"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% 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. 16
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 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 17
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 Page394of789
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. 2016-3
(SUNDANCE)
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. 2016-3 (SUNDANCE)
2025 SPECIAL TAX BONDS
Subject to
10% Test Hold -The -
Maturity Principal Interest 10% Test Not Offering -
(September 1) Amount Rate Yield Price Satisfied* Satisfied Price Rule 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. 2016-3 (SUNDANCE)
2025 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. 2016-3 (Sundance).
(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 LLP in connection with rendering its opinion that the interest on the Bonds is excluded from B-1
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. 2016-3 (SUNDANCE)
2025 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 , 2025 (the "Appraisal Report"), on behalf of the City of Beaumont Community Facilities District No. 2016-3 (Sundance) (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. 2016-3 (Sundance) 2025 Special Tax Bonds (the "Bonds").
3. That the Appraiser hereby consents to the reproduction and use of the Appraisal Report appended to the Preliminary Official Statement and the Official Statement. The Appraiser also consents to the references to the Appraiser and the Appraisal made in the Preliminary Official Statement and the Official Statement.
4. In the opinion of the Appraiser the assumptions made in the Appraisal Report 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 —Appraisal Report," and "APPENDIX D - 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.
Page LiaQ of 789
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. 2016-3 (SUNDANCE)
2025 SPECIAL TAX BONDS
FORM OF DEVELOPER LETTER OF REPRESENTATIONS AND CLOSING
CERTIFICATE
LETTER OF REPRESENTATIONS OF TRI POINTE HOMES IE-SD, INC. [POS Date]
City of Beaumont Community Facilities District No. 2016-3 (Sundance) Beaumont, California
Stifel, Nicolaus & Company, Incorporated
Los Angeles, California
Ladies and Gentlemen:
Reference is made to the City of Beaumont Community Facilities District No. 2016-3 (Sundance) 2025 Special Tax Bonds (the "2025 Bonds") and to the Bond Purchase Agreement to be entered into by and between the City of Beaumont Community Facilities District No. 2016-3 (Sundance) (the "Community Facilities District"), and Stifel, Nicolaus & Company, Incorporated, as Underwriter (the "Purchase Agreement"). This Letter of Representations of Tri Pointe Homes IE-SD, 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 Tri Pointe Homes IE- SD, 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, is in good standing under the laws of the State of California, and has all requisite corporate 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 Entities2 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 perform its obligations 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.
' "Actual Knowledge of the Undersigned" means the knowledge that the individual signing on behalf of the Developer currently has as of the date of this Letter of Representations or has obtained through (i) interviews with such current officers and responsible employees of the Developer and its Relevant Entities as the undersigned has determined are reasonably likely, in the ordinary course of their respective duties, to have knowledge of the matters set forth in this Letter of Representations, and/or (ii) review of documents that were reasonably available to the undersigned and which the undersigned has reasonably deemed necessary for the undersigned to obtain knowledge of the matters set forth in this Letter of Representations. The undersigned has not conducted any extraordinary inspection or inquiry other than such inspections or inquiries as are prudent and customary in connection with the ordinary course of the Developer's current business and operations. Individuals who are no longer employees of the Developer or its Relevant Entities have not been contacted. 2 "Relevant Entity" means, with respect to the Developer, any other Person: (i) who directly, or indirectly through one or more intermediaries, is currently controlling, controlled by or under common control with the Developer, and (ii) for whom information, including financial information or operating data, concerning such Person is material to an evaluation of the Community Facilities District and the 2025 Bonds (i.e., such Person's assets or funds would materially affect the Developer's ability 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. "Person" means an individual, a corporation, a partnership, a limited liability company, an association, a joint stock company, a trust, any unincorporated organization or a government or political subdivision thereof. For purposes hereof, the term "control" (including the terms "controlling," "controlled by" or "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
Page L of 789
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 2025 Bonds (e.g., the 2025 Bonds Reserve Subaccount 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" (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 2025 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 2025 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 2025 Bonds. The Developer expects that the proceeds of the 2025 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," 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 2025 Bonds Reserve Subaccount for payment of principal of or interest on the 2025 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 , 2025 (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 January 15, 2025 (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 2025 Bonds at the time of issuance of the 2025 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 2025 Bonds under the Purchase Agreement, and with the discussions, undertakings and procedures leading up to the consummation of the purchase and sale of the 2025 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 2025 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.
TRI POINTE HOMES IE-SD, INC.
By:
EXHIBIT A
CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2016-3 (SUNDANCE)
2025 SPECIAL TAX BONDS
FORM OF CLOSING CERTIFICATE OF
TRI POINTE HOMES LE -SD, INC.
[Closing Date]
City of Beaumont Community Facilities District No. 2016-3 (Sundance) Beaumont, California
Stifel, Nicolaus & Company, Incorporated
Los Angeles, California
Ladies and Gentlemen:
Reference is made to the City of Beaumont Community Facilities District No. 2016-3 (Sundance) (the "Community Facilities District") and the City of Beaumont Community Facilities District No. 2016-3 (Sundance) 2025 Special Tax Bonds (the "2025 Bonds") and to the Bond Purchase Agreement, dated [BPA Date] (the "Purchase Agreement"), entered into in connection therewith. This Closing Certificate of Tri Pointe Homes IE-SD, Inc. (the "Closing Certificate") is delivered by Tri Pointe Homes IE-SD, 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 Tri Pointe Homes IE-SD, 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 2025 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 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.
D-9
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.
TRI POINTE HOMES IE-SD, INC.
By:
D-1 1
EXHIBIT B
CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2016-3 (SUNDANCE)
2025 SPECIAL TAX BONDS
DEVELOPER PROVIDED INFORMATION IN APPRAISAL REPORT
See attached.
D-12
Stradling Yocca Carlson & Rauth
° - Draft of 2/28/25
0 •-
,
o PRELIMINARY OFFICIAL STATEMENT DATED , 2025
o NEW ISSUE -BOOK -ENTRY ONLY NO RATING
o • -0
o In the opinion of Stradling Yocca Carlson & Rauth LLP, Newport Beach, California ("Bond Counsel'), under existing statutes, regulations, rulings I. and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest ar
o (and original issue discount) on the 2025 Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. In the further opinion of Bond Counsel, interest (and original issue discount) on the • 2025 Bonds is exempt from State of California personal income tax. See "TAX MATTERS" with respect to tax consequences relating to the 2025 Bonds, including o with respect to the alternative minimum tax imposed on certain large corporations. o
ti' : $6,580,000*
o .2 CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2016-3 (SUNDANCE)
E
,4 2025 SPECIAL TAX BONDS
= o Dated: Delivery Date Due: September 1, as shown on inside cover page
75.1 The City of Beaumont Community Facilities District No. 2016-3 (Sundance) 2025 Special Tax Bonds (the "2025 Bonds") are being issued by the City a.) • 2 of Beaumont Community Facilities District No. 2016-3 (Sundance) (the "District") to: (i) fmance certain public improvements owned by the City of Beaumont o w (the "City") and needed with respect to the development of property located within the District; (ii) fund a deposit to the 2025 Bonds Reserve Subaccount of the • o Reserve Account (both as defined herein); and (iii) pay costs of issuance for the 2025 Bonds. The 2025 Bonds are authorized to be issued pursuant to the Mello- Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the Government Code of the State of Califomia) (the "Act"), and pursuant to that a a) certain Bond Indenture, dated as of May 1, 2023, as supplemented by that certain First Supplement to Bond Indenture, dated as of 1, 2025, (together, the g "Indenture") each by and between the District and Zions Bancorporation, National Association, as successor trustee (the "Trustee"). s~ The 2025 Bonds are payable from Net Taxes (as defined herein) derived from a certain annual Special Tax (as defined herein) to be levied on taxable 0 o parcels within the District and from certain other funds pledged under the Indenture, all as further described herein. The 2025 Bonds are secured under the Indenture by a pledge of and lien upon Net Taxes on a parity with the District's 2023 Special Tax Bonds, which are currently outstanding in the aggregate principal CA
• E amount of $8,665,000 (the "2023 Bonds"). The Special Tax is to be levied according to the rate and method of apportionment approved by the City Council of H y the City and the qualified electors within the District. See the caption "SOURCES OF PAYMENT FOR THE BONDS — Special Taxes" and Appendix A — up "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX."
E 'v The 2025 Bonds will be issued in fully registered form and when issued will be registered in the name of Cede & Co., as nominee of The Depository ro •
o �« -" Trust Company, New York, New York ("DTC"). Individualpurchases of the 2025 Bonds may be made in principal amounts of $5,000 and integral multiples O (" ) P P gr P
0 3 thereof and will be in book -entry form only. Purchasers of the 2025 Bonds will not receive certificates representing their beneficial ownership of the 2025 Bonds cd
but will receive credit balances on the books of their respective nominees. The 2025 Bonds will not be transferable or exchangeable except for transfer to another 0 •5 nominee of DTC or as otherwise described herein. Interest on the 2025 Bonds will be payable on each March 1 and September 1, commencing September 1, 2025. .- •- Principal of and interest on the 2025 Bonds will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants, who will remit such payments • 7:) to the Beneficial Owners of the 2025 Bonds.
to. a o
E
NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE COUNTY OF RIVERSIDE, THE STATE OF o CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE 2025 BONDS. EXCEPT FOR THE NET TAXES, NO OTHER REVENUES OR TAXES ARE PLEDGED TO THE PAYMENT OF THE 2025 BONDS. THE 2025 BONDS ARE NOT GENERAL OR • o SPECIAL OBLIGATIONS OF THE CITY OR GENERAL OBLIGATIONS OF THE DISTRICT BUT ARE LIMITED OBLIGATIONS OF THE DISTRICT • u o PAYABLE SOLELY FROM NET TAXES AND OTHER AMOUNTS HELD UNDER THE INDENTURE AS MORE FULLY DESCRIBED HEREIN.
The 2025 Bonds are subject to redemption prior to maturity as set forth herein. See the caption "THE 2025 BONDS — Redemption." Investment in the 2025 Bonds involves risks that are not appropriate for certain investors. Certain events could affect the ability of the District to pay the principal of and interest on the 2025 Bonds when due. See the caption "SPECIAL RISK FACTORS" for a discussion of certain risk factors o
c that should be considered, in addition to the other matters set forth herein, in evaluating the investment quality of the 2025 Bonds. • -: THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR GENERAL REFERENCE ONLY. IT IS NOT INTENDED TO BE A o SUMMARY OF THE SECURITY OR TERMS OF THIS ISSUE. INVESTORS ARE ADVISED TO READ THE ENTIRE OFFICIAL STATEMENT TO • OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION. o MATURITY SCHEDULE
w W ,o
o (See Inside Cover Page)
'rj ? The 2025 Bonds are offered when, as and if issued and accepted by the Underwriter, subject to approval as to their legality by Stradling Yocca • >, Carlson & Rauth LLP, Newport Beach, California, Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed on for the City g and the District by Slovak Baron Empey Murphy & Pinkney LLP, Palm Springs, California, City Attorney, and for the District by Stradling Yocca Carlson & •4 .E Rauth LLP, Disclosure Counsel, for the Underwriter by Kutak Rock LLP, Irvine, California, and for the Trustee by its counsel. It is anticipated that the 2025 • Bonds in book -entry form will be available for delivery on or about , 2025. [STIFEL LOGO]
• Dated: 2025
O w a)
• • O * Preliminary, subject to change.
ar
w E
• 4922-7396-4055v9/022599-0037
CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2016-3 (SUNDANCE)
2025 SPECIAL TAX BONDS
MATURITY SCHEDULE
BASE CUSIPt: 074434
Maturity Date Principal
(September 1) Amount Interest Rate Yield Price CUSIP No.t $ % Term Bonds due September 1, Yield: % Price: CUSIP No.t CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by FactSet Research Systems Inc. Copyright(c) 2025 CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. None of the City, the District nor the Underwriter is responsible for the selection or uses of these CUSIP numbers, and no representation is made as to their correctness on the applicable 2025 Bonds or as included herein. The CUSIP number for a specific maturity is subject to being changed after the issuance of the 2025 Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the 2025 Bonds.
4922-7396-4055v9/022599-0037
CITY OF BEAUMONT
COUNTY OF RIVERSIDE, CALIFORNIA
CITY COUNCIL
David Fenn, Mayor
Mike Lara, Mayor Pro Tem
Jessica Voigt, Councilmember
Lloyd White, Councilmember
Julio Martinez III, Councilmember
CITY ADMINISTRATORS
Elizabeth Gibbs, City Manager
Jennifer Ustation, Finance Director
CITY ATTORNEY
Slovak Baron Empey Murphy & Pinkney LLP
Palm Springs, California
BOND AND DISCLOSURE COUNSEL
Stradling Yocca Carlson & Rauth LLP
Newport Beach, California
MUNICIPAL ADVISOR
Urban Futures, Inc.
Walnut Creek, California
SPECIAL TAX CONSULTANT
Spicer Consulting Group, LLC
Murrieta, California
APPRAISER
Integra Realty Resources
Rocklin, California
TRUSTEE
Zions Bancorporation, National Association
Los Angeles, California
4922-7396-4055v9/022599-0037
Except where otherwise indicated, all information contained in this Official Statement has been provided by the City and the District. No dealer, broker, salesperson or other person has been authorized by the City, the District, the Trustee or the Underwriter to give any information or to make any representations in connection with the offer or sale of the 2025 Bonds other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by the City, the District, the Trustee or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the 2025 Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.
This Official Statement is not to be construed as a contract with the purchasers or Owners of the 2025 Bonds.
Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact.
The Underwriter has provided the following sentence for inclusion in this Official Statement:
The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.
The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City, the District or any other parties described herein since the date hereof. All summaries of the Indenture or other documents are made subject to the provisions of such documents respectively and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the City for further information in connection therewith.
THE 2025 BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE 2025 BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.
Certain statements included or incorporated by reference in this Official Statement constitute "forward -looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as a "plan," "expect," "estimate," "project," "budget," or similar words. Such forward -looking statements include, but are not limited to certain statements contained in the information under the captions "THE DISTRICT" and "PROPERTY OWNERSHIP AND THE DEVELOPMENT."
THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN
SUCH FORWARD -LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS,
PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY
FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD -LOOKING STATEMENTS. THE DISTRICT DOES NOT PLAN TO ISSUE ANY UPDATES
OR REVISIONS TO THE FORWARD -LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT. IN EVALUATING SUCH STATEMENTS, POTENTIAL INVESTORS SHOULD
SPECIFICALLY CONSIDER THE VARIOUS FACTORS WHICH COULD CAUSE ACTUAL EVENTS OR
RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH FORWARD -LOOKING STATEMENTS.
The City maintains a website. However, the information presented on such website is not part of this Official Statement and should not be relied upon in making an investment decision with respect to the 2025 Bonds. 4922-7396-4055v9/022599-0037
TABLE OF CONTENTS
Page
INTRODUCTION 1
The District 1
Sources of Payment for the Bonds 3
Appraisal Report 4
Description of the 2025 Bonds 5
Tax Exemption 5
Professionals Involved in the Offering 5
Continuing Disclosure 6
Parity Bonds for Refunding Purposes Only 6
SEC Order 6
Bond Owners' Risks 6
Other Information 6
FINANCING PLAN 7
Estimated Sources and Uses of Funds 7
THE 2025 Bonds 7
General Provisions 7
Debt Service Schedule 9
Redemption 9
Registration, Transfer and Exchange 13
SOURCES OF PAYMENT FOR THE BONDS 13
Limited Obligations 13
Special Taxes 14
2025 Bonds Reserve Subaccount of the Reserve Account of the Special Tax Fund 21 No Teeter Plan 22
Parity Bonds 22
THE COMMUNITY FACILITIES DISTRICT 23
General 23
Status of Development in the District 23
Description of Authorized Facilities 24
Appraisal Report 24
Value -to -Lien Ratios 25
Direct and Overlapping Debt 29
Delinquency History 30
Top Taxpayers 31
PROPERTY OWNERSHIP AND THE DEVELOPMENT 31
The Developer 32
Development and Financing Plan 32
SPECIAL RISK FACTORS 34
Risks of Real Estate Secured Investments Generally 35
Insufficiency of Special Tax Revenues 35
Impact of Economic Conditions on the Development in the District 36 Increase in Mortgage Interest Rates 37
Concentration of Ownership 37
Property Values 37
Natural Disasters 38
Hazardous Substances 38
Enforcement Delays — Bankruptcy 39
4922-7396-4055v9/022599-0037
Special Tax Delinquencies 39
FDIC/Federal Government Interests in Parcels 39
Direct and Overlapping Indebtedness 41
Payment of Special Taxes is not a Personal Obligation of the Property Owners 41 No Acceleration Provision 41
Limited Obligations 41
Ballot Initiatives 42
Proposition 218 42
Litigation with Respect to Community Facilities Districts 42 Loss of Tax Exemption 44
No Ratings — Limited Secondary Market 44
Limitations on Remedies 44
Potential Early Redemption of 2025 Bonds from Prepayments or Community Facilities District Bond Proceeds 44
Cybersecurity 45
CONTINUING DISCLOSURE 45
TAX MATTERS 46
LEGAL OPINION 47
ABSENCE OF LITIGATION 47
NO RATING 48
UNDERWRITING 48
FINANCIAL INTERESTS 48
MUNICIPAL ADVISOR 48
MISCELLANEOUS 49
APPENDIX A RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX A-1 APPENDIX B CERTAIN ECONOMIC AND DEMOGRAPHIC INFORMATION B-1 APPENDIX C FORM OF OPINION OF BOND COUNSEL C-1
APPENDIX D APPRAISAL REPORT D-1
APPENDIX E SUMMARY OF THE INDENTURE E-1
APPENDIX F FORM OF DISTRICT CONTINUING DISCLOSURE CERTIFICATE F-1 APPENDIX G BOOK -ENTRY ONLY SYSTEM G-1
APPENDIX H SECURITIES AND EXCHANGE COMMISSION ORDER H-1 ii
4922-7396-4055v9/022599-0037
[INSERT VICINITY MAP]
4922-7396-4055v9/022599-0037
[INSERT AERIAL PHOTOGRAPH]
4922-7396-4055v9/022599-0037
$6,580,000*
CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2016-3 (SUNDANCE)
2025 SPECIAL TAX BONDS
INTRODUCTION
The purpose of this Official Statement, which includes the cover page, the table of contents and the attached appendices (collectively, the "Official Statement"), is to provide certain information concerning the issuance by the City of Beaumont Community Facilities District No. 2016-3 (Sundance) (the "District") of its 2025 Special Tax Bonds in the aggregate principal amount of $6,580,000* (the "2025 Bonds"). The proceeds of the 2025 Bonds will be used to: (i) finance certain public improvements owned by the City of Beaumont (the "City") and needed with respect to the development of property located within the District; (ii) fund a deposit to the 2025 Bonds Reserve Subaccount of the Reserve Account (both as defined herein); and (iii) pay costs of issuance for the 2025 Bonds.
The 2025 Bonds are authorized to be issued pursuant to the Mello -Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the Government Code of the State of California) (the "Act"), a resolution adopted on , 2025, by the City Council of the City, acting as the legislative body of the District, and a Bond Indenture, dated as of May 1, 2023, as supplemented by that certain First Supplement to Bond Indenture dated as of 1, 2025 (together, the "Indenture"), each by and between the District and Zions Bancorporation, National Association, as successor trustee (the "Trustee"). The 2025 Bonds are secured under the Indenture by a pledge of and lien upon Net Taxes (as such term is defined herein) and all moneys in the Special Tax Fund (other than the Administrative Expense Account and the 2023 Bonds Reserve Subaccount of the Reserve Account therein) as described in the Indenture, on a parity with the District's 2023 Special Tax Bonds, which are currently outstanding in the aggregate principal amount of $8,665,000 (the "2023 Bonds").
The 2023 Bonds and the 2025 Bonds are referred to collectively herein as the "Bonds." This Introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement and the documents summarized or described herein. A full review should be made of the entire Official Statement.
The sale and delivery of 2025 Bonds to potential investors is made only by means of the entire Official Statement.
All capitalized terms used in this Official Statement and not defined have the meanings set forth in Appendix E.
The District
General. The City is located in the western portion of the County of Riverside (the "County"), California (the "State"). The District is located in the northeastern portion of the City and is bounded by Starlight Avenue to the west, North Highland Springs Avenue to the east and Cougar Way to the north. Tri Pointe Homes IE-SD, Inc., a California corporation (the "Developer" or "Tri Pointe"), is developing the land within the District into a residential development of 704 age -restricted (55+) single family detached homes known as "Altis Beaumont" in the City. Located at the center of Altis Beaumont is a 16,000 square foot community center ("The Vuepoint") that offers several swimming pools, five pickleball courts, a billiards lounge, a fitness club, as well as studies and outdoor event spaces. Since the first homes were completed in 2019, Altis Beaumont has won several architectural design and planning awards.
The District is part of a master planned community known as "Sundance." At buildout, Sundance is expected to consist of approximately 4,450 residential units on approximately 1,195 acres of land, with 13.5 acres of commercial/industrial land uses and the balance set aside for public/quasi/public uses. The Sundance * Preliminary, subject to change.
4922-7396-4055v9/022599-0037
master planned community is complete, with the exception of the remaining units to be developed and sold in the District.
As of March 1, 2025 (the cutoff date for classifying Taxable Property pursuant to the Rate and Method (as defined herein)), building permits had been issued for 607 of the parcels within the District; accordingly, 607 lots will be classified as Developed Property, and Special Taxes will be levied against such properties in Fiscal Year 2025-26 at 100% of their Assigned Special Tax rate. For the projected Fiscal Year 2025-26 Special Tax levy, the Bonds have been sized so that the Assigned Special Taxes on the 607 parcels of Developed Property as of March 1, 2025 plus a reduced Special Tax rate against the remaining 97 Final Map lots will produce an amount equal to at least 110% of the debt service due on the Bonds in Fiscal Year 2025-26 plus Administrative Expenses of $30,000. See Table 1 for more information regarding the projected Fiscal Year 2025-26 Special Tax levy and the percent of such levy based on land use class. Neither the Assigned Special Taxes nor the Administrative Expenses escalate over time.
As of January 17, 2025, 556 homes within the District had been built and sold to individual homeowners, and Tri Pointe owned 11 completed homes (0 of which were in escrow) which include 11 model homes, 40 homes under construction (14 of which were in escrow) and 97 lots in a finished condition without any vertical construction thereon (0 of which were in escrow). Homes under contract may not result in closed escrows as sales contracts are subject to cancellation. As of March 1, 2025, an additional homes had been transferred to individual homeowners. The Developer currently expects to complete and convey all homes planned within the District to individual homebuyers by the Second quarter of 2026.
All property planned for residential development in the District is being developed by the Developer.
The area remaining to be built in the District has been graded and the infrastructure (water, street improvements, streetlights and dry utilities including power, gas cable and phone) necessary to build out the balance of homes remains within the District has been completed.
See the captions "THE COMMUNITY FACILITIES DISTRICT" and "PROPERTY OWNERSHIP AND THE DEVELOPMENT" for further information with respect to the District, the Developer and development within the District.
Formation Proceedings. The District was formed by the City pursuant to the Act and constitutes a governmental entity separate and apart from the City.
The Act was enacted by the California legislature to provide an alternative method of financing certain public capital facilities and services, especially in developing areas of the State. Any local agency (as defined in the Act) may establish a community facilities district to provide for and finance the cost of eligible public facilities and services. Generally, the legislative body of the local agency which forms a community facilities district acts on behalf of such district as its legislative body. Subject to approval by two-thirds of the votes cast at an election and compliance with the other provisions of the Act, a legislative body of a local agency may issue bonds for a community facilities district and may levy and collect a special tax within such district to repay such indebtedness.
Pursuant to the Act, the City formed the District on February 7, 2017. Subsequent to a noticed public hearing on February 7, 2017, the City Council adopted resolutions which established the District, authorized the levy of special taxes within the District, determined the necessity to incur bonded indebtedness within the District, and called an election within the District on the proposition of incurring bonded indebtedness, levying special taxes and setting an appropriations limit within the District.
On February 7, 2017, an election was held within the District at which the landowners eligible to vote approved the issuance of bonds for the District in an amount not to exceed $22,000,000 and approved a rate and method of apportionment of special tax for the District (the "Rate and Method"). A copy of the Rate and Method is attached hereto as Appendix A.
