Beaumont City Council
July 15, 2025

TABLE 7

CITY OF RIALTO
LARGEST 2021-22 LOCAL SECURED TAXPAYERS
Property Owner

1. Target Corporation

2. Prologis-Macquarie US LLC

3. El Rivino Industrial I LLC

4. Amazon Com Service Inc.

5. Niagra Bottling LLC

6. Liberty Property LP

7. Fedex Ground Package System Inc.

8. GPT BTS Linden Avenue Owner

9. B9 Kline Ranch Owner LLC

10. MRE Propco LP
TOTAL
Primary Land Use
Commercial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
(1) 2021-22 Assessed Valuation: $12,226,951,239.

Source: HdL Coren & Cone; City of Rialto ACFR Fiscal Year 2021-22.

Direct and Overlapping Debt
2021-22
Assessed Valuation
$ 496,815,045
490,746,651
335,688,815
242,788,604
196,066,809
186,461,939
175,896,858
135,584,513
123,719,453
113,950,968
$2,497,719,655
% of
Total( 1)

4.15%

4.10 2.81

2.03 1.64

1.56 1.47

1.13 1.03

0.95 20.87%
Set forth on the following table is a direct and overlapping debt report (the "Debt Report") for the City prepared by California Municipal Statistics, Inc., dated as of November 1, 2023. The Debt Report is included for general information purposes only.

The Debt Report generally includes long term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the City in whole or in part. Such long-term obligations generally are not payable from revenues of the City (except as indicated) nor are they necessarily obligations secured by land within the City. In many cases long-term obligations issued by a public agency are payable from the general fund or other revenues of such public agency. The City has not reviewed the Debt Report for completeness or accuracy and makes no representations in connection therewith. [Remainder of page intentionally left blank.]
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TABLE 8

CITY OF RIALTO
Statement of Direct and Overlapping Debt
As of November 1, 2023
2023-24 Assessed Valuation: $14,908,243,043
OVERLAPPING TAX AND ASSESSMENT DEBT:

The Metropolitan Water District of Southern California
Chaffey Community College District
San Bernardino Community College District
Colton Joint Unified School District
Fontana Unified School District
Rialto Unified School District
San Bernardino City Unified School District
City of Rialto Community Facilities District No. 2006-1 City of Rialto Community Facilities District No. 2019-2 City of Rialto Community Facilities District No. 2020-1 California Statewide Communities Development Agency Assessment District No. 22-01

TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT
DIRECT AND OVERLAPPING GENERAL FUND DEBT:

San Bernardino County General Fund Obligations
San Bernardino County Flood Control District General Fund Obligations Chaffey Community College District Certificates of Participation Fontana Unified School District Certificates of Participation Rialto Unified School District Certificates of Participation San Bernardino City Unified School District Certificates of Participation City of Rialto General Fund Obligations

TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT
% Applicable

4.680%

1.159

12.874

19.749

7.100

74.512

0.016
100.
100.
100.
100.

4.680%

4.680

1.159

7.100

74.512

0.016
100.

OVERLAPPING TAX INCREMENT DEBT (Successor Agency): 100. %

COMBINED TOTAL DEBT
(1) Excludes 2023A Bonds to be sold.
(2) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and non -bonded capital lease obligations.

Debt 11/1/23
$ 899,262
3,361,448
88,071,712
34,223,318
18,412,064
114,620,225
50,494
3,885,000
4,850,000
16,840,000
1,435,000
$286,648,523
$ 6,157,242
1,745,406
287,780
1,217,295
5,461,666
8,964
10,150,852
$25,029,205
Ratios to 2023-24 Assessed Valuation:

Total Overlapping Tax and Assessment Debt 1.92%
Total Direct Debt ($10,150,852) 0.07%
Combined Total Debt 2.77%
Ratios to Redevelopment Successor Agency Incremental Valuation ($8,28L383,342):

Total Overlapping Tax Increment Debt 1.23%
Source: California Municipal Statistics, Inc.
[Remainder of page intentionally left blank.]
$101,645,000
(1)
$413,322,728 (2)
27

General Fund Long -Term Obligations
The following obligations payable from the City's General Fund are identified as governmental activities in the City's audited fmancial statements for the Fiscal Year ended June 30, 2022.

Long -Term Debt
Certificates of Participation
Leases
Direct Borrowings:

Financed Purchases
Notes payable
Subtotal
Total
Beginning at Balance Due within Due in More
June 30, 2021 Additions Deletions June 30, 2022 One Year than One Year $ 270,000
240,339
11,128,200
2,200,000
13,328,200
$13,838,539
$ (270,000)
(57,004) $ 183,335 $ 58,959 $ 124,376
(389,389) 10,738,811
(410,000) 1,790,000
(799,389) 12,528,811
$(1,126,393) 12,712,146
480,666 10,258,145
84,000 1,706,000
564,666 11,964,145
$623,625 $12,088,521
Source: City of Rialto and APPENDIX B — "AUDITED FINANCIAL STATEMENTS OF THE CITY OF RIALTO FOR THE FISCAL YEAR ENDING JUNE 30, 2022 — Note 9 Long -Term Obligations." Labor Contracts
The following table sets forth the current status of the employment contracts, as applicable, for the City's employee groups. The City has not experienced a labor stoppage during the past thirty-seven years and has generally experienced good relations with each employee group.

Unit
Budgeted
Number of
Employees
Date of Contract
Expiration
RCEA
TMMU
RFMA
RPBA Management
RPBA General
3688
Total
Source: City of Rialto.

Pension Plans
124
39 7
27 160
80 437
06/30/2023
06/30/2023
06/30/2023
06/30/2023
06/30/2023
06/30/2023
Pension Funding Policy. Like most municipalities, the City is facing rising pension costs and growing unfunded pension liabilities. On June 14, 2022, the City Council of the City adopted a pension funding policy. The pension funding policy, among other things, provides guidance in making annual budget decisions and creating sustainable and affordable budgets for pension obligations.

General. All qualified permanent and probationary employees are eligible to participate in the City's separate Safety (police and fire) and Miscellaneous (all other) Plans. The Plans are agent multiple - employer defined benefit pension plans administered by the California Public Employees' Retirement System ("CaIPERS"), which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plans are established by State statute and City resolution.

CaIPERS issues publicly available reports that include a full description of the pension plan regarding 28

benefit provisions, assumptions and membership information that can be found on the Ca1PERS website at www.calpers.ca.gov .

Benefits Provided. Ca1PERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries.

Benefits are based on years of credited service, equal to one year of fulltime employment. Members with five years of total service are eligible to retire at age 50 to 62 with statutorily reduced benefits. All members are eligible for non -duty disability benefits after 5 years of service. The death benefit is one of the following:
the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. Safety members can receive a special death benefit if the member dies while actively employed and the death is job -related. Fire members may receive the alternate death benefit in lieu of the Basic Death Benefit or the 1957 Survivor Benefit if the member dies while actively employed and has at least 20 years of total Ca1PERS service. The cost of living adjustments for each plan are applied as specified by the Public Employees' Retirement Law.

General Information for the Pension Plans. The Plan's provisions and benefits in effect at June 30, 2022 are summarized as follows:

Miscellaneous Plan
Hire date
Benefit formula
Benefit vesting schedule
Benefit payments
Retirement age
Monthly benefits, as a % of eligible compensation
Required employee contribution rates
Required employer contribution rates
Hire date
Benefit formula
Benefit vesting schedule
Benefit payments
Retirement age
Monthly benefits, as a % of eligible compensation
Required employee contribution rates
Required employer contribution rates
Prior to
January 1, 2013

2.7% @ 55
5 years of service
monthly for life
50 - 55

2.0%to2.7%

8.00%

22.87%
Prior to
January 1, 2013
On or after
January 1, 2013

2.0%a@62
5 years of service
monthly for life
52-67

1.0% to 2.5%

7.25%

12.79%
Safety Plan

3.0% @ 50
5 years of service
monthly for life
50 3.0%

9.0%

35.43%
On or After
January 1, 2013

2.7% @ 57
5 years of service
monthly for life
50 - 57

2.0% to 2.7%

14.25%

25.23%
Employees Covered. At June 30, 2022, the following employees were covered by the benefit terms of each Plan:

Miscellaneous Plan
Inactive Employees or Beneficiaries
Currently Receiving Benefits 397
Inactive Employees entitled to but not
Yet Receiving Benefits 216
Active Employees 176
Total
Safety Plan
268
98 152
789 518
29

Contributions. Section 20814(c) of the California Public Employees' Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through Ca1PERS' annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contribution requirements are classified as plan member contributions.

Actuarial Assumptions. A summary of actuarial assumptions and methods used to determine the net pension liability for each Plan is as follows:

Valuation Date
Measurement Date
Actuarial Cost Method
Actuarial Assumptions:

Discount Rate
Inflation
Projected Salary Increase
Investment Rate of Return
Mortality Rate Table
Post Retirement Benefit Increase
June 30, 2018
June 30, 2019
Entry -Age Normal Cost Method

7.15 2.50
Varies')

7.65 Ca1PERS' membership date)
See footnote)
Source: APPENDIX B — "AUDITED FINANCIAL STATEMENTS OF THE CITY OF RIALTO FOR FISCAL YEAR ENDED JUNE 30, 2022" at Note 12.
(1) Depending on age, service and type of employment.
(2) The mortality table used was developed based on Ca1PERS' specific data. The table includes 15 years of mortality improvements using Society of Actuaries Scale 90% of scale MP 2016. For more details on the table, please refer to the December 2017 experience study report (based on CaIPERS demographic data from 1997 to 2015) that can be found on the Ca1PERS website.
(3) Contract COLA up to 2% until Purchasing Power Protection Allowance Floor on Purchasing Power applies, 2.50% thereafter.

For further information see APPENDIX B — "AUDITED FINANCIAL STATEMENTS OF THE CITY OF RIALTO FOR FISCAL YEAR ENDED JUNE 30, 2022" at Note 12.

Funding Status. The Unfunded Accrued Liability ("UAL") is the present value of future employer contributions for service that has already been earned and is in addition to future normal cost contributions for active members. The City's required UAL payment contributions for 2024-25 for its Miscellaneous Plan is $6,626,107 and $14,410,802 for its Safety Plan.

The funded status is an assessment of the need for future employer contributions based on the actuarial cost method used to fund the Plans. The following tables set forth the valuation results as of June 30, 2022, in reports by CalPERS dated July 2023. The valuation results are based on an investment return assumption of 6.8%. Other assumptions used in valuation reports are those recommended in the Ca1PERS Experience Study and Review of Actuarial Assumptions November 2021 report available on the Ca1PERS website.
30

Miscellaneous Plan
June 30, 2021 June 30, 2022

1. Present Value of Projected Benefits $177,394,336 $191,025,036

2. Entry Age Normal Accrued Liability 156,516,893 164,948,683

3. Market Value of Assets 121,070,728 109,605,934

4. Unfunded Accrued Liability (UAL) [(2) — (3)] $35,446,165 $55,342,749

5. Funded Ratio [(3) / (2)] 77.4% 66.4%
Source: July 2022 CalPERS Annual Valuation.

Safety Plan
June 30, 2021 June 30, 2022

1. Present Value of Projected Benefits

2. Entry Age Normal Accrued Liability

3. Market Value of Assets

4. Unfunded Accrued Liability (UAL) [(2) — (3)]

5. Funded Ratio [(3) / (2)]
Source: July 2022 CalPERS Annual Valuation.
$399,502,756 $428,594,830
337,567,559 362,656,244
274,165,461 251,786,618
$63,402,098 $110,869,626

81.2% 69.04%
Public Employees' Pension Reform Act ("PEPRA"). On September 12, 2012, Governor Brown signed Assembly Bi11 340, creating PEPRA. Among other things, PEPRA creates a new benefit tier for new employees/members entering public agency employment and public retirement system membership for the first time on or after January 1, 2013. The new tier has a single general member benefit formula and three safety member benefit formulas that must be implemented by all public agency employers unless the formula in existence on December 31, 2012 has both a lower normal cost and a lower benefit factor at normal retirement age. PEPRA requires that all new employees/members, hired on or after January 1, 2013, pay at least 50% of the normal cost contribution. The normal cost contribution is the contribution set by the retirement system's actuary to cover the cost of a current year of service.

Other Post -Employment Benefits
The City provides postemployment healthcare benefits through the CalPERS healthcare program entitled Public Employees' Medical and Hospital Care Act ("PEMHCA") to eligible employees and any qualified family members under the authority of a Memorandum of Understanding with the employee bargaining units. The City contributes toward the health premium based on the Memorandum of Understanding. The City does not provide a retiree contribution for dental, vision, or life insurance benefits.

Upon attainment of a minimum age of 50 (or age 52, if a new miscellaneous employee was hired on or after January 1, 2013) and completion of a minimum State or public agency service requirement of five years, an employee may retire and remain covered at the City's expense for period depending on employment classification. The City is obligated to contribute toward the cost of retiree medical coverage for the retiree's lifetime or until coverage is discontinued. Benefits continue to dependents so long as they remain eligible for coverage. The City contributes 100% of medical premiums for the retiree and his or her covered dependents, but not more than the maximum monthly premiums as follows: $279.25 for single, $558.49 for two-party, and $726.04 for family. Insurance provided by the City will be supplemental to Medicare upon the retiree reaching the age of 65. In addition, the City will not contribute less than the 31

PEMHCA minimum employer contribution of $149 for 2022 and so on. In fiscal year ended June 30, 2022, the City made contributions of $10,000,000 and $848,268 implied subsidy benefit payments.

