500 -year floodplain
Insurance Required? No
Zoning; Other Regulations
Zoning Jurisdiction City of Beaumont
Zoning Designation SPA
Description Specific Plan Area
Legally Conforming? Appears to be legally conforming
Zoning Change Likely? No
Permitted Uses The Specific Plan zoning designation applies to those areas of the City that have an adopted Specific Plan as well as those areas where a Specific Plan will be required at which time a development concept is proposed. Those Specific Plans that were adopted prior to the adoption of this Zoning Ordinance or the currently adopted General Plan have been incorporated herein by reference. Any future Specific Plan or Specific Plan Amendment must be consistent with the adopted General Plan.
Other Land Use Regulations
The appraised properties are located within the Fairway Canyon master planned community, in the western portion of the city of Beaumont. In total, Fairway Canyon comprises approximately 1,556 acres of land of which 678 acres are zoned for 3,300 residential units, with 46.4 acres of commercial/industrial land uses and the balance set aside for public/quasi-public uses. Fairway Canyon surrounds the Tukwet Canyon 18 -hole golf course.
None reported or observed
Utilities
Service Provider
Water Beaumont -Cherry Valley Water District
Sewer City of Beaumont
Electricity Southern California Edison
Natural Gas SoCal Gas Company
Local Phone Various providers
Fairway Canyon (Phase 4)
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Land Description and Analysis 30
We are not experts in the interpretation of zoning ordinances. An appropriately qualified land use attorney should be engaged if a determination of compliance is required.
Entitlements
A summary of the current legal (entitlements) and physical status of the appraised properties (233 Assessor's parcels) is shown in the following table.
Entitlement Status
Description No. Homes/Lots
Completed Single Family Homes without Assessed Improvement Value Partially Comlete Single -Family Homes (Under Construction) Finished Single Family Lots
Total
133
91 9
233
The balance of CFD No. 2021-1, 296 single-family residential homes, are reflected on the County of Riverside Assessor's Tax Roll with a complete assessment for both land and improvements and are not a part of this Appraisal Report.
Remaining Site Development Costs
Site development for the subject project appears to be complete.
Permits and Fees
Permits and fees represent all fees payable upon obtaining building permit for the construction of the proposed units and include school fees and impact fees. Based on information provided by the homebuilder, impact fees (DIF) are captured in the site development costs cited above.
It is important to again note which fees the local market includes in the definition of an improved lot.
Though all of the fees above and on the previous page are due at or near building permit, the local market recognizes water fees, school fees, and impact fees as part of an improved lot value. Building permits are excluded from the improved lot value.
In the upcoming extraction analysis, only building permits (estimated at $3,000 per unit) will be deducted, as the remaining impact fees are included in the definition of an improved lot. These estimates of building permits and fees are consistent with our experience with other new home projects throughout Southern California. Any DIF or impact fees not yet paid will be deducted from the improved lot value conclusion to derive an estimate of market value for the subject lots.
Environmental Hazards
An environmental assessment report was not provided for review, and during our inspection, we did not observe any obvious signs of contamination on or near the subject. However, environmental issues are beyond our scope of expertise. It is assumed that the property is not adversely affected by environmental hazards.
Fairway Canyon (Phase 4)
irr
Land Description and Analysis 31
Easements, Encroachments and Restrictions
We were not provided a current title report to review. We are not aware of any easements, encroachments, or restrictions that would adversely affect value. Our valuation assumes no adverse impacts from easements, encroachments, or restrictions, and further assumes that the subject has clear and marketable title.
Seismic Hazards
According to the Seismic Safety Commission, the subject site is located within Zone 4, which is considered to be the highest risk zone in California. There are only two zones in California: Zone 4, which is assigned to areas near major faults; and Zone 3, which is assigned to all other areas of more moderate seismic activity. In addition, the subject is located in a Fault -Rupture Hazard Zone (formerly referred to as an Alquist-Priolo Special Study Zone), as defined by Special Publication 42 (revised January 1994) of the California Department of Conservation, Division of Mines and Geology. In general, a number of faults are located in the Southern California and throughout California; thus, the area is subject to severe ground shaking during earthquakes. Competitive sites face similar seismic risk.