2 4922-7396-4055v9/022599-0037
Sources of Payment for the Bonds
General. The Bonds and any Parity Bonds are limited obligations of the District, and the interest on and principal of and redemption premiums, if any, on the Bonds and any Parity Bonds are payable solely from the Special Taxes to be levied annually against the property in the District, or, to the extent necessary, from the moneys on deposit in the various subaccounts of the Reserve Account. As described herein, the Special Taxes are collected along with ad valorem property taxes on the tax bills mailed by the Treasurer -Tax Collector of the County. Although the Special Taxes will constitute a lien on the property subject to taxation in the District, they will not constitute a personal indebtedness of the owners of such property. There is no assurance that such owners will be fmancially able to pay the annual Special Taxes or that they will pay such taxes even if they are financially able to do so.
Limited Obligations. Except for the Special Taxes, no other taxes are pledged to the payment of the Bonds and any Parity Bonds. The Bonds and any Parity Bonds are not general or special obligations of the City nor general obligations of the District, but are special obligations of the District payable solely from Special Taxes collected in the District and amounts held under the Indenture as more fully described herein.
Special Tax. As used in this Official Statement, the term "Special Tax" is that tax which has been authorized pursuant to the Act to be levied against certain land within the District pursuant to the Act and in accordance with the Rate and Method to pay for facilities only, but excluding penalties and interest imposed upon delinquent installments. See "SOURCES OF PAYMENT FOR THE BONDS — Special Taxes" and APPENDIX A — "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX." Under the Indenture, the District will pledge to repay the Bonds and any Parity Bonds from the Special Tax revenues remaining after the payment of annual Administrative Expenses of the District up to the Administrative Expenses Cap (the "Net Taxes") and from certain amounts on deposit in the Special Tax Fund established under the Indenture.
The Special Taxes are the primary security for the repayment of the Bonds and any Parity Bonds. In the event that the Special Taxes are not paid when due, the only sources of funds available to pay the debt service on the Bonds and any Parity Bonds are amounts held by the Trustee in the Special Tax Fund, including amounts held in the various subaccounts of the Reserve Account therein. See "SOURCES OF PAYMENT FOR THE BONDS — 2025 Bonds Reserve Subaccount of the Reserve Account of the Special Tax Fund." The Special Tax was first levied in Fiscal Year 2019-20. See Table 6 herein under the caption "THE COMMUNITY FACILITIES DISTRICT — Delinquency History" for more information related to prior years Special Tax levies and delinquencies. No assurances can be made that Special Taxes will be collected in an amount required to make debt service payments on the Bonds. See "THE COMMUNITY FACILITIES DISTRICT — Delinquency History" and "SPECIAL RISK FACTORS — Special Tax Delinquencies" and "SPECIAL RISK FACTORS — Insufficiency of Special Taxes." Reserve Subaccounts of the Reserve Account. The Indenture creates a 2023 Bonds Reserve Subaccount in the Reserve Account for the 2023 Bonds and a 2025 Bonds Reserve Subaccount in the Reserve Account for the 2025 Bonds. The amounts on deposit in the 2023 Bonds Reserve Subaccount are equal to the 2023 Bonds Reserve Requirement. In order to secure further the payment of principal of and interest on the Bonds, the District is required, upon delivery of the 2025 Bonds, to deposit in the 2025 Bonds Reserve Subaccount an amount equal to the 2025 Bonds Reserve Requirement and thereafter to maintain in the 2025 Bonds Reserve Subaccount an amount equal to the 2025 Bonds Reserve Requirement. The initial 2025 Bonds Reserve Requirement shall be $ , and the 2025 Bonds Reserve Requirement shall never exceed this amount.
See "SOURCES OF PAYMENT FOR THE BONDS — 2025 Bonds Reserve Subaccount of the Reserve Account of the Special Tax Fund."
Amounts in the 2023 Bonds Reserve Subaccount are only available to pay debt service on the 2023 Bonds and amounts in the 2025 Bonds Reserve Subaccount are only available to pay debt service on the 2025 Bonds.
3 4922-7396-4055v9/022599-0037
Foreclosure Proceeds. The District will covenant in the Indenture for the benefit of the owners of the Bonds and Parity Bonds that it will: (i) commence judicial foreclosure proceedings against parcels with delinquent Special Taxes in excess of $2,500 by the December 1 following the close of each Fiscal Year in which such Special Taxes were due; (ii) commence judicial foreclosure proceedings against all parcels with delinquent Special Taxes by the December 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than 95% of the total Special Tax levied; and (iii) diligently pursue such foreclosure proceedings until the delinquent Special Taxes are paid; provided that, notwithstanding the foregoing, the District may elect to defer foreclosure proceedings on any parcel so long as the amount in the 2023 Bonds Reserve Subaccount is at least equal to the 2023 Bonds Reserve Requirement, the amount in the 2025 Bonds Reserve Subaccount is at least equal to the 2025 Bonds Reserve Requirement and the amount in all other Subaccounts of the Reserve Account is at least equal to the applicable Reserve Requirement. See the caption "SOURCES OF PAYMENT FOR THE BONDS - Special Taxes —Proceeds of Foreclosure Sales." There is no assurance that the property within the District can be sold for the appraised or assessed values described herein, or for a price sufficient to pay the principal of and interest on the Bonds in the event of a default in payment of Special Taxes by the current or future landowners within the District. See the caption "SPECIAL RISK FACTORS — Property Values."
The District does not participate in the County's Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the "Teeter Plan"); accordingly, the collection of Special Taxes is subject to delinquency. See "SOURCES OF PAYMENT FOR THE BONDS — No Teeter Plan."
NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE DISTRICT, THE
CITY, THE COUNTY OF RIVERSIDE, THE STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. EXCEPT FOR THE SPECIAL TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE
BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE CITY OR GENERAL
OBLIGATIONS OF THE DISTRICT, BUT ARE SPECIAL OBLIGATIONS OF THE DISTRICT
PAYABLE SOLELY FROM NET TAXES AND CERTAIN AMOUNTS HELD UNDER THE BOND INDENTURE AS MORE FULLY DESCRIBED HEREIN.
Liens. Other taxes and/or special assessments with liens equal in priority to the continuing lien of the Special Taxes have been levied and may also be levied in the future on the property within the District which could adversely affect the willingness of the landowners to pay the Special Taxes when due. See "SPECIAL RISK FACTORS — Parity Taxes and Special Assessments" herein. See Table 4 for a description of the direct and overlapping debt applicable to the parcels within the District.
Appraisal Report
An MAI appraisal of the land and existing improvements within the District (the "Appraisal Report") dated February 28, 2025 was prepared by Integra Realty Resources, Rocklin, California (the "Appraiser"). See APPENDIX D — "APPRAISAL REPORT." The Appraisal Report provides an estimate of the approximate market value of certain of the property in the District, assuming development of the property as currently planned and assessed value for the remainder of the property. As currently planned, development in the District will consist of 704 residential units. The Appraisal Report appraised 302 of the lots within the District ($96,567,000) and relied on the assessed value for the remaining 402 lots ($180,692,091). As of January 17, 2025, the date of value set forth in the Appraisal Report, the Appraiser estimates that the value of all of the Taxable Parcels (based on appraised and assessed value) within the District subject to the Special Tax was $277,259,091.
The Appraisal Report is based upon a variety of assumptions and limiting conditions that are described in Appendix D. The City, the District and the Underwriter make no representations as to the accuracy of the Appraisal Report. See "THE COMMUNITY FACILITIES DISTRICT Appraisal Report" and "THE COMMUNITY FACILITIES DISTRICT — Value -to -Lien Ratios." There is no assurance that property within the District can be sold for the prices set forth in the Appraisal Report or that any parcel can be sold for a price 4 4922-7396-4055v9/022599-0037
sufficient to pay the Special Tax for that parcel in the event of a default in payment of Special Taxes by the landowner. See "THE COMMUNITY FACILITIES DISTRICT," "SPECIAL RISK FACTORS — Property Values," "SPECIAL RISK FACTORS - Impact of Economic Conditions on the Development in the District" and APPENDIX D - "APPRAISAL REPORT" herein.
Description of the 2025 Bonds
The 2025 Bonds will be issued and delivered as fully registered Bonds, registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"), and will be available to actual purchasers of the 2025 Bonds (the "Beneficial Owners") in the denominations of $5,000 or any integral multiple thereof, under the book -entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants as described herein. Beneficial Owners will not be entitled to receive physical delivery of the 2025 Bonds. In the event that the book -entry only system described herein is no longer used with respect to the 2025 Bonds, the 2025 Bonds will be registered and transferred in accordance with the Indenture.
See Appendix G — "BOOK -ENTRY ONLY SYSTEM."
Principal of, premium, if any, and interest on the 2025 Bonds is payable by the Trustee to DTC.
Disbursement of such payments to DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of DTC Participants. See Appendix G — `BOOK -ENTRY ONLY SYSTEM.
The 2025 Bonds are subject to redemption prior to maturity as described herein. See the caption "THE 2025 Bonds — Redemption." For a more complete description of the 2025 Bonds and the basic documentation pursuant to which they are being sold and delivered, see the caption "THE 2025 BONDS" and Appendix E — "SUMMARY OF THE INDENTURE."
Tax Exemption
In the opinion of Stradling Yocca Carlson & Rauth LLP, Newport Beach, California ("Bond Counsel"), under existing statutes, regulations, rulings and judicial decisions, and assuming certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the 2025 Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. In the further opinion of Bond Counsel, interest (and original issue discount) on the 2025 Bonds is exempt from State of California personal income tax. See the caption "TAX MATTERS" with respect to tax consequences relating to the 2025 Bonds, including with respect to the alternative minimum tax imposed on certain large corporations.
Set forth in Appendix C is the form of opinion of Bond Counsel expected to be delivered in connection with the issuance of the 2025 Bonds. For a more complete discussion of such opinion and certain tax consequences incident to the ownership of the 2025 Bonds, see the caption "TAX MATTERS." Professionals Involved in the Offering
Zions Bancorporation, National Association, Los Angeles, California, will act as Trustee under the Indenture. Stifel, Nicolaus & Company, Incorporated, will serve as the underwriter (the "Underwriter") of the 2025 Bonds. Certain proceedings in connection with the issuance and delivery of the 2025 Bonds are subject to the approval of Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, Bond Counsel and Disclosure Counsel to the District in connection with the issuance of the 2025 Bonds. Certain legal matters will be passed on for the District and the City by Slovak, Baron, Empey, Murphy & Pinkney LLP, Palm Springs, California, for the Underwriter by Kutak Rock LLP, Irvine, California, as counsel to the Underwriter, and for the Trustee by its counsel. Other professional services have been performed by Integra Realty Resources, Rocklin, California, as the Appraiser, Urban Futures, Inc., Walnut Creek, California, as Municipal Advisor to the City and the District, and Spicer Consulting Group LLC, Murrieta, California, as Special Tax Consultant. 5 4922-7396-4055v9/022599-0037
For information concerning circumstances in which certain of the above -mentioned professionals, advisors, counsel and consultants may have a financial or other interest in the offering of the 2025 Bonds, see the caption "FINANCIAL INTERESTS."
Continuing Disclosure
Pursuant to a Continuing Disclosure Certificate to be executed by the District (the "District Continuing Disclosure Certificate"), the District will agree to provide, or cause to be provided, to the Municipal Securities Rulemaking Board's Electronic Municipal Market Access system ("EMMA"), maintained on the Internet at http://emma.msrb.org , certain annual financial information and operating data and notices of certain enumerated events. These covenants are being made in order to assist the Underwriter in complying with subsection (b)(5) of Rule 15c2-12 adopted by the Securities and Exchange Commission, as amended ("Rule 15c2-12"). See "CONTINUING DISCLOSURE."
See "CONTINUING DISCLOSURE," Appendix F — "FORM OF DISTRICT CONTINUING DISCLOSURE CERTIFICATE."
Parity Bonds for Refunding Purposes Only
Under the Indenture, the District may issue Parity Bonds secured by the Net Taxes on a parity with the Bonds but only to refund all or a portion of the Bonds or Parity Bonds. See the caption "SOURCES OF PAYMENT FOR THE BONDS — Parity Bonds for Refunding Purposes Only." Other taxes and/or special assessments with liens equal in priority to the continuing lien of the Special Taxes may also be levied in the future on the property within the District, which could adversely affect the willingness of the landowners to pay the Special Taxes when due. See the captions "THE COMMUNITY FACILITIES DISTRICT — Direct and Overlapping Debt" and "SPECIAL RISK FACTORS — Direct and Overlapping Indebtedness." SEC Order
On August 23, 2017, following an offer of settlement by the Beaumont Financing Authority (the "BFA"), the U.S. Securities and Exchange Commission ("SEC") entered a Cease -and -Desist Order and imposed certain undertakings on the BFA (the "SEC Order"). The BFA neither admits nor denies the findings in the SEC Order. The members of the City Council of the City act as the Board of Directors of the BFA and City staff acts as the staff of the BFA. A copy of the SEC Order is attached hereto as Appendix H.
Bond Owners' Risks
Certain events could affect the ability of the District to pay the principal of and interest on the 2025 Bonds when due. See the caption "SPECIAL RISK FACTORS" for a discussion of certain factors which should be considered, in addition to other matters set forth herein, in evaluating an investment in the 2025 Bonds. The purchase of the 2025 Bonds involves risks, and the 2025 Bonds may not be appropriate investments for some types of investors.
Other Information
This Official Statement speaks only as of its date, and the information contained herein is subject to change.
Brief descriptions of the 2025 Bonds and the Indenture are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. All references herein to the Indenture, the 2025 Bonds and the Constitution and laws of the State, as well as the proceedings of the City Council, acting as the legislative body of the District, are qualified in their entirety by references to such 6 4922-7396-4055v9/022599-0037
documents, laws and proceedings, and with respect to the 2025 Bonds, by reference to the Indenture. Capitalized terms not otherwise defined in this Official Statement have the meanings set forth in Appendix E.
Copies of the Indenture and other documents and information are available for inspection and (upon request and payment to the District of a charge for copying, mailing and handling) for delivery from the City at 550 East 6th Street, Beaumont, California 92223.
FINANCING PLAN
Estimated Sources and Uses of Funds
The following table sets forth the expected sources and uses of 2025 Bond proceeds and Special Taxes that have been collected and deposited with the Trustee.
Sources of Funds
Principal Amount of Bonds
[Plus] Original Issue [Premium]
Plus Special Taxes Collected
Total Sources
Uses of Funds:
Acquisition and Construction Fund
Special Tax Fund
Costs of Issuance')
2025 Bonds Reserve Subaccount(2)
Total Uses
(1)
(2)
To pay costs of issuance of the 2025 Bonds, including legal fees, underwriter's discount, printing costs, Appraiser, Special Tax Consultant and Trustee fees.
Such amount has been calculated to equal the 2025 Bonds Reserve Requirement as of the date of issuance of the 2025 Bonds.
THE 2025 BONDS
General Provisions
The 2025 Bonds will be dated their date of delivery and will bear interest at the rates per annum set forth on the inside cover page hereof, payable semiannually on each March 1 and September 1, commencing September 1, 2025 (each, an "Interest Payment Date"), and will mature in the amounts and on the dates set forth on the inside cover page of this Official Statement. Interest will be calculated on the basis of a 360 -day year comprised of twelve 30 -day months. The 2025 Bonds will be issued in fully registered form in denominations of $5,000 or any integral multiple thereof.
Interest on any 2025 Bond will be payable from the Interest Payment Date next preceding the date of authentication of such 2025 Bond, unless: (i) such date of authentication is an Interest Payment Date, in which event interest will be payable from such date of authentication; (ii) the date of authentication is after the fifteenth day of the month preceding an Interest Payment Date, regardless of whether such day is a Business Day (each, a "Record Date") but prior to the immediately succeeding Interest Payment Date, in which event interest will 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 occurring after the issuance of such 2025 Bond, in which event interest will be payable from the dated date of such 2025 Bond, as applicable; provided, however, that if at the time of authentication of such 2025 Bond, interest is in default, interest on such 2025 Bond will 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 on such 2025 Bond, interest on such 2025 Bond will be payable from its dated date.
4922-7396-4055v9/022599-0037
7
Interest on any 2025 Bond will be paid to the person whose name appears as its owner in the registration books held by the Trustee on the close of business on the Record Date. Principal of, premium, if any, due upon redemption is payable upon presentation and surrender of the 2025 Bonds at the principal corporate trust office of the Trustee in Los Angeles, California.
The 2025 Bonds will be issued as fully registered bonds and will be registered in the name of Cede & Co., as nominee of DTC. DTC will act as securities depository of the 2025 Bonds. Ownership interests in the 2025 Bonds may be purchased in book -entry form only in denominations of $5,000 and any integral multiple thereof. So long as DTC is the securities depository all payments of principal and interest on the 2025 Bonds will be made to DTC and will be paid to the Beneficial Owners in accordance with DTC's procedures and the procedures of DTC's Participants. See APPENDIX G — "BOOK -ENTRY -ONLY SYSTEM." In the event the 2025 Bonds are not held in book -entry form, interest will be paid by check of the Trustee mailed by first class mail, postage prepaid, to the Bondowner at its address on the registration books kept by the Trustee. Pursuant to a written request prior to the Record Date of a Bondowner of at least $1,000,000 in aggregate principal amount of 2025 Bonds or of any issue of Parity Bonds, payment will be made by wire transfer in immediately available funds to a designated account in the United States. [Remainder of Page Intentionally Left Blank]
8 4922-7396-4055v9/022599-0037
Debt Service Schedule
The following table presents the annual debt service on the Bonds (including sinking fund redemptions), assuming that there are no optional or special mandatory redemptions. See the caption "—Redemption" below.
Year Ending 2023 Bonds 2025 Bonds 2025 Bonds Total 2025 Bonds Total Aggregate September 1 Debt Service Principal Interest Debt Service Debt Service 2025 $573,250.00
2026 571,250.00
2027 574,000.00
2028 571,250.00
2029 573,250.00
2030 574,750.00
2031 570,750.00
2032 571,500.00
2033 571,750.00
2034 571,500.00
2035 570,750.00
2036 574,500.00
2037 572,500.00
2038 570,000.00
2039 572,000.00
2040 573,250.00
2041 573,750.00
2042 573,500.00
2043 572,500.00
2044 570,750.00
2045 573,250.00
2046 569,750.00
2047 570,500.00
2048 570,250.00
2049 574,000.00
2050 571,500.00
2051 573,000.00
2052 573,250.00
2053 572,250.00
2054 0.00
2055 0.00
Total $16,594,500.00
Source: The Underwriter.
Redemption*
Optional Redemption. The 2025 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, , 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:
Preliminary, subject to change.
9 4922-7396-4055v9/022599-0037
Redemption Date Redemption Price
September 1, and March 1,
September 1, and March 1,
September 1, and March 1,
September 1, and any Interest Payment Date thereafter
103%
102
101
100
In the event that the District elects to redeem 2025 Bonds as provided above, the District will give written notice to the Trustee of its election to so redeem, the redemption date and the principal amount of the 2025 Bonds of each maturity to be redeemed. The notice to the Trustee will be given at least 30 but no more than 60 days prior to the redemption date, or by such later date as is acceptable to the Trustee.
Mandatory Sinking Fund Redemption. The 2025 Bonds maturing on September 1, (the " Term Bonds") will 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, , and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The Term Bonds so called for redemption will be selected by the Trustee by lot and will be redeemed at a redemption price for each redeemed Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:
Term Bonds Maturing September 1,
Sinking Fund Redemption Date
(September 1)
Maturity.
Sinking Fund Payments
If the District purchases Term Bonds during the Fiscal Year immediately preceding one of the sinking fund redemption dates specified above, the District will notify the Trustee at least 45 days prior to the redemption date as to the principal amount purchased, and the amount purchased will be credited at the time of purchase to the next Sinking Fund Payment for the Term Bond so purchased, to the extent of the full principal amount of the purchase. All Term Bonds purchased will be cancelled pursuant to the Indenture.
In the event of a partial optional redemption or special mandatory redemption of the Term Bonds, each of the remaining Sinking Fund Payments for such Term Bonds will be reduced, as nearly as practicable, on a pro rata basis.
Special Mandatory Redemption from Special Tax Prepayments. The 2025 Bonds are subject to special mandatory 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, 2025, and will be redeemed by the Trustee, from any amounts paid by the District to the Trustee and designated by the District as a prepayment of Special Taxes for one or more parcels in the District made in accordance with the Rate and Method (the "Prepayments") deposited to the Redemption Account pursuant to the Indenture, plus amounts transferred from the 2025 Bonds Reserve Subaccount of the Reserve Account pursuant to the Indenture, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date:
4922-7396-4055v9/022599-0037
10
Redemption Date Redemption Price
Any Interest Payment Date from September 1, through March 1, September 1, and March 1,
September 1, and March 1,
September 1, and any Interest Payment Date thereafter
103%
102
101
100
Prepayments and amounts released from the applicable subaccount of the Reserve Account in connection with Prepayments will be allocated to the payment at maturity and redemption of Bonds and any Parity Bonds as nearly as practicable on a proportionate basis based on the outstanding principal amount of the Bonds and any Parity Bonds and such amounts shall be applied to redeem Bonds and Parity Bonds as nearly as practicable on a pro rata basis among maturities in increments of $5,000; provided, however, that, for Prepayments of less than $50,000, the District may specify in a Certificate of an Authorized Representative that Prepayments be applied to one or more maturities of the Bonds or Parity Bonds so long as there is delivered to the Trustee a Certificate of the Independent Financial Consultant that, following such application of the Prepayments, the maximum Special Taxes that may be levied in each Fiscal Year on Taxable Property is not less than 110% of Annual Debt Service, plus the Administrative Expenses Cap, in the Bond Year that begins in such Fiscal Year.
See the caption "SPECIAL RISK FACTORS — Potential Early Redemption of 2025 Bonds from Prepayments or Community Facilities District Bond Proceeds" for a discussion of the potential for a lower than expected yield on the 2025 Bonds as a result of a special mandatory redemption from prepayment of Special Taxes or proceeds of bonds of other community facilities districts.
Notice of Redemption. So long as the 2025 Bonds are held in book -entry form, notice of redemption will be sent by the Trustee to DTC and not to the Beneficial Owners of the 2025 Bonds under the DTC book - entry only system. Neither the District nor the Trustee is responsible for notifying the Beneficial Owners, who are to be notified in accordance with the procedures in effect for the DTC book -entry system. See Appendix G — "BOOK -ENTRY ONLY SYSTEM."
The Trustee will give notice, in the name of the District, of the redemption of 2025 Bonds. Such notice of redemption will: (i) specify the CUSIP numbers (if any), the 2025 Bond numbers and the maturity date or dates of the 2025 Bonds selected for redemption, except that where all of the 2025 Bonds are subject to redemption, or all of the 2025 Bonds of one maturity are to be redeemed, the 2025 Bond numbers of such issue need not be specified; (ii) state the date fixed for redemption and surrender of the 2025 Bonds to be redeemed; (iii) state the redemption price; (iv) state the place or places where the 2025 Bonds are to be redeemed; (v) in the case of 2025 Bonds to be redeemed only in part, state the portion of such 2025 Bond which is to be redeemed; (vi) state the date of issue of the 2025 Bonds as originally issued; (vii) state the rate of interest borne by each 2025 Bond being redeemed; and (viii) state any other descriptive information needed to identify accurately the 2025 Bonds being redeemed as specified by the Trustee. Such notice will further state that on the date fixed for redemption, there will become due and payable on each 2025 Bond, or portion thereof called for redemption, the principal thereof, together with any premium, and interest accrued to the redemption date, and that from and after such date, interest thereon will cease to accrue and be payable. At least 30 days but no more than 45 days prior to the redemption date, the Trustee will mail a copy of such notice of redemption, by first class mail, postage prepaid, to the respective Owners thereof at their addresses appearing on the Bond Register, and to the original purchaser of any 2025 Bonds; provided, however, so long as the 2025 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.
The actual receipt by the Owner of any 2025 Bond of notice of such redemption is not a condition precedent to redemption, and neither the failure to receive nor any defect in such notice will affect the validity of the proceedings for the redemption of such 2025 Bonds, or the cessation of interest on the redemption date. A certificate by the Trustee that notice of such redemption has been given as provided in the Indenture will be conclusive as against all parties and the Owner is not entitled to show that he or she failed to receive notice of such redemption.
4922-7396-4055v9/022599-0037
11
In addition to the foregoing notice, further notice will be given by the Trustee as set out below, but no defect in said further notice nor any failure to give all or any portion of such further notice will in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed.