The City established a trust account with Public Agency Retirement Services ("PARS") to hold assets that are legally restricted for use in administering the City's OPEB health plan. The OPEB Trust's specific cash and investments are managed by a third -party portfolio manager under guidelines approved by the City. The City generally makes an annual contribution to the Trust and currently pays benefits either directly to retirees or through PEMHCA during the year as pay-as-you-go expenses.

As of June 30, 2020 actuarial valuation, the following current and former employees were covered by the benefit terms under the Plan:

Active Employees
Inactive Employees or Beneficiaries Currently Receiving Benefits Inactive Employees entitled to, but not Yet Receiving Benefits Total
338
239
91 668
For a further description of the OPEB plan, the City's net liability, actuarial assumptions and other information, see APPENDIX B — "AUDITED FINANCIAL STATEMENTS OF THE CITY OF RIALTO FOR FISCAL YEAR ENDED JUNE 30, 2022" at Note 12.

STATE OF CALIFORNIA BUDGET INFORMATION
State Budget
General. Information about the State budget is regularly available at various State -maintained websites. Text of proposed and adopted budgets may be found at the website of the Department of Finance, www.dofca.gov , under the heading "California Budget." An nonpartisan analysis of each State budget is posted by the Office of the Legislative Analyst at www.lao.ca.gov . A summary of the May Revision related to the State budget described below is located at www.ebudget.ca.gov . In addition, various State official statements, many of which contain a summary of the current and past State budgets, may be found at www.emma.msrb.org . The information referred to is prepared by the respective State agency maintaining each website and not by the City or the Authority, and the City and the Authority can take no responsibility for the continued accuracy of these internet addresses or for the accuracy, completeness or timeliness of information posted there, and such information is not incorporated herein by these references. Actions by the State, including through its budget process may have material impacts on the City's operations and finances.
2023-24 State Budget On June 27, 2023, Governor Newsom signed into law the Fiscal Year 2023- 24 State Budget (as amended effective July 10, 2023, the "2023-24 Budget"). The 2023-24 Budget totals approximately $310.8 billion while closing a shortfall of more than $30 billion. The 2023-24 Budget does not draw from budgetary reserves to close the projected shortfall, but rather includes building up these reserve accounts by $600 million more than in the May Revision. The 2023-24 Budget includes $37.8 billion in budgetary reserves, which include: $22.3 billion in the Budget Stabilization Account (the "Rainy Day Fund") for fiscal emergencies; $10.8 billion in the Public School System Stabilization Account ("PSSSA") (used to lessen the impact of State revenue volatility on K-12 schools and community colleges); $900 million in the Safety Net Reserve Fund (used to maintain benefits and services for Ca1WORKs and Medi-Cal participants during economic downturns); and $3.8 billion in the State's operating reserve. The Rainy Day Fund is now at its constitutional maximum (10 percent of General Fund revenues). 32

Due to severe winter storms during fiscal year 2022-23 the Internal Revenue Service extended certain federal tax filing and payment deadlines (first to October 16, 2023 and then on such date extending them again to November 16, 2023. The Franchise Tax Board extended certain state tax filing and payment deadlines in line with the federal tax relief extensions). The extensions applied to over 99 percent of the State's tax filers in 55 of the State's 58 counties. The 2023-24 Budget projected a shift in State revenue collections (based on the initial delay to October 16, 2023), from earlier months to October 2023 of $42 billion in tax receipts — $28.4 billion from personal income tax and $13.3 billion from corporation tax — representing nearly one-fourth of the 2022-23 Fiscal Year's total projected personal income tax, and nearly one-third of the 2022-23 Fiscal Year's corporation tax. The 2023-24 Budget closes the $31.7 billion shortfall through fund shifts ($9.3 billion), reductions and pullbacks ($8.1 billion), funding delays ($7.9 billion), revenue and internal borrowing ($6.1 billion) and trigger reductions ($340 million).

Significant features of the 2023-24 Budget affecting cities in California include the following:
• Climate. The 2021 and 2022 budget acts allocated approximately $54.3 billion over five years and delivered a climate agenda to fully integrate climate solutions with equity and economic opportunity. The 2023-24 Budget maintains approximately $51.4 billion (approximately $2.9 billion reduction, or 5% reduction) of these investments. • Homelessness. The Homeless Housing, Assistance, and Prevention ("HHAP") program was created in 2019 and has since provided large cities, counties, and continuums of care ("CoCs") with $2.95 billion General Fund monies in one-time flexible aid, through several rounds of multi -year grants, to address homelessness in their communities. The 2023-24 Budget includes an additional $1 billion in one-time General Fund monies for a fifth round of HHAP grants. The 2023-24 Budget provides for new accountability measures that hold cities, counties, and CoCs more accountable by requiring coordinated regional plans — identifying each jurisdiction's role, outcome goals, and how local entities are using various state, local and federal funding resources to reduce homelessness. • Affordable Housing. The 2022 budget act included $500 million one-time General Fund monies to the California Housing Finance Agency for the Dream for All program, which provides shared - appreciation loans to help low and moderate -income first-time homebuyers achieve homeownership. The 2023-24 Budget maintains this investment of $500 million one-time General Fund monies. The 2022 budget act included $350 million one-time General Fund monies ($250 million in the 2022 budget act and $100 million committed for fiscal year 2023-24) for the Department of Housing and Community Development's CalHome program, to provide local agencies and nonprofit agencies with grants to assist low- and very -low-income first-time homebuyers with housing assistance, counseling and technical assistance. The 2023-24 Budget withdraws $50 million one-time General Fund monies in fiscal year 2023-24, leaving $300 million for this program.
• Healthcare. The 2023-24 Budget reflects a new Managed Care Organization ("MCO") Provider Tax effective April 1, 2023 through December 31, 2026. The MCO tax provides a benefit of $19.4 billion in funding to the state over the period of the tax, resulting in a total of $8.3 billion to support the Medi-Cal Program and achieve a balanced budget and $11.1 billion Medi-Cal Provider Payment Reserve Fund to support investments in Medi-Cal that maintain and expand access and quality of care. Further, with respect to Covered California, the 2023-24 Budget ensures that $361.7 million in revenues in fiscal year 2023-24, and increasing in future years, from penalty collections will be deposited into the Health Care Affordability Reserve Fund ("HCARF"), instead of the General Fund. The 2023-24 Budget also commits $82.5 million in fiscal year 2023-24 and $165 million ongoing of new HCARF spending for healthcare affordability. The 2023-24 Budget provides for a 33

$600 million budgetary loan from the HCARF to the General Fund to help address the state's shortfall, which will be repaid in fiscal year 2025-26. • Public Transportation. The 2023-24 Budget includes a total of $5.1 billion over four years, restoring the full $4 billion for construction and adding the $1.1 billion from cap -and -trade, with complete flexibility for transit operators to use the money for operations as well as construction, subject to accountability measures and state oversight. • Infrastructure. The 2023-24 Budget includes proposals to facilitate and streamline project approval and completion to maximize California's share of the federal infrastructure spending opportunity and expedite the implementation of projects that meet our social, climate, and economic goals. The State has received about $50.9 billion in federal infrastructure funding so far.

Future State Budgets
No prediction can be made by the City as to whether the State will encounter budgetary problems in future fiscal years, and if it were to do so, it is not clear what measures would be taken by the State to balance its budget, as required by law. In addition, the City cannot predict the final outcome of future State budget negotiations, the impact that such budgets will have on City finances and operations or what actions will be taken in the future by the State Legislature and the Governor to deal with changing State revenues and expenditures. There can be no assurance that actions taken by the State to address its financial condition will not materially adversely affect the financial condition of the City. Current and future State budgets will be affected by national and State economic conditions and other factors, including any future economic downturn, over which the City has no control.

RISK FACTORS
Purchase of the 2023A Bonds will constitute an investment subject to certain risks, including the risk of nonpayment of principal and interest. Before purchasing any of the 2023A Bonds, prospective investors should carefully consider, among other things, the risk factors described below and otherwise referenced herein. However, the following is not meant to be an exhaustive listing of all the risks associated with the purchase of the 2023A Bonds. Moreover, the order of presentation of the risk factors does not necessarily reflect the order of their importance.

Base Rental Payments Are Not Debt; 2023A Bonds are Limited Obligations The obligation of the City to make the Base Rental Payments under the Lease does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. Neither the 2023A Bonds nor the obligation of the City to make Base Rental Payments constitutes a debt of the City, the State or any political subdivision thereof (other than the Authority) within the meaning of any constitutional or statutory debt limitation or restriction.

The 2023A Bonds are not general obligations of the Authority, but are limited obligations payable solely from and secured by a pledge of Revenues and amounts held in the funds and accounts created under the Indenture, consisting primarily of applicable Base Rental Payments. The Authority has no taxing power.

The 2023A Bonds are being issued by the Authority pursuant to the Act. The Supreme Court of the State in its 1998 decision of Rider v. City of San Diego, 18 Cal. 4th 1035, upheld the validity of a joint powers agency financing and found that bonds issued pursuant to the Act and payable from lease payments made pursuant to a lease with the City of San Diego were not subject to the State constitutional provisions 34

that require two-thirds voter approval of indebtedness incurred by a city, county or school district. No voter approval of the 2023A Bonds or the Lease has been sought.

Although the Lease does not create a pledge, lien or encumbrance upon the funds of the City, the City is obligated under the Lease to pay the Base Rental Payments from any source of legally available funds and the City has covenanted in the Lease that, for so long as the Leased Property is available for its use, it will make the necessary annual appropriations within its budget for the Base Rental Payments. The City is currently liable and may become liable on other obligations payable from general revenues, some of which may have a priority over the Base Rental Payments, or which the City, in its discretion, may determine to pay prior to the Base Rental Payments.

Additional General Fund Obligations
The City has the capacity to enter into other obligations payable from the City's General Fund, without the consent of or prior notice to the Owners of the 2023A Bonds. To the extent that additional obligations are incurred by the City, the funds available to make Base Rental Payments may be decreased. If the City's revenue sources are less than its total obligations, the City could choose to fund other activities before making Base Rental Payments and other payments due under the Lease. The same result could occur if state constitutional expenditure limitations were to prohibit the City from appropriating and spending all of its otherwise available revenues.

Abatement
The obligation of the City to pay Base Rental Payments and Additional Rental Payments shall be abated during any period in which by reason of any damage, destruction, condemnation or title defect there is substantial interference with the use by the City of the Leased Property or any portion thereof. Such abatement shall be in an amount such that the resulting Base Rental Payments in any year during which such interference continues does not exceed the fair rental value of the portions of the Leased Property as to which such damage, destruction, taking or title defect does not substantially interfere with the City's use and right of possession, as evidenced by a Certificate of the City. Such abatement shall continue for the period commencing with the date of interference resulting from such damage, destruction, condemnation, taking or title defect and, with respect to damage to or destruction of the Leased Property, ending with the substantial completion of the work of repair or replacement of the Leased Property, or the portion thereof so damaged or destroyed, and the term of the Lease shall be extended as provided in the Lease.

Notwithstanding the foregoing, to the extent that moneys are available for the payment of base rental payments in any of the funds and accounts established under the Indenture, such base rental payments shall not be abated but shall be payable by the City as a special obligation payable solely from such funds and accounts. See APPENDIX C — "SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS — The Lease — Abatement of Rental."
Police Station Project Completion
There can be no assurance that the Project will be completed for the costs and within the time described in this Official Statement. A delay in the completion or damage to the Project during construction could have an adverse effect on the costs of the Project. Contractor and subcontractor performance and integrity, availability and cost of labor, equipment and materials, and weather conditions, among other unexpected factors, could cause such a failure of timely on -budget construction.

If the Project is not delivered and installed by July 2026, and if there are no amounts on deposit in the Lease Revenue Fund, and the City determines that the fair rental value of the site for the Project and any completed improvements on the Project site is less than the Base Rental Payment then due, the Lease 35

remains in effect, but the Base Rental Payments are abated so as to equal the then -current fair rental value of completed improvements of the Project and the fair rental value of the site for the Project, but not more, until the Project or portion thereof is completed. The combination of the unabated Base Rental Payments plus other funds held by the Trustee may not be sufficient to pay the full amount of principal and interest due with respect to the 2023A Bonds.

Risk of Uninsured Loss
The City covenants under the Lease to maintain certain insurance policies on the Leased Property.

These insurance policies do not cover all types of risk. The Leased Property could be damaged or destroyed due to earthquake or other casualty for which the Leased Property is uninsured. The Lease does not require earthquake insurance. Additionally, the Leased Property could be the subject of an eminent domain proceeding. Under these circumstances an abatement of Base Rental Payments could occur and could continue indefinitely. There can be no assurance that the providers of the City's liability will in all events be able or willing to make payments under the respective policies for such loss should a claim be made under such policies. Further, there can be no assurances that amounts received as proceeds from insurance or from condemnation of the Leased Property will be sufficient to repair the Leased Property or to redeem the 2023A Bonds secured by Base Rental Payments.