Fire Hazard Risk
The City of Beaumont is served by the Riverside County Fire Department, which operates two fire stations in the city. Additionally, a third station (West Side Fire Station) broke ground in September of this year and is expected to improve response times for nearby communities including Olivewood, Tournament Hills and Tukwet. The City of Beaumont is heavily urbanized, subject primarily to urban structural fires. According to the CAL FIRE Fire and Resource Assessment Program, the subject is not located within a state responsibility area. The following map identifies areas of the city of Beaumont that have been classified as Fire Hazard Severity Zones. As shown in the following map, the subject is not located within a Very High Fire Hazard Severity Zone (VHFHSZ). irr
Fairway Canyon (Phase 4)
Land Description and Analysis
32 If MOP
Beaumont
Very High Fire Hazard Severity Zones in LRA
As Recommended by CAL FIRE
Fromaon
Conclusion of Site Analysis
Overall, the physical characteristics of the site and the availability of utilities result in functional utility suitable for a variety of uses including those permitted by zoning. Uses permitted by zoning include single-family residential development; we are not aware of any other particular restrictions on development.
Fairway Canyon (Phase 4)
Land Description and Analysis
33 Assessor's Parcel Maps
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Fairway Canyon (Phase 4)
Land Description and Analysis
34 400-72
Fairway Canyon (Phase 4)
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Land Description and Analysis
35 Tentative Map — Planning Area 25C
Fl.(1.17UNITIM NAVIN, •L,
'merry; T Add T
IIITN,A„IIII
LOT .11011•4111-• VAIL/
1.1 TENTATIVE TRACT NO, 37696
CITY OF BEAUMONT, COUNTY OF RIVERSIDE. STATE OF CALIFORNIA "SINGLE FAMILY SUIDIVI SIGN'
OCTOBER 2•11
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Fairway Canyon (Phase 4)
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Land Description and Analysis
36 Aerial
City of Beaumont CFD No. 2021-1 (Fairway Can yon)
•i
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Tukwet Canyon Pkwy
Fairway Canyon (Phase 4)
irr
Land Description and Analysis
37 Site Plans
RidgeView at The Fairways
Fairway Canyon (Phase 4)
irr
Land Description and Analysis
38 Seasons at The Fairways
Fairway Canyon (Phase 4)
irr
Proposed Improvements Description 39
Proposed Improvements Description
Overview
A summary of the projects within the boundaries of the City of Beaumont CFD No. 2021-1 (Fairway Canyon) is provided below.
Floor Plan Summary
Living Typical Lot Developer's Base
Project Name Area (SF) Bedroom Bathroom Stories Garage Size (SF) Price Comments RidgeView at the Fairways by Woodside
Plan 1 1,432 2 2.0 One 2 -Car 3,800 N/Av Sold Out
Plan 2 2,024 4 3.0 One 2 -Car 3,800 $503,500
Plan 3 2,227 4 3.0 Two 2 -Car 3,800 $524,000
Plan 4 2,362 4 3.0 Two 2 -Car 3,800 $528,500
Augusta at the Fairways by DR Horton
Plan 1
Plan 2
Plan 3
Plan 4
Plan 5
Plan 6
Plan 7
1,342 3 2.0 One 2 -Car 4,500 N/Av
1,865 4 3.0 One 2 -Car 4,500 $537,000
1,981 3 2.5 Two 2 -Car 4,500 $527,000
1,986 3 2.5 Two 2 -Car 4,500 $492,000
2,065 4 3.0 Two 2 -Car 4,500 $543,000
2,259 4 3.0 Two 2 -Car 4,500 $540,000
2,617 4 3.5 Two 2 -Car 4,500 N/Av
Seasons at the Fairways by Richmond
Pearl 2,370 4 3.0 Two 2 -Car 4,950 $544,990
Tourmaline 2,680 4 3.0 Two 2 -Car 4,950 $606,119
Ammolite 3,040 2 2.5 Two 2 -Car 4,950 $659,276
Sold Out
Fairway Canyon (Phase 4)
irr
Proposed Improvements Description
40 Seasons at The Fairways by Richmond American
OPT. BED u
BATH 3
OK COVOIRO
ALT. KITCHEN
OPT. BEDROOM 5
Fairway Canyon (Phase 4)
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Proposed Improvements Description
41 "wm
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ALT. KITCHEN
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Fairway Canyon (Phase 4)
Proposed Improvements Description
42 OPT. BED Y
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Fairway Canyon (Phase 4)
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Proposed Improvements Description
43 Fairway Canyon (Phase 4)
Proposed Improvements Description
44 FIRST FLOOR
SECOND FLOOR
Fairway Canyon (Phase 4)
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Proposed Improvements Description
45 FIRST FLOOR
SECOND FLOOR
Fairway Canyon (Phase 4)
Proposed Improvements Description
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Fairway Canyon (Phase 4)
Proposed Improvements Description
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Fairway Canyon (Phase 4)
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Proposed Improvements Description
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Fairway Canyon (Phase 4)
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Proposed Improvements Description
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Fairway Canyon (Phase 4)
Proposed Improvements Description
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Fairway Canyon (Phase 4)
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Proposed Improvements Description
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Proposed Improvements Description
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Proposed Improvements Description
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Proposed Improvements Description
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Proposed Improvements Description
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Proposed Improvements Description
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Proposed Improvements Description
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Proposed Improvements Description
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Proposed Improvements Description 60
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Fairway Canyon (Phase 4)
Real Estate Taxes 61
Real Estate Taxes
The property tax system in California was amended in 1978 by Article XIII to the State Constitution, commonly referred to as Proposition 13. It provides for a limitation on property taxes and for a procedure to establish the current taxable value of real property by reference to a base year value, which is then modified annually to reflect inflation (if any). Annual increases cannot exceed 2% per year.