Each further notice of redemption will be sent not later than the date that notice of redemption is given to the Owners pursuant to the Indenture by first class mail or facsimile to the Depository and to any other registered securities depositories then in the business of holding substantial amounts of obligations of types comprising the 2025 Bonds as determined by the Trustee and to one or more of the national information services that the Trustee determines are in the business of disseminating notice of redemption of obligations such as the 2025 Bonds.
Upon the payment of the redemption price of any 2025 Bonds being redeemed, each check or other transfer of funds issued for such purpose will to the extent practicable bear the CUSIP number identifying, by issue and maturity, the 2025 Bonds being redeemed with the proceeds of such check or other transfer.
With respect to any notice of optional redemption of 2025 Bonds, such notice may state that such redemption is conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption of moneys sufficient to pay the principal of, premium, if any, and interest on such 2025 Bonds to be redeemed and that, if the District determines that such moneys will not be so received on or prior to the redemption date, said notice shall be of no force and effect and the Trustee shall not be required to redeem such 2025 Bonds. If any condition stated in the redemption notice for an optional redemption shall not have been satisfied on or prior to the redemption date: (i) the redemption notice shall be of no force and effect, (ii) the District shall not be required to redeem such 2025 Bonds, (iii) the redemption shall not be made, and (iv) the Trustee shall within a reasonable time thereafter give notice to the persons in the manner in which the conditional redemption notice was given that such condition or conditions were not met and that the redemption was canceled.
Selection of 2025 Bonds for Redemption. If less than all of the 2025 Bonds Outstanding are to be redeemed, the portion of any 2025 Bond of a denomination of more than $5,000 to be redeemed will be in the principal amount of $5,000 or an integral multiple thereof. In selecting portions of such 2025 Bonds for redemption, the Trustee will treat such 2025 Bonds, as applicable, as representing that number of 2025 Bonds of $5,000 denominations which is obtained by dividing the principal amount of such 2025 Bonds to be redeemed in part by $5,000. The procedure for the selection of Parity Bonds for redemption may be modified as set forth in the Supplemental Indenture for such Parity Bonds. The Trustee will promptly notify the District in writing of the 2025 Bonds, or portions thereof, selected for redemption.
Partial Redemption of 2025 Bonds. Upon surrender of any 2025 Bond to be redeemed in part only, the District will execute and the Trustee will authenticate and deliver to the Owner, at the expense of the District, a new 2025 Bond or 2025 Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the 2025 Bonds surrendered, with the same interest rate and the same maturity.
Effect of Notice and Availability of Redemption Money. Notice of redemption having been duly given, as provided in the Indenture, and the amount necessary for the redemption having been made available for that purpose and being available therefor on the date fixed for such redemption: (i) the 2025 Bonds, or portions thereof, designated for redemption will, on the date fixed for redemption, become due and payable at the redemption price thereof as provided in the Indenture, anything in the Indenture or in the 2025 Bonds to the contrary notwithstanding; (ii) upon presentation and surrender thereof at the office of the Trustee, the redemption price of such 2025 Bonds will be paid to the Owners thereof; (iii) as of the redemption date the 2025 Bonds, or portions thereof so designated for redemption will be deemed to be no longer Outstanding and such 2025 Bonds, or portions thereof, will cease to bear further interest; and (iv) as of the date fixed for redemption no Owner of any of the 2025 Bonds, or portions thereof so designated for redemption will be entitled to any of the benefits of the Indenture, or to any other rights, except with respect to payment of the redemption price and interest accrued to the redemption date from the amounts so made available. 12 4922-7396-4055v9/022599-0037
Registration, Transfer and Exchange
Registration. The Trustee will keep sufficient books for the registration and transfer of the 2025 Bonds.
The ownership of the 2025 Bonds will be established by the Bond registration books held by the Trustee.
Transfer or Exchange. Subject to the limitations set forth in the following paragraph, the registration of any 2025 Bond may, in accordance with its terms, be transferred upon the Bond Register by the person in whose name it is registered, in person or by his or her duly authorized attorney, upon surrender of such 2025 Bond for cancellation at the office of the Trustee, accompanied by delivery of written instrument of transfer in a form acceptable to the Trustee and duly executed by the Owner or his or her duly authorized attorney. 2025 Bonds may be exchanged at the office of the Trustee for a like aggregate principal amount of 2025 Bonds for other authorized denominations of the same maturity and issue. The Trustee may not collect from the Owner any charge for any new 2025 Bond issued upon any exchange or transfer, but will require the Owner requesting such exchange or transfer to pay any tax or other governmental charge required to be paid with respect to such exchange or transfer. Whenever any 2025 Bonds are surrendered for registration of transfer or exchange, the District will execute and the Trustee will authenticate and deliver a new 2025 Bond or 2025 Bonds, as applicable, of the same issue and maturity, for a like aggregate principal amount; provided that the Trustee is not required to register transfers or make exchanges of: (i) 2025 Bonds for a period of 15 days next preceding any selection of the 2025 Bonds to be redeemed; or (ii) any 2025 Bonds chosen for redemption.
SOURCES OF PAYMENT FOR THE BONDS
Limited Obligations
The 2025 Bonds are special, limited obligations of the District payable only from amounts pledged under the Indenture and from no other sources. The 2025 Bonds are secured under the Indenture by a pledge of and lien upon Net Taxes and all moneys in the Special Tax Fund (other than the Administrative Expense Account therein) on a parity with the 2023 Bonds, other than with respect to the 2023 Bonds Reserve Subaccount which amounts therein can only be used to pay debt service on the 2023 Bonds, and the 2025 Bonds Reserve Subaccount which amounts therein can only be used to pay debt service on the 2025 Bonds.
The Special Taxes are the primary source of security for the repayment of the Bonds. Under the Indenture, the District has pledged to repay the Bonds from the Net Taxes (which are Special Tax revenues remaining after the payment of the annual Administrative Expenses in an amount not to exceed the Administrative Expenses Cap (as defined in the Indenture)) and from amounts held in the Special Tax Fund (other than amounts held in the Administrative Expense Account therein and the applicable subaccount of the Reserve Account of the Special Tax Fund). Special Tax revenues include the proceeds of the annual Special Tax levy received by the District, including any scheduled payments and Prepayments thereof, and the net proceeds of the redemption of delinquent Special Taxes or sale of property sold as a result of foreclosure of the lien of delinquent Special Taxes to the amount of said lien, and penalties and interest thereon; provided that any delinquent Special Tax sold to an independent third -party or to the City for 100% of the delinquent amount will no longer be pledged under the Indenture to the payment of the Bonds or Parity Bonds.
In the event that the Special Tax revenues are not received when due, the only sources of funds available to pay the debt service on the Bonds are amounts held by the Trustee in the Special Tax Fund (other than the Administrative Expense Account therein and the applicable subaccount of the Reserve Account of the Special Tax Fund), for the exclusive benefit of the Owners of the Bonds.
NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE COUNTY
OF RIVERSIDE, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE 2025 BONDS. EXCEPT FOR THE NET TAXES, NO OTHER REVENUES OR TAXES ARE PLEDGED TO THE PAYMENT OF THE 2025 BONDS. THE 2025 BONDS 13 4922-7396-4055v9/022599-0037
ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE CITY OR GENERAL OBLIGATIONS OF
THE DISTRICT BUT ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM NET
TAXES AND OTHER AMOUNTS HELD UNDER THE INDENTURE AS MORE FULLY DESCRIBED HEREIN.
Special Taxes
Authorization and Pledge. In accordance with the provisions of the Act, the City established the District on February 7, 2017 for the purpose of financing the various public improvements and services required in connection with the proposed development within the District. On February 7, 2017, an election was held within the District at which the landowners eligible to vote approved the issuance of bonds for the District in an amount not to exceed $22,000,000, secured by special taxes levied on property within the District to finance Facilities. The landowners within the District also voted to approve the Rate and Method which authorized the Special Tax to be levied to repay indebtedness issued for the benefit of the District, including the Bonds. There are three types of special taxes levied by the District: a special tax for facilities, a special tax for maintenance services and a special tax for public safety services. Throughout this Official Statement, all references to the Special Tax shall refer to the special tax for facilities. The special tax for maintenance services and the special tax for public safety services are not pledged to, and shall not be available to make payments on, the Bonds.
The District will covenant in the Indenture that each year it will levy Special Taxes up to the maximum rates permitted under the Rate and Method in an amount sufficient, together with other amounts on deposit in the Special Tax Fund, to pay the principal of and interest on any Outstanding Bonds and Parity Bonds, to replenish the 2025 Bonds Reserve Subaccount to the 2025 Bonds Reserve Requirement and any other Subaccount of the Reserve Account to the applicable Reserve Requirement, and to pay Administrative Expenses.
The "Special Taxes" are the special taxes for facilities authorized to be levied and collected by the District in accordance with the Rate and Method and the Act. The Special Taxes are collected in the manner and at the same time as ad valorem property taxes are collected and are subject to the same penalties and the same procedure, sale, and lien priority in case of delinquency as is provided for ad valorem property taxes. See APPENDIX A — "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX." The "Net Taxes" pledged by the District to the Bonds (and any Parity Bonds) is defined in the Indenture as the "Gross Taxes" minus amounts permitted to be set aside prior to the payment of the principal of and interest on the Bonds and Parity Bonds in order to pay Administrative Expenses up to the Administrative Expenses Cap.
The Administrative Expenses Cap shall be $30,000 annually. "Gross Taxes" is defined in the Indenture as the amount of all Special Taxes received by the District together with the proceeds collected from the sale of property pursuant to foreclosure for the delinquency of such Special Taxes remaining after the payment of all costs related to such foreclosure actions.
Except for Prepayments, which will be deposited to the Redemption Account of the Special Tax Fund, the Trustee will, on each date on which the Special Taxes are received from the District, deposit the Special Taxes in the Special Tax Fund to be held in trust for the Owners. The Trustee will transfer the Special Taxes on deposit in the Special Tax Fund on the dates, in the amounts and in the following order of priority, to:
First: To the Administrative Expense Account in an amount up to the Administrative Expenses Cap.
Second: To the Interest Account, an amount such that the balance in the Interest Account one Business Day prior to each Interest Payment Date is equal to the installment of interest due on the Bonds and any Parity Bonds on said Interest Payment Date and any installment of interest due on a previous Interest Payment Date which remains unpaid. Moneys in the 14 4922-7396-4055v9/022599-0037
Interest Account will be used for the payment of interest on the Bonds and any Parity Bonds as the same become due.
Third: To the Principal Account, an amount such that the balance in the Principal Account one Business Day prior to September 1 of each year, commencing September 1, 2025, is equal the principal payment due on the Bonds and any Parity Bonds maturing on such September 1 and any principal payment due on a previous September 1 which remains unpaid. Moneys in the Principal Account shall be used for the payment of the principal of such Bonds and any Parity Bonds as the same become due at maturity.
Fourth: To the Redemption Account, the amount needed to make the balance in the Redemption Account one Business Day prior to each September 1 on which a Sinking Fund Payment is due equal to the Sinking Fund Payment due on any Outstanding Bonds and Parity Bonds on such September 1; provided, however, that, if amounts in the Special Tax Fund are inadequate to make the foregoing transfers, then any deficiency with respect to the Bonds shall be made up by an immediate transfer from the 2023 Bonds Reserve Subaccount and any deficiency with respect to a series of Parity Bonds shall be made up by an immediate transfer from the Subaccount of the Reserve Account for such series of Parity Bonds, if funded, pursuant to the Indenture; and thereafter, to pay the principal and premium, if any, due in connection with an optional redemption of Bonds or Parity Bonds.
Fifth: To the Subaccounts of the Reserve Account of the Special Tax Fund, on a proportionate basis based on the outstanding principal amount of the Bonds and any Parity Bonds, to the extent necessary to replenish the 2023 Bonds Reserve Subaccount to the 2023 Bonds Reserve Requirement, the 2025 Bonds Reserve Subaccount to the 2025 Bonds Reserve Requirement and the Reserve Requirement with respect to Parity Bonds, if any.
Sixth: To the Administrative Expense Account of the Special Tax Fund the amount of any Administrative Expenses for the current Bond Year in excess of the Administrative Expenses Cap as directed by the City.
Seventh: To the Rebate Fund established by the Indenture to the extent directed by the City pursuant to the Indenture.
Eighth: To the Surplus Fund established by the Indenture such remaining amounts in the Special Tax Fund after making the foregoing transfers on September 1.
See APPENDIX D -"SUMMARY OF CERTAIN PROVISIONS OF THE BOND INDENTURE." The Special Taxes levied in any fiscal year may not exceed the maximum rates authorized pursuant to the Rate and Method. See APPENDIX A — "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX" hereto. There is no assurance that the Special Tax proceeds will, in all circumstances, be adequate to pay the principal of and interest on the Bonds when due. See the caption "—Limitation on Special Tax Levy and Potential Impact on Coverage" below and "SPECIAL RISK FACTORS - Insufficiency of Special Taxes" herein.
Rate and Method of Apportionment of Special Tax. The District is legally authorized and will covenant to cause the levy of the Special Taxes in an amount determined according to a methodology, i.e., the Rate and Method which the City Council and the electors within the District have approved. The Rate and Method apportions the total amount of Special Taxes to be collected among the taxable parcels in the District as more particularly described below. There are three types of special taxes levied by the District: a special tax for facilities, a special tax for maintenance services and a special tax for public safety services. The special tax for 15 4922-7396-4055v9/022599-0037
maintenance services and the special tax for public safety services are not pledged to, and shall not be available to make payments on, the Bonds. See "—Special Taxes — Authorization and Pledge." The following is a synopsis of the provisions of the Rate and Method for the District, which should be read in conjunction with the complete text of the Rate and Method which is attached as APPENDIX A - "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX." The meanings of the defined terms used in this section are as set forth in Appendix A. This section provides only a summary of the Rate and Method, and is qualified by more complete and detailed information contained in the entire Rate and Method attached as Appendix A.
"Building Permit" means a permit for new construction for a residential dwelling or non-residential structure. For purposes of this definition, "Building Permit does not include permits for construction or installation of retaining walls, utility improvements, or other such improvements not intended for human habitation.
"Developed Property" means all Assessor's Parcels for which Building Permits were issued on or before March 1 of the prior Fiscal Year, provided that such Assessor's Parcels were created on or before January 1 of the prior Fiscal Year and that each such Assessor Parcel is associated with a Lot, as determined by the CFD Administrator.
"Exempt Property" means all Assessor's Parcels designated as being exempt from Special Tax as more fully set forth below.
"Final Map Property" means all Assessor's Parcels: (i) that are included in a Final Map that was recorded prior to the January 1st preceding the Fiscal Year in which the Special Tax is being levied, and (ii) for which a Building Permit was not issued prior to the March 1st preceding the Fiscal Year in which the Special Tax is being levied, as determined by the CFD Administrator. "Minimum Acreage" means the smallest allowable amount of taxable acreage. For the District, it shall not be less than 84.04 acres.
"Public Property" means all Assessor's Parcels which, as of July 1st of the Fiscal Year in which the Special Tax is being levied, are used for rights -of -way or any other purpose and is owned by, dedicated to, or irrevocably offered for dedication to the federal government, the State of California, the County, or any other local jurisdiction, provided, however, that any property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified according to its use. "Special Tax" means any of the special taxes authorized to be levied by the District pursuant to the Act to fund the Special Tax Requirement.
"Special Tax Requirement" means the amount required in any Fiscal Year to pay (i) the debt service or the periodic costs on all outstanding Bonds due in the Calendar Year that commences in such Fiscal Year, (ii) Administrative Expenses, (iii) the costs associated with the release of funds from an escrow account, (iv) any amount required to establish or replenish any reserve funds established in association with the Bonds, and (v) the collection or accumulation of funds for the acquisition or construction of facilities authorized by the District provided that the inclusion of such amount does not cause an increase in the levy of Special Tax on Final Map Property or Undeveloped Property, less (vi) any amounts available to pay debt service or other periodic costs on the Bonds pursuant to any applicable bond indenture, fiscal agent agreement, or trust agreement. "Taxable Property" means all Assessor's Parcels within the District which are not Exempt Property, as determined by the CFD Administrator.
16 4922-7396-4055v9/022599-0037
"Undeveloped Property" means all Assessor's Parcels of Taxable Property which are not Developed Property or Final Map Property, as determined by the CFD Administrator.
Exempt Property. The City shall classify as Exempt Property (i) Assessor's Parcels defined as Public Property, (ii) Assessor's Parcels which are used as places of worship and are exempt from ad valorem property taxes because they are owned by a religious organization, (iii) Assessor's Parcels used exclusively by a Property Owner's Association, or (iv) Assessor's Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement, provided that no such classification would reduce the sum of the Taxable Property to less than the Minimum Acreage. Notwithstanding the above, the City Council shall not classify an Assessor's Parcel as Exempt Property if such classification would reduce the sum of the Taxable Property to less than the Minimum Acreage. Assessor's Parcels which cannot be classified as Exempt Property because such classification would reduce the Acreage of the Taxable Property to less than the Minimum Acreage will continue to be classified as Taxable Property, and will continue to be subject to Special Taxes accordingly.
Tax-exempt status will be assigned by the CFD Administrator in chronological order. If an Assessor's Parcel's classification is changed after the initial status is assigned, then its tax-exempt status will be revoked.
Maximum Special Tax. The Maximum Special Tax provided for in the Rate and Method is as follows:
Developed Property
The Maximum Special Tax for each Assessor's Parcel of Residential Property that is classified as Developed Property in any Fiscal Year shall be the amount determined by the greater of (i) the application of the Assigned Special Tax set forth in the table below or (ii) the application of the Backup Special Tax. The Maximum Special Tax for each Assessor's Parcel of Non -Residential Property that is classified as Developed Property in any Fiscal Year shall be $14,310.
ASSIGNED SPECIAL TAX RATES
FOR DEVELOPED PROPERTY
Land Use Category
Residential Property
Residential Property
Residential Property
Residential Property
Residential Property
Residential Property
Residential Property
Residential Property
Residential Property
Non -Residential Property
Building Square Footage
2,475
N/A
Final Map Property and Undeveloped Property
Assigned Special Tax
$1,366 per Dwelling Unit
1,436 per Dwelling Unit
1,520 per Dwelling Unit
1,590 per Dwelling Unit
1,659 per Dwelling Unit
1,785 per Dwelling Unit
1,855 per Dwelling Unit
1,980 per Dwelling Unit
2,058 per Dwelling Unit
14,310 per Acre
The Maximum Special Tax for each Assessor's Parcel classified as Undeveloped Property and Final Map Property in any Fiscal Year shall be the Assigned Special Tax. The Assigned Special Tax for Final Map Property and Undeveloped Property for any Fiscal Year shall be $14,310 per Acre.
Assigned Special Tax. The Assigned Special Tax is determined as follows:
4922-7396-4055v9/022599-0037
17
Developed Property
For Fiscal Year 2025-26, the projected Special Tax rates for Developed Property range from $1,366 to $2,058 per unit, and the projected Special Tax rate for Final Map Property is $5.2.59 per lot. See Table 1 for more information regarding the projected Fiscal Year 2025-26 Special Tax levy and the percent of such levy based on land use class.
Backup Special Tax. Each Assessor's Parcel of Developed Property classified as Residential Property shall be subject to a Backup Special Tax. In each Fiscal Year, the Backup Special Tax rate for Developed Property classified as Residential Property shall be the rate per Lot calculated by multiplying the Maximum Special Tax rate per Acre for Undeveloped Property by the Acreage of Developed Property classified or to be classified as Residential Property and dividing such amount by the number of Lots which are classified or to be classified as Residential Property.
Notwithstanding the foregoing, if Assessor's Parcels of Developed Property which are classified or to be classified as Residential Property are subsequently changed or modified by recordation of a lot line adjustment or similar instrument, then the Backup Special Tax for the area that has been changed or modified shall be a rate per square foot of Acreage calculated by dividing the total Backup Special Tax anticipated to apply to the changed or modified Final Map area prior to the change or modification divided by the Acreage of Developed Property classified or to be classified as Residential Property which is ultimately expected to exist in such changed or modified Final Map area, as reasonably determined by the CFD Administrator and then dividing that amount by 43,560.
The Backup Special Tax shall not apply to Non -Residential Property, Public Property, or Property Owners' Association Property.
Method of Apportionment of Special Tax. For each Fiscal Year until terminated, the City Council will levy Special Taxes on all Taxable Property until the amount of Special Tax levied equals the Special Tax Requirement in accordance with the following steps:
First: The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax rates as needed to satisfy the Special Tax Requirement;
Second: If additional moneys are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Final Map Property, at up to 100% of the Assigned Special Tax applicable to each such Assessor's Parcel as needed to satisfy the Special Tax Requirement;
Third: If additional moneys are needed to satisfy the Special Tax Requirement after the first two steps have been completed, the Annual Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property, excluding any Undeveloped Property exempt from the Special Tax pursuant to Section J of the Rate and Method, at up to 100% of the Assigned Special Tax applicable to each such Assessor's Parcel as needed to satisfy the Special Tax Requirement; Fourth: If additional moneys are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then for each Assessor's Parcel of Developed Property whose Maximum Special Tax is the Backup Special Tax shall be increased Proportionately from the Assigned Special Tax up to 100% of the Backup Special Tax as needed to satisfy the Special Tax Requirement; and Fifth: If additional moneys are needed to satisfy the Special Tax Requirement after the first four steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Property Owner's Association Property and Public Property, found not to be exempt pursuant to 18 4922-7396-4055v9/022599-0037
Section J of the Rate and Method, at up to 100% of the Maximum Special Tax applicable to each such Assessor's Parcel as needed to satisfy the Special Tax Requirement.
Prepayment of Special Taxes. The Special Tax obligation of an Assessor's Parcel of Developed Property, an Assessor's Parcel of Final Map Property or Undeveloped Property for which a building permit has been issued and will be classified as Developer's Property in the next Fiscal year, may be prepaid in part or in full, provided that there are no delinquent Special Taxes, penalties, or interest charges outstanding with respect to such Assessor's Parcel at the time that the Special Tax obligation would be prepaid. The Prepayment Amount is calculated based on the Bond Redemption Amount plus Redemption Premium plus Future Facilities Costs plus the Defeasance amount plus the Administrative Fees, and less a credit for the resulting reduction in the Reserve Requirement for the Bonds (if any), all as specified in APPENDIX A — "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX — Section G." No parcel within the District has prepaid its Special Tax obligation; accordingly, all parcels will be subject to the Special Tax levy going forward, subject to future Special Tax prepayments, if any.
Estimated Debt Service Coverage. Based on development status as of March 1, 2025 (the cutoff date for classifying Taxable Property pursuant to the Rate and Method), 607 parcels within the District were classified as Developed Property for the Fiscal Year 2025-26 Special Tax levy. Annual Debt Service for the Bonds in each future Fiscal Year has been structured so that Assigned Special Taxes levied on all taxable parcels of Developed Property as of March 1, 2025 (607 lots), plus a reduced Special Tax rate against the remaining 97 Final Map lots, will generate in each Fiscal Year not less than 110% of debt service payable with respect to the Bonds in the calendar year that begins in that Fiscal Year, plus estimated Administrative Expenses, assuming that Special Taxes are levied and collected on such Developed Property and Final Map lots in the District pursuant to the Rate and Method. See Table 1 for more information regarding the projected Fiscal Year 2025- 26 Special Tax levy and the percent of such levy based on land use class. Neither the Assigned Special Tax nor the Administrative Expenses escalate over time. Special Taxes are expected to be additionally levied against the remaining parcels as they become Developed Property, and such Special Taxes will be available to pay debt service on the Bonds, if needed.
Limitation on Special Tax Levy and Potential Impact on Coverage. Pursuant to Section 53321(d) of the Government Code, the Special Tax levied against any Assessor's parcel for which an occupancy permit for private residential use has been issued shall not be increased as a consequence of delinquency or default by the owner of any other Assessor's parcel within the District by more than 10% above the amount that would have been levied in that fiscal year had there never been any such delinquencies or defaults. As a result, it is possible that the District may not be able to increase the tax levy to the Assigned Special Tax in all years. In addition, under the Rate and Method, in no event shall the Maximum Special Tax be levied after Fiscal Year 2055-56.
Collection of Special Taxes. The Special Taxes are levied and collected by the Treasurer -Tax Collector of the County of Riverside in the same manner and at the same time as ad valorem property taxes. The District may, however, collect the Special Taxes at a different time or in a different manner if necessary to meet its financial obligations.