City General Fund
In General. The Base Rental Payments and other payments due under the Lease are payable from funds lawfully available to the City. If the amounts which the City is obligated to pay in a fiscal year exceed the revenues for such year, the City may choose to make some payments rather than making other payments, including Base Rental Payments, based on the perceived needs of the City. The same result could occur if, because of California Constitutional limits on expenditures, the City is not permitted to appropriate and spend all of its available revenues or is required to expend available revenues to preserve the public health, safety and welfare. For more information regarding California Constitutional limits on expenditures see "LIMITATIONS ON REVENUES AND APPROPRIATIONS — Property Tax Limitations — Article XIIIA, XIHB, XIIIC (Proposition 218)."
Risk of Increased Expenditures. Under the Lease, provided the City is not currently in default thereunder, the City is permitted to expend for any municipal purpose or otherwise incur other evidences of indebtedness or other obligations payable from the City's General Fund without the consent of Owners of the 2023A Bonds. To the extent that additional obligations are incurred by the City, the funds available to pay Base Rental Payments could decrease.

Risk of Decreased Revenues. A variety of national, state or regional factors, which are beyond the control of the City's fiscal policies, as well as the City's fiscal policies could reduce the amount of the City's General Fund revenues. To the extent that City revenues decrease, the funds available to pay Base Rental Payments could decrease.

Public Health Emergencies
In recent years, public health authorities have warned of threats posed by outbreaks of disease and other public health threats. The spread of COVID-19 had adverse health and financial impacts throughout the City. From time to time since the onset of the COVID-19 pandemic, in California local authorities implemented and revised restrictions on mass gatherings and widespread closings or other limitations of the operations of government, commercial, educational, and other institutions. While significant portions of the population of the State of California have been vaccinated, COVID-19 variants have resulted, and may continue to result, in increased infection rates and the imposition of certain restrictions on commercial 36

and other activities in the future. The City cannot predict what impact future public health emergencies will have on the City's operations and finances or the regional economy.

Bankruptcy
General. A bankruptcy petition may be filed by the City. In particular, the City may file a petition under Chapter 9 ("Chapter 9") of Title 11 of the United States Code (the "Bankruptcy Code"), provided that it complies with requirements of Section 53760 et seq. of the Government Code of the State. Under the Government Code, a local public entity, including the City, is prohibited from filing under the Bankruptcy Code unless it has participated in a specified neutral evaluation process with interested parties, as defined, or it has declared a fiscal emergency and has adopted a resolution by a majority vote of the governing board at a noticed public hearing that includes findings that the financial state of the local public entity jeopardizes the health, safety, or well-being of the residents of the local public entity's jurisdiction or service area absent bankruptcy protections.

The adjustment plans approved by the Bankruptcy Courts in connection with the bankruptcies of the cities of Vallejo, San Bernardino and Stockton resulted in significant reductions in the amounts payable by the cities under lease revenue obligations substantially identical or similar to the 2023A Bonds. The City can provide no assurances about the outcome of the bankruptcy cases of other California municipalities or the nature of any adjustment plan if it were to file for bankruptcy.

City Bankruptcy. If the City were to become a debtor under the Bankruptcy Code, the City would be entitled to all of the protective provisions of the Bankruptcy Code as applicable in a Chapter 9 proceeding. Among the adverse effects of such a bankruptcy might be: (i) the application of the automatic stay provisions of the Bankruptcy Code, which, until relief is granted, would prevent collection of payments from the City or the commencement of any judicial or other action for the purpose of recovering or collecting a claim against the City; (ii) the avoidance of preferential transfers occurring during the relevant period prior to the filing of a bankruptcy petition; (iii) the existence of unsecured or court -approved secured debt which may have a priority of payment superior to that of the Base Rental Payments under the Lease as they relate to Revenues due to Owners of 2023A Bonds; and (iv) the possibility of the adoption of a plan for the adjustment of the City's debt (a "Plan") without the consent of the Trustee or all of the Owners of 2023A Bonds, which Plan may restructure, delay, compromise or reduce the amount of any claim of the Owners if the Bankruptcy Court finds that the Plan is fair and equitable.

In addition, the City could either reject the Lease or assume the Lease despite any provision of the Lease which makes the bankruptcy or insolvency of the City an event of default thereunder. If the City rejects the Lease, the Trustee, on behalf of the Owners of the 2023A Bonds, would have a pre -petition claim that may be limited under the Bankruptcy Code and treated in a manner under a Plan over the objections of the Trustee or Owners of the 2023A Bonds. Moreover, such rejection would terminate the Lease and the City's obligations to make payments thereunder.

Authority Bankruptcy. Further, the Authority is a public agency and, like the City, is not subject to the involuntary procedures of the Bankruptcy Code. The Authority may also seek voluntary protection under Chapter 9 of the Bankruptcy Code. In the event the Authority were to become a debtor under the Bankruptcy Code, the Authority would be entitled to all of the protective provisions of the Bankruptcy Code as applicable in a Chapter 9 proceeding. Such a bankruptcy could adversely affect the payments under the Indenture. Among the adverse effects might be: (i) the application of the automatic stay provisions of the Bankruptcy Code, which, until relief is granted, would prevent collection of payments from the Authority or the commencement of any judicial or other action for the purpose of recovering or collecting a claim against the Authority; (ii) the avoidance of preferential transfers occurring during the relevant period prior to the filing of a bankruptcy petition; (iii) the existence of unsecured or court -approved secured debt 37

which may have priority of payment superior to that of the Owners of the 2023A Bonds; and (iv) the possibility of the adoption of a plan for the adjustment of the Authority's debt without the consent of the Trustee or all of the Owners of the 2023A Bonds, which plan may restructure, delay, compromise or reduce the amount of any claim of the Owners if the Bankruptcy Court finds that the Plan is fair and equitable.

However, the bankruptcy of the Authority, and not the City, should not affect the Trustee's rights under the Lease. The Authority could still challenge the assignment, and the Trustee and/or the Owners of the 2023A Bonds could be required to litigate these issues in order to protect their interests.

Opinion Qualifications. The various legal opinions to be delivered concurrently with the 2023A Bonds (including Bond Counsel's approving opinion) will be qualified as to the enforceability of the various agreements relating to the 2023A Bonds by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by general principles of equity applied in the exercise of judicial discretion.

State Finances
According to the State Constitution, the Governor is required to propose a budget to the State Legislature by no later than January 10 of each year, and a final budget must be adopted by the vote of each house of the Legislature no later than June 15, although this deadline has been breached in the past. In November 2010, the voters of the State passed Proposition 25, which reduced the vote required to adopt a budget to a majority vote of each house and which provided that there would be no appropriation from the current budget or future budget to pay any salary or reimbursement for travel or living expenses for members of the Legislature for the period during which the budget was presented late to the Governor. The State budget becomes law upon the signature of the Governor, who may veto specific items of expenditure.

The State's financial condition and budget policies affect communities and local public agencies throughout California. State budgets are affected by regional, national or even international economic conditions and a multitude of other factors over which the City has no control. The City cannot give any assurances regarding the financial conditions of the State during any period of time. The City also cannot predict what measures the State will adopt to respond to any future financial difficulties. The City can provide no guarantees regarding the outcome of future State budget negotiations, the actions that will be taken in the future by the State Legislature and Governor to deal with changing State revenues and expenditures, or the impact that such budgets or actions will have on the City's finances and operations.

Some of the State's budget solutions have caused in the past, and may cause in the future, increased financial stress to cities, counties and other local governments by: (i) decreasing local revenues (for example, the property tax, road improvement funding, public safety or other categorical funded initiatives), or (ii) increasing directly or indirectly demand for local programs (such as public safety or indigent health programs).

Information about the State budget and State spending is available at various State -maintained websites. Text of proposed and adopted budgets may be found at the website of the State Department of Finance, www.dofca.gov . An analysis of the budget is posted by the Office of the Legislative Analyst at www.lao.ca.gov . In addition, various official statements for State -issued bonds, many of which contain a summary of the current and past State budgets may be found at the website of the State Treasurer, www.treasurer.ca.gov . None of the websites referenced above is in any way incorporated into this Official Statement. They are cited for informational purposes only. The City makes no representation concerning, and does not take any responsibility for, the accuracy or timeliness of information posted on such websites or the continued maintenance of such websites by the respective entities. 38

No Liability of Authority to the Owners
Except as expressly provided in the Indenture, the Authority will not have any obligation or liability to the Owners of the 2023A Bonds with respect to the payment when due of the Base Rental Payments by the City, or with respect to the performance by the City of other agreements and covenants required to be performed by it contained in the Lease or the Indenture, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained in the Indenture.

No Limitation on Incurring Additional Obligations
Neither the Lease nor the Indenture contains any limitations on the ability of the City to enter into other obligations that may constitute additional claims against its General Fund revenues. To the extent that the City incurs additional obligations, the funds available to make Base Rental Payments may be decreased. The City is currently liable on other obligations payable from General Fund revenues and expects to enter into other such obligations in the future. Such obligations may impose significant additional burdens on the City's General Fund.

Natural Disasters
General. From time to time, the City is subject to natural calamities which could result in the substantial interference with the use and occupancy of the Leased Property, which could result in Base Rental Payments being subject to abatement or an adverse impact on the City's General Fund. Under such circumstances, no assurance can be given that the City would have insurance or other resources available to make repairs to the Leased Property or to make Base Rental Payments under the Lease.

Geological and Seismic. Rialto, like most cities in California, is located in a seismically active region. The timing and magnitude of any particular seismic event cannot be predicted by the City. There are three major faults within the City: The San Jacinto, Glen Helen, and Lytle Creek Faults. These faults are included in the San Jacinto Fault System, an extension of the San Andreas Fault System. The San Jacinto Fault Zone is considered one of the most active in Southern California. Unless proven otherwise, the area within 50 feet of an active fault is presumed to be underlain by that fault. The fault system parallels Lytle Creek Wash, north of Riverside Avenue and then enters the City limits slightly south of El Rancho Verde Golf Course; it then traverses and cuts through Frisbie Park, runs along the bench area and leaves the City at the intersection of Baseline and Meridian Avenues. The Glen Helen Fault, part of the San Jacinto Fault System, is located in the extreme northeastern section of the planning area. This fault has been relatively inactive with no major ground displacement occurring along its path. The Lytle Creek Fault, also part of the San Jacinto Fault System, runs along the northernmost section of the planning area and merges with the San Jacinto Fault northwest of the Country Club area. Because of this fault's close relationship to the San Jacinto System, the possibility of major ground displacement occurring along its path is likely.

The Rialto -Colton Fault System is an ancient fault system that runs between the Rialto and Chino Water Basins. This fault, though inactive for a long period of time, has a maximum credible earthquake magnitude of 6.5 on the Richter Scale. The fault is 16 miles in length and is considered relatively stable Liquefaction is unlikely to occur in most portions of Rialto.

Liquefaction is a process whereby strong earthquake shaking causes sediment layers that are saturated with groundwater to lose strength and behave as fluid. This subsurface process can lead to near - surface or surface ground failure that can result in property damage and structural failure. Liquefaction is a concern in the Lytle Creek Wash area where there are sand soils and a high water table, and in the areas near the Santa Ana River due to an extremely high water table. 39

The City makes no representation regarding the impact that a future seismic event may have on the Leased Property. The City is not required to, and currently does not, maintain earthquake insurance with respect to the facilities. Therefore, the damage from earthquakes may not be insured in future years.

A major earthquake could cause widespread destruction and significant loss of life in a populated area such as the City. If an earthquake were to substantially damage or destroy taxable property within the City, a reduction in taxable values of property in the City and a reduction in revenues available to the General Fund to make Base Rental Payments would be likely to occur and therefore, Revenues available to pay debt service on the Bonds could be materially adversely affected. Seismic activity may also reduce or eliminate the use and occupancy of the Leased Property by the City. There is no assurance that, in the event of a natural disaster, sufficient City reserves or Federal Emergency Management Agency assistance would be available for the repair or replacement of any Leased Property.

Should an earthquake occur that results in substantial interference with the use of the Leased Property, under the abatement provisions of the Lease, the City would not be obligated to make the Base Rental Payments. See "RISK FACTORS — Abatement" above.

Wildfires. There are three categories of interface fire: The classic wildland/urban interface exists where well-defined urban and suburban development presses up against open expanses of wildland areas; the mixed wildland/urban interface is characterized by isolated homes, subdivisions and small communities situated predominantly in wildland settings; and the occluded wildland/urban interface exists where islands of wildland vegetation occur inside a largely urbanized area. Certain conditions must be present for significant interface fires to occur. The most common conditions include: hot, dry and windy weather; the inability of fire protection forces to contain or suppress the fire; the occurrence of multiple fires that overwhelm committed resources; and a large fuel load (dense vegetation). Once a fire has started, several conditions influence its behavior, including fuel topography, weather, drought and development. Although major fire conflagrations have spread over flat areas of communities, because of wind driven flames spotting from roof to roof, most communities are at highest risk of wildland fires in their hillside areas.

If such events described above occur, the City's emergency response to such an event may add unanticipated expenditures to the General Fund budget, some or all of which may not be reimbursed by federal or state disaster funding, and, if reimbursed, may not be received by the City in a timely manner.

This could lead to reduced ability by the City to make Base Rental Payments and therefore, Revenues available to pay debt service on the Bonds could be materially adversely affected. Such event could also result in substantial damage to properties in the City, which, in turn, could substantially reduce the value of such properties and could affect the ability or willingness of the property owners to pay their property taxes or of businesses to operate and generate sales tax.