The base year was set at 1975-76 or any year thereafter in which the property is substantially improved or changes ownership. When either of these two conditions occurs, the property is to be re- appraised at market value, which becomes the new base year assessed value. Proposition 13 also limits the maximum tax rate to 1% of the value of the property, exclusive of bonds and direct charges.
Bonded indebtedness approved prior to 1978, and any bonds subsequently approved by a two-thirds vote of the district in which the property is located, can be added to the 1% tax rate.
Ad Valorem Taxes
The existing ad valorem taxes are of nominal consequence in this appraisal, primarily due to the fact these taxes will be adjusted substantially as the remaining property improvements are completed and in consideration of the definition of market value employed in this appraisal, which assumes a sale of the appraised properties. According to the Riverside County Treasurer -Tax Collector's Office, the appraised properties have a cumulative annual tax rate of 1.327970% based on assessed value.
Special Assessments
All of the appraised properties are encumbered by the Special Tax Lien of CFD No. 2021-1. With respect to such special taxes, we have relied upon information provided by the special tax consultant (Spicer Consulting Group) for the annual special tax levy (as of the 2023/24 tax year) on the appraised properties.
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Fairway Canyon (Phase 4)
Real Estate Taxes 62
Special Tax Table (Fiscal Year 2023-2024)
Land Use Category
Building Square Footage Assigned Special Tax
Zone 1
Residential Property
Residential Property
Residential Property
Residential Property
Residential Property
Residential Property
Residential Property
Zone 2
Residential Property
Residential Property
Residential Property
Residential Property
Residential Property
Residential Property
Residential Property
Zone 3
Residential Property
Residential Property
Residential Property
Residential Property
Residential Property
Residential Property
Residential Property
Zone 4
Residential Property
Residential Property
Residential Property
Residential Property
Residential Property
Residential Property
Residential Property
Less than 1,801 SF
1,801 - 2,000 SF
2,001 - 2,200 SF
2,201 - 2,400 SF
2,401 - 2,600 SF
2,601 - 2,800 SF
Greater than 2,800 SF
Less than 1,801 SF
1,801 - 2,000 SF
2,001 - 2,200 SF
2,201 - 2,400 SF
2,401 - 2,600 SF
2,601 - 2,800 SF
Greater than 2,800 SF
Less than 1,801 SF
1,801 - 2,000 SF
2,001 - 2,200 SF
2,201 - 2,400 SF
2,401 - 2,600 SF
2,601 - 2,800 SF
Greater than 2,800 SF
Less than 1,801 SF
1,801 - 2,000 SF
2,001 - 2,200 SF
2,201 - 2,400 SF
2,401 - 2,600 SF
2,601 - 2,800 SF
Greater than 2,800 SF
$1,745 per unit
$1,845 per unit
$1,949 per unit
$2,045 per unit
$2,145 per unit
$2,245 per unit
$2,345 per unit
$1,545 per unit
$1,645 per unit
$1,815 per unit
$1,845 per unit
$1,945 per unit
$2,045 per unit
$2,145 per unit
$1,840 per unit
$1,930 per unit
$2,020 per unit
$2,110 per unit
$2,200 per unit
$2,290 per unit
$2,380 per unit
$1,640 per unit
$1,730 per unit
$1,820 per unit
$1,910 per unit
$2,000 per unit
$2,090 per unit
$2,180 per unit
Source: Rate and Method ofApportionment of Special Taxes Fairway Canyon (Phase 4)
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Highest and Best Use 63
Highest and Best Use
Process
Before a property can be valued, an opinion of highest and best use must be developed for the subject site, both as if vacant, and as improved or proposed. By definition, the highest and best use must be:
• Legally permissible under the zoning regulations and other restrictions that apply to the site. • Physically possible.