The County of Riverside assesses and collects secured and unsecured property taxes for the cities, school districts, and special districts within the County of Riverside, including the Special Taxes for the District. The delinquency dates for property tax payments are December 10 for the first installment and April 10 for the second installment. Once the property taxes are collected, the County of Riverside conducts its internal reconciliation for accounting purposes and distributes the City's share of such taxes (including the Special Taxes) to the City, periodically and typically pursuant to a published schedule. Prior to distribution, the moneys are deposited in an account established on behalf of the County of Riverside in the Riverside County Investment Pool (the "Pool") which is invested by the County Treasurer. If the County of Riverside or the Pool were at any time to become subject to bankruptcy proceedings, it is possible that District property taxes held in the Pool (including the Special Taxes), if any, could be temporarily unavailable to the County of Riverside. The District does not 19 4922-7396-4055v9/022599-0037
participate in the County's Teeter Plan, which is an alternate method for allocating property taxes by counties.
Accordingly, the collection of Special Taxes is subject to delinquencies.
The Special Tax was first levied in Fiscal Year 2019-20. See Table 6 herein under the caption "THE COMMUNITY FACILITIES DISTRICT — Delinquency History" for more information related to prior years Special Tax levies and delinquencies. No assurances can be made that Special Taxes will be collected in an amount required to make debt service payments on the Bonds. See "THE COMMUNITY FACILITIES DISTRICT — Delinquency History" and "SPECIAL RISK FACTORS — Special Tax Delinquencies" and "SPECIAL RISK FACTORS — Insufficiency of Special Taxes." The District will make certain covenants in the Indenture for the purpose of ensuring that the current maximum Special Tax rates and method of collection of the Special Taxes are not altered in a manner that would impair the District's ability to collect sufficient Special Taxes to pay debt service on the Bonds and Administrative Expenses when due.
First, the District will covenant in the Indenture that it will take no actions that would discontinue or cause the discontinuance of the Special Tax levy or the District's authority to levy the Special Tax for so long as the Bonds and any Parity Bonds are Outstanding.
Second, the District will covenant in the Indenture, to the maximum extent that the law permits it to do so, not to initiate proceedings to reduce the maximum Special Tax rates for the District, unless, in connection therewith, the District receives a certificate from one or more Independent Financial Consultants which, when taken together, certify that: (i) such changes do not reduce the maximum Special Taxes that may be levied in each year on property within the District to an amount which is less than the Administrative Expense Cap plus 110% of the Annual Debt Service due in each corresponding future Bond Year with respect to the Bonds and Parity Bonds Outstanding as of the date of such proposed reduction; and (ii) the District is not delinquent in the payment of the principal of or interest on the Bonds or any Parity Bonds.
Third, the District will covenant in the Indenture that, in the event that any initiative is adopted by the qualified electors within the District which purports to reduce the maximum Special Tax below the levels specified in the preceding paragraph or to limit the power of the District to levy the Special Taxes for the purposes set forth in the Indenture, it will commence and pursue legal action in order to preserve its ability to comply with such covenants. The District can provide no assurance that any such legal action will be successful. See the caption "SPECIAL RISK FACTORS — Proposition 218."
Fourth, the District will covenant in the Indenture that it will not adopt any policy pursuant to the Act permitting the tender of Bonds or Parity Bonds in full payment or partial payment of any Special Taxes unless the District has first received a certificate from an Independent Financial Consultant that the acceptance of such a tender will not result in the District having insufficient Net Taxes to pay the principal of and interest on the Bonds and Parity Bonds when due.
Although the Special Taxes constitute liens on taxed parcels within the District, they do not constitute a personal indebtedness of the owners of property within the District. Moreover, other liens for taxes and assessments already exist on the property located within the District and others could come into existence in the future in certain situations without the consent or knowledge of the City or the landowners in the District. See the captions "THE COMMUNITY FACILITIES DISTRICT — Direct and Overlapping Debt" and "SPECIAL RISK FACTORS — Direct and Overlapping Indebtedness." There is no assurance that property owners will be financially able to pay the annual Special Taxes or that they will pay such taxes even if financially able to do so, all as more fully described under the caption "SPECIAL RISK FACTORS." Proceeds of Foreclosure Sales. The net proceeds received following a judicial foreclosure sale of property within the District resulting from a property owner's failure to pay the Special Taxes when due are 20 4922-7396-4055v9/022599-0037
included within the Net Taxes pledged to the payment of principal of and interest on the Bonds and any Parity Bonds under the Indenture.
Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of any Special Tax or receipt by the District of Special Taxes in an amount which is less than the Special Taxes levied, the City Council, as the legislative body of the District, may order that Special Taxes be collected by a Superior Court action to foreclose the lien within specified time limits. In such an action, the real property subject to the unpaid amount may be sold at a judicial foreclosure sale. Under the Act, the commencement of judicial foreclosure following the nonpayment of a Special Tax is not mandatory. However, the District will covenant in the Indenture for the benefit of the owners of the Bonds and any Parity Bonds that it will: (i) commence judicial foreclosure proceedings against parcels with delinquent Special Taxes in excess of $2,500 by the December 1 following the close of each Fiscal Year in which such Special Taxes were due; and (ii) commence judicial foreclosure proceedings against all parcels with delinquent Special Taxes by the December 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than 95% of the total Special Tax levied; and (iii) diligently pursue such foreclosure proceedings until the delinquent Special Taxes are paid; provided that, notwithstanding the foregoing, the District may elect to defer foreclosure proceedings on any parcel so long as the amount in the 2023 Bonds Reserve Subaccount is at least equal to the 2023 Bonds Reserve Requirement, the 2025 Bonds Reserve Subaccount to the 2025 Bonds Reserve Requirement and the amounts in all other Subaccounts of the Reserve Account is at least equal to the applicable Reserve Requirement.
The District will covenant in the Indenture that it will deposit the net proceeds of any foreclosure in the Special Tax Fund and will apply such proceeds remaining after the payment of Administrative Expenses to make current payments of principal and interest on the Bonds and any Parity Bonds, to bring the amount on deposit in the 2023 Bonds Reserve Subaccount up to the 2023 Bonds Reserve Requirement, the 2025 Bonds Reserve Subaccount to the 2025 Bonds Reserve Requirement and the amount on deposit in any other Subaccount of the Reserve Account up to the applicable Reserve Requirement, and to pay any delinquent installments of principal or interest due on the Bonds and any Parity Bonds. See APPENDIX D — "SUMMARY OF THE INDENTURE — COVENANTS AND WARRANTY — Covenants" herein.
If foreclosure is necessary and other funds (including amounts in the 2023 Bonds Reserve Subaccount and the 2025 Bonds Reserve Subaccount) have been exhausted, debt service payments on the Bonds could be delayed unless the foreclosure proceedings produce sufficient net foreclosure sale proceeds. Judicial foreclosure actions are subject to the normal delays associated with court cases and may be further slowed by bankruptcy actions, involvement by agencies of the federal government and other factors beyond the control of the City and the District. See the caption "SPECIAL RISK FACTORS — Enforcement Delays — Bankruptcy." Moreover, no assurances can be given that the real property subject to foreclosure and sale at a judicial foreclosure sale will be sold or, if sold, that the net proceeds of such sale will be sufficient to pay any delinquent Special Tax installment. See the caption "SPECIAL RISK FACTORS — Property Values." Although the Act authorizes the District to cause such an action to be commenced and diligently pursued to completion, the Act does not impose on the District or the City any obligation to purchase or acquire any lot or parcel of property sold at a foreclosure sale if there is no other purchaser at such sale. The Act provides that, in the case of a delinquency, the Special Tax will have the same lien priority as is provided for ad valorem taxes. 2025 Bonds Reserve Subaccount of the Reserve Account of the Special Tax Fund In order to secure further the payment of principal of and interest on the 2025 Bonds, the District is required, upon delivery of the 2025 Bonds, to deposit in the 2025 Bonds Reserve Subaccount and thereafter to maintain in the 2025 Bonds Reserve Subaccount an amount equal to the 2025 Bonds Reserve Requirement. The term "2025 Bonds Reserve Requirement" is defined in the Indenture to mean, that amount as of any date of calculation, equal to the lesser of: (i) 10% of the initial principal amount of the 2025 Bonds; (ii) Maximum Annual Debt Service on the then Outstanding 2025 Bonds; (iii) 125% of average Annual Debt Service on the then Outstanding 2025 Bonds; provided, however, that the 2025 Bonds Reserve Subaccount shall not exceed $ . The Reserve Requirement may be satisfied in whole or in part by cash, a Reserve Policy (as defined in 21 4922-7396-4055v9/022599-0037
the Indenture), or a combination thereof. On the date of issuance of the 2025 Bonds, the District will deposit $ from proceeds of the 2025 Bonds into the 2025 Bonds Reserve Subaccount to satisfy the 2025 Bonds Reserve Requirement.
The 2025 Bonds Reserve Subaccount only secures and the amounts therein are only available to pay the principal of, redemption premium, if any, and interest on the 2025 Bonds. In connection with the issuance of a series of Parity Bonds, if any, the District may establish an additional Subaccount within the Reserve Account which secures such series of Parity Bonds. Such additional Subaccounts within the Reserve Account established for Parity Bonds will not secure the 2025 Bonds. In addition, amounts on deposit in the 2023 Bonds Reserve Subaccount of the Reserve Account of the Special Tax Fund are not available to pay debt service on either the 2025 Bonds or any Parity Bonds.
Subject to the limits on the maximum annual Special Tax levy set forth in the Rate and Method and in the Indenture, the District will covenant in the Indenture to levy Special Taxes in an amount sufficient, in light of the other intended uses of the Special Tax proceeds, to maintain the balance in the 2023 Bonds Reserve Subaccount at the 2023 Bonds Reserve Requirement, the 2025 Bonds Reserve Subaccount at the 2025 Bonds Reserve Requirement and any other Subaccount of the Reserve Account at the applicable Reserve Requirement.
Amounts in the 2025 Bonds Reserve Subaccount are to be applied: (i) to pay debt service on the 2025 Bonds, including Sinking Fund Payments, to the extent that other monies are not available therefor; (ii) to redeem 2025 Bonds in the event of prepayment of Special Taxes, to optionally redeem 2025 Bonds or in connection with a partial defeasance of 2025 Bonds, in accordance with the Indenture; and (iii) to pay any rebate requirements with respect to the 2025 Bonds. See Appendix E under the caption "CREATION OF FUNDS AND APPLICATION OF PROCEEDS — Reserve Account of the Special Tax Fund.
No Teeter Plan
Although the Riverside County Board of Supervisors has adopted the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the "Teeter Plan") which allows each entity levying secured property taxes in the County to draw on the amount of property taxes levied rather than the amount actually collected, as provided for in Section 4701 et seq. of the California Revenue and Taxation Code, the District is not included in the County Teeter Plan. Consequently, the District may not draw on the County Tax Loss Reserve Fund in the event of delinquencies in Special Tax payments within the District.
Parity Bonds
The Indenture provides that, upon satisfaction of certain conditions, the District may issue Parity Bonds payable from the Net Taxes and other amounts deposited in the Special Tax Fund (other than in the Administrative Expenses Account therein and the applicable subaccount of the Reserve Account of the Special Tax Fund) and secured by a lien and charge upon such amounts equal to the lien and charge securing the Outstanding Bonds and any other Parity Bonds theretofore issued; provided, however, Parity Bonds may only be issued for the purpose of refunding all or a portion of the Bonds or any Parity Bonds then Outstanding.
Among other conditions, in order to issue Parity Bonds to refund all or a portion of the Bonds or any Parity Bonds, the District shall have received a Certificate of the Special Tax Administrator certifying that in each Bond Year the Annual Debt Service on the Bonds and Parity Bonds to remain Outstanding following the issuance of the Parity Bonds proposed to be issued is less than the Annual Debt Service on the Bonds and Parity Bonds Outstanding prior to the issuance of such Parity Bonds. See Appendix E under the caption "DEFEASANCE AND PARITY BONDS."
22 4922-7396-4055v9/022599-0037
THE COMMUNITY FACILITIES DISTRICT
General
The City formed the District on February 7, 2017. The District is located in the northeastern portion of the City and is bounded by Starlight Avenue to the west, N. Highland Springs Avenue to the east and Cougar Way to the north. Tri Pointe is developing the land within the District into a residential development of 704 age - restricted (55+) single family detached homes known as "Altis Beaumont" in the City. The Vuepoint, a 16,000 square foot community center that offers several swimming pools, five pickleball courts, a billiards lounge, a fitness club, as well as studies and outdoor event spaces is located at the center of Altis Beaumont. Since the first homes were completed in 2019, Altis Beaumont has won several architectural design and planning awards.
The District is part of a master planned community known as "Sundance." At buildout, Sundance is expected to consist of approximately 4,450 residential units on approximately 1,195 acres of land, with 13.5 acres of commercial/industrial land uses and the balance set aside for public/quasi/public uses. The Sundance master planned community is complete, with the exception of the remaining units to be developed and sold in the District.
Status of Development in the District
As of March 1, 2025 (the cutoff date for classifying Taxable Property pursuant to the Rate and Method), building permits had been issued for 607 of the parcels within the District; accordingly, 607 lots will be classified as Developed Property, and Special Taxes will be levied against such properties in Fiscal Year 2025-26 at 100% of their Assigned Special Tax rate. For the projected Fiscal Year 2025-26 Special Tax levy, the Bonds have been sized so that the Assigned Special Taxes on the 607 parcels of Developed Property as of March 1, 2025 plus a reduced Special Tax rate against the remaining 97 Final Map lots will produce an amount equal to at least 110% of the debt service due on the Bonds in Fiscal Year 2025-26 plus Administrative Expenses of $30,000.
See Table 1 for more information regarding the projected Fiscal Year 2025-26 Special Tax levy and the percent of such levy based on land use class. Neither the Assigned Special Taxes nor the Administrative Expenses escalate over time.
As of January 17, 2025, 556 homes within the District had been built and sold to individual homeowners, and Tri Pointe owned 11 completed homes (0 of which were in escrow) which include 11 model homes, 40 homes under construction (14 of which were in escrow) and 97 lots in a finished condition without any vertical construction thereon (0 of which were in escrow). Homes under contract may not result in closed escrows as sales contracts are subject to cancellation. The Developer currently expects to complete and convey all homes planned within the District to individual homebuyers by the Second quarter of 2026.
All property planned for residential development in the District is being developed by the Developer.
The area remaining to be built in the District has been graded and the infrastructure (water, street improvements, streetlights and dry utilities including power, gas cable and phone) necessary to build out the balance of homes remains within the District has been completed.
Table 1 below sets forth the Assigned Special Tax per unit of Developed Property and Final Map Property, the Fiscal Year 2025-26 projected Special Tax levy and the percent of such levy based on land use class. The District expects to levy the Special Tax on Developed Property at 100% of the Assigned Rate and on Final Map Property at only 3.5% in Fiscal Year 2025-26, however, the District has the ability to increase the levy on Final Map Property under the Rate and Method up to 100% of the Assigned Rate if necessary to meet the Special Tax Requirement.
23 4922-7396-4055v9/022599-0037
Page444of789
TABLE 1
CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2016-3 (SUNDANCE)
ASSIGNED SPECIAL TAXES FOR FISCAL YEAR 2025-26
Land
Use
Class Land Use Type
Residential
2 Residential
3 Residential
4 Residential
5 Residential
6 Residential
7 Residential
8 Residential
9 Residential
10 Final Map Property
Total
Residential Floor
Area (sq. ft)
Less than 1,426 sq. ft.
1,426 sq. ft. to 1,575 sq. ft.
1,576 sq. ft. to 1,725 sq. ft.
1,726 sq. ft. to 1,875 sq. ft.
1,876 sq. ft. to 2,025 sq. ft
2,026 sq. ft. to 2,175 sq. ft.
2,176 sq. ft. to 2,325 sq. ft.
2,326 sq. ft. to 2,475 sq. ft
Greater than 2,475 sq. ft.
N/A
Maximum Rate for Land Use Type Final Property.
Includes estimated Administrative Expenses of $30,000.
Source: Spicer Consulting Group, LLC.
Description of Authorized Facilities
Maximum
/Assigned Special
Special Tax Levy Aggregate
Tax Rates Rates Estimated
Fiscal Fiscal Percent of Special Taxes
Year year Assigned No. of Fiscal Year Percent
2025-26°) 2025-26 Rate Units 2025-26(2) of Total
$1,366.00 $1,366.00 100.0% 46 $ 62,836.00 6.2%
1,436.00 1,436.00 100.0 203 291,508.00 29.0
1,520.00 1,520.00 100.0 102 155,040.00 15.4
1,590.00 1,590.00 100.0 52 82,680.00 8.2
1,659.00 1,659.00 100.0 84 139,356.00 13.8
1,785.00 1,785.00 100.0 18 32,130.00 3.2
1,855.00 1,855.00 100.0 74 137,270.00 13.6
1,980.00 1,980.00 100.0 7 13,860.00 1.4
2,058.00 2,058.00 100.0 21 43,218.00 4.3
14,310.00 502.59 3.5 97 48,751.00 4.8
704 $1,006,649.00 100.00%
Pursuant to a Settlement Agreement dated February 7, 2017 (the "Settlement Agreement"), by and among Community Facilities District No. 93-1 of the City of Beaumont, the City and Pardee Homes, a California corporation, the Developer agreed to pay and/or advance certain development impact fees ("DIF Fees") to the City for the construction of certain facilities. The City has used and will use a portion of these DIF Fees to construct certain authorized facilities benefiting the District (collectively, the "DIF Facilities"). The 2025 Bond proceeds deposited to the Acquisition and Construction Fund, held under the Indenture, are expected to be used to reimburse the Developer for the cost of the DIF Facilities, along with certain other eligible public infrastructure improvements.
Appraisal Report
The estimated assessed value of the property within the District, as shown on the County's assessment roll for Fiscal Year 2024-25, is approximately $211,365,938. However, as a result of the requirements of Article XIIIA of the California Constitution, a property's assessed value is not necessarily indicative of its market value. In order to provide information with respect to the value of the property within the District, the City engaged Integra Realty Resources, the Appraiser, to prepare the Appraisal Report. The Appraiser has an "MAI" designation from the Appraisal Institute and has prepared numerous appraisals for the sale of land -secured municipal bonds. The Appraiser was selected by the City through a request for proposal process and has no material relationships with the City, the District, or the owners of the land within the District other than the relationship represented by the engagement to prepare the Appraisal Report. The City instructed the Appraiser to prepare its analysis and report in conformity with City -approved guidelines and the Appraisal Standards for Land Secured Financings published in 1994 and revised in 2004 by the California Debt and Investment Advisory Commission. A copy of the Appraisal Report is included as APPENDIX D — "APPRAISAL REPORT" to this Official Statement.
The purpose of the Appraisal Report was to estimate the market value, by parcel, and aggregate value of the "as is" condition of the property within the District subject to the Special Taxes because such property did not have an improved value on the Fiscal Year 2024-25 County Assessor's roll. The remainder of the taxable 4922-7396-4055v9/022599-0037
24
property is valued in the Appraisal based on its assessed value. The estimate of market value takes into consideration and assumes the improvements to be funded with the proceeds of the 2025 Bonds have been installed and that the development costs provided to the Appraiser by the Developer include all of the costs necessary to bring the subject properties to a finished lot condition. The Appraisal Report appraised 302 of the lots within the District ($96,567,000) and relied on the assessed value for the remaining 402 lots ($180,692,091).
Subject to the contingencies, assumptions and limiting conditions set forth in the Appraisal Report, the Appraiser concluded that, as of January 17, 2025 the value of the Taxable Parcels (based on appraised and assessed values) within the District was $277,259,091.
In estimating the market value, the Appraiser utilized a sales comparison approach for the completed single family homes and a land residual analysis for the remaining property to derive a value indication for the finalized lots within each tract adjusted by any costs to complete such finished lots.
Reference is made to Appendix D for a complete list of the assumptions and limiting conditions and a full discussion of the appraisal methodology and the basis for the Appraiser's opinions. In the event that any of the contingencies, assumptions and limiting conditions are not actually realized, the value of the property within the District may be less than the amount reported in the Appraisal Report. In any case, there can be no assurance that any portion of the property within the District would actually sell for the amount indicated by the Appraisal Report.
The Appraisal Report merely indicates the Appraiser's opinion as to the market value of the property referred to therein as of the date and under the conditions specified therein. The Appraiser's opinion reflects conditions prevailing in the applicable market as of the date of the Appraisal Report. The Appraiser's opinion does not predict the future value of the subject property, and there can be no assurance that market conditions will not change adversely in the future. See, for example, "SPECIAL RISK FACTORS — Impact of Economic Conditions on the Development in the District."
It is a condition precedent to the issuance of the 2025 Bonds that the Appraiser deliver to the District a certification to the effect that, while the Appraiser has not updated the Appraisal Report since its date and has not undertaken any obligation to do so, nothing has come to the attention of the Appraiser subsequent to the date of the Appraisal Report that would cause the Appraiser to believe that the value of the property that it appraised in the District is less than the value reported in the Appraisal Report. However, the Appraiser notes that acts and events may have occurred since the date of the Appraisal Report which could result in both positive and negative effects on market value within the District.
Value -to -Lien Ratios
Table 2 below incorporates the values assigned to parcels in the Appraisal Report, the estimated principal amount of the 2025 Bonds allocable to each category of parcels and the estimated assessed/appraised value -to -lien ratios for various categories of parcels based upon land values as of January 17, 2025 as set forth in the Appraisal Report and based on information received from the Developer. Based on the principal amount of the Bonds, the estimated assessed/appraised District -wide value -to -lien ratio including all Taxable Property as of January 17, 2025 is 18.19* -to -1. This ratio does not include other direct and overlapping debt within the District. See "—Direct and Overlapping Indebtedness" below. Taking that direct and overlapping debt into account, the ratio of the aggregate assessed/appraised value of the Taxable Property within the District to the total principal amount of all direct and overlapping bonded debt for the District is approximately 14.50* -to -1.
The District expects to levy the Special Tax on Developed Property at 100% of the Assigned Rate and on Final Map Property at only 3.5% in Fiscal Year 2025-26, however, the District has the ability to increase the levy on Final Map Property under the Rate and Method up to 100% of the Assigned Rate if necessary to meet the Special Tax Requirement. The estimated appraised/assessed District -wide value -to -lien ratio of Developed * Preliminary, subject to change.
25 4922-7396-4055v9/022599-0037
Property as of January 17, 2025 is 17.29* -to -1. This ratio does not include other direct and overlapping debt within the District. See "—Direct and Overlapping Indebtedness" below. Taking that direct and overlapping debt into account, the ratio of the aggregate assessed/appraised value of Developed Property within the District to the total principal amount of all direct and overlapping bonded debt for the District is approximately 13.78* - to -1.
26 4922-7396-4055v9/022599-0037
TABLE 2
CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2016-3
ASSESSED/APPRAISED VALUE -TO -LIEN RATIOS
ALLOCATED BY PROPERTY OWNER*
Fiscal Year % of
Fiscal Year 2025-26 Projected Estimated CFD No.
Appraised % of 2025-26 Percentage Fiscal Year Fiscal Year 2016-3 All other Appraised No. of Property Appraised Maximum ofMaxunum 2025-26 2025-26 2025 Overlapping Value -to - Property Owner()) Parcels Value(4) Value Tax Tax Levy (5) Levy Bonds(6) Debt Issued') Lien Ratio Developed Property
Developed Individually Owned(') 556 $251,091,442 90.56% $1,063,572 78.90% $ 880,305 87.45% $5,754,148 $10,972,765 15.01:1 Developed—Tri Pointe HomesOwned(L) 51 12,473,649 4.50 97,218 7.21 77,593 7.71 507,190 967,176 8.46:1 Total Developed 607 $263,565,091 95.06% $1,160,638 86.11% $ 957,898 95.16% $6,261,337 $11,939,941 14.48:1 Approved Property
Approved—Tri Pointe HomesOwned(s) 97 $ 13,694,000 4.94% $ 187,175 13.89% $ 48,751 4.84% $ 318,663 $ 607,668 14.78:1 Total Approved 97 $ 13,694,000 4.94% $ 187,175 13.89% $ 48,751 4.84% $ 318,663 $ 607,668 14.78:1 Total 704 $277,259,091 100.00% $1,347,965 100.00% $1,006,649 100.00% $6,580,000 $12,547,609 14.50:1 (u
(2)
(3)
(4)
(5)
(6)
(7)
Preliminary, subject to change.