Hazardous Substances
The public works activities of the City may, from time to time, result in the use of hazardous substances on the facilities owned and operated by the City, including, but not limited, to the Leased Property. Accordingly, it is possible that spills, discharges or other adverse environmental consequences of such use in the future could cause an adverse effect on the fair rental value of the Leased Property and lead, in an extreme case, to abatement, in whole or in part, of all or a portion of the Base Rental Payments.

See "RISK FACTORS — Abatement" above.

Cybersecurity
The City, like many other public and private entities, relies on computer and other digital networks and systems to conduct its operations and finances. As a recipient and provider of personal, private or other 40

electronic sensitive information, the City is potentially subject to multiple cyber threats including, but not limited to, hacking, viruses, malware, ransomware and other attacks on computer and other sensitive digital networks and systems. Entities or individuals may attempt to gain unauthorized access to the City's systems for the purposes of misappropriating assets or information or causing operational disruption or damage.

The City provides training to its staff on phishing and safe browsing and how to avoid potential cyber threats. However, no assurances can be given that the security and operational control measures of the City will be successful in guarding against any and each cyber threat or breach. A ransomware or other cyber- attack could result in the disruption of City operations and a material financial liability.

Climate Change
Numerous scientific studies on global climate change show that, among other effects on the global ecosystem, sea levels will rise, extreme temperatures will become more common, wildfires will become more common and intense, and extreme weather events will become more frequent as a result of increasing global temperatures attributable to atmospheric pollution. For example, the Fourth National Climate Assessment, published by the U.S. Global Change Research Program, in November 2018 (NCA4) finds that more frequent and intense extreme weather and climate -related events, as well as changes in average climate conditions, are expected to continue to damage infrastructure, ecosystems and social systems over the next 25 to 100 years. The City cannot predict what impacts climate change will ultimately have on its finances and operations in the future. Such impacts could be material and adverse.

Future Initiatives
From time to time, other initiative measures may be adopted, which may affect the City's revenues and its ability to expend said revenues. The above -mentioned measures and any future measures could restrict the City's ability to raise additional funds for its General Fund.

Limitations on Remedies
The enforceability of the rights and remedies of the owners of the 2023A Bonds and the Trustee, and the obligations incurred by the Authority and the City, respectively, may be subject to the following, among others: the limitations on legal remedies against joint powers authorities and cities in California; the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect; principles of equity that may limit the specific enforcement under State law of certain remedies; the exercise by the United States of America of the powers delegated to it by the U.S. Constitution; and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose.

Bankruptcy proceedings, or the exercise of powers by the federal or State government, if initiated, could subject the owners of the 2023A Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitations or modification of their rights. See also, "— Bankruptcy" above.

Remedies on Default
If an Event of Default occurs and is continuing under the Lease, the Authority at its option may terminate the Lease and re -lease all or any portion of the Leased Property. The City irrevocably appoints the Authority under the Lease as the agent and attorney -in -fact of the City and the City will allow the Trustee to enter upon and re -lease the Leased Property upon the occurrence and continuation of an Event of Default, other than as described in the preceding paragraph. The Authority may take whatever action at law or in equity may appear necessary or desirable, to collect each Base Rental Payment as it becomes due 41

under the Lease, if the Lease is not terminated in accordance with its terms. See APPENDIX C — "SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS." Substitution of Property
Pursuant to the Lease, the City will have, so long as the Lease is in effect, the option at any time and from time to time, to substitute other real property for any portion of the Leased Property or release any identifiable real property and/or improvements constituting the Leased Property, provided that the City shall satisfy all of the requirements set forth in the Lease. See APPENDIX C - "SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS — The Lease — Substitution and Release of Property."
Secondary Market Risk
There can be no assurance that there will be a secondary market for purchase or sale of the 2023A Bonds, and from time to time there may be no market for them, depending upon prevailing market conditions, the financial condition or market position of firms who may make the secondary market and the financial condition of the City.

LIMITATIONS ON REVENUES AND APPROPRIATIONS
There are a number of provisions in the State of California Constitution that limit the ability of the City to raise and expend revenues. Contained below is a description of some of these limitations. In addition to the ones discussed in this section below, other initiative measures could be adopted from time to time further affecting the City's revenues and finances.

Property Tax Limitations — Article XIHA, XHIB, XIIIC (Proposition 218) Article XIIIA of the California Constitution limits the amounts of ad valorem tax on real property to 1% o of "full cash value" as determined by the county assessor. Article XIIIA defines "full cash value" to mean "the City Assessor's valuation of real property as shown on the 1975-76 tax bill under 'full cash value,' or thereafter the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment period." Furthermore, all real property valuation may be increased to reflect the inflation rate, as shown by the consumer price index, not to exceed 2% per year, or may be reduced in the event of declining property values caused by damage, destruction or other factors.

Article XIIIA exempts from the 1% tax limitation any taxes to repay indebtedness approved by the voters prior to July 1, 1978, and any bonded indebtedness for the acquisition or improvement of real property approved on or after July 1, 1978 by two-thirds of the voters voting on the proposition approving such bonds, and requires a vote of two-thirds of the qualified electorate to impose special taxes, while totally precluding the imposition of any additional ad valorem, sales or transaction tax on real property. In addition, Article XIIIA requires the approval of two-thirds of all members of the State legislature to change any State tax law resulting in increased tax revenues.

In addition to the limits Article XIIIA imposes on property taxes that may be collected by local governments, certain other revenues of the State and most local governments are subject to an annual "appropriations limit" imposed by Article XIIIB which effectively limits the amount of such revenues those entities are permitted to spend. Article XIIIB, approved by the voters in June 1979, was modified substantially by Proposition 111 in 1990. The appropriations limit of each government entity applies to "proceeds of taxes," which consist of tax revenues, State subventions and certain other funds, including proceeds from regulatory licenses, user charges or other fees to the extent that such proceeds exceed "the 42

cost reasonably borne by such entity in providing the regulation, product or service." "Proceeds of taxes" excludes tax refunds and some benefit payments such as unemployment insurance. No limit is imposed on the appropriation of funds which are not "proceeds of taxes," such as reasonable user charges or fees, and certain other non -tax funds. Article XIIIB also does not limit appropriation of local revenues to pay debt service on bonds existing or authorized by January 1, 1979, or subsequently authorized by the voters, appropriations required to comply with mandates of courts or the federal government, appropriations for qualified capital outlay projects, and appropriation by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990, levels. The Legislature has defined "qualified capital outlay project" to mean a fixed asset (including land and construction) with a useful life of 10 or more years and a value which equals or exceeds $100,000. As a result of this amendment, the appropriations to pay the lease payments on the City's long term General Fund lease obligations are generally excluded from the City's appropriations limit. The appropriations limit may also be exceeded in case of emergency; however, the appropriations limit for the next three years following such emergency appropriation must be reduced to the extent by which it was exceeded, unless the emergency arises from civil disturbance or natural disaster declared by the Governor, and the expenditure is approved by two- thirds of the legislative body of the local government.

The State and each local government entity has its own appropriations limit. See "THE CITY — Appropriations Limit" herein. Each year, the limit is adjusted to allow for changes, if any, in the cost of living, the population of the jurisdiction, and any transfer to or from another government entity of financial responsibility for providing services. Proposition 111 requires that each agency's actual appropriations be tested against its limit every two years. If the aggregate "proceeds of taxes" for the preceding two-year period exceeds the aggregate limit, the excess must be returned to the agency's taxpayers through tax rate or fee reductions over the following two years. While the City recently experienced additional sales tax revenues attributable to a distribution center located in the City, the additional revenues did not cause the City to exceed its appropriation limit. See "THE CITY — General Fund Revenue Sources — Distribution Center in the City" herein.

On November 5, 1996, California voters approved an initiative to amend the California Constitution known as the Right to Vote on Taxes Act ("Proposition 218"), which added Article XIIIC and XIIID to the California Constitution. Among other provisions, Proposition 218 requires majority voter approval for the imposition, extension or increase of general taxes and two-thirds voter approval for the imposition, extension or increase of special taxes by a local government, which is defined in Proposition 218 to include cities. Proposition 218 also provides that any general tax imposed, extended or increased without voter approval by any local government on or after January 1, 1995 and prior to November 6, 1996 will continue to be imposed only if approved by a majority vote in an election held within two years of November 6, 1996. Proposition 218 also provides that the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge. This extension of the initiative power is not limited by the terms of Proposition 218 to impositions after November 6, 1996 and absent other legal authority, could result in retroactive reduction in any existing taxes, assessments, fees and charges. In addition, Proposition 218 limits the application of assessments, fees and charges and requires certain existing, new and increased assessments, fees and charges to be submitted to property owners for approval or rejection, after notice and public hearing. Neither the City nor the Authority expects the provisions of Proposition 218 to have any immediate material effect on the revenues from which Base Rental Payments are expected to be appropriated.

Article XIIIA Implementing Legislation
Legislation enacted by the California Legislature to implement Article XIIIA (Statutes of 1978, Chapter 292, as amended) provides that, notwithstanding any other law, local agencies may not levy any property tax, except to pay debt service on indebtedness approved by the voters prior to July 1, 1978, and 43

that each county will levy the maximum tax permitted by Article XIIIA of $4.00 per $100 assessed valuation (based on the traditional practice of using 25% of full cash value as the assessed value for tax purposes).

The legislation further provided that, for Fiscal Year 1978-79 only, the tax levied by each county was to be appropriated among all taxing agencies within the county in proportion to their average share of taxes levied in certain previous years.

Future assessed valuation growth allowed under Article XIIIA (i.e., new construction, change of ownership, and 2% annual value growth) will be allocated on the basis of "situs" among the jurisdictions that serve the tax rate area within which the growth occurs. Local agencies and schools will share the growth of "base" revenue from the tax rate area. Each year's growth allocation becomes part of each agency's allocation in the following year. The Authority is unable to predict the nature or magnitude of future revenue sources that may be provided by the State to replace lost property tax revenues. Article XIIIA effectively prohibits the levying of any other ad valorem property tax above those described above, even with the approval of the affected voters.

Challenges to Article XIIIA
There have been many challenges to Article XIIIA of the California Constitution. The United States Supreme Court heard the appeal in Nordlinger v. Hahn, a challenge relating to residential property. Based upon the facts presented in Nordlinger, the United States Supreme Court held that the method of property tax assessment under Article XIIIA did not violate the federal Constitution. Neither the Authority nor the City can predict whether there will be any future challenges to California's present system of property tax assessment.

Statutory Revenue Limitations — Proposition 62
Proposition 62 is a statewide statutory initiative adopted by the voters at the November 4, 1986 general election. It added Sections 53720 to 53730 to the Government Code to require that all new local taxes be approved by the voters. The statute provides that all local taxes are either general taxes or special taxes. General taxes are imposed for general governmental purposes. Special taxes are imposed for specific purposes only. General taxes may not be imposed by local government unless approved by a two-thirds vote of the entire legislative body and a majority of the voters voting on the proposed general tax. Special taxes may not be imposed by local government unless approved by a majority of the entire legislative body and by two-thirds of the voters voting on the special tax. Soon after Proposition 62 was adopted by the voters, legal challenges to taxes adopted contrary to its provisions were filed. In 1991, in the most significant case, City of Woodlake v. Logan, the California Court of Appeal held that the statutory voter approval requirement for general taxes was unconstitutional. The California Supreme Court refused to review Woodlake.

On September 28, 1995, the California Supreme Court, on a 5-2 vote, in a decision entitled Santa Clara County Local Transportation Authority v. Guardino (Case No. S036269), "disapproved" Woodlake and held that the voter approval requirements of Proposition 62 are valid. On December 14, 1995, the Supreme Court made minor nonsubstantive changes to its written opinion and denied the petition for rehearing. The decision provides that the voter approval requirements of Proposition 62 for both general and special taxes are valid. The Guardino case fails to say (1) whether the decision is retroactively applicable to general taxes adopted prior to the decision; (2) whether taxpayers have any remedies for refund of taxes paid under a tax ordinance that was not voter approved; (3) what statute of limitations applies to taxes adopted without voter approval prior to Guardino; (4) whether Proposition 62 applies only to new taxes or to tax increases as well.
44

The Court of Appeals in a December 15, 1997 decision entitled McBearty v. City of Brawley (Case No. D027877) addressed some of these issues. In Brawley, a taxpayer challenged the city's utility tax that was passed by the city council in 1991 without a vote of the electorate. The Court of Appeals held that (i) a three year statute of limitations applies to challenges to a tax ordinance subject to Proposition 62; and (ii) the statute of limitations did not begin to run until September 1995 when the Guardino case determined that Proposition 62 was constitutional. The effect of the holding in Brawley is that any tax ordinances passed between November 1986 and December 1995 that were not approved by the electorate would be subject to a challenge until December 1998. The court ordered the city to either cease collecting the tax or seek voter approval to continue levying the tax. However, in Howard Jarvis Taxpayers Association v. City of La Habra, decided on June 4, 2001, the California Supreme Court overruled part of McBearty, finding that the three year statute of limitations applicable to such taxes does not run from the date of the Guardino decision, but rather the continued imposition and collection of such tax is an ongoing violation, upon which the limitations period begins with each new collection.