• Financially feasible.
• Maximally productive, i.e., capable of producing the highest value from among the permissible, possible, and financially feasible uses.
Highest and Best Use As If Vacant
Legally Permissible
The legal factors influencing the highest and best use of the appraised properties are primarily government regulations, such as zoning and building codes. The appraised properties are zoned and approved for single-family residential development uses. Overall, the legally permissible uses are to develop the appraised properties in accordance with the existing entitlements and land use designation (single-family residential), which have undergone extensive planning and review. A re- zone to any other land use is highly unlikely.
Physically Possible
The physical characteristics of a site that affect its possible use(s) include, but are not limited to, location, street frontage, visibility, access, size, shape, topography, availability of utilities, off -site improvements, easements and soil and subsoil conditions. The physical characteristics are examined to see if they are suited for the legally permissible use.
Locational considerations include the compatibility and position of the subject property with respect to surrounding uses. Based on our physical inspection of the subject property, we know of no reason why the property would not support development. The size, shape and topography of the subject property appear adequate for development, similar to other projects currently developing in the immediate area.
The subject is not located within a floodplain. In addition, the property is not located within a Fault - Rupture Hazard Zone. All utility services are available to the parcels, and evidence of development in the immediate area provides additional support for the possibility of development.
Based on the physical characteristics of the subject property, residential development is considered physically possible and most appropriate.
Financially Feasible
Financial feasibility depends on supply and demand influences. With respect to financial feasibility of single-family residential development, consideration to the current state of the residential housing market and its impact on the residential land market is necessary. As previously discussed in the Residential Market Analysis section, the significant rise in mortgage interest rates had an inverse irr
Fairway Canyon (Phase 4)
Highest and Best Use 64
relationship on the affordability of a home. Prior to the second half of 2022, interest rates remained historically low, often at or below 3.0%. Conversations with sales agents in multiple new home projects noted there was a slowing in demand for new residential homes in the second half of 2022, with some buyers priced out of entry-level (lower -priced) homes. Current mortgage interest rates more closely resemble historic rates and for the most part the home buyer pool appears to recognize that the 3% mortgage rate environment was the anomaly and rates around the 7% level are most likely into the foreseeable future.
Prior to mid -2022, homebuilders were able to sell homes faster than they were able to construct the homes, but with moderating demand due to rising interest rates and inflation factors, construction delivery is no longer a project challenge. The downward shifts in home prices in the second half of 2022 had a significant impact on underlying land/lot values, and land brokers indicated an abrupt drop in builder demand for developable lots and challenges in selling lots presently available during that time period. Recent market conditions for new homes, constraints on new home inventory, appears to have reversed this trend and early indications are builders are once again looking to increase buildable lot inventories. Reports from active market participants indicate there is increased interest and several pending sales are in the due diligence period for acquisition. The lack of supply of re -sale home inventories has led to a recovery in the new home market despite higher mortgage interest rates, suggesting the contraction in new home prices may have been short-lived. This growing homebuyer demand has prompted many national homebuilders to, once again, increase their inventory of developable lots. Recent surveys suggest improved lot prices may have recently surpassed the prior market peak in early 2022.
Current market conditions once again appear to support development of partially improved and unimproved residential lots, if the vacant land is acquired at prices commensurate with current new home pricing. This return to feasibility is driven by new home buyers (as of Summer 2023) beginning to adjust their budgets to the new interest rates and making purchases. Due to depleting existing lot inventories for many builders, additional land and lot acquisitions may be the maximally productive use of vacant land (discussed below).
Maximally Productive
Legal, physical and market conditions have been analyzed to evaluate the highest and best use of the appraised properties as vacant. The analysis is presented to evaluate the type of use(s) that will generate the greatest level of future benefits possible to the property. Based on the factors previously discussed, the maximally productive use of the appraised properties, and its highest and best use as vacant, maybe be to hold for future single-family residential development. While land development maybe feasible (generates revenue at least some increment greater than cost to complete), it may not be the maximally productive use. The probable buyer of vacant land in the residential space is a merchant builder. For the most part these likely buyers have existing inventories, which under current new home pricing and pace of sales may supply their needs into the foreseeable future.
Highest and Best Use as Improved
Highest and best use of the property as improved pertains to the use that should be made in light of its current improvements.
Fairway Canyon (Phase 4)