Ownership status based on Ownership Information provided by the developer as of January 15, 2025.
Reflects Appraised Value for 11 Models and 40 Under Construction for Tri Pointe which have building permits issued by January 15, 2025 and therefore are considered developed per the Rate and Method of Apportionment.
Reflects Appraised Value for 97 Finished Lots for Tri Pointe which do not have building permits issued by January 15, 2025 and therefore are considered final mapped per the Rate and Method of Apportionment.
Reflects the Assessed/Appraised Value based as of January 17, 2025 the date of value of the Appraisal Report.
The Fiscal Year 2025-26 Special Tax Levy based upon assumed development status as of January 15, 2025 and 110% of debt service plus Administrative Expenses of $30,000.
Reflects the principal amount of the 2025 Bonds. Responsibility of the principal amount of the 2025 Bonds has been allocated based on the projected Fiscal Year 2025-26 Special Tax levy.
See Table 4.
Source: County of Riverside Assessor's Office; Spicer Consulting Group, LLC. 4922-7396-4055v9/022599-0037
27
Table 3 below summarizes the assessed/appraised value -to -lien of the Developed Property within the District by value -to -lien range based on development status as of January 17, 2025.
TABLE 3
CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2016-3
ASSESSED/APPRAISED VALUE -TO -LIEN STRATIFICATION FOR PARCELS OF DEVELOPED PROPERTY*111 No. of Percent Share
Parcels of % of % of Projected of Projected CFD 2016-3 All Other Developed Developed Appraised Appraised Fiscal Year Fiscal Year Proposed Percent Share Overlapping Aggregate Value -to -Lien Category Property Property Value (2) Value 2025-26 Levy 2025-26 Levy 2025 Bonds (3) of Bonds Debts) Value -to -Lien Less than 4.00:1 0 0.00% $ 0 0.00% $ 0 0.00% $ 0 0.00% $ 0 N/A Between 4.01:1 to 8.00:1(4) 40 6.59 7,488,000 2.84 60,331 6.30 394,356 6.30 752,010 6.53:1 Between 8.01:1 to 12.00:1 13 2.14 5,030,386 1.91 23,513 2.45 153,694 2.45 293,083 11.26:1 Between 12.01:1 to 16.00:1 371 61.12 161,938,326 61.44 596,956 62.32 3,902,026 62.32 7,440,896 14.28:1 Between 16.01:1to20.00:1 179 29.49 86,195,513 32.70 269,819 28.17 1,763,682 28.17 3,363,221 16.81:1 Greaterthan20.00:1w 4 0.66 2,912,866 1.11 7.279 0.76 47,579 0.76 90,731 21.06:1 Totals 607 100.00% $263,565,091 100.00% $957,898 100.00% $6,261,337 100.00% $11,939,941 14.48:1 Preliminary, subject to change.
cu Does not include 97 parcels without building permits as of January 17, 2025. (2) Reflects the Assessed/Appraised Value as of January 17, 2025, the Date of Value of the Appraisal Report. This does not include 97 parcels with $13,694,000 in Appraised Value. (3) Responsibility ofthe par amount of the 2025 Bonds has been allocated based on the projected Fiscal Year2025-26 Special Tax levy, with development status as of January 17, 2025, and bond sizing as provided by the Underwriter.
(4) The minimum value to lien in the between 4.01:1 to 8.00:1 category is 5.36:1. The maximum value to lien in the Greater than 20.00:1 category is 22.28:1. (5) See Table 4.
Source: County of Riverside Assessor's Office; Spicer Consulting Group, LLC. 28 4922-7396-4055v9/022599-0037
Authorized but Unissued Direct
and Overlapping Indebtedness
Beaumont Unified School District
San Gorgonio Pass Mem Hospital
Mt San Jacinto Jr College
Total Unissued General Obligation Indebtedness
Direct and Overlapping Debt
The District is included within the boundaries of overlapping local agencies providing governmental services. Some of these local agencies have outstanding bonds, and/or the authority to issue bonds, payable from taxes or assessments. The existing and authorized indebtedness payable from taxes and assessments that may be levied upon the property within the District is shown in Table 4 below. In addition to current debt, new community facilities districts and/or special assessment districts could be formed in the future encompassing all or a portion of the property within the District; and such districts or the agencies that formed them could issue more bonds and levy additional special taxes or assessments.
TABLE 4
CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2016-3
DIRECT AND OVERLAPPING DEBT
I. Assessed/Appraisal Value a) $277,259,091
II. Land Secured Bond Indebtedness
Parcels in
Outstanding Direct and % CFD No. Amount
OverlappingBondedDebt Type Issued Outstanding Applicable 2016-3 (s) Applicable City of Beaumont CFD No. 2016-3, Series 2025 CFD $6,580,000 $6,580,000 100.000% 704 $ 6,580,000 City of Beaumont CFD No. 2016-3, Series 2023 CFD $8,800,000 $8,665,000 100.000% 704 8,665,000 Total Land Secured Bonded Debt (2) $ 15,245,000*
Parcels in
Authorized but Unissued Direct and % CFD No. Amount
Overlapping Indebtedness Type Authorized Unissued Applicable 2016-3 (3) Applicable City of Beaumont CFD No. 2016-3 CFD $22,000,000 $ 0 100.000% 704 $ 0 Total Un i ssued La n d S ecured Indebtedness $ 0
TO TAL OUTSTANDING AND UNISSUED LAND SECURED INDEBTEDNESS $ 15,245,000* M. General Obligation Bond Indebtedness
Parcels in
Outstanding Direct and % CFD No. Amount
Overlapping Bonded Debt Type Issued Outstanding Applicable 2016-3 (3) Applicable Beaumont Unified School District GO $140,998,583 $124,246,209 1.826% 704 $ 2,269,019 San Gorgonio PassMemHospital GO 108,000,000 90,700,000 1.371 704 1,243,319 Mt San Jacinto Jr College GO 295,000,000 237,330,000 0.156 704 370,271 Total O utstanding General Obligation Bonded Debt $ 3,882,609 Parcels in
% CFD No. Amount
Type Authorized Unissued Applicable 2016-3 (3) Applicable GO $141,000,000 $ 1,417 1.826% 704 $ 26
GO 108,000,000 0 1.371 704 0
GO 295,000,000 0 0.156 704 0
$ 26
TO TAL O UTS TANDING AND UNISSUED GENERAL O BLIGATION INDEBTEDNESS $ 3,882,635
TO TAL O F ALL O UTS TANDING DIREC TAND O VERLAPPING BONDED DEBT
TO TAL O F ALL O UTSTANDING DIREC TAND UNISSUED DIREC TO VERLAPPING INDEBTEDNESS $ 19,127,609*
$ 19,127,635*
IV. Ratios to Appraisal Value
Out standing Land Secured Bonded Debt 18.19:1w
Total Outstanding Bonded Debt 14.50:1`
(1) Based on the Assessed/Appraisal Value per the Appraisal Report as of January 17, 2025 Date of Value. (2) Parity Bonds may only be issued for refunding purposes. (3) All parcels have subdivided into 704 individual parcels. Based on development status as of January 17, 2025, and assuming no further development, 607 parcels will be classified as Developed Property and 97 parcels will be classified as Final Mapped Pmperty under the Rate and Method for Fiscal Year 2025-26.
Source: County of Riverside Assessor's Office; Spicer Consulting Group, LLC.
Preliminary, subject to change.
4922-7396-4055v9/022599-0037
29
Table 4 below describes the estimated Fiscal Year 2024-25 effective tax burden for a property within the District based on the average value of a home within the District as of the Date of Value, the actual Fiscal Year 2024-25 Special Tax levy and Fiscal Year 2024-25 actual levies for all other overlapping taxing jurisdictions. Based on the foregoing and the projected debt service on the Bonds, the Administrative Expenses Cap of $30,000 (which amount may not escalate), in Fiscal Year 2024-25, the projected effective tax rate to be levied on Developed Property in the District will average 1.86%.
TABLE 5
CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2016-3
ESTIMATED AVERAGE FISCAL YEAR 2024-25 TAX OBLIGATION (1) Average Home Value(2) $409,425
Ad Valorem Property Taxes:
General Purpose
Beaumont Unified School (0.07326%)
Mt San Jacinto Jr College (0.00268%)
San Gogonio Pass Mem Hospital (0.04607%)
San Gorgonio Pass Water Debt Svc (0.17500%)
Total General Property Taxes
Assessment, Special Taxes & Parcel Charges:
San Gorgoio Hospital Measure H
Flood Control Stormwater / Cleanwater / Santa Ana
CFD No. 2016-3 — Public Services Special Tax
CFD No. 2016-3 — Maintenance Services Special Tax
CFD No. 2016-3 — Facilities Special Tax
Total Assessments & Special Taxes
Projected Total Property Tax
Projected Effective Tax Rate (3)
$ 4,094
300
11 189
716
$ 5,310
$ 61
4 574
97 1,574
$ 2,310
$ 7,621
1.86%
(1) Average Fiscal Year 2024-25 tax rates based upon Fiscal Year 2024-25 Overlapping Taxes and Assessment Rates reflects the average assessed value based as of January 17, 2025, the Date of Value in the Appraisal Report. (2) Average Home Value is based upon average assessed values for developed parcels with improvement value for Fiscal Year 2024-25 per Riverside County Equalized Ro11 data.
(3) Reflects the District's Average Fiscal Year 2024-25 Special Tax levy for facilities for developed parcels with an assessed value for improvements.
Source: County of Riverside Assessor's Office; Spicer Consulting Group, LLC.
Delinquency History
Special Taxes within the District were first levied in Fiscal Year 2019-20 in the amount of $100,822.
For each Fiscal Year, the first installment of the Special Taxes becomes due on December 10 and the second installment becomes due on April 10. Table 6 below summarizes the annual secured tax levies within the District and the amounts delinquent as of January 17, 2025 for Fiscal Years 2019-20 through 2024-25 (first installment only). Future delinquencies could increase as a result of factors such as changes in the local or national economy, increases in the mortgage rates and/or increases in the unemployment rate in the area. See "SPECIAL RISK FACTORS — Special Tax Delinquencies" and "SPECIAL RISK FACTORS - Increase in Mortgage Interest Rates."
4922-7396-4055v9/022599-0037
30
TABLE 6
CITY OF BEAUMONT
COMMUNITY FACILITIES DISTRICT NO. 2016-3
SPECIAL TAX LEVIES, DELINQUENCIES, AND DELINQUENCY RATES FISCAL YEARS 2019-20 THROUGH 2024-25
Delinquencies as of January 17, 2025
Fiscal Amount Parcels Parcels Amount Percent
Year Levied Levied Delinquent Delinquent Delinquent
2019-20 $100,822 61 0 $ 0 0.00%
2020-21 207,685 124 0 0 0.00
2021-22 486,922 297 0 0 0.00
2022-23 598,869 373 0 0 0.00
2023-24 893,946 561 6 8,241 0.46
2024-25(1) 896,734 563 18 14,103 0.79
(1)
Includes first installment only for Fiscal Year 2024-25.
Source: County of Riverside Assessor's Office; Spicer Consulting Group, LLC.
Top Taxpayers
As of January 17, 2025, individual homeowners owned 556 of the 607 parcels of Developed Property in the District. Based on ownership status and development status as of January 17, 2025, individual homeowners are projected to be responsible for 91.90% of the Special Taxes projected to be levied on Developed Property in Fiscal Year 2025-26, with the Developer being responsible for the other 8.10%. Based on ownership status and development status as of January 17, 2025, individual homeowners are projected to be responsible for
87.44% of the Maximum Special Tax that may be levied on Taxable Property in Fiscal Year 2025 -26, with the Developer being responsible for the other 12.56%.
PROPERTY OWNERSHIP AND THE DEVELOPMENT
The information regarding the development and ownership of the Property contained under this caption, "PROPERTY OWNERSHIP AND THE DEVELOPMENT," has been provided by representatives of Tri Pointe Homes IE-SD, Inc., a California corporation (the "Developer" or "Tri Pointe'), and has not been independently confirmed or verified by the Underwriter, the City or the District. The Underwriter, the City and the District make no representation as to the accuracy or adequacy of the information contained under this caption. There may be material adverse changes in this information after the date of this Official Statement. Neither the 2025 Bonds nor the Special Taxes securing the 2025 Bonds are personal obligations of the Developer or any affiliate thereof, or any other property owner and, in the event that any property owner defaults in the payment of its Special Taxes, the District may proceed with judicial foreclosure but has no direct recourse to the assets of any property owner or any affiliate thereof. See "SPECIAL RISK FACTORS" herein." Notwithstanding the belief of TriPointe that it will have sufficient funds to complete its planned development in the District, no assurance can be given that amounts necessary to fund the remaining planned development by TriPointe in the District will be available when needed. None of TriPointe, or any other entity or person is under any legal obligation of any kind to expend funds for the development of the property as planned by TriPointe in the District. Any contributions by TriPointe or any other entity or person to fund the costs of its development are entirely voluntary. if and to the extent the aforementioned sources are inadequate to pay the costs to complete the planned development by TriPointe within the District, the remaining portions of such development may not be completed. TriPointe has no legal obligation to 2025 Bondholders to make any such funds available for construction or development, or the payment of ad valorem property taxes or the Special Taxes. See the caption "SPECIAL RISK FACTORS."
4922-7396-4055v9/022599-0037
3l
The Developer
As previously defined in this Official Statement as the "Developer" or "Tri Pointe" is Tri Pointe Homes IE-SD, Inc., a California corporation, which is an indirect, wholly -owned subsidiary of Tri Pointe Homes, Inc., a Delaware corporation ("Tri Pointe Homes"), a publicly traded company whose common stock is listed on the New York Stock Exchange under the ticker symbol "TPH." TriPointe Homes is engaged in the design, construction and sale of innovative single-family attached and detached homes across ten states, including Arizona, California, Colorado, Maryland, Nevada, North Carolina, South Carolina, Texas, Virginia and Washington, and the District of Columbia. In April 2024, TriPointe Homes announced further expansion into Orlando, Florida and the Coastal Carolinas area, which includes parts of Georgia and South Carolina. As of December 31, 2024, the company had not yet commenced significant homebuilding operations in these new markets.
TriPointe Homes is subject to the informational requirements of the Exchange Act and, in accordance therewith, files reports, proxy statements, and other information, including financial statements, with the SEC.
Such filings, set forth, among other things, certain data relative to the consolidated results of operations and financial position of TriPointe Homes and its consolidated subsidiaries, including TriPointe, as of such dates (e.g., see TriPointe Homes' Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as filed with the SEC on February 21, 2025.
The SEC maintains an Internet website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC, including TriPointe Homes. The address of such website is www.sec.gov . All documents filed by TriPointe Homes pursuant to the requirements of the Exchange Act after the date of this Official Statement will be available for inspection in such manner as the SEC prescribes. Copies of TriPointe Homes' most recent Annual Report on Form 10-K and each of its other quarterly and current reports, including any amendments, are available in the "investors" portion of its website at www. tripointehomes. com.
The foregoing intemet websites are included for reference only and the information on these intemet sites is not a part of this Official Statement and is not incorporated by reference into this Official Statement. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on such intemet websites. Neither TriPointe nor TriPointe Homes is obligated to advance funds for construction or development or to pay ad valorem property taxes or the Special Taxes and investors should not rely on the information and financial statements contained on such intemet sites in evaluating whether to buy, hold or sell the 2025 Bonds.
Development and Financing Plan
The Altis Beaumont development includes 704 planned age -restricted (55+) single family detached homes with 18 floor plans ranging in size from approximately 1,419 square feet to approximately 2,559 square feet. The following table describes the development and ownership status as of January 17, 2025 by floor plan within the Altis Beaumont development.
32 4922-7396-4055v9/022599-0037
TABLE 7
ALTIS BEAUMONT
DEVELOPMENT AND OWNERSHIP STATUS
(AS OF JANUARY 17, 2025)
Estimated Closings
Total Home as of Completed Homes Partially Homes
Units Square January 17, Homes/ Under Finished Finished in Base Home Floor Plan Planned Footage 2025 Models Construction Lots Lots Escrow Prices Avid
Plan 1 25 1,661 24 1 0 0
P1an2 15 1,802 15 0 0 0
Plan 3 25 1,929 25 0 0 0
Total Avid 65 64 1 0 0
Han
Plan 1 26 2,278 26 0 0 0
Plant 7 2,404 7 0 0 0
Plan 3 21 2,559 21 0 0 0
Total Dan 54 54 0 0 0
Lin a
Plan 1 35 1,934 20 1 3 11
Plan2 32 1,989 19 1 2 10
Plana 36 2,186 21 1 2 12
Total Lina 103 60 3 7 33
Mira
Plan 1 13 1,970 13 0 0 0
Plan 1 2 2,626 2 0 0 0
Plan2 18 2,174 17 1 0 0
Plan 3 22 2,230 22 0 0 0
Total Mira 55 54 1 0 0
Rosa
Plan 1 60 1,419 35 1 10 14
P1an2 63 1,563 39 1 6 17
Plan 3 51 1,763 27 1 9 14
Total Rosa 174 101 3 25 45
Vita
Plan 1 94 1,473 84 1 2 7
Plant 79 1,534 66 1 3 9
Plan 3 80 1,682 73 1 3 3
Total Vita 253 223 3 8 19
Total 704 556 11 40 97
Source: The Developer.
0 $340,000
0 $359,000
0 $374,000
0 0 $402,000
0 $408,000
0 $423,000
0 3 $485,500
2 $502,500
3 $526,000
8 0 $377,000
0 $365,000
0 $418,000
0 $400,000
1 $418,000
3 $423,000
2 $440,000
6 0 $418,000
0 $423,000
0 $440,000
0 14
As of January 17, 2025, 556 homes within the District had been built and sold to individual homeowners, and Tri Pointe owned 11 completed homes (0 of which were in escrow) which include 11 model homes, 40 homes under construction (14 of which were in escrow) and 97 lots in a finished condition without any vertical construction thereon (0 of which were in escrow). Homes under contract may not result in closed escrows as sales contracts are subject to cancellation.
All property planned for residential development in the District is being developed by the Developer.
The area remaining to be built in the District has been graded and the infrastructure (water, street improvements, streetlights and dry utilities including power, gas cable and phone) necessary to build out the balance of homes remains within the District has been completed. No discretionary approvals or remediation is necessary in order for Tri Pointe to complete its active development projects within the District. Tri Pointe anticipates closing escrow to individual homebuyers on all of the remaining homes planned within the District by the Second quarter 4922-7396-4055v9/022599-0037
33
of 2026. Sales contracts are subject to cancelation and, therefore, homes currently in escrow may not result in closed escrows with the prospective homebuyers.
To date, Tri Pointe has fmanced its land acquisition and various site development costs related to its property in the District through internally generated funds (which may include home sales revenues and funding from its parent company Tri Pointe Homes). As of January 17, 2025, Tri Pointe has expended approximately $163 million on land acquisition and development and homebuilding costs in the District. As of such date, Tri Pointe expects to incur approximately $23 million on remaining development and homebuilding costs in the District.
Tri Pointe expects to use internally generated funds (which may include home sales revenues and funding from its parent company Tri Pointe Homes) to complete its developments within the District, and believes that it will have sufficient funds available to complete its planned development as described in this Official Statement.
Although Tri Pointe expects to have sufficient funds available to complete its development in the District as described in this Official Statement, there can be no assurance that amounts necessary to finance the remaining development costs will be available to Tri Pointe when needed. While Tri Pointe Homes has made such internal funding available in the past, there can be no assurance whatsoever of its willingness or ability to do so in the future. Neither Tri Pointe, nor any other entity or person is under any legal obligation of any kind to expend funds for the development of and construction of homes on Tri Pointe's property in the District or the payment of ad valorem property taxes or the Special Taxes. Any contributions by Tri Pointe or any other entity or person to fund the costs of such development are entirely voluntary.
If and to the extent that the aforementioned sources are inadequate to pay the costs to complete the planned development by Tri Pointe within the District and other financing is not put into place, there could be a shortfall in the funds required to complete the planned development by Tri Pointe or to pay ad valorem property taxes or Special Taxes related to Tri Pointe's property in the District, and the remaining portions of such development may not be completed. Many factors beyond Tri Pointe's control, or a decision by Tri Pointe to alter its current plans, may cause the actual sources and uses to differ from the projections. See "SPECIAL RISK FACTORS" herein for a discussion of risk factors. " Except as described in this Official Statement and except for those consents, permits, authorizations, certifications and approvals of governmental entities required in the ordinary course of development, Tri Pointe has no actual knowledge of any impediment to construction or obtaining land use entitlements which could be reasonably expected to have a material adverse effect on its ability to complete the planned development of its property within the District as described in the Official Statement.
Although the information in this Official Statement reflects the current development expectations of Tri Pointe, no assurance can be given that home construction and sales will be carried out on the schedule and according to the plans described herein, or that the home construction and sale plans or base prices set forth above will not change after the date of this Official Statement. Moreover, rising interest rate may affect prospective buyers' willingness or ability to close escrow or enter into future sales contracts. See "SPECIAL RISK FACTORS — Increase in Mortgage Interest Rates. " Tri Pointe reserves the right to change its development at any time without notice. Additionally, homes under contract to be sold may not result in closed escrows as sales contracts are subject to cancellation. See "SPECIAL RISK FACTORS — Concentration of Property Ownership. "
SPECIAL RISK FACTORS
The 2025 Bonds have not been rated by any rating agency, and the purchase of the 2025 Bonds involves significant risks that are not appropriate for certain investors. The following is a discussion of certain risk factors which should be considered, in addition to other matters set forth herein, in evaluating the investment quality of 34 4922-7396-4055v9/022599-0037
the 2025 Bonds. This discussion does not purport to be comprehensive or defmitive and does not purport to be a complete statement of all factors which may be considered as risks in evaluating the credit quality of the 2025 Bonds. The occurrence of one or more of the events discussed herein could adversely affect the ability or willingness of property owners in the District to pay their Special Taxes when due. Such failures to pay Special Taxes could result in the inability of the District to make full and punctual payments of debt service on the 2025 Bonds. In addition, the occurrence of one or more ofthe events discussed herein could adversely affect the value of the property in the District. See "— Property Values" below.
Risks of Real Estate Secured Investments Generally
The 2025 Bond Owners will be subject to the risks generally incident to an investment secured by real estate, including, without limitation: (i) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of the District, the supply of or demand for competitive properties in such area, and the market value of residential property or buildings and/or sites in the event of sale or foreclosure; (ii) changes in real estate tax rates and other operating expenses, governmental rules (including, without limitation, zoning laws and laws relating to endangered species and hazardous materials) and fiscal policies; (iii) natural disasters (including, without limitation, earthquakes, wildfires and floods), which may result in uninsured losses; (iv) adverse changes in local market conditions; and (v) increased delinquencies due to rising mortgage costs and other factors.
No assurance can be given that the property owners within the District will pay Special Taxes in the future or that they will be able to pay such Special Taxes on a timely basis. See the caption "— Enforcement Delays — Bankruptcy" for a discussion of certain limitations on the District's ability to pursue judicial proceedings with respect to delinquent parcels.
Insufficiency of Special Tax Revenues
As discussed below, the Special Taxes may not produce revenues sufficient to pay the debt service on the 2025 Bonds due to nonpayment of the amounts levied.
In order to pay debt service on the 2025 Bonds, it is generally necessary that the Special Taxes be paid in a timely manner. Should the Special Taxes not be paid on time, the District has established a Reserve Account under the Indenture to be maintained in an amount equal to the Reserve Requirement to pay debt service on the Bonds to the extent other funds are not available. See "SOURCES OF PAYMENT FOR THE BONDS — Reserve Account of the Special Tax Fund." The District has covenanted in the Indenture to maintain in the Reserve Account an amount equal to the Reserve Requirement, subject, however, to the availability of Net Taxes in amounts sufficient to do so and to the limitation that the District may not levy the Special Tax in any Fiscal Year at a rate in excess of the maximum amounts permitted under the Rate and Method. See Appendix A and Appendix E hereto. As a result, if a significant number of Special Tax delinquencies occurs within the District, the District could be unable to replenish the 2025 Bonds Reserve Subaccount ofthe Reserve Account to the 2025 Bonds Reserve Requirement due to the limitations on the amount of the Special Tax that may be levied. If such defaults were to continue in successive years, the 2025 Bonds Reserve Subaccount of the Reserve Account could be depleted and a default on the 2025 Bonds could occur.