Several questions raised by the Guardino decision remain unresolved. Proposition 62 provides that if a jurisdiction imposes a tax in violation of Proposition 62, the portion of the one percent general ad valorem tax levy allocated to that jurisdiction is reduced by $1 for every $1 in revenue attributable to the improperly imposed tax for each year that such tax is collected. The practical applicability of this provision has not been fully determined. Potential future litigation and legislation may resolve some or all of the issues raised by the Guardino decision.

Neither the Authority nor the City can predict the outcome of any pending or future litigation concerning the validity of Proposition 62, nor can either predict the scope of the Guardino or McBearty decisions discussed above. Proposition 62 could affect the ability of the City to continue the imposition of, or to retain, certain taxes, and restrict the City's ability to raise revenue.

Proposition lA
Proposition 1A ("Proposition 1A"), proposed by the Legislature in connection with the 2004-05 Budget Act and approved by the voters in November 2004, restricts State authority to reduce major local tax revenues such as the tax shifts permitted to take place in Fiscal Years 2004/05 and 2005-06. Proposition lA provides that the State may not reduce any local sales tax rate, limit existing local government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject to certain exceptions.

Proposition 1A generally prohibits the State from shifting to schools or community colleges any share of property tax revenues allocated to local governments for any fiscal year, as set forth under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues among local governments within a county must be approved by two-thirds of both houses of the Legislature. Proposition lA provides, however, that beginning in Fiscal Year 2008-09, the State may shift to schools and community colleges up to 8% of local government property tax revenues, which amount must be repaid, with interest, within three years, if the Governor proclaims that the shift is needed due to a severe state financial hardship, the shift is approved by two-thirds of both houses and certain other conditions are met. Such a shift may not occur more than twice in any ten-year period. The State may also approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county.

Proposition lA provides that if the State reduces the vehicle license fee ("VLF") rate below 0.65% of vehicle value, the State must provide local governments with equal replacement revenues. Further, Proposition 1A requires the State to suspend State mandates affecting cities, counties and special districts, excepting mandates relating to employee rights, schools or community colleges, in any year that the State does not fully reimburse local governments for their costs to comply with such mandates. 45

Proposition 22
On November 2, 2010, voters in the State approved Proposition 22. Proposition 22, known as the "Local Taxpayer, Public Safety, and Transportation Protection Act of 2010," eliminates or reduces the State's authority to (i) temporarily shift property taxes from cities, counties and special districts to schools, (ii) use vehicle license fee revenues to reimburse local governments for state -mandated costs (the State will have to use other revenues to reimburse local governments), (iii) redirect property tax increment from redevelopment agencies to any other local government, (iv) use State fuel tax revenues to pay debt service on State transportation bonds, or (v) borrow or change the distribution of State fuel tax revenues.

Proposition 26
On November 2, 2010, voters in the State also approved Proposition 26. Proposition 26 amends Article XIIIC of the State Constitution to expand the definition of "tax" to include "any levy, charge, or exaction of any kind imposed by a local government" except the following: (1) a charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege; (2) a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product; (3) a charge imposed for the reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof; (4) a charge imposed for entrance to or use of local government property, or the purchase, rental, or lease of local government property; (5) a fine, penalty, or other monetary charge imposed by the judicial branch of government or a local government, as a result of a violation of law; (6) a charge imposed as a condition of property development; and (7) assessments and property -related fees imposed in accordance with the provisions of Article XIIID. Proposition 26 provides that the local government bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor's burdens on, or benefits received from, the governmental activity. Neither the City nor the Authority expects provisions of Proposition 26 to materially impede the City's ability to pay Base Rental Payments when due.

Unitary Property
AB 454 (Chapter 921, Statutes of 1986) provides that revenues derived from most utility property assessed by the CDTFA ("Unitary Property"), commencing with the 1988-89 fiscal year, will be allocated as follows: (i) each jurisdiction will receive up to 102% of its prior year State -assessed revenue; and (ii) if county -wide revenues generated from Unitary Property are less than the previous year's revenues or greater than 102% of the previous year's revenues, each jurisdiction will share the burden of the shortfall or benefit of the excess revenues by a specified formula. This provision applies to all Unitary Property except railroads, whose valuation will continue to be allocated to individual tax rate areas.

The provisions of AB 454 do not constitute an elimination of the assessment of any State -assessed properties nor a revision of the methods of assessing utilities by the CDTFA. Generally, AB 454 allows valuation growth or decline of Unitary Property to be shared by all jurisdictions in a county. 46

TAX MATTERS
General
The delivery of the 2023A Bonds is subject to delivery of the opinion of Bond Counsel, to the effect that interest on the 2023A Bonds for federal income tax purposes under existing statutes, regulations, published rulings, and court decisions (1) will be excludable from the gross income, as defined in section 61 of the Internal Revenue Code of 1986, as amended to the date of initial delivery of the 2023A Bonds (the "Code"), of the owners thereof pursuant to section 103 of the Code, and (2) will not be included in computing the alternative minimum taxable income of the owners thereof who are individuals. The delivery of the 2023A Bonds is also subject to the delivery of the opinion of Bond Counsel, based upon existing provisions of the laws of the State, that interest on the 2023A Bonds is exempt from personal income taxes of the State. A form of Bond Counsel's anticipated opinion is included as APPENDIX E — FORM OF OPINION OF BOND COUNSEL. The statutes, regulations, rulings, and court decisions on which such opinion will be based are subject to change.

In rendering the foregoing opinions, Bond Counsel will rely upon the representations and certifications of the Authority and the City made in a certificate of even date with the initial delivery of the 2023A Bonds (the "Tax Certificate") pertaining to the use, expenditure and investment of the proceeds of the 2023A Bonds and will assume continuing compliance with the provisions of the Indenture and the Lease by the Authority and the City subsequent to the issuance of the 2023A Bonds. The Indenture, the Lease and the Tax Certificate contain covenants by the Authority and the City with respect to, among other matters, the use of the proceeds of the 2023A Bonds and the facilities and equipment financed or refinanced therewith by persons other than state or local governmental units, the manner in which the proceeds of the 2023A Bonds are to be invested, if required, the calculation and payment to the United States Treasury of any "arbitrage profits" and the reporting of certain information to the United States Treasury. Failure to comply with any of these covenants may cause interest on the 2023A Bonds to be includable in the gross income of the owners thereof from the date of the issuance of the 2023A Bonds.

Except as described above, Bond Counsel will express no other opinion with respect to any other federal, State or local tax consequences under present law, or proposed legislation, resulting from the receipt or accrual of interest on, or the acquisition or disposition of, the 2023A Bonds. Prospective purchasers of the 2023A Bonds should be aware that the ownership of tax-exempt obligations such as the 2023A Bonds may result in collateral federal tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, S corporations with subchapter C earnings and profits, certain foreign corporations doing business in the United States, corporations subject to the alternative minimum tax on adjusted financial statement income, individual recipients of Social Security or Railroad Retirement benefits, individuals otherwise qualifying for the earned income tax credit, owners of an interest in a financial asset securitization investment trust ("FASIT"), and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax-exempt obligations. Prospective purchasers should consult their own tax advisors as to the applicability of these consequences to their particular circumstances.

Bond Counsel's opinions are not a guarantee of a result, but represent its legal judgment based upon its review of existing statutes, regulations, published rulings and court decisions and the representations and covenants of the Authority and the City described above. No ruling has been sought from the Internal Revenue Service (the "Service") or the State with respect to the matters addressed in the opinions of Bond Counsel, and Bond Counsel's opinions are not binding on the Service or the State. The Service has an ongoing program of auditing the tax-exempt status of the interest on municipal obligations.

If an audit of the 2023A Bonds is commenced, under current procedures, the Service is likely to treat the Authority as the "taxpayer," and the owners of the 2023A Bonds would have no right to participate in the 47

audit process. In responding to or defending an audit of the tax-exempt status of the interest on the 2023A Bonds, the Authority may have different or conflicting interests from the owners of the 2023A Bonds.

Public awareness of any future audit of the 2023A Bonds could adversely affect the value and liquidity of the 2023A Bonds during the pendency of the audit, regardless of its ultimate outcome.

For taxable years beginning after 2022, the Code imposes a minimum tax of 15 percent of the adjusted financial statement income of certain large corporations, generally consisting of corporations (other than S corporations, regulated investment companies and real estate investment trusts) with more than $1 billion in average annual adjusted financial statement income, determined over a three-year period.

For this purpose, adjusted financial statement income generally consists of the net income or loss of the taxpayer set forth on the taxpayer's applicable financial statement for the taxable year, subject to various adjustments, but is not reduced for interest earned on tax-exempt obligations, such as the 2023A Bonds.

Prospective purchasers that could be subject to this minimum tax should consult with their own tax advisors regarding the potential impact of owning the 2023A Bonds.

Existing law may change to reduce or eliminate the benefit to owners of the 2023A Bonds of the exclusion of interest on the 2023A Bonds from gross income for federal income tax purposes. Any proposed legislation or administrative action, whether or not taken, could also affect the value and marketability of the 2023A Bonds. Prospective purchasers of the 2023A Bonds should consult with their own tax advisors with respect to any proposed or future changes in tax law.

Tax Accounting Treatment of Premium on Certain 2023A Bonds The purchase price of certain 2023A Bonds (the "Premium Bonds") paid by an owner may be greater than the amount payable on such 2023A Bonds at maturity. An amount equal to the excess of a purchaser's tax basis in a Premium Bond over the amount payable at maturity constitutes premium to such purchaser. The basis for federal income tax purposes of a Premium Bond in the hands of such purchaser must be reduced each year by the amortizable bond premium, although no federal income tax deduction is allowed as a result of such reduction in basis for amortizable bond premium. Such reduction in basis will increase the amount of any gain (or decrease the amount of any loss) to be recognized for federal income tax purposes upon a sale or other taxable disposition of a Premium Bond. The amount of premium that is amortizable each year by a purchaser is determined by using such purchaser's yield to maturity (or, in some cases with respect to a callable 2023A Bond, the yield based on a call date that results in the lowest yield on the 2023A Bond). Purchasers of the Premium Bonds should consult with their own tax advisors with respect to the determination of amortizable bond premium with respect to the Premium Bonds for federal income purposes and with respect to the state and local tax consequences of owning and disposing of Premium Bonds.

LITIGATION
General. There is no controversy of any nature now pending against the City or the Authority or, to the knowledge of their respective officers threatened, seeking to restrain or enjoin the sale, execution, issuance or delivery of the 2023A Bonds or in any way contesting or affecting the validity of the 2023A Bonds or any proceedings of the City or the Authority taken with respect to the sale, execution, issuance or delivery thereof or the pledge or application of any moneys or security provided for the payment of the 2023A Bonds or the use of the 2023A Bond proceeds or contesting the corporate existence of the City or the Authority, or the title of the officers thereof to their respective offices.

Bridgette Angulo v. City of Rialto and Does 1-50. This case involves allegations of failure to perform mandatory duties, gross negligence/bad faith pre -hospital care and wrongful death/negligence relating to the death of Plaintiff's father. The Complaint in Case No. CIV SB 2218619 alleges that City first 48

responders with the Rialto Fire Department failed to render assistance to Plaintiff's father in a timely manner resulting in his demise. Allegedly, such first responders refused to enter the Rialto Post Acute Center to assist Plaintiff's father and transport him from the center to a local hospital because of COVID- 19 related restrictions. The initial demand from the Plaintiff is $100 million. The City has been advised that its excess and reinsurance coverages may apply for all or a portion of an adverse judgment, if any. No trial date has been set for the matter and the City cannot predict the outcome or potential uninsured exposure to the City at this time.

Claims of Lelia Deborah Robertson. Lelia Deborah Robertson (also known as Deborah Robertson, the current Mayor of the City) has filed three claims for damages with the City (dated in February, March and May 2023, respectively) under California Government Code section 900 et seq. (the "Government Claims Act"). Claims under the Government Claims Act are not court proceedings, but often precede lawsuits. Under the claims, Ms. Robertson alleges that the City (i) impermissibly accessed her personal information through the State of California's criminal justice information systems without a permitted law enforcement purpose (with a $1 million claim of damages), (ii) made a calculation error regarding in -lieu health retirement system reimbursements (with a claim of damages of up to approximately $480,000) and (iii) violated regulations under the Americans with Disabilities Act and Fair Employment and Housing Guidelines (with a claim of damages of $5 million). The City denied such claims. Ms. Robertson has filed and served on the City a lawsuit regarding the alleged calculation error regarding in -lieu health retirement system reimbursements and a separate lawsuit regarding the alleged impermissible access to her personal information through the State of California's criminal justice information systems without a permitted law enforcement purpose. The City has been advised that its excess and reinsurance coverages may apply for all or a portion of an adverse judgment, if any. No trial dates have been set for the matters and the City cannot predict the outcome or potential uninsured exposure to the City at this time.

Other Lawsuits and Claims. There are currently some lawsuits and claims pending against the City for which the City is either self -insured or insured in varying degrees by commercial insurance, or which in the aggregate, if determined adversely to the City, could have a material adverse impact on the City's finances in the future. However, the City does not expect any such suits or claims to have a material adverse effect on the City's ability to make Base Rental Payments under the Lease.

FINANCIAL STATEMENTS
The City's financial statements for the Fiscal Year ended June 30, 2022, included in APPENDIX B hereto, have been audited by Lance, Soll & Lunghard, LLP (the "Auditor"). The Auditor was not requested to consent to the inclusion of its report in APPENDIX B and it has not undertaken to update its report or to take any action intended or likely to elicit information concerning the accuracy, completeness or fairness of the statements made in the Official Statement, and no opinion is expressed by the Auditor with respect to any event subsequent to the date of its report.

MUNICIPAL ADVISOR
The City has retained Urban Futures, Inc., as Municipal Advisor in connection with the authorization and delivery of the 2023A Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or assume responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement. The Municipal Advisor is an independent municipal advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities. 49

RATING
S&P Global Ratings ("S&P) has assigned its rating of "AA-" to the 2023A Bonds. Such rating reflects only the view of S&P. Any explanation of the significance of such rating may only be obtained from S&P. The information set forth on such website is not incorporated by reference herein. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance that any rating will continue for any given period of time or that any of them will not be revised downward, suspended or withdrawn entirely by the rating agency, if in the judgment of the rating agency circumstances so warrant. Any such downward revision, suspension or withdrawal of a rating may have an adverse effect on the market price of the 2023A Bonds.

UNDERWRITING
Citigroup Global Markets Inc. (the "Underwriter") has agreed, subject to certain customary conditions precedent to closing, to purchase the 2023A Bonds from the Authority at a price equal to $61,074,212.75 (which equals the principal amount of the 2023A Bonds, plus an original issue premium of $4,874,231.50, and less an underwriting discount of $325,018.75). The Underwriter intends to offer the 2023A Bonds to the public initially at the prices set forth on the inside cover page of this Official Statement, which prices may subsequently change without any requirement of prior notice. The Underwriter reserves the right to join with dealers and other underwriters in offering the 2023A Bonds to the public.

In connection with the offering of the 2023A Bonds, the Underwriter may over allot or effect transactions that stabilize or maintain the market price of the 2023A Bonds at levels above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time.

The Underwriter has entered into a retail distribution agreement with Fidelity Capital Markets, a division of National Financial Services LLC (together with its affiliates, "Fidelity"). Under this distribution agreement, the Underwriter may distribute municipal securities to retail investors at the original issue price through Fidelity. As part of this arrangement, the Underwriter will compensate Fidelity for its selling efforts.

The Underwriter and its affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, fmancial advisory, investment management, principal investment, hedging, financing and brokerage activities. The Underwriter and its affiliates may in the future perform various investment banking services for the Authority and/or the City for which they would receive customary fees and expenses.

CONTINUING DISCLOSURE
The Authority has determined that no financial or operating data concerning the Authority is material to any decision to purchase, hold or sell the 2023A Bonds and the Authority will not provide any such information.

The City has covenanted for the benefit of the holders and beneficial owners of the 2023A Bonds pursuant to a Continuing Disclosure Agreement, dated as of December 1, 2023 (the "Continuing Disclosure Agreement"), by and between the City and Willdan Financial Services, as Dissemination Agent, to provide certain financial information and operating data relating to the City (the "Annual Report") no later than March 31 following the end of each fiscal year, commencing with the report for Fiscal Year 2022-23, and to provide notices of the occurrence of certain enumerated events through the EMMA System. The specific nature of the information to be contained in the Annual Report and the enumerated events is set forth in APPENDIX D - "FORM OF CONTINUING DISCLOSURE AGREEMENT." 50

APPROVAL OF LEGAL PROCEEDINGS
The issuance of the 2023A Bonds is subject to the approving opinion of Norton Rose Fulbright US LLP, Los Angeles, California, Bond Counsel to the Authority, to be delivered in substantially the form set forth in APPENDIX E. Norton Rose Fulbright US LLP in its role as Bond Counsel has undertaken no responsibility to the owners of the 2023A Bonds or any other party for the accuracy, completeness or fairness of this Official Statement or any other offering material related to the 2023A Bonds, and expresses no opinion to the Owners with respect thereto. Certain legal matters also will be passed upon for the City and the Authority by Burke, Williams & Sorensen, LLP and for the Underwriter by its counsel Orrick, Herrington & Sutcliffe LLP, Sacramento, California. [Remainder of page intentionally left blank.]
51

EXECUTION AND DELIVERY
City.

The execution and delivery of this Official Statement has been authorized by the Authority and the

RIALTO PUBLIC FINANCING AUTHORITY
By: /s/ Henry Garcia
Interim Executive Director

CITY OF RIALTO, CALIFORNIA
By: /s/ Henry Garcia
Interim City Manager
52

APPENDIX A

SUPPLEMENTAL INFORMATION - THE CITY OF RIALTO AND

SAN BERNARDINO COUNTY
The following information relating to the City of Rialto, California (the "City') and the County of San Bernardino (the "County') is provided for informational purposes only. The 2023A Bonds (as defined in the front part of this Official Statement) are payable solely as described in the body of this Official Statement and are not payable or secured by a pledge of the faith and credit or taxing power of the City.

General
The City. The City is located in the western portion of the County of San Bernardino (the "County"), approximately 60 miles east of the City of Los Angeles and just west of the City of San Bernardino. The City was incorporated in 1911 and is organized as a general law city with a Council - Manager form of government. The City is approximately four miles wide and eight and one-half miles long, encompassing 22 square miles. The City is served by Interstate Freeways 210, 215, 10 and 15.

The County. The County is located in Southern California and was established by an act of the State Legislature on April 23, 1853, which formed the County over an area formerly composing the eastern part of the County of Los Angeles. The County encompasses an area of over 20,000 square miles and includes twenty-four incorporated cities. It is bordered on the west by Los Angeles County, on the east by the State of Arizona and the State of Nevada, on the north by Inyo and Kern Counties, and on the south by Orange and Riverside Counties. The County is the largest county in the State of California in terms of geographical area.

Municipal Government
The City provides general government services either with its own employees or through contracts.

The City has a Council -Manager form of municipal government. The City Council appoints the City Manager who is responsible for the day-to-day administration of City business and the coordination of all departments. The Mayor is elected at large to serve a four-year term. The four Council Members are elected to serve staggered four-year terms. The City Council is composed of five members elected biannually at large to four-year staggered terms.

The current members of the City Council, term expiration and their current Council position are as follows:

City Council
Deborah Robertson
Andy Carrizales
Rafael Trujillo
Ed Scott
Joe Baca
Term Expires
November 2024
November 2026
November 2024
November 2026
November 2024
Current City Management Staff includes the following:

Position
Mayor
Mayor Pro Tem
Councilmember
Councilmember
Councilmember
Henry T. Garcia — Interim City Manager. Mr. Garcia has over 30 years of professional public administration, where he served as City Manager for the cities of Azusa, Colton, Rialto, and Moreno Valley, and worked in other managerial capacities for the cities of Fontana, Riverside, and San Jacinto. Mr. Garcia has served as a professor of public policy at California State University teaching a variety of undergraduate A-1

and graduate level courses. With Mr. Garcia's broad background, he has served as a consultant to cities and organizations in areas of Consensus Building, Strategic Planning and Goal Setting; City Manager and City Council Evaluation Process; Executive Coaching and Leadership Development; Team building and Conflict Resolution; Economic Development; and Management Problem Solving.

Mr. Garcia received his Master's degree from the University of California, Los Angeles, in Political Science and his Bachelor's degree from the University of California, Riverside in Political Science. He is a graduate of Berkeley's Executive Institute of Public Policy, Harvard's Leadership and Strategic Planning Program, and University of Virginia's Public Policy Program. Mr. Garcia is also a distinguished author of two major publications with the League of California Cities.

Arron Brown —Assistant City Manager. Mr. Brown has 20 years of various government experience working for municipalities, a joint powers agency, the County of Riverside, and the State of California.

Mr. Brown started his public service career with four years in the military and is an honorably discharged disabled veteran of the United States Marine Corps. Mr. Brown has a multifaceted background in information technology, marketing, project management, public procurement, and human resources. He came to the City from the City of Palm Springs where he was the Deputy City Manager and managed numerous capital improvement projects such as the $36 million Palm Springs International Airport ticket wing expansion project.

Mr. Brown earned a Bachelor of Science degree in Business Administration with a concentration in Information Systems and a Master of Business Administration degree with a concentration in Management, both from California Baptist University. Mr. Brown also holds numerous certifications such as Certified Government Chief Information Officer (CGCIO) and the Society for Human Resources Management Senior Certified Professional (SHRM-SCP).

Katherine I. Stevens — Finance Director. Katherine I. Stevens is the Director of Finance for the City of Rialto. Prior to her current position, she has served as the Deputy Director of Finance for the City of Rialto, the Accounting Manager for the City of Loma Linda, the Finance Manager for the City of Calimesa, and a Senior Accountant for the City of Rancho Cucamonga. Ms. Stevens has over 19 years of experience in the finance and accounting sector. She has worked in for-profit accounting, manufacturing accounting, non-profit accounting, and governmental accounting. Ms. Stevens has a Master of Business Administration concentrated in Accounting and a Bachelor of Science in Business Administration concentrated in Finance. She is currently an active member of the California Society of Municipal Finance Officers and the Government Finance Officers Association. Ms. Stevens holds a Local Government Supervisory Program Certification through the Local Government Supervisory Program offered at the California State Polytechnic University, Pomona. Throughout her career she has been instrumental in updating policies and procedures, implementing city-wide/department financial software, and monitoring city-wide internal controls.

Municipal Services
The City provides a full range of services to its residents with 452 full-time employees as of June 30, 2023. Major services such as attorney, library, transit, street sweeping, and landscape maintenance are provided through contractual arrangements. The City provides services such as fire, police, affordable housing, economic development, planning, community compliance, recreation programs, humane services, park and facilities maintenance, street maintenance, city engineering, and administrative management services with city employees.

A-2

Population
The following table shows a historical comparison of the respective populations of the City, the County and the State for the last five years.

Table A-1
City of Rialto, San Bernardino,
and the State Of California
Population Comparison")
Year
City of San Bernardino State of
Rialto County California
2019 102,733 2,165,876 39,605,361
2020 102,813 2,175,424 39,648,938
2021 103,760 2,179,007 39,286,510
2022 103,406 2,180,777 39,078,674
2023 102,985 2,182,056 38,940,231
(D As of January 1.

Source: State Department of Finance, 2010 Benchmark for Years 2019-2020 and 2020 Benchmark for Years 2021-2023.

Income
The U.S. Census Bureau American Community Survey reports that the median income of households in the City for 2021 is $69,982 compared to $84,907 for the State and $69,717 for the nation. [Remainder of page intentionally left blank.]
A-3

Employment and Industry
The following table summarizes the annual average civilian labor force, employment and unemployment in the County for the calendar years 2018 through 2022.

Table A-2
San Bernardino
Civilian Labor Force, Employment and Unemployment
(Annual Averages)
Civilian Labor Force
Employment
Unemployment
Unemployment Rate
2018 2019 2020 2021 2022
955,100 967,100 974,700 992,200 1,008,500
915,800 929,800 880,900 918,600 967,200
39,200 37,400 93,800 73,600 41,300

4.1% 3.9% 9.6% 7.4% 4.1%
Wage and Salary Employment:(�)
Total Farm 2,200 2,500 2,300 2,300 2,400
Mining and Logging 800 700 900 1,000 1,100
Construction 37,800 39,000 38,100 39,200 40,900
Manufacturing 56,600 55,400 52,200 52,500 54,600
Wholesale Trade 40,500 41,500 41,100 41,800 42,500
Retail Trade 88,300 87,000 81,800 85,600 88,200
Transportation, Warehousing, 87,100 96,300 110,800 127,700 136,100 Utilities
Information 5,300 5,000 4,100 4,400 5,100
Finance and Insurance 12,700 13,600 13,400 33,500 13,210 Real Estate and Rental and Leasing 9,000 9,800 9,700 10,300 11,200 Professional and Business Services 80,900 85,000 83,900 92,100 99,300 Educational and Health Services 124,500 135,000 129,100 129,700 135,600 Leisure and Hospitality 76,900 78,100 63,700 71,600 79,300 Other Services 23,000 22,900 20,300 21,800 24,100
Federal Government 13,500 13,800 14,400 6,300 6,100
State Government 13,100 13,500 13,500 13,400 13,200
Local Government 100,400 101,700 96,100 95,100 101,400
Total, All Industries (3) 772,700 801,000 775,400 808,200 854,200 (') Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(3) Totals may not add due to rounding.

Source: Labor Division of the California State Employment Development Department, March 2022 Benchmark. [Remainder of page intentionally left blank.]
A-4

Permits
The number of establishments selling merchandise subject to sales tax and the valuation of taxable transactions in the City is presented in the following table.

Table A-3
City of Rialto
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions (Dollars in Thousands)
Total Retail and
Food Services Total All Outlets
Taxable Number of Taxable
Transactions Permits Transactions
2018 $ 804,442
2019 882,892
2020 916,844
2021 3,385,629
2022 3,569,656
1,791 $1,759,274
1,943 1,880,217
2,311 1,972,235
2,179 4,653,920
2,245 5,015,008
Sources: California Department of Tax and Fee Administration, Taxable Sales — Cities by Type of Business.

The number of establishments selling merchandise subject to sales tax and the valuation of taxable transactions in the County is presented in the following table.