The Act provides that, if any property within the District not otherwise exempt from the Special Tax is acquired by a public entity through a negotiated transaction, or by gift or devise, the Special Tax will continue to be levied on and enforceable against the public entity that acquired the property. In addition, the Act provides that, if property subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property is to be treated as if it were a special assessment and be paid from the eminent domain award. The constitutionality and operation of these provisions of the Act have not been tested in the courts, but it is doubtful that they would be upheld as to, for example, property owned by the federal government. If for any reason property within the District becomes exempt from taxation by reason of ownership by a non-taxable entity such as the federal government or another public agency, subject to 35 4922-7396-4055v9/022599-0037
the limitation of the Maximum Special Tax, the Special Tax will be reallocated to the remaining taxable parcels within the District. This would result in the owners of such property paying a greater amount of the Special Tax and could have an adverse impact upon their willingness and/or ability to pay the Special Tax. Moreover, if a substantial portion of additional land within the District became exempt from the Special Tax because of public ownership, or otherwise, the Maximum Special Tax which could be levied upon the remaining acreage might not be sufficient to pay principal of and interest on the 2025 Bonds when due and a default would occur with respect to the payment of such principal and interest.
The District has covenanted in the Indenture that, under certain circumstances, it will institute foreclosure proceedings to sell any property with delinquent Special Taxes in order to obtain funds to pay debt service on the Bonds. If foreclosure proceedings were ever instituted, any mortgage or deed of trust holder could, but would not be required to, advance the amount of the delinquent Special Tax to protect its security interest. See "SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales" for provisions which apply in the event of such foreclosure and which the District is required to follow in the event of delinquencies in the payment of the Special Tax.
In the event that sales or foreclosures of property are necessary, there could be a delay in payments to Owners of the 2025 Bonds (if the 2025 Bonds Reserve Subaccount of the Reserve Account has been depleted) pending such sales or the prosecution of such foreclosure proceedings and receipt by the City on behalf of the District of the proceeds of sale. The District may adjust the future Special Tax levied on taxable parcels in the District, subject to limitations described above under the caption "THE COMMUNITY FACILITIES DISTRICT — Rate and Method of Apportionment," to provide an amount required to pay interest on and principal of the Bonds, and the amount, if any, necessary to replenish the Reserve Account to an amount equal to the Reserve Requirement, and to pay all current expenses. There is, however, no assurance that the total amount of the Special Tax that could be levied and collected against taxable parcels in the District will be at all times sufficient to pay the amounts required to be paid by the Indenture, even if the Special Tax is levied at the Maximum Special Tax rates. See "— Enforcement Delays — Bankruptcy."
No assurance can be given that the real property subject to sale or foreclosure will be sold, or if sold, that the proceeds of sale will be sufficient to pay any delinquent installments of the Special Tax. The Act does not require the City to purchase or otherwise acquire any lot or parcel of property to be sold at foreclosure if there is no other purchaser at such sale. The Act and the Indenture do specify that the Special Tax will have the same lien priority as for ad valorem property taxes in the case of delinquency. Section 53356.6 of the Act requires that property sold pursuant to foreclosure under the Act be sold for not less than the amount of judgment in the foreclosure action, plus post judgment interest and authorized costs, unless the consent of the owners of 75% of the Outstanding Bonds and any Parity Bonds is obtained.
Prior to July 1, 1983, the right of redemption from foreclosure sales was limited to a period of one year from the date of sale. Under legislation effective July 1, 1983, the statutory right of redemption from such foreclosure sales has been repealed. However, a period of 20 days must elapse after the date on which the notice of levy of the interest in real property was served on the judgment debtor before the sale of such lot or parcel can be made. Furthermore, if the purchaser at the sale is the judgment creditor (e.g., the District), an action may be commenced by the delinquent property owner within 90 days after the date of sale to set aside such sale. The constitutionality of the aforementioned legislation, which repeals the one-year redemption period, has not been tested and there can be no assurance that, if tested, such legislation will be upheld. (Section 701.680 of the Code of Civil Procedure of the State.)
Impact of Economic Conditions on the Development in the District Certain events and factors which negatively affect the regional, State and national economies could have an adverse effect on the pace at which the current or any future developers in the District can complete the remaining infrastructure and future homes, and demand by, and the ability of individuals to purchase homes within the District. Such events and factors could include rising inflation and interest rates, persistent supply 36 4922-7396-4055v9/022599-0037
chain issues and global market instability caused by geopolitical events. Any adverse impact of the foregoing and other economic factors on the projects in the District and the real estate market in general cannot be predicted.
Increase in Mortgage Interest Rates
30 -year fixed mortgage interest rates increased substantially between 2022 and 2024. Increases in mortgage interest rates could have a negative impact on the estimated absorption rates of the planned for -sale residential units within the District described herein. With respect to entry-level households, increased mortgage interest rates may adversely impact the affordability of homes and may increase mortgage payment levels for owning a lower -priced home relative to renting a residence, thereby making purchasing less attractive. With respect to move -up households, higher mortgage interest rates may impact the desire of current homeowners to move from their present home due to the fact that their present home likely has a relatively low mortgage interest rate. In addition, the new home would likely have a higher interest rate on a new mortgage loan as well as higher purchase price and property taxes. Such considerations may decrease the desire for move -up households to purchase a new home.
Concentration of Ownership
Based on ownership status as of January 17, 2025 (and assuming none of the homes or lots under construction and then in escrow close to individual homeowners), individual homeowners and TriPointe are expected to be responsible for approximately 91.90% and 8.10%, respectively, of the projected Fiscal Year 2025- 26 Special Tax levy. Based on ownership status and development status as of January 15, 2025, individual homeowners are projected to be responsible for 87.44% of the Maximum Special Tax that may be levied on Taxable Property in Fiscal Year 2025-26, with the Developer being responsible for the other 12.56%.
The timely payment of principal of and interest on the 2025 Bonds depends upon the willingness and ability of the current and future property owners in the District to pay the Special Taxes prior to delinquency.
General and local economic conditions and governmental requirements or restrictions may affect the willingness of the current property owners, or any successor property owners, to pay the Special Taxes, and there is no assurance that the current property owners, or any successor property owners, will pay such Special Taxes even if financially able to do so. Due to the concentration of ownership of the property within the District, a failure by TriPointe or any successor property owner thereto to pay the Special Taxes may result in a default in the payment of debt service on the Bonds. See "PROPERTY OWNERSHIP AND THE DEVELOPMENT." Property Values
The value of the property within the District is a critical factor in determining the investment quality of the 2025 Bonds. If a property owner is delinquent in the payment of Special Taxes, the District's only remedy is to commence foreclosure proceedings against the delinquent parcel in an attempt to obtain funds to pay the Special Taxes. Reductions in property values due to a downturn in the economy, physical events such as earthquakes, fires or floods, stricter land use regulations, delays in development or other events will adversely impact the security underlying the Special Taxes. See "THE COMMUNITY FACILITIES DISTRICT — Appraisal Report" and Appendix D — "APPRAISAL REPORT."
The Appraiser has estimated, on the basis of certain assumptions and limiting conditions contained in the Appraisal Report, that as of the Date of Value, the market value of the land and improvements within the District was approximately $277,259,091. See "THE COMMUNITY FACILITIES DISTRICT — Appraisal Report." The Appraisal Report indicates the Appraiser's opinion as to the market value of the properties referred to therein as of the date and under the conditions specified therein. The Appraiser's opinion reflects conditions prevailing in the applicable market as of the Date of Value. The Appraiser's opinion does not predict the future value of the subject property, and there can be no assurance that market conditions will not change adversely in the future.
37 4922-7396-4055v9/022599-0037
Prospective purchasers of the 2025 Bonds should not assume that the taxable land within the District could be sold for the appraised amount or for the assessed values at a foreclosure sale for delinquent Special Taxes. In arriving at the estimate of market value of the property in the District, the Appraiser assumes that any sale will be unaffected by undue stimulus and will occur following a reasonable marketing period, which is not always present in a foreclosure sale. See Appendix D for a description of other assumptions made by the Appraiser and for the definitions and limiting conditions used by the Appraiser. Any event which causes one of the Appraiser's assumptions to be untrue could result in a reduction of the value of the taxable land and improvements within the District from the market value estimated by the Appraiser.
No assurance can be given that any bid will be received for a parcel with delinquent Special Taxes offered for sale at foreclosure or, if a bid is received, that such bid will be sufficient to pay all delinquent Special Taxes. See "SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales."
Natural Disasters
The District, like all California communities, may be subject to unpredictable seismic activity, fires, flood, or other natural disasters. Southern California is a seismically active area. Seismic activity represents a potential risk for damage to buildings, roads, bridges and property within the District. In addition, land susceptible to seismic activity may be subject to liquefaction during the occurrence of such event. According to the Seismic Safety Commission, the area within the District 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 earthquake faults, and Zone 3, which is assigned to all other areas of more moderate seismic activity.
In addition, the property within the District is located in a Fault -Rupture Hazard Zone (formerly referred to as an Alquist-Priolo Study Zone).
In recent years, wildfires have caused extensive damage throughout the State, including within the County. Certain of these fires have burned thousands of acres and destroyed hundreds and in some cases thousands of homes. In some instances entire neighborhoods have been destroyed. Several fires in recent years damaged or destroyed property in areas that were not previously considered to be at risk from such events.
The District is not located in an area which the Department of Forestry and Fire Protection of the State of California has designated as a high fire hazard severity zone; however, it is located within approximately one mile of such a zone. There is a risk of residential property within the District being destroyed by wildfires and no assurance can be given as to the severity or frequency of wildfires within the vicinity of the District Additionally, property located adjacent to burn areas can be subject to mudslides and flooding, which can cause significant damage and destruction to property.
In the event of a severe earthquake, fire, flood or other natural disaster, there may be significant damage to both property and infrastructure in the District. As a result, a substantial portion of the property owners may be unable or unwilling to pay the Special Taxes when due. In addition, the value of land in the District could be diminished in the aftermath of such a natural disaster, reducing the resulting proceeds of foreclosure sales in the event of delinquencies in the payment of the Special Taxes.
Hazardous Substances
While government taxes, assessments and charges are a common claim against the value of a parcel, other less common claims may also be relevant. One of the most serious in terms of the potential reduction in the value of a parcel is a claim with regard to a hazardous substance. In general, the owners and operators of a parcel may be required by law to remedy conditions relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as "CERCLA" or the "Super Fund Act," is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar in effect. Under 38 4922-7396-4055v9/022599-0037
many of these laws, the owner (or operator) is obligated to remedy a hazardous substance c ondition of a parcel whether or not the owner (or operator) had anything to do with creating or handling the hazardous substance.
The effect, therefore, should any of the parcels within the District be affected by a hazardous substance, is to reduce the marketability and value by the costs of remedying the condition.
The District is not aware of the presence of any federally or state classified hazardous substances in violation of any environmental laws, located on the property within the District. However, it is possible that such materials do currently exist and that the District is not aware of them.
It is possible that property in the District may be liable for hazardous substances in the future as a result of the existence, currently, of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or the existence, currently, on the property of a substance not presently classified as hazardous but which may in the future be so classified. Additionally, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling such substance.
All of these possibilities could have the effect of reducing the value of the applicable property.
Enforcement Delays — Bankruptcy
In the event of a delinquency in the payment of the Special Taxes, the District is required to commence enforcement proceedings under the circumstances described under the caption "SOURCES OF PAYMENT FOR THE BONDS — Special Taxes —Proceeds of Foreclosure Sales." However, prosecution of such proceedings could be delayed due to crowded local court calendars or by bankruptcy, insolvency and other laws generally affecting creditors' rights (such as the Soldiers' and Sailors' Relief Act of 1940) and by the laws of the State relating to judicial and non judicial foreclosure. Although bankruptcy proceedings would not cause the liens of the Special Taxes to become extinguished, bankruptcy of a person or entity with an interest in the applicable property could result in a delay in the enforcement proceedings because federal bankruptcy laws provide for an automatic stay of foreclosure and tax sale proceedings. Any such delay could increase the likelihood of delay or default in payment of the principal of and interest on the applicable 2025 Bonds. The various legal opinions to be delivered in connection with the issuance of the 2025 Bonds, including Bond Counsel's approving legal opinion, are qualified as to the enforceability of the 2025 Bonds and the Indenture by reference to bankruptcy, reorganization, moratorium, insolvency and other laws affecting the rights of creditors generally or against public entities such as the District.
Special Tax Delinquencies
Under provisions of the Act, the Special Taxes, from which funds necessary for the payment of principal of, and interest on, the Bonds are derived, will be billed to the properties within the District on the regular ad valorem property tax bills sent to owners of such properties by the County Tax Collector. The Act currently provides that such Special Tax installments are due and payable, and bear the same penalties and interest for non-payment, as do ad valorem property tax installments.
See APPENDIX E- "SUMMARY OF THE INDENTURE — COVENANTS AND WARRANTY — Covenants" for a discussion of the provisions which apply, and procedures which the District is obligated to follow under the Indenture, in the event of delinquencies in the payment of Special Taxes. See "— FDIC/Federal Government Interests in Parcels" for a discussion of the policy of the Federal Deposit Insurance Corporation regarding the payment of special taxes and assessment and limitations on the District's ability to foreclose on the lien of the Special Taxes in certain circumstances.
FDIC/Federal Government Interests in Parcels
The ability of the District to collect interest and penalties specified by the Act and to foreclose the lien of delinquent Special Taxes may be limited in certain respects with regard to parcels in which the Federal Deposit 39 4922-7396-4055v9/022599-0037
Insurance Corporation (the "FDIC"), or other federal government entities such as Fannie Mae or Freddie Mac, has or obtains an interest.
In the case of the FDIC, in the event that any financial institution making a loan which is secured by parcels is taken over by the FDIC and the applicable Special Tax is not paid, the remedies available to the District may be constrained. The FDIC's policy statement regarding the payment of state and local real property taxes (the "Policy Statement") provides that taxes other than ad valorem taxes which are secured by a valid lien in effect before the FDIC acquired an interest in a property will be paid unless the FDIC determines that abandonment of its interests is appropriate. The Policy Statement provides that the FDIC generally will not pay installments of non -ad valorem taxes which are levied after the time the FDIC acquires its fee interest, nor will the FDIC recognize the validity of any lien to secure payment except in certain cases where the Resolution Trust Corporation had an interest in property on or prior to December 31, 1995. Moreover, the Policy Statement provides that, with respect to parcels on which the FDIC holds a mortgage lien, the FDIC will not permit its lien to be foreclosed out by a taxing authority without its specific consent, nor will the FDIC pay or recognize liens for any penalties, fines or similar claims imposed for the nonpayment of taxes.
The FDIC has taken a position similar to that expressed in the Policy Statement in legal proceedings brought against Orange County in United States Bankruptcy Court and in Federal District Court. The Bankruptcy Court issued a ruling in favor of the FDIC on certain of such claims. Orange County appealed that ruling, and the FDIC cross -appealed. On August 28, 2001, the Ninth Circuit Court of Appeals issued a ruling favorable to the FDIC except with respect to the payment of pre -receivership liens based upon delinquent property tax.
The District is unable to predict what effect the application of the Policy Statement would have in the event of a delinquency with respect to parcels in which the FDIC has or obtains an interest, although prohibiting the lien of the FDIC to be foreclosed out at a judicial foreclosure sale would prevent or delay the foreclosure sale.
In the case of Fannie Mae and Freddie Mac, in the event a parcel of taxable property is owned by a federal government entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, or a private deed of trust secured by a parcel of taxable property is owned by a federal government entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, the ability to foreclose on the parcel or to collect delinquent Special Taxes may be limited. Federal courts have held that, based on the supremacy clause of the United States Constitution "this Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, anything in the Constitution or Laws of any State to the contrary notwithstanding." In the absence of Congressional intent to the contrary, a state or local agency cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal government interest. This means that, unless Congress has otherwise provided, if a federal government entity owns a parcel of taxable property but does not pay taxes and assessments levied on the parcel (including Special Taxes), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments.
Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and the District wishes to foreclose on the parcel as a result of delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on a parity with the Special Taxes and preserve the federal government's mortgage interest. For a discussion of risks associated with taxable parcels within the District becoming owned by the federal government, federal government entities or federal government sponsored entities, see "—Insufficiency of Special Tax Revenues."
40 4922-7396-4055v9/022599-0037
The District's remedies may also be limited in the case of delinquent Special Taxes with respect to parcels in which other federal agencies (such as the Internal Revenue Service and the Drug Enforcement Administration) have or obtain an interest.
Direct and Overlapping Indebtedness
The ability of an owner of property within the District to pay the applicable Special Taxes could be affected by the existence of other taxes and assessments imposed upon taxable parcels. See "THE COMMUNITY FACILITIES DISTRICT — Direct and Overlapping Debt" herein. The City and other public agencies whose boundaries overlap those of the District could impose additional taxes or assessment liens on the property within the District in order to finance public improvements or services to be located or provided inside of or outside of such area. The lien created on the property within the District through the levy of such additional taxes may be on a parity with the lien of the Special Taxes applicable to the property within the District.
The imposition of additional liens on a parity with the Special Taxes may reduce the ability or willingness of property owners to pay the Special Taxes and increase the possibility that foreclosure proceeds will not be adequate to pay delinquent Special Taxes.
Payment of Special Taxes is not a Personal Obligation of the Property Owners An owner of a taxable parcel is not personally obligated to pay Special Taxes. Rather, Special Taxes are an obligation which is secured only by a lien against the taxable parcel. If the value of a taxable parcel is not sufficient, taking into account other liens imposed by public agencies, to secure fully Special Taxes, the District has no recourse against the property owner.
No Acceleration Provision
The 2025 Bonds do not contain a provision allowing for the acceleration of the 2025 Bonds in the event of a payment default or other default under the terms of the 2025 Bonds or the Indenture.
Limited Obligations
The Bonds and interest thereon are not payable from the general funds of the City. Except with respect to the Net Taxes, neither the credit nor the taxing power of the District or the City is pledged for the payment of the Bonds or the interest thereon, and, except as provided in the Indenture, no Owner of the Bonds may compel the exercise of any taxing power by the District or the City or force the forfeiture of any City or District property.
The principal of, premium, if any, and interest on the Bonds are not a debt of the City or a legal or equitable pledge, charge, lien or encumbrance upon any of the City's or the District's property or upon any of the City's or the District's income, receipts or revenues, except the Net Taxes and other amounts pledged under the Indenture.
The District's legal obligations with respect to any delinquent Special Taxes are limited to: (i) payments from the Reserve Account to the extent of funds on deposit therein; and (ii) the institution of judicial foreclosure proceedings under certain circumstances with respect to any parcels for which Special Taxes are delinquent. See the caption "SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales." The Bonds cannot be accelerated in the event of any default.
The obligation to pay Special Taxes does not constitute a personal obligation of the current or subsequent owners of the respective parcels which are subject to such liens. See the caption "— Payment of the Special Tax is Not a Personal Obligation of the Property Owners." Enforcement of Special Tax payment obligations by the District is limited to judicial foreclosure in the Superior Court of California, County of Riverside. There is no assurance that any current or subsequent owner of a parcel subject to a Special Tax lien 41 4922-7396-4055v9/022599-0037
will be able to pay the amounts due or that such owner will choose to pay such amounts even though financially able to do so.
Failure by owners of the parcels to pay Special Tax installments when due, delay in foreclosure proceedings, or the inability of the District to sell parcels that have been subject to foreclosure proceedings for amounts sufficient to cover the delinquent installments of Special Taxes levied against such parcels may result in the inability of the District to make full or timely payments of debt service on the Bonds, which may in tum result in the depletion of the Reserve Account. See the caption "— Enforcement Delays — Bankruptcy." Ballot Initiatives
Articles XIII A, XIII B, XIII C, and XIII D of the California Constitution were adopted pursuant to measures qualified for the ballot pursuant to the State's constitutional initiative process. From time to time, other initiative measures could be adopted by California voters. The adoption of any such initiative might place limitations on the ability of the State, the City, or other local agencies to increase revenues or to increase appropriations.
Proposition 218
An initiative measure entitled "The Right to Vote on Taxes Act" ("Proposition 218") was approved by the voters at the November 5, 1996, statewide general election. Among other things, Proposition 218 added a new Article XIII C to the California Constitution which states that "... the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge." The Act provides for a procedure which includes notice, hearing, protest and voting requirements to alter the rate and method of apportionment of an existing special tax. However, the Act prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the Act unless such legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt. While the application of Proposition 218 in this context has not yet been interpreted by the courts and the matter is not completely free from doubt, it is not likely that Proposition 218 has conferred on the voters the power to effect a repeal or reduction of the Special Tax if the result thereof would be to impair the security of the 2025 Bonds.
It may be possible, however, for voters or the City Council, acting as the legislative body of the District, to reduce the Special Taxes in a manner which does not interfere with the timely repayment of the Bonds, but which does reduce the maximum amount of Special Taxes that may be levied in any year below the existing levels. Therefore, no assurance can be given with respect to the future levy of Special Taxes in amounts greater than the amount necessary for the timely retirement of the Bonds. Nevertheless, to the maximum extent that the law permits it to do so, the District has covenanted that it will not initiate proceedings under the Act to reduce the maximum Special Tax rates for the District, unless, in connection therewith, the District receives a certificate from one or more Independent Financial Consultants which, when taken together, certify that: (i) such changes do not reduce the maximum Special Taxes that may be levied in each year on property within the District to an amount which is less than the Administrative Expense Cap plus 110% of the Annual Debt Service due in each corresponding future Bond Year with respect to the Bonds and Parity Bonds Outstanding as of the date of such proposed reduction; and (ii) the District is not delinquent in the payment of the principal of or interest on the Bonds or any Parity Bonds. The District has also covenanted that, in the event an initiative is adopted which purports to reduce or otherwise alter the Rate and Method, it will commence and pursue legal action in order to preserve its ability to comply with the foregoing covenant. However, no assurance can be given as to the enforceability of the foregoing covenants.
Litigation with Respect to Community Facilities Districts Shapiro. The California Court of Appeal, Fourth Appellate District, Division One, issued its opinion in City of San Diego v. Melvin Shapiro (2014) 228 Ca1.App.4th 756 (the "San Diego Decision"). The case 42 4922-7396-4055v9/022599-0037
involved a Convention Center Facilities District (the "CCFD") established by the City of San Diego ("San Diego"). The CCFD is a financing district much like a community facilities district established under the provisions of the Act. The CCFD is comprised of all of the real property in San Diego. However, the special tax to be levied within the CCFD was to be levied only on hotel properties located within the CCFD.
The election authorizing the special tax was limited to owners of hotel properties and lessees of real property owned by a governmental entity on which a hotel is located. Thus, the election was not a registered voter election. Such approach to determining who would constitute the qualified electors of the CCFD was modeled after Section 53326(c) of the Act, which generally provides that, if a special tax will not be apportioned in any tax year on residential property, the legislative body may provide that the vote shall be by the landowners of the proposed district whose property would be subject to the special tax. The Court held that the CCFD special tax election was invalid under the California Constitution because Article XIII A, Section 4 thereof and Article XIIIC, Section 2 thereof require that the electors in such an election be the registered voters within the district.
Horizon. The Sacramento County Superior Court issued a ruling in Horizon Capital Investments, LLC v. City of Sacramento et al. (Case No. 34-2017-80002661), which was a case involving an election to approve the levy of a special tax within a community facilities district ("CFD") formed under the Act.
In 2017, the City of Sacramento initiated proceedings to form a CFD to finance certain costs to operate and maintain a streetcar line. As permitted by the Act, the proposed district included non-contiguous parcels of non-residential property. Because there were fewer than 12 registered voters residing within the territory of the proposed CFD, the City Council submitted the special tax proposed to be levied within the proposed CFD to the owners of land within the proposed CFD, as required by the Act. The propos ed special tax received the requisite two-thirds vote in the landowner election.
Petitioners Horizon Capital Investments, LLC et aL filed a writ of mandate and complaint for reverse validation and declaratory relief. Petitioners argued, and the superior court agreed in its final ruling, that under section 4(a) of article XIII A of the California Constitution (which provides that "Cities, Counties and special districts, by a two-thirds vote of the qualified electors of such district [sic], may impose special taxes on such district...") the phrase "qualified electors" means the registered voters of the entire City of Sacramento and not just the owners of the property within the boundaries of the proposed CFD. Citing the San Diego Decision, the tentative ruling states that the phrase "qualified electors of the district" refers to the registered voters of the entity imposing the special tax, which in this case was the City of Sacramento. Because the vote within the proposed CFD was by landowners only and not by all registered voters in the City of Sacramento, the final ruling states that the special tax is invalid.