Housing
Table A-4
San Bernardino
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions (Dollars in Thousands)
Number Taxable
of Permits Transactions
2018 61,838 $40,554,024
2019 64,771 41,768,748
2020 71,145 43,265,512
2021 66,585 55,378,097
2022 68,480 59,992,846
Source: California Department of Tax and Fee Administration, Taxable Sales — By County (2018- 2022 data).

As of January 1, 2023, the California Department of Finance reported that there were 20,239 single family detached units in the City, 788 single family attached units, 5,515 multifamily housing units and 1,688 mobile home units. The vacancy rate is approximately 2.4%.

A-5

Construction Activity
The following tables show a five year summary of the valuation of building permits issued in the City and the County.

Table A-5
City of Rialto
Building Permit Valuation
Permit Valuation
Single-family dwelling
Multi -family
Res. Alterations/Additions
Total Residential
Hotels & Motels
Non -Housekeeping Shelter
Amusement and Recreation
Churches
Industrial & Manufacturing
Parking Garages
Service Stations
Hospitals
Offices
Public Works
Schools Education
Stores, Mercantile & Warehouses
Other Non -Residential Buildings
Structures Other Than Buildings
Non -Residential Alterations
Residential Garages
Total Nonresidential
New Dwelling Units
Single Family
Multiple Family
Total
2018
$3,401,547
0 801,827
$4,203,374
0 0
0 0
2,418
0 181,116
0 0
0 908,371
12,895,273
515,868
3,001,049
15,891,000
13,708
$33,408,803
16 0
16 2019 2020 2021 2022
$15,054,141
0 1,143,213
$16,197,354 $322,124 $5,098,935 $1,118,387
0 0
0 0
111,571,554
0 0
0 914,056
0 3,348,272
22,359,113
956,392
3,199,608
108,956,410
225,926
$251,531,331
59 0
59 $ 54,522 $5,067,290 $ 943,087
0 0 0
267,602 31,645 175300
o o o
o o o
o o o
o o o
o o o
o o o
o o o
o o o
o 0 0
0 0 0
0 0 0
0 0 200,000
0 0 8,363,088
741,281 100,000 321,000
7,437,068 0 269,271
4,750 5,000 0
$8,183,099 $105,000 $9,153,359
Source: Construction Industry Research Board, Annual Building Permit Summary. 1 [Remainder of page intentionally left blank.]
19 0
19 7
0 7
A-6

Table A-6
County of San Bernardino
Building Permit Valuation
Permit Valuation
New Single-family
New Multi -family
Res. Alterations/Additions
Total Residential
2018
2019
2020
2021
2022
$1,114,777,827
268,564,946
71,937,836
$1,455,280,609
New Commercial $211,175,724
New Industrial 387,108,590
New Other 388,145,460
Alterations/Additions 93,699,940
Total Nonresidential $1,080,129,714
New Dwelling Units
Single Family
Multiple Family
Total
3,311
1,775
5,086
$1,078,797,667
232,079,305
139,761,121
$1,450,638,093
$413,404,484
476,322,279
365,127,043
122,245,823
$1,377,099,629
4,096
1,884
5,980
$934,304,422
143,366,170
61,788,531
$1,139,459,123
$237,588,657
330,960,066
486,398,444
9,748,343
$1,064,695,510
3,631
910
4,541
Source: Construction Industry Research Board, Annual Building Permit Summary.

Development Activity within the City
1,086,398,163
310,255,425
88,244,125
$1,484,897,713
$218,357,692
385,616,522
273,490,954
288,180,759
$1,165,645,927
4,376
2,636
7,012
$1,028,474,447
345,433,503
89,903,254
$1,463,811,204
$389,536,575
588,067,879
819,692,658
277379,266
$2.074,676,378
3,701
2,852
6,553
The following are examples of recently completed and currently planned economic development projects in the City. The City makes no assurance whether or when any of the below -listed on -going economic development projects will be completed.

Housing. Richmond American Homes is currently selling detached single-family homes in a new community known as Seasons at Acacia. The Seasons at Acacia a community that will ultimately be comprised of 82 detached single-family homes within the City. Century Communities is also currently selling detached single-family homes in a new community known as The Depot. At full buildout, the Depot will be comprised of 56 detached single-family homes. Lastly, Monte Vista Homes recently began construction on a new gated community comprised of 22 detached single-family homes that will be known as Cedar Villas.

Commercial. Link Logistics recently completed development of a 135,408 square foot industrial warehouse building. Lovett Industrial is nearing completion of development of a 116,060 square foot industrial warehouse building. Birtcher Logistics recently began construction of a new 492,410 square foot industrial warehouse development.

Civic Uses. The City recently completed several projects including the construction of the $3 million Fire Station 205, the Community Resource Center ADA Improvement project and the Cactus Trails project, a multi -use path along the west side of Cactus Avenue, from Rialto Avenue to Baseline Road.

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APPENDIX B

AUDITED FINANCIAL STATEMENTS OF THE CITY OF RIALTO
FOR THE FISCAL YEAR ENDED JUNE 30, 2022

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APPENDIX C

SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS The following is a summary of certain provisions of the Indenture, the Lease, the Site Lease and the Assignment Agreement. This summary is not a full statement of the terms of such documents and accordingly is qualified by reference thereto. Capitalized terms used and not defined in this Appendix C or in the body of the Official Statement shall have the meanings ascribed to them in the applicable document.
"Act" means Articles 1 through 4 (commencing with Section 6500), Chapter 5, Division 7, Title 1 of the Government Code of the State, as in existence on the Closing Date or as thereafter amended from time to time.
"Additional Rental Payments" means the additional rental payable by the City under and pursuant to the Lease.
"Annual Debt Service" means, for each Bond Year with respect to each of the Bonds, the sum of (a) the interest payable on the Outstanding Bonds in such Bond Year, and (b) the principal amount of the Outstanding Bonds scheduled to be paid in such Bond Year. "Authorized Denominations" means $5,000 or any integral multiple thereof. "Base Rental Payments" means all Base Rental Payments under the Lease. "Bond Counsel" means (a) Norton Rose Fulbright US LLP, or (b) any other attorney or firm of attorneys appointed by or acceptable to the Authority of nationally recognized experience. "Bond Law" means the Marks -Roos Local Bond Pooling Act of 1985, constituting Article 4 of the Act, as in existence on the Closing Date or as thereafter amended from time to time. "Bond Year" means each twelve-month period extending from June 1 in one calendar year to May 31 of the succeeding calendar year, both dates inclusive, except that the first Bond Year shall begin on the Closing Date and shall end on May 31, 2024. "Bonds" means the Authority's Lease Revenue Bonds, 2023 Series A (Police Station Project).
"Business Day" means a day other than (i) a Saturday or Sunday, (ii) a day on which the commercial banks in the city in which the Trustee maintains its Trust Office are authorized or required by law or executive order to close or (iii) a day on which the New York Stock Exchange is closed.
"Certificate of the Authority" means a certificate in writing signed by the Chairperson, Vice Chairperson, Executive Director or Treasurer of the Authority or by any other officer of the Authority duly authorized for that purpose, as evidenced in writing to the Trustee.

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"Certificate of the City" means a certificate in writing signed by the Mayor, City Manager or the Director of Finance of the City or by any other officer of the City duly authorized for that purpose, as evidenced in writing to the Trustee.
"Closing Date" means the date of delivery of the Bonds to the Original Purchaser thereof. "Code" means the Internal Revenue Code of 1986, as amended. "Costs of Issuance" means all items of expense directly or indirectly relating to the authorization, issuance, sale and delivery of the Bonds, including but not limited to printing expenses, rating agency fees, filing and recording fees, fees, expenses and charges of the City, the Authority, the Trustee, and their respective counsel (including the fees of Bond Counsel and Disclosure Counsel), including the Trustee's first annual administrative fee, costs of obtaining bond insurance, if any, a Permitted Investment for monies held in the funds and accounts created and held under the Indenture, fees, charges and disbursements of bond counsel, disclosure counsel and other attorneys, municipal advisors, accounting firms, consultants and other professionals, fees and charges for preparation, execution and safekeeping of the Bonds and any other cost, charge or fee in connection with the original issuance of the Bonds and the execution and delivery of the Lease.
"Defeasance Securities" means (1) cash, (2) non -callable direct obligations of the United States of America ("Treasuries"), fully and unconditionally guaranteed as to timely payment by, the United States government and any agency, instrumentality, or establishment of the United States government, (3) evidences of ownership of proportionate interests in future interest and principal payments on Treasuries held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are not available to any person claiming through the custodian or to whom the custodian may be obligated, (4) pre -refunded municipal obligations rated "AAA" and "Aaa" by S&P and Moody's, respectively. "Depository" means DTC and its successors and assigns or if (a) the then Depository resigns from its functions as securities depository of the Bonds, or (b) the Authority discontinues use of the Depository pursuant to the Indenture, any other securities depository which agrees to follow the procedures requested to be followed by a securities depository in connection with the Bonds and which is selected by the Authority.
"Depository Participant" means a member of, or participant in, the Depository. "Development Agreement" means the Development Agreement dated as of December 12, 2023, between the City and Griffin / Swinerton, LLC, a Delaware limited liability company, as originally executed or as it may from time to time be amended or supplemented. The form of the Development Agreement is attached as Appendix G to this Official Statement. "DTC" means The Depository Trust Company, New York, New York, and its successors and assigns.
"Event of Default" means any of the events described in the Indenture.

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"Final Completion of the Project" means the construction, the installation of improvements and the substantial readiness of the Project for use and occupancy by the City (subject to minor architectural finish items e.g., "punch list" items) as evidenced by the delivery of the Written Certificate of Project Completion (in the form set forth in the Indenture). "Fiscal Year" means any twelve-month period extending from July 1 in one calendar year to June 30 of the succeeding calendar year, both dates inclusive, or any other twelve-month period selected and designated by the Authority as its official fiscal year period. "Indenture" means the Indenture, dated as of December 1, 2023, as originally executed or as it may from time to time be amended or supplemented. "Independent Certified Public Accountant" means any certified public accountant or firm of certified public accountants appointed and paid by the Authority, and who, or each of whom:
(a) is in fact independent and not under domination of the Authority or the City; (b) does not have any substantial interest, direct or indirect, in the Authority or the City; and
(c) is not connected with the Authority or the City as an officer or employee of the Authority or the City but who may be regularly retained to make annual or other audits of the books of or reports to the Authority or the City.
"Information Services" means the Electronic Municipal Market Access System (referred to as "EMMA"), a facility of the Municipal Securities Rulemaking Board, at http://emma.msrb.org; provided, however, in accordance with then current guidelines of the Securities and Exchange Commission, Information Services shall mean such other organizations providing information with respect to called Bonds as the Authority may designate in writing to the Trustee.
"Lease" means that certain Lease Agreement, dated as of December 1, 2023, by and between the Authority as lessor and the City as lessee, as it may be further amended or modified. "Lease Revenue Fund" means the fund by that name established and held by the Trustee pursuant to the Indenture.
"Leased Property" means, collectively, those certain parcels of real property, together with the improvements thereon, leased by the Authority to the City pursuant to the Lease, as more fully described in the Lease, and the body of the Official Statement. For purposes of clarity, the Leased Property does not include the "Equipment" as defined in the Solar Equipment Lease, notwithstanding the manner in which such Equipment may be attached or affixed to the realty in the Leased Property.

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"Maximum Annual Debt Service" in respect of any Bond Year means the largest of the sums obtained for that or any succeeding Bond Year after totaling the following for each such Bond Year:
(a) The principal amount of all Outstanding Bonds maturing or required to be redeemed by mandatory sinking account redemption in such Bond Year; and (b) The interest that would be due during such Bond Year on the aggregate principal amount of Bonds which would be Outstanding in such Bond Year if the Bonds Outstanding on the date of such computation were to mature or be redeemed in accordance with the applicable maturity or mandatory sinking account redemption schedule. At the time and for the purpose of making such computation, the amount of Bonds already retired in advance of the above mentioned schedule or schedules shall be deducted pro rata from the remaining amounts thereon. "Moody's" means Moody's Investors Service, and its successors and assigns. "Nominee" means the nominee of the Depository, which may be the Depository, as determined from time to time.
"Original Purchaser" means Citigroup Global Markets Inc. "Outstanding," when used as of any particular time with reference to Bonds means (subject to the provisions of the Indenture) all Bonds theretofore executed, issued and delivered by the Authority under the Indenture except:
(a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation;
(b) Bonds paid or deemed to have been paid within the meaning of the Indenture; and (c) Bonds in lieu of which or in substitution for which other Bonds shall have been executed, issued and delivered pursuant to the Indenture or any Supplemental Indenture. "Owner" when used with respect to any Bond, means the person in whose name the ownership of such Bond shall be registered on the Registration Books. "Permitted Encumbrances" means, with respect to the Leased Property, as of any particular time, (i) the Site Lease; (ii) the Lease, (iii) the Indenture, (iv) the Assignment Agreement and the Trustee's and the Authority's interests in the Leased Property, (v) the right to enter upon the premises in order to inspect equipment that is the subject of the Solar Equipment Lease, (vi) liens for taxes and assessments not then delinquent, (vii) utility, access and other easements and rights of way, restrictions and exceptions that as certified in a Certificate of the City will not interfere with or impair the use intended to be made of the Leased Property; (viii) encumbrances upon any additions and improvements to the Leased Property as permitted in the Lease and which do not materially impair the use intended to be made of the portions of the Leased Property other than such additions and improvements; (ix) any sublease or use permitted by the Lease, (x) covenants, conditions or restrictions or liens of record relating to the Leased Property and existing on the Closing Date; and (xi) such minor defects, irregularities, encumbrances and clouds on title C-4