The superior court's final ruling is not binding upon other courts within the State and does not directly apply to the District, the Special Taxes, or the Bonds. The City of Sacramento did not appeal the superior court's ruling.
The Special Tax Election in the District. With respect to the San Diego Decision, the facts of such case show that there were thousands of registered voters within the CCFD (viz., all of the registered voters in San Diego). The elections held in the District had less than 12 registered voters at the time of the election to authorize the Special Taxes. In the San Diego Decision, the court expressly stated that it was not addressing the validity of landowner voting to impose special taxes pursuant to the Act in situations where there are fewer than 12 registered voters. Thus, by its terms, the court's holding in the San Diego Decision does not apply to the Special Tax election in the District. Moreover, Section 53341 of the Act provides that any "action or proceeding to attack, review, set aside, void or annul the levy of a special tax...shall be commenced within 30 days after the special tax is approved by the voters." Similarly, Section 53359 of the Act provides that any action to determine the validity of bonds issued pursuant to the Act be brought within 30 days of the voters approving the issuance of such bonds. The petitioners in Horizon filed the writ of mandate within 30 days of the landowner election.
Voters in the District approved Special Tax on May 18, 2022. Based on Sections 53341 and 53359 of the Act 43 4922-7396-4055v9/022599-0037
and analysis of existing laws, regulations, rulings and court decisions, the District believes that no successful challenge to the Special Tax being levied in accordance with the Rate and Method may now be brought. In connection with the issuance of the 2025 Bonds, Bond Counsel expects to deliver its opinion in the proposed form attached hereto as Appendix C.
Loss of Tax Exemption
As discussed under the heading "TAX MATTERS," interest on the 2025 Bonds could cease to be excluded from gross income for purposes of federal income taxation, retroactive to the date the 2025 Bonds were issued, as a result of future acts or omissions of the District or the City. In addition, it is possible that future changes in applicable federal tax laws could cause interest on the 2025 Bonds to be included in gross income for federal income taxation or could otherwise reduc e the equivalent taxable yield of such interest and thereby reduce the value of the 2025 Bonds.
No Ratings — Limited Secondary Market
The District has not applied to have the 2025 Bonds rated by any nationally recognized bond rating company, and it does not expect to do so in the future.
There can be no guarantee that there will be a secondary market for the 2025 Bonds or, if a secondary market exists, that such 2025 Bonds can be sold for any particular price. Although the District has committed to provide certain financial and operating information on an annual basis, there can be no assurance that such information will be available to 2025 Bond owners on a timely basis. The failure to provide the required annual financial information does not give rise to monetary damages but merely an action for specific performance.
Occasionally, because of general market conditions, lack of current information, the absence of a credit rating for the 2025 Bonds or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price.
Limitations on Remedies
Remedies available to the Owners of the 2025 Bonds may be limited by a variety of factors and may be inadequate to assure the timely payment of principal of and interest on the Bonds or to preserve the tax-exempt status of interest on the 2025 Bonds.
Bond Counsel has limited its opinion as to the enforceability of the 2025 Bonds and of the Indenture to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other similar laws affecting generally the enforcement of creditor's rights, by equitable principles and by the exercise of judicial discretion and by limitations on remedies against public agencies in the State of California. The lack of availability of certain remedies or the limitation of remedies may entail risks of delay, limitation or modification of the rights of the Owners.
Potential Early Redemption of 2025 Bonds from Prepayments or Community Facilities District Bond Proceeds
Property owners within the District are permitted to prepay their Special Taxes at any time. Such prepayments could also be made from the proceeds of bonds issued by or on behalf of an overlapping community facilities district. Such prepayments will result in a redemption of the 2025 Bonds on the Interest Payment Date for which timely notice may be given under the Indenture following the receipt of the prepayment. The resulting redemption of 2025 Bonds that were purchased at a price greater than par could reduce the otherwise expected yield on such Bonds. See the caption "THE 2025 BONDS — Redemption — Special Mandatory Redemption from Special Tax Prepayments."
44 4922-7396-4055v9/022599-0037
Cybersecurity
The City, like many other public and private entities, relies on computer and other digital networks and systems to conduct its operations. The City is potentially subject to multiple cyber threats, including without limitation hacking, viruses, ransomware, malware and other attacks. No assurance can be given that the efforts of the City to manage cyber threats and attacks will be successful in all cases, or that any such attack will not materially impact the operations or finances of the City, or the administration of the 2025 Bonds. The City is also reliant on other entities and service providers in connection with the administration of the 2025 Bonds, including without limitation, the County tax collector for the levy and collection of Special Taxes and the Trustee. No assurance can be given that the City and these other entities will not be affected by cyber threats and attacks in a manner that may affect the levy and collection of Special Taxes or the payment of debt service on the 2025 Bonds.
CONTINUING DISCLOSURE
Pursuant to a Continuing Disclosure Certificate, dated as of 1, 2025 (the "Disclosure Certificate"), to be executed and delivered by the District at the time of issuance of the 2025 Bonds, the District will covenant for the benefit of the holders and Beneficial Owners of the 2025 Bonds to provide certain financial information and operating data relating to the District by February 10 following the end of the District's Fiscal Year (currently its Fiscal Year ends on June 30) (the "Annual Report"), commencing with the Annual Report for the Fiscal Year ending June 30, 2025, and to provide notices of the occurrence of certain enumerated events.
The Annual Report and the notices of enumerated events will be filed by the District with EMMA. The specific nature of the information to be contained in the Annual Report and the notice of enumerated events is set forth in Appendix F —"FORM OF DISTRICT CONTINUING DISCLOSURE CERTIFICATE." These covenants have been made in order to assist the Underwriter in complying with subsection (b)(5) of Rule 15c2-12, as amended.
In connection with the SEC Order, the Beaumont Financing Authority ("BFA") conducted a review of noncompliance with all existing continuing disclosure undertakings of the District with respect to bonds issued by the BFA. See the caption "INTRODUCTION —SEC Order." The BFA identified omissions and deficiencies in prior continuing disclosure filings for Fiscal Years 2003 through 2019. Such omissions and deficiencies included the late filing of annual reports, the late filing of or failure to file the City's audited and/or unaudited financial statements, the failure to file completed information on the status of facilities being constructed with bond proceeds, the failure to file one or more rating change notices and information concerning the certificates of occupancy and certificates of fmal inspection. Such omissions and deficiencies also included the failure to report certain information concerning the assessed valuation date, special tax delinquency data and reserve fund balances, cash flow management fund balances, rate stabilization fund balances, improvement fund balances, residual fund balances, special escrow fund balances, the aggregate number of building permits issued, statements of the reserve requirement, cash flow management fund requirement and rate stabilization fund requirement, and to link certain annual reports to all relevant CUSIPs. See Appendix H — "SECURITIES AND EXCHANGE COMMISSION ORDER."
The BFA has caused corrective filings to be made for Fiscal Years 2013-14 through 2020-21 with EMMA, including the filing of audited and unaudited fmancial statements for Fiscal Years 2013-14 through 2020-21, supplements to certain prior continuing disclosure annual reports and notic es of the failure to file certain continuing disclosure annual reports and audited financial statements.
The City will assist the District in preparing the Annual Reports. In order to ensure ongoing compliance by the District with its continuing disclosure undertaking, (i) City staff will take steps to ensure that the filing due date is correctly documented in policies and procedures and a single City staff member has been assigned primary responsibility to monitor compliance; and (ii) the City has contracted with Spicer Consulting Group, LLC to assist in filing accurate, complete and timely disclosure reports on behalf of the District. In addition, the City has adopted policies and procedures with respect to its continuing disclosure practices. 45 4922-7396-4055v9/022599-0037
TAX MATTERS
In the opinion of Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the 2025 Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals.
However, it should be noted that, with respect to applicable corporations as defined in Section 59(k) of the Internal Revenue Code of 1986, as amended (the "Code"), generally certain corporations with more than $1,000,000,000 of average annual adjusted financial statement income, interest (and original issue discount) with respect to the 2025 Bonds might be taken into account in determining adjusted financial statement income for purposes of computing the alternative minimum tax imposed by Section 55 of the Code on such corporations.
In the further opinion of Bond Counsel, interest (and original issue discount) on the 2025 Bonds is exempt from State of California personal income tax.
The excess of the stated redemption price at maturity of a 2025 Bond over the issue price of a 2025 Bond (the first price at which a substantial amount of the 2025 Bonds of a maturity is to be sold to the public) constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Beneficial Owner before receipt of cash attributable to such excludable income.
The amount of original issue discount deemed received by the Beneficial Owner will increase the Beneficial Owner's basis in the applicable 2025 Bond.
Bond Counsel's opinion as to the exclusion from gross income of interest (and original issue discount) on the 2025 Bonds is based upon certain representations of fact and certifications made by the District, the City and others and is subject to the condition that the District, the City and others making such representations comply with all requirements of the Code that must be satisfied subsequent to the issuance of the 2025 Bonds to assure that interest (and original issue discount) on the 2025 Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause the interest (and original issue discount) on the 2025 Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the 2025 Bonds. The District and the City will covenant to comply with all such requirements.
The amount by which a Beneficial Owner's original basis for determining loss on sale or exchange in the applicable 2025 Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable 2025 Bond premium, which must be amortized under Section 171 of the Code; such amortizable Bond premium reduces the Beneficial Owner's basis in the applicable 2025 Bond (and the amount of tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of 2025 Bond premium may result in a Beneficial Owner realizing a taxable gain when a 2025 Bond is sold by the Beneficial Owner for an amount equal to or less (under certain circumstances) than the original cost of the 2025 Bond to the Beneficial Owner. Purchasers of the 2025 Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable 2025 Bond premium.
The Internal Revenue Service (the "IRS") has initiated an expanded program for the auditing of tax- exempt bond issues, including both random and targeted audits. It is possible that the 2025 Bonds will be selected for audit by the IRS. It is also possible that the market value of the 2025 Bonds might be affected as a result of such an audit of the 2025 Bonds (or by an audit of other similar bonds). No assurance can be given that in the course of an audit, as a result of an audit, or otherwise, Congress or the IRS might not change the Code (or interpretation thereof) subsequent to the issuance of the 2025 Bonds to the extent that it adversely affects the exclusion from gross income of interest (and original issue discount) on the 2025 Bonds or their market value.
SUBSEQUENT TO THE ISSUANCE OF THE 2025 BONDS THERE MIGHT BE FEDERAL,
STATE, OR LOCAL STATUTORY CHANGES (OR JUDICIAL OR REGULATORY CHANGES TO OR 46 4922-7396-4055v9/022599-0037
INTERPRETATIONS OF FEDERAL, STATE, OR LOCAL LAW) THAT AFFECT THE FEDERAL, STATE, OR LOCAL TAX TREATMENT OF THE 2025 BONDS INCLUDING THE IMPOSITION OF ADDITIONAL
FEDERAL INCOME OR STATE TAXES BEING IMPOSED ON OWNERS OF TAX-EXEMPT STATE OR LOCAL OBLIGATIONS, SUCH AS THE 2025 BONDS. THESE CHANGES COULD ADVERSELY AFFECT THE MARKET VALUE OR LIQUIDITY OF THE 2025 BONDS. NO ASSURANCE CAN BE GIVEN THAT SUBSEQUENT TO THE ISSUANCE OF THE 2025 BONDS STATUTORY CHANGES WILL
NOT BE INTRODUCED OR ENACTED OR JUDICIAL OR REGULATORY INTERPRETATIONS WILL NOT OCCUR HAVING THE EFFECTS DESCRIBED ABOVE. BEFORE PURCHASING ANY OF THE 2025 BONDS, ALL POTENTIAL PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS
REGARDING POSSIBLE STATUTORY CHANGES OR JUDICIAL OR REGULATORY CHANGES OR INTERPRETATIONS, AND THEIR COLLATERAL TAX CONSEQUENCES RELATING TO THE 2025 BONDS.
Bond Counsel's opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the 2025 Bonds. Bond Counsel has not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. The Indenture and the Tax Certificate relating to the 2025 Bonds permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the effect on the exclusion from gross income of interest (and original issue discount) on the 2025 Bonds for federal income tax purposes with respect to any 2025 Bond if any such action is taken or omitted based upon the advice of counsel other than Stradling Yocca Carlson & Rauth LLP.
Although Bond Counsel will render an opinion that interest (and original issue discount) on the 2025 Bonds is excluded from gross income for federal income tax purposes provided that the District and the City continue to comply with certain requirements of the Code, the ownership of the 2025 Bonds and the accrual or receipt of interest (and original issue discount) with respect to the 2025 Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any such tax consequences.
Accordingly, before purchasing any of the 2025 Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences relating to the 2025 Bonds.
Should interest on the 2025 Bonds (including any original issue discount) become includable in gross income for federal income tax purposes, the 2025 Bonds are not subject to early redemption and will remain outstanding until maturity or until redeemed in accordance with the Indenture.
A copy of the proposed form of opinion of Bond Counsel is attached hereto as Appendix C.
LEGAL OPINION
The legal opinion of Bond Counsel approving the validity of the 2025 Bonds, in substantially the form set forth as Appendix C hereto, will be made available to purchasers of the 2025 Bonds at the time of original delivery of the 2025 Bonds. Certain legal matters will be passed upon for the City and the District by Rutan & Tucker, LLP, Irvine, California, City Attorney, and for the District by Stradling Yocc a Carlson & Rauth LLP, Disclosure Counsel, for the Underwriter by Kutak Rock LLP, Irvine, California, and for the Trustee by its counsel. Bond Counsel undertakes no responsibility to the purchasers of the 2025 Bonds for the accuracy, completeness or fairness of this Official Statement.
ABSENCE OF LITIGATION
In connection with the issuance of the 2025 Bonds, the City Attorney will deliver an opinion to the effect that, to their actual knowledge, after due inquiry and investigation, there is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body, pending or threatened, or any unfavorable decision, ruling or finding, against or affecting the District, which would affect the validity of the 2025 Bonds or the Indenture, or contest the authority of the District to enter into or perform its obligations under 47 4922-7396-4055v9/022599-0037
the 2025 Bonds or the Indenture, or affects in any manner the right or ability of the District to collect the Special Taxes or pledge the Net Taxes levied within the District for the repayment of the 2025 Bonds.
NO RATING
The District has not made, and does not contemplate making, an application to any rating organization for the assignment of a rating on the 2025 Bonds.
UNDERWRITING
The 2025 Bonds are being purchased by Stifel, Nicolaus & Company, Incorporated (the "Underwriter").
The Underwriter has agreed to purchase the 2025 Bonds at a price of $ (being the $ aggregate principal amount of the 2025 Bonds, less an Underwriter's discount of $ , [plus] original issue [premium] of $ ). The Bond Purchase Agreement relating to the 2025 Bonds provides that the Underwriter will purchase all of the 2025 Bonds if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in the Bond Purchase Agreement, the approval of certain legal matters by counsel and certain other conditions. The Underwriter's compensation is contingent upon the successful issuance of the 2025 Bonds.
Under certain circumstances, the Underwriter may offer and sell the 2025 Bonds to certain dealers and others at prices lower or yields higher than those stated on the page immediately following the cover page of this Official Statement. The offering prices may be changed from time to time by the Underwriter.
The Underwriter and its affiliates comprise a full -service financial institution engaged in activities which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non- financial activities and services. The Underwriter and its affiliates may have provided, and may in the future provide, a variety of these services to the District or the City and to persons and entities with relationships with the District or the City, for which they received or will receive customary fees and expenses.
In the ordinary course of these business activities, the Underwriter and its affiliates may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the District or the City (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the District or the City.
The Underwriter and its affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire such assets, securities and instruments. Such investment and securities activities may involve securities and instruments of the District or the City.
FINANCIAL INTERFS TS
The fees being paid to the Underwriter and its counsel, Bond Counsel, Disclosure Counsel and the Trustee are contingent upon the issuance and delivery of the 2025 Bonds. From time to time, Stradling Yocca Carlson & Rauth LLP, represents the Underwriter on matters unrelated to the 2025 Bonds.
MUNICIPAL ADVISOR
The District has retained Urban Futures, Inc., Walnut Creek, California, as Municipal Advisor for the sale of the 2025 Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, 48 4922-7396-4055v9/022599-0037
an independent verification or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement.
Urban Futures, Inc., is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities.
MI SCELLANEO US
So far as any statements made in this Official Statement involve matters of opinion, assumptions, projections, anticipated events or estimates, whether or not expressly stated, they are set forth as such and not as presentations of fact, and actual results may differ substantially from those set forth therein. Neither this Official Statement nor any statement that may have been made verbally or in writing is to be construed as a contract with the Owners of the 2025 Bonds.
The summaries of certain provisions of the 2025 Bonds, statutes and other documents or agreements referred to in this Official Statement do not purport to be complete, and reference is made to each of them for a complete statement of their provisions. Copies are available for review by making requests to the City.
The execution and delivery of this Official Statement by the City Manager of the City has been duly authorized by the City Council of the City acting in its capacity as the legislative body of the District.
CITY OF BEAUMONT COMMUNITY FACILITIES
DISTRICT NO. 2016-3 (SUNDANCE)
BY:
Elizabeth Gibbs
City Manager of the City of Beaumont
49 4922-7396-4055v9/022599-0037
APPENDIX A
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
RATE AND METHOD OF APPORTIONMENT FOR
COMMUNITY FACILITIES DISTRICT NO. 2016-3 (SUNDANCE)
OF THE CITY OF BEAUMONT
A Special Tax as hereinafter defined shall be levied on and collected in Community Facilities District No. 2016- 3 (Sundance) ("CFD No. 2016-3") each Fiscal Year, in an amount determined by the City Council of the City of Beaumont through the application of the appropriate Special Tax for "Developed Property", "Final Map Property" and "Undeveloped Property". All of the real property in CFD No. 2016-3, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent, and in the manner herein provided.
SECTION A
DEFINITIONS
The terms hereinafter set forth have the following meanings:
"Acre" or "Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, or other recorded County parcel map or instrument. The square footage of an Assessor's Parcel is equal to the Acreage multiplied by 43,560. "Act" means the Mello -Roos Communities Facilities Act of 1982, as amended, being Chapter 2.5, Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of CFD No. 2016-3: the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the City or otherwise); the costs of remitting the Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 2016-3 or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No. 2016-3 or any designee thereof of complying with City or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs associated with the release of funds from an escrow account; the costs associated with the issuance of Bonds, and the City's annual administration fees and third party expenses. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD No. 2016-3 for any other administrative purposes, including attorney's fees and other costs related to commencing and pursuing to completion any foreclosure, or otherwise addressing the disposition of delinquent Special Taxes. "Assessor's Parcel" means a lot or parcel of land designated on an Assessor's Parcel Map with an assigned Assessor's Parcel Number within the boundaries of CFD No. 2016-3. "Assessor's Parcel Map" means an official map of the Assessor of the County designating parcels by Assessor's Parcel Number.
"Assigned Special Tax" means the Special Tax of that name described in Section D below. "Backup Special Tax for Facilities" means the Special Tax of that name described in Section E below.
A-1
4922-7396-4055v9/022599-0037
"Bonds" means any obligation to repay a sum of money, including obligations in the form of bonds, notes, certificates of participation, long-term leases, loans from government agencies, or loans from banks, other financial institutions, private businesses, or individuals, or long-term contracts, or any refunding thereof, to which Special Taxes for Facilities have been pledged.
"Building Permit" means a permit for new construction for a residential dwelling or non-residential structure.
For purpose of this definition, "Building Permit" shall not include permits for construction or installation, retaining walls, utility improvements, or other such improvements not intended for human habitation. "Building Square Footage" or "BSF" means the square footage of assessable internal living space, exclusive of garages or other structures not used as living space, as determined by reference to the building permit application for such Assessor's Parcel, as determined by the CFD Administrator. "Calendar Year" means the period commencing January 1 of any year and ending the following December 31. "CFD Administrator" means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement for Facilities, the Special Tax Requirement for Maintenance Services, the Special Tax Requirement for Public Services, and providing for the levy and collection of the Special Taxes. "CFD Boundary Map" means the map recorded at CFD formation, and attached hereto as Exhibit A. "CFD No. 2016-3" or "CFD" means City of Beaumont Community Facilities District No. 2016-3 (Sundance) established by the City under the Act.
"City" means the City of Beaumont.
"City Council" means the City Council of the City, acting as the legislative body of CFD No. 2016-3, or its designee.
"Consumer Price Index" means the index published monthly by the U.S. Department of Labor, Bureau of Labor Statistics for all urban consumers in the Los Angeles -Riverside -Orange County area. "County" means the County of Riverside.
"Developed Property" means all Assessor's Parcels for which Building Permits were issued on or before March 1 of the prior Fiscal Year, provided that such Assessor's Parcels were created on or before January 1 of the prior Fiscal Year and that each such Assessor Parcel is associated with a Lot, as determined by the CFD Administrator.
"Dwelling Unit" means each separate residential dwelling unit that comprises an independent facility capable of conveyance or rental separate from adjacent residential dwelling units. "Exempt Property" means all Assessor's Parcels designated as being exempt from Special Taxes as provided for in Section J, as determined by the CFD Administrator. "Final Map" means a subdivision of property evidenced by the recordation of a final map, parcel map, or lot line adjustment, pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or the recordation of a condominium plan pursuant to California Civil Code 1352 that creates individual lots for which building permits may be issued without further subdivision. "Final Map Property" means Assessor's Parcels: (i) that are included in a Final Map that was recorded prior to the January 1 preceding the Fiscal Year in which the Special Tax is being levied, and (ii) for which a Building A-2
4922-7396-4055v9/022599-0037
Permit was not issued prior to March 1 preceding the Fiscal Year in which the Special Tax is being levied, as determined by the CFD Administrator.
"Fiscal Year" means the period commencing on July 1 of any year and ending the following June 30. "Indenture" means the indenture, fiscal agent agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time. "Land Use Category" means any of the categories listed in the tables included in Section D. "Lot" means an individual legal lot created by a Final Map for which a Building Permit could be issued. "Maintenance Services" means the services permitted under the Act including, without limitation, street sweeping, traffic signal maintenance, the maintenance, landscaping and lighting of publicly owned parks, parkways, streets, roads and open spaces, flood and storm protection services, and the operation of storm drainage systems contained within the boundaries of CFD No. 2016-3 and the City. "Maximum Special Tax" means the Maximum Special Tax for Facilities, the Maximum Special Tax for Maintenance Services, and the Maximum Special Tax for Public Services. "Maximum Special Tax for Facilities" means the maximum Special Tax for Facilities, determined in accordance with Section C, which can be levied by CFD No. 2016-3 in any Fiscal Year on any Assessor's Parcel "Maximum Special Tax for Maintenance Services" means the maximum Special Tax for Maintenance Services, determined in accordance with Section C, which can be levied by CFD No. 2016-3 in any Fiscal Year on any Assessor's ParceL
"Maximum Special Tax for Public Services" means the maximum Special Tax for Public Services, determined in accordance with Section C, which can be levied by CFD No. 2016-3 in any Fiscal Year on any Assessor's Parc el.
"Minimum Acreage" means the smallest allowable amount of taxable acreage. For CFD No. 2016-3, it shall not be less than 84.04 acres.
"Non -Residential Property" means all Assessor's Parcels of Developed Property for which a building permit was issued for any type of non-residential use, as determined by the CFD Administrator. "Operating Fund for Maintenance Services" means a fund that shall be maintained for CFD No. 2016-3 for any Fiscal Year to pay for the actual costs of providing the Maintenance Services and the Administrative Expenses attributable to providing such Maintenance Services. "Operating Fund for Public Services" means a fund that shall be maintained for CFD No. 2016-3 for any Fiscal Year to pay for the actual costs of providing the Public Services and the Administrative Expenses attributable to providing such Public Services.
"Operating Fund Balance" means the amount of funds in the applicable Operating Fund at the end of the preceding Fiscal Year.
"Partial Prepayment Amount" means the amount required to prepay a portion of the Special Tax for the Facilities obligation for an Assessor's Parcel, as described in Section H. "Prepayment Amount" means the amount required to prepay the Special Tax for the Facilities obligation in full for an Assessor's Parcel, as described in Section G.
A-3
4922-7396-4055v9/022599-0037
"Property Owner Association" means a corporation formed by a real estate developer for the purpose of marketing, managing, and selling of homes and lots in a residential subdivision. "Property Owner's Association Property" means all Assessor's Parcels which, as of July 1st of the Fiscal Year in which the Special Tax is being levied, have been conveyed, dedicated to, or irrevocably offered for dedication to a property owner association, including any master or sub -association. "Proportionately" means that the ratio of the actual Special Tax levy to the applicable Maximum Special Tax is equal for all applicable Assessors' Parcels.
"Public Property" means all Assessor's Parcels which, as of July 1st of the Fiscal Year in which the Special Tax is being levied, are used for rights -of -way or any other purpose and is owned by, dedicated to, or irrevocably offered for dedication to the federal government, the State of California, the County, or any other local jurisdiction, provided, however, that any property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified according to its use. "Public Services" means the services permitted under the Act including, without limitation, police and fire protection, ambulance and paramedic services provided within the boundaries of CFD No. 2016-3 and the City. "Residential Floor Area" means all of the square footage of living area within the perimeter of a residential dwelling unit, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The CFD Administrator shall determine the Residential Floor Area based upon the Building Permit issued for such residential dwelling unit.
"Residential Property" means all Assessor's Parcels of Developed Property for which a building permit has been issued for purposes of constructing one or more residential dwelling units, as determined by the CFD Administrator.
"Special Tax(es)" means the Special Tax for Facilities, the Special Tax for Maintenance Services, and the Special Tax for Public Services.
"Special Tax for Facilities" means any of the Special Taxes authorized to be levied within CFD No. 2016-3 pursuant to the Act to fund the Special Tax Requirement for Facilities. "Special Tax for Maintenance Services" means any of the Special Taxes authorized to be levied by CFD No. 2016-3 pursuant to the Act to fund the Special Tax Requirement for Maintenance Services. Under no circumstances shall this Special Tax be eligible for prepayment of any kind. "Special Tax for Public Services" means any of the Special Taxes authorized to be levied by CFD No. 2016- 3 pursuant to the Act to fund the Special Tax Requirement for Public Services. Under no circumstances shall this Special Tax be eligible for prepayment of any kind. "Special Tax Requirement for Facilities" means the amount required in any Fiscal Year to pay: (i) the debt service or the periodic costs on all outstanding Bonds due in the Calendar Year that commences in such Fiscal Year, (ii) Administrative Expenses, (iii) the costs associated with the release of funds from an escrow account, (iv) any amount required to establish or replenish any reserve funds established in association with the Bonds, (v) the collection or accumulation of funds for the acquisition or construction of facilities authorized by CFD No. 2016-3 provided that the inclusion of such amount does not cause an increase in the levy of Special Tax for Facilities on Final Map Property or Undeveloped Property, less (vi) any amounts available to pay debt service or other periodic costs on the Bonds pursuant to any applicable bond Indenture, fiscal agent agreement, or trust agreement.
A-4
4922-7396-4055v9/022599-0037
"Special Tax Requirement for Maintenance Services" means that amount to be collected in any Fiscal Year to pay for certain costs as required to meet the needs of CFD No. 2016-3 for Maintenance Services in both the current Fiscal Year and the next Fiscal Year. The costs to be covered shall be the (i) direct costs for Maintenance Services (ii) amount necessary to fund an operating reserve for the costs of Maintenance Services as determined by the Administrator, and (iii) Administrative Expenses, less (iv) a credit in an amount equal to the Operating Fund Balance. Under no circumstances shall the Special Tax Requirement for Maintenance Services include funds for bonds.
"Special Tax Requirement for Public Services" means the amount to be collected in any Fiscal Year to pay for certain costs as required to meet the needs of CFD No. 2016-3 for Public Services in both the current Fiscal Year and the next Fiscal Year. The costs to be covered shall be the (i) direct costs for Public Services (ii) amount necessary to fund an operating reserve for the costs of Public Services as determined by the Administrator, and (iii) Administrative Expenses, less (iv) a credit in an amount equal to the Operating Fund Balance. Under no circumstances shall the Special Tax Requirement for Public Services include funds for bonds. "Taxable Property" means all Assessor's Parcels within CFD No. 2016-3, which are not Exempt Property, as determined by the CFD Administrator.
"Trustee" means the firm that holds and administers assets on behalf of CFD No. 2016-3 under and pursuant to the Indenture.
"Undeveloped Property" means all Assessor's Parcels of Taxable Property which are not Developed Property or Final Map Property, as determined by the CFD Administrator.
SECTION B
CLASSIFICATION OF ASSESSOR'S PARCELS
Each Fiscal Year, beginning with Fiscal Year 2017-18, each Assessor's Parcel shall be classified as Taxable Property or Exempt Property. In addition, each Assessor's Parcel of Taxable Property shall be further classified as Developed Property, Final Map Property or Undeveloped Property. Lastly, each Assessor's Parcel of Developed Property shall further be classified as Residential Property or Non -Residential Property.
SECTION C
MAXIMUM SPECIAL TAXES
1. Developed Property
a. The Maximum Special Tax for Facilities for each Assessor's Parcel of Residential Property that is classified as Developed Property in any Fiscal Year shall be the amount determined by the greater of (i) the application of the Assigned Special Tax for Facilities in the tables included in Section D below or (ii) the application of the Backup Special Tax for Facilities. The Maximum Special Tax for Facilities for each Assessor's Parcel of Non -Residential Property that is classified as Developed Property in any Fiscal Year shall be the Assigned Special Tax in the Table 1 included in Section D below. b. The Maximum Special Tax for Maintenance Services for each Assessor's Parcel of Residential Property that is classified as Developed Property in Fiscal Year 2017-18 shall be $79 per unit. The Maximum Special Tax for Maintenance Services for each Assessor's Parcel of Non -Residential Property that is classified as Developed Property in Fiscal Year 2017-18 shall be $657 per Acre.
On each July 1, commencing July 1, 2018, the Maximum Special Tax for Maintenance Services for the prior Fiscal Year shall be adjusted by the greater of (i) an amount equal to the percentage change increase in the Consumer Price Index for the Calendar Year ending in December of the prior Fiscal Year or (ii) two percent (2%).
A-5
4922-7396-4055v9/022599-0037
c. The Maximum Special Tax for Public Services for each Assessor's Parcel of Residential Property that is classified as Developed Property in Fiscal Year 2017-18 shall be $419 per unit.
On each July 1, commencing July 1, 2018, the Maximum Special Tax for Public Services for the prior Fiscal Year shall be adjusted by the greater of (i) an amount equal to the percentage change increase in the Consumer Price Index for the Calendar Year ending in December of the prior Fiscal Year or (ii) five percent (5%).
2. Final Map Property
a. The Maximum Special Tax for Facilities for each Assessor's Parcel classified as Final Map Property shall be the Assigned Special Tax set forth in Section D below. b. The Maximum Special Tax for Maintenance Services for each Assessor's Parcel of Residential Property that is classified as Final Map Property in Fiscal Year 2017-18 shall be $657 per Acre.
On each July 1, commencing July 1, 2018, the Maximum Special Tax for Maintenance Services for the prior Fiscal Year shall be adjusted by the greater of i) an amount equal to the percentage change increase in the Consumer Price Index for the Calendar Year ending in December of the prior Fiscal Year or ii) two percent (2%).
c. Final Map Property shall not be subject to the Maximum Special Tax for Public Services.
3. Undeveloped Property
a. The Maximum Special Tax for Facilities for each Assessor's Parcel classified as Undeveloped Property shall be the Assigned Special Tax set forth in Section D below. b. Undeveloped Property shall not be subject to the Maximum Special Tax for Maintenance Services. c. Undeveloped Property shall not be subject to the Maximum Special Tax for Public Services.
SECTION D
ASSIGNED SPECIAL TAX FOR FACILITIES
1. Developed Property
Each Fiscal Year, beginning with Fiscal Year 2017-18, each Assessor's Parcel of Developed Property shall be subject to an Assigned Special Tax. The Assigned Special Tax applicable to an Assessor's Parcel of Developed Property for any Fiscal Year shall be determined pursuant to Table 1 below.
A-6
4922-7396-4055v9/022599-0037
TABLE 1
ASSIGNED SPECIAL TAX RATES FOR FACILITIES
FOR DEVELOPED PROPERTY
Land Use Category
Building Square Footage
Assigned Special Tax
Residential Property
2,475
$2,058 per Dwelling Unit
Non -Residential Property
N/A
$14,310 per Acre
2. Final Map Property and Undeveloped Property
Each Fiscal Year, beginning with Fiscal Year 2017-18, each Assessor's Parcel of Final Map Property and Undeveloped Property shall be subject to an Assigned Special Tax. The Assigned Special Tax applicable to an Assessor' s Parc el of Final Map Property and Undeveloped Property for any Fiscal Year shall be $14,310 per Acre.
SECTION E
BACKUP ANNUAL SPECIAL TAX FOR FACILITIES
Each Fiscal Year, beginning with Fiscal Year 2017-18, each Assessor's Parcel of Developed Property classified as Residential Property shall be subject to a Backup Special Tax for Facilities. In each Fiscal Year, the Backup Special Tax for Facilities rate for Developed Property classified as Residential Property shall be the rate per Lot calculated according to the following formula:
RxA
B=
L
The terms above have the following meanings:
B = Backup Special Tax for Facilities per Lot in each Fiscal Year.
R = Maximum Special Tax for Facilities rate per Acre for Undeveloped Property.
A = Acreage of Developed Property classified or to be classified as Residential Property.
L = Lots which are classified or to be classified as Residential Property.
Notwithstanding the foregoing, if Assessor's Parcels of Developed Property which are classified or to be classified as Residential Property are subsequently changed or modified by recordation of a lot line adjustment or similar instrument, then the Backup Special Tax for Facilities for the area that has been changed or modified shall be a rate per square foot of Acreage calculated as follows:
1. Determine the total Backup Special Tax for Facilities anticipated to apply to the changed or modified Final Map area prior to the change or modification.
A-7
4922-7396-4055v9/022599-0037
2. The result of paragraph 1 above shall be divided by the Acreage of Developed Property classified or to be classified as Residential Property which is ultimately expected to exist in such changed or modified Final Map area, as reasonably determined by the CFD Administrator.
3. The result of paragraph 2 above shall be divided by 43,560. The result is the Backup Special Tax for Facilities per square foot of Acreage which shall be applicable to Assessor's Parcels of Developed Property classified as Residential Property in such changed or modified Final Map area for all remaining Fiscal Years in which the Special Tax for Facilities may be levied.
SECTION F
METHOD OF APPORTIONMENT OF THE SPECIAL TAXES
1. Commencing with Fiscal Year 2017-18 and for each subsequent Fiscal Year, the City Council shall levy Special Taxes for Facilities on all Taxable Property until the amount of Special Tax for Facilities equals the Special Tax Requirement for Facilities in accordance with the following steps:
Step One:
Step Two:
Step Three:
Step Four:
Step Five:
The Special Tax for Facilities shall be levied Proportionately on each Assessor's Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax for Facilities rates in the table included in Section D as needed to satisfy the Special Tax Requirement for Facilities.
If additional moneys are needed to satisfy the Special Tax Requirement for Facilities after the first step has been completed, the Special Tax for Facilities shall be levied Proportionately on each Assessor's Parcel of Final Map Property, at up to 100% of the Assigned Special Tax for Facilities applicable to each such Assessor's Parcel as needed to satisfy the Special Tax Requirement for Facilities.
If additional moneys are needed to satisfy the Special Tax Requirement for Facilities after the first two steps have been completed, the Annual Special Tax for Facilities shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property, excluding any Undeveloped Property exempt from the Special Tax pursuant to Section J, at up to 100% of the Assigned Special Tax for Facilities applicable to each such Assessor's Parcel as needed to satisfy the Special Tax Requirement for Facilities.
If additional moneys are needed to satisfy the Special Tax Requirement for Facilities after the first three steps have been completed, then for each Assessor's Parcel of Developed Property whose Maximum Special Tax for Facilities is the Backup Special Tax for Facilities shall be increased Proportionately from the Assigned Special Tax for Facilities up to 100% of the Backup Special Tax for Facilities as needed to satisfy the Special Tax Requirement for Facilities.
If additional moneys are needed to satisfy the Special Tax Requirement for Facilities after the first four steps have been completed, the Special Tax for Facilities shall be levied Proportionately on each Assessor's Parcel of Property Owner's Association Property and Public Property, found not to be exempt pursuant to Section J, at up to 100% of the Maximum Special Tax for Facilities applicable to each such Assessor's Parcel as needed to satisfy the Special Tax Requirement for Facilities.
2. Commencing with Fiscal Year 2017-18 and for each subsequent Fiscal Year, the City Council shall levy Special Taxes for Maintenance Services on all Taxable Property until the amount of Special Tax for Maintenance Services equals the Special Tax Requirement for Maintenance Services in accordance with the following steps:
4922-7396-4055v9/022599-0037
A-8
Step One:
Step Two:
The Special Tax for Maintenance Services shall be levied Proportionately on each Assessor's Parcel of Developed Property at up to 100% of the applicable Maximum Special Tax for Maintenance Services as needed to satisfy the Special Tax Requirement for Maintenance Services.
If additional moneys are needed to satisfy the Special Tax Requirement for Maintenance Services after the first step has been completed, the Special Tax for Maintenance Services shall be levied Proportionately on each Assessor's Parcel of Final Map Property, at up to 100% of the Maximum Special Tax for Maintenance Services applicable to each such Assessor's Parcel as needed to satisfy the Special Tax Requirement for Maintenance Services.
3. Commencing with Fiscal Year 2017-18 and for each subsequent Fiscal Year, the City Council shall levy Special Taxes for Public Services on all Taxable Property until the amount of the Special Tax for Public Services equals the Special Tax Requirement for Public Services in accordance with the following steps:
Step One:
The Special Tax for Public Services shall be levied Proportionately on each Assessor's Parcel of Developed Property at up to 100% of the applicable Maximum Special Tax for Public Services as needed to satisfy the Special Tax Requirement for Public Services.
Under no circumstances will the Special Tax for Facilities, the Special Tax for Maintenance Services, or the Special Tax for Public Services levied against any Assessor's Parcel used as a private residence be increased as a consequence of delinquency or default by the owner of any other Assessor's Parcel or Parcels within the CFD by more than ten percent (10%) of the Special Tax that would have been levied in that Fiscal Year, had there never been any such delinquencies or defaults, pursuant to California Government Code Section 53321(d), as in effect on the date of formation of CFD No. 2016-3.
SECTION G
PREPAYMENT OF SPECIAL TAX FOR FACILITIES
The following additional definitions apply to this Section G:
"CFD Public Facilities" means $16,000,000, or such lessor amount as determined by the CFD Administrator, expressed in 2017 dollars, which shall increase by the Construction Inflation Index on January 1, 2018, and on each January 1 thereafter, or such lower amount (i) shall be determined by the City as sufficient to provide the public facilities under the authorized bonding program for CFD No. 2016-3, or (ii) determined by the City Council concurrently with a covenant that it will not issue any more Bonds to be supported by Special Taxes levied under this Rate and Method of Apportionment.
"Construction Fund" means an account specifically identified in the Indenture or functionally equivalent to hold funds, which are currently available for expenditure to acquire or construct public facilities eligible under CFD No. 2016-3.
"Construction Inflation Index" means the annual percentage change in the Engineering News -Record Building Cost Index for the city of Los Angeles, measured as of the Calendar Year which ends in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the City that is reasonably comparable to the Engineering News -Record Building Cost Index for the City of Los Angeles.
"Future Facilities Costs" means the CFD Public Facilities minus public facility costs available to be funded through existing construction or escrow accounts that have been funded by the Outstanding Bonds, and minus public facility costs funded by interest earnings on the Construction Fund actually earned prior to the date of prepayment.
4922-7396-4055v9/022599-0037
A-9
"Outstanding Bonds" means all previously issued Bonds issued and secured by the levy of Special Taxes for Facilities which will remain outstanding after the first interest and/or principal payment date following the current Fiscal Year, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayments of Special Taxes for Facilities.
The Special Tax for Facilities obligation of an Assessor' s Parcel of Developed Property, an Assessor's Parcel of Final Map Property or Undeveloped Property for which a building permit has been issued or an Assessor' s Parcel of Undeveloped Property that is classified as Undeveloped Property pursuant to Section J may be prepaid in full, provided that there are no delinquent Special Taxes, penalties, or interest charges outstanding with respect to such Assessor's Parcel at the time the Special Tax for Facilities obligation would be prepaid. The Prepayment Amount for an Assessor's Parcel eligible for prepayment shall be determined as described below.
An owner of an Assessor's Parcel intending to prepay the Special Tax for Facilities obligation shall provide the City with written notice of intent to prepay, and within 5 days of receipt of such notice, the City shall notify such owner of the amount of the non-refundable deposit determined to cover the cost to be incurred by CFD No. 2016- 3 in calculating the proper amount of a prepayment. Within 15 days of receipt of such non-refundable deposit, the City shall notify such owner of the prepayment amount of such Assessor's Parcel.
The Prepayment Amount for each applicable Assessor's Parcel shall be calculated according to the following formula (capitalized terms defined below):
Bond Redemption Amount
plus Redemption Premium
plus Future Facilities Amount
plus Defeasance
plus Administrative Fee
less Reserve Fund Credit
equals Prepayment Amount
As of the date of prepayment, the Prepayment Amount shall be calculated as follows:
1. For Assessor' s Parcels of Developed Property, compute the Assigned Special Tax for Facilities and the Backup Special Tax for Facilities applicable to the Assessor's Parcel. For Assessor's Parcels of Final Map Property or Undeveloped Property, excluding any Undeveloped Property pursuant to Section J, compute the Assigned Special Tax for Facilities and the Backup Special Tax for Facilities as though it was already designated as Developed Property based upon the building permit issued or to be issued for that Assessor's Parcel. For an Assessor's Parcel classified as Undeveloped Property pursuant to Section J, compute the Assigned Special Tax for Facilities for that Assessor's Parcel.
2. For each Assessor's Parcel of Developed Property, Final Map Property or Undeveloped Property to be prepaid, (a) divide the Assigned Special Tax for Fac ilities computed pursuant to paragraph 1 for such Assessor's Parcel by the sum of the estimated Assigned Special Tax for Facilities applicable to all Assessor's Parcels of Taxable Property at buildout, as reasonably determined by the CFD Administrator, and (b) divide the Backup Special Tax for Facilities computed pursuant to paragraph 1 for such Assessor's Parcel by the sum of the estimated Backup Special Tax for Facilities applicable to all Assessor's Parcels of Taxable Property at buildout, as reasonably determined by the CFD Administrator.
3. Multiply the larger quotient computed pursuant to paragraph 2(a) or 2(b) by the Outstanding Bonds. The product shall be the "Bond Redemption Amount".
A- 1 0
4922-7396-4055v9/022599-0037
4. Multiply the Bond Redemption Amount by the applicable redemption premium, if any, on the Outstanding Bonds to be redeemed with the proceeds of the Bond Redemption Amount. This product is the "Redemption Premium."
5. Compute the Future Facilities Cost.
6. Multiply the larger quotient computed pursuant to paragraph 2(a) or 2(b) by the amount determined pursuant to paragraph 5 to determine the Future Facilities Cost to be prepaid (the "Future Facilities Amount").
7. Compute the amount needed to pay interest on the Bond Redemption Amount, the Redemption Premium, and the Reserve Fund Credit (see step 11) to be redeemed with the proceeds of the Prepayment Amount until the earliest redemption date for the Outstanding Bonds.
8. Estimate the amount of interest earnings to be derived from the reinvestment of the Bond Redemption Amount plus the Redemption Premium until the earliest call date for the Outstanding Bonds.
9. Subtract the amount computed pursuant to paragraph 8 from the amount computed pursuant to paragraph 7. This difference is the "Defeasance."
10. Estimate the administrative fees and expenses associated with the prepayment, including the costs of computation of the Prepayment Amount, the costs of redeeming Bonds, and the costs of recording any notices to evidence the prepayment and the redemption. This amount is the "Administrative Fee."
11. Calculate the "Reserve Fund Credit" as the lesser of: (a) the expected reduction in the applicable reserve requirements, if any, associated with the redemption of Outstanding Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirements in effect after the redemption of Outstanding Bonds as a result of the prepayment from the balance in the applicable reserve funds on the prepayment date. Notwithstanding the foregoing, if the reserve fund requirement is satisfied by a surety bond or other instrument at the time of the prepayment, then no Reserve Fund Credit shall be given. Notwithstanding the foregoing, the Reserve Fund Credit shall in no event be less than 0.
12. The Prepayment Amount is equal to the sum of the Bond Redemption Amount, the Redemption Premium, the Future Facilities Amount, the Defeasance, and the Administrative Fee, less the Reserve Fund Credit.
With respect to a Special Tax for Facilities obligation that is prepaid pursuant to this Section H, the City Council shall indicate in the records of CFD No. 2016-3 that there has been a prepayment of the Special Tax for Facilities obligation and shall cause a suitable notice to be recorded in compliance with the Act within thirty (30) days of receipt of such prepayment to indicate the prepayment of the Special Tax for Facilities obligation and the release of the Special Tax for Facilities lien on such Assessor's Parcel and the obligation of such Assessor's Parcel to pay such Special Taxes for Facilities shall cease.
Notwithstanding the foregoing, no prepayment will be allowed unless the amount of Special Tax for Facilities that may be levied on Taxable Property in each future Fiscal Year, net of Administrative Expenses, shall be at least 1.1 times the regularly scheduled annual interest and principal payments on all currently Outstanding Bonds in each future Fiscal Year.
A-11
4922-7396-4055v9/022599-0037
SECTION H
PARTIAL PREPAYMENT OF SPECIAL TAX FOR FACILITIES
The Special Tax for Facilities obligation of an Assessor's Parcel of Developed Property, or an Assessor's Parcel of Final Map Property or Undeveloped Property for which a building permit has been issued and will be classified as Developed Property in the next Fiscal Year, as calculated in this Section H below, may be partially prepaid, provided that there are no delinquent Special Taxes, penalties, or interest charges outstanding with respect to such Assessor's Parcel at the time the Special Tax for Facilities obligation would be prepaid.
The Partial Prepayment Amount shall be calculated according to the following formula:
PP=PG xF
The terms above have the following meanings:
PP = the Partial Prepayment Amount.
PG = the Prepayment Amount calculated according to Section G.
F = the percent by which the owner of the Assessor's Parcel is partially prepaying the Special Tax for Facilities obligation.
With respect to any Assessor's Parcel that is partially prepaid, the City Council shall indicate in the record of CFD No. 2016-3 that there has been a partial prepayment of the Special Tax for Facilities obligation and shall cause a suitable notice to be recorded in compliance with the Act within thirty (30) days of receipt of such partial prepayment of the Special Tax for Facilities obligation, to indicate the partial prepayment of the Special Tax for Facilities obligation and the partial release of the Special Tax for Facilities lien on such Assessor's Parcel, and the obligation of such Assessor's Parcel to pay such prepaid portion of the Special Tax for Facilities shall cease.
Notwithstanding the foregoing, no partial prepayment will be allowed unless the amount of Special Tax for Facilities that may be levied on Taxable Property in each future Fiscal Year after such partial prepayment, net of Administrative Expenses, shall be at least 1.1 times the regularly scheduled annual interest and principal payments on all currently Outstanding Bonds in each future Fiscal Year.
SECTION I
TERMINATION OF SPECIAL TAX
For each Fiscal Year that any Bonds are outstanding the Special Tax for Facilities shall be levied on all Assessor's Parcels subject to the Special Tax for Facilities. If any delinquent Special Tax for Facilities remain uncollected prior to or after all Bonds are retired, the Special Tax for Facilities may be levied to the extent necessary to reimburse CFD No. 2016-3 for uncollected Special Taxes for Facilities associated with the levy of such Special Taxes for Facilities, but no later than 2055-56 Fiscal Year. The Special Tax for Maintenance Services and the Special Tax for Public Services shall be levied as long as each is needed to meet the Special Tax Requirement for Maintenance Services and the Special Tax Requirement for Public Services, as determined at the sole discretion of the City Council.
SECTION J
EXEMPTIONS
The City shall classify as Exempt Property (i) Assessor's Parcels defined as Public Property, (ii) Assessor's Parcels which are used as places of worship and are exempt from ad valorem property taxes because they are owned by a religious organization, (iii) Assessor's Parcels used exclusively by a Property Owner's Association, or (iv) Assessor's Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement, provided that no such classification would reduce the sum of the Taxable Property to less than the Minimum Acreage. Notwithstanding the above, the City Council shall not classify an Assessor's Parcel as Exempt Property if such classification would reduce the sum of the Taxable Property to A-12
4922-7396-4055v9/022599-0037