as normally exist with respect to property similar in character to the Leased Property and as do not materially impair the use intended to be made of property affected thereby. "Permitted Investments" means any of the following which at the time of investment are legal investments under the laws of the State for the moneys proposed to be invested therein (the Trustee is entitled to conclusively rely on a Request of the Authority directing investment in such Permitted Investment as a certification by the Authority to the Trustee that such Permitted Investment is a legal investment under the laws of the State), but only to the extent that the same are acquired at fair market value:
(a) direct obligations of the United States of America (including obligations issued or held in book -entry form on the books of the Department of the Treasury of the United States of America or any Federal Reserve Bank and CATS and TIGRS) or obligations the timely payment of the principal of and interest on which are unconditionally guaranteed by the United States of America;
(b) bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies, provided that such obligations are backed by the full faith and credit of the United States of America (stripped securities shall constitute Eligible Securities only if they have been stripped by the agency itself); U.S. Export -Import Bank, Farmers Home Administration, Federal Financing Bank, General Services Administration, U.S. Maritime Administration, U.S. Department of Housing and Urban Development, Government National Mortgage Association, and Federal Housing Administration; (c) bonds, debentures, notes, or other evidence of indebtedness issued or guaranteed by any of the following non -full faith and credit U.S. government agencies (stripped securities shall constitute Eligible Securities only if they have been stripped by the agency itself): Federal Home Loan Bank System, Federal Home Loan Mortgage Corporation ("FHLMC"), Federal National Mortgage Association ("FNMA"), Student Loan Marketing Association, Resolution Funding Corporation or Farm Credit System;
(d) bonds or notes issued by any state or municipality, or political subdivisions thereof, which are rated by S&P, Fitch or Moody's in one of the three highest rating (without regard to qualifier) categories assigned by such agencies;
(e) repurchase agreements with a primary dealer on the reporting dealer list of the Federal Reserve, or any bank, or any other financial institution, which, in any case, has capital of not less than $500 million and which has, or is guaranteed by an entity which has, long-term ratings, at the time of purchase, in the "A" category (without regard to modifiers) or better by at least two of the following rating agencies: S&P, and Moody's, and or Fitch; and which has a minimum short-term rating of no less than "A-1" or equivalent (A -1/P -1/F1), at the time of purchase, by at least two of the following rating agencies: S&P, Moody's, or Fitch, provided that (i) the term of such repurchase agreement is not greater than the Developer Obligation Date as set forth in Exhibit F of the Development Agreement, (ii) the Trustee or third party acting solely as agent for the Trustee has possession of the collateral, (iii) the collateral is valued weekly with deficiencies to be cured within two (2) days and the market value of the collateral is maintained at an amount equal to at least 104% (or, if the collateral consists of obligations of FHLMC or FNMA C-5

or States or Municipalities, 105%) of the amount of cash transferred by the Trustee to the repurchase agreement provider under the repurchase agreement plus interest, (iv) failure to maintain the requisite collateral levels will require the Trustee to liquidate the collateral, (v) eligible collateral must consist of Eligible Securities as defined under (a), (b), (c) or (d) of such definition; (vi) the repurchase securities are free and clear of any third -party lien or claim; and (vii) there shall have been delivered to the Trustee, the Authority and the City an Opinion of Counsel as to the validity, legality and enforceability of the repurchase agreement; (f) investment agreements, including guaranteed investment contracts ("GICs") with providers in one of the two highest rating categories (without regard to qualifier) of Moody's and S&P;
(g) money market funds registered under the Federal Investment Company Act of 1940, and having a rating, at the time of purchase, by S&P of "AAAm-G", "AAA -m", or "AA -m" and if rated by Moody's rated "Aaa", "Aal" or "Aa2", including such funds for which the Trustee, its affiliates or subsidiaries provide investment advisory or other management services or for which the Trustee or an affiliate of the Trustee serves as investment administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that (i) the Trustee or an affiliate of the Trustee receives fees from funds for services rendered, (ii) the Trustee collects fees for services rendered pursuant to the Indenture, which fees are separate from the fees received from such funds, and (iii) services performed for such funds and pursuant to the Indenture may at times duplicate those provided to such funds by the Trustee or an affiliate of the Trustee; (h) certificates of deposit or similar bank deposit products secured at all times by collateral described in (a) and/or (b) above, issued by commercial banks, savings and loan associations or mutual savings banks relating to collateral held by a third party, and in which collateral the Trustee on behalf of the Bondholders has a perfected first security interest; (i) certificates of deposit, savings accounts, deposit accounts or money market deposits that are fully insured by FDIC, including BIF and SAIF; (j) federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating, at the time of purchase, of "Prime -1" or "A-3" or better by Moody's and "A-1" or "A" or better by S&P; (k) shares in a California common law trust established pursuant to Title 1, Division 7, Chapter 5 of the Government Code of the State which invests exclusively in investments permitted by Section 53635 of Title 5, Division 2, Chapter 4 of the Government Code of the State as it may be amended;
(1) the State of California's Pooled Money Investment Account; (m) the State of California's Local Agency Investment Fund; and (n) any other investments which meet the criteria established by applicable published investment guidelines issued by each rating agency then rating the Bonds.

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"Project" means the acquisition, construction and improvement of a new police facility in the City.
"Project Costs" means all costs which are paid from moneys on deposit in the Project Fund, including but not limited to:
(a) all costs required to be paid to any person under the terms of any agreement for or relating to the Project;
(b) obligations incurred for labor and materials in connection with the Project; (c) the cost of performance or other bonds and any and all types of insurance that may be necessary or appropriate to have in effect in connection with the Project; (d) all costs of engineering and architectural services, including the actual out-of- pocket costs for test borings, surveys, estimates, plans and specifications and preliminary investigations therefor, development fees, sales commissions, and for supervising construction, as well as for the performance of all other duties required by or consequent to the Project; (e) any sums required to reimburse the Authority or the City for advances made for any of the above items or for any other costs incurred and for work done which are properly chargeable to the Project; and
(f) all financing costs incurred in connection with the Project, including but not limited to Costs of Issuance and other costs incurred in connection herewith and the financing of the Project.
"Record Date" means, with respect to any Interest Payment Date, the fifteenth calendar day of the month immediately preceding such Interest Payment Date, whether or not such day is a Business Day.
"Registration Books" means the records maintained by the Trustee pursuant to the Indenture for the registration and transfer of ownership of the Bonds. "Rental Payments" means, collectively, the Base Rental Payments and any Additional Rental Payments.
"Request of the Authority" means a request or direction in writing signed by the Chairperson, Vice Chairperson, Executive Director or Treasurer of the Authority or by any other officer of the Authority duly authorized for that purpose, as evidenced in writing to the Trustee. "Request of the City" means a request or direction in writing signed by the Mayor, the City Manager or the Director of Finance or by any other officer of the City duly authorized for that purpose by the City Council, as evidenced in writing to the Trustee. "Responsible Officer" means any member of the Authority, the Executive Director or Treasurer of the Authority or any other person authorized by resolution of the Authority to act on behalf of the Authority under or with respect to the Lease or the Indenture.

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"Revenues" means (i) all Base Rental Payments payable by the City pursuant to the Lease (including prepayments), (ii) any proceeds of Bonds deposited with the Trustee and all moneys on deposit in the funds and accounts established under the Indenture, (iii) investment income with respect to such moneys held by the Trustee (iv) amounts under Section 7.2(b) and Section 8.13 of the Development Agreement and subject to the terms of Section 10 of the Lease and (v) any insurance proceeds or condemnation awards received by or payable to the Trustee relating to the Base Rental Payments..
"S&P" means S&P Global Ratings, and its successors and assigns. "Securities Depositories" means The Depository Trust Company, New York, New York and its successors and assigns or if (i) the then Securities Depository resigns from its functions as depository of the Bonds or (ii) the Authority discontinues use of the then Securities Depository pursuant to the Indenture, any other securities depository which agrees to follow the procedures required to be followed by a securities depository in connection with the Bonds and which is selected by the Authority.
"Site Lease" means that certain Site and Facility Lease, dated as of December 1, 2023, by and between the City and the Authority, pursuant to which the Authority leases the Leased Property from the City.
"Solar Equipment Lease" means the Equipment Lease Purchase Agreement, dated November 30, 2017, by and between Holman Capital Corporation and the City. "State" means the State of California.
"Supplemental Indenture" means any agreement supplemental to or amendatory of the Indenture entered into in accordance with the provisions of Article VII. "Trust Office" means the corporate trust office of the Trustee in Los Angeles, California or such other offices as may be specified to the Authority by the Trustee in writing or, solely for purposes of the surrender of the Bonds for payment, transfer or exchange, the corporate trust operations or agency office designated by the Trustee.
"Trustee" means U.S. Bank Trust Company, National Association, and its successors and assigns, and any other banking corporation or association that may at any time be substituted in its place as provided in the Indenture.
"Written Request of the Authority" means a request in writing signed by a Responsible Officer.
"2023 City Project Contribution Account" means the account by that name in the 2023 Project Fund established and held by the Trustee pursuant to the Indenture. "2023 Insurance and Condemnation Fund" means the fund by that name established and held by the Trustee pursuant to the Indenture.

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"2023 Project Fund" means the fund by that name established and held by the Trustee pursuant to the Indenture.
"2023 Project Proceeds Account" means the account by that name in the 2023 Project Fund established and held by the Trustee pursuant to the Indenture.

THE INDENTURE
The Bonds
Transfer of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the Registration Books, by the person in whose name it is registered, in person or by his duly authorized attorney, upon presentation and surrender of such Bond for cancellation, accompanied by delivery of a written instrument of transfer in a form approved by the Trustee, duly executed.

Whenever any Bond shall be surrendered for transfer, the Authority shall execute and the Trustee shall thereupon authenticate and deliver to the transferee a new Bond or Bonds of like tenor, interest rate, maturity and aggregate principal amount in Authorized Denominations. The cost of printing any Bonds and any services rendered or expenses incurred by the Trustee in connection with any such transfer shall be paid by the Authority, except that the Trustee shall require the payment by the Owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer. The Trustee shall not be required to transfer, pursuant to the Indenture, (a) any Bond during the period established by the Trustee for the selection of Bonds for redemption or (b) any Bond selected for redemption pursuant to the Indenture.

Exchange of Bonds. Bonds may be exchanged at the Trust Office of the Trustee for the same aggregate principal amount of Bonds of the same tenor, interest rate, and maturity and of other Authorized Denominations. The cost of printing any Bonds and any services rendered or expenses incurred by the Trustee in connection with any such exchange shall be paid by the Authority, except that the Trustee shall require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. The Trustee shall not be required to exchange, pursuant to the Indenture, (a) any Bond during the period established by the Trustee for the selection of Bonds for redemption or (b) any Bond selected for redemption pursuant to the Indenture.

Registration Books. The Trustee will keep or cause to be kept at its Trust Office sufficient records for the registration and transfer of the Bonds, which shall at all times during regular business hours be open to inspection by the Authority with reasonable prior notice; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer, or cause to be registered or transferred, on said records, Bonds as provided in the Indenture.

Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the Authority, at the expense of the Owner of said Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor, maturity and aggregate principal amount in an Authorized Denomination in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by it. If any Bond issued under the Indenture shall be lost, destroyed or C-9

stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence shall be satisfactory to it and indemnity satisfactory to it shall be given, the Authority, at the expense of the Bond Owner, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in lieu of and in substitution for the Bond so lost, destroyed or stolen (or if any such Bond shall have matured or shall have been called for redemption, instead of issuing a substitute Bond the Trustee may pay the same without surrender thereof upon receipt of indemnity satisfactory to the Trustee). The Authority may require payment of a reasonable fee for each new Bond issued under the Indenture and of the expenses that may be incurred by the Authority and the Trustee. Any Bond issued under the provisions of the Indenture in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original contractual obligation on the part of the Authority whether or not the Bond alleged to be lost, destroyed or stolen shall be at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of the Indenture with all other Bonds secured by the Indenture.

Pledge of Revenues; Assignment of Rights. Subject to the provisions of the Indenture, the Bonds shall be secured by a first lien on and pledge (which shall be effected in the manner and to the extent provided in the Indenture) of all of the Revenues, including all of the moneys in the 2023 Interest Account, the 2023 Capitalized Interest Subaccount and the 2023 Principal Account, including all amounts derived from the investment of such moneys. The Bonds shall be equally secured by a pledge, charge and lien upon the Revenues and such moneys without priority for number, date of the Bonds, date of execution or date of delivery; and the payment of the interest on and principal of the Bonds and any premiums upon the redemption of any portion thereof shall be and are secured by an exclusive pledge, charge and lien upon the Revenues and such moneys.

So long as any of the Bonds are Outstanding, the Revenues and such moneys shall not be used for any other purpose; except that out of the Revenues there may be apportioned such sums, for such purposes, as are expressly permitted by the Indenture.

The Authority transfers in trust and assigns to the Trustee, for the benefit of the Owners from time to time of the Bonds, all of the Revenues and all of the right, title and interest (but none of the obligations) of the Authority in the Lease with respect to the Revenues, including its rights to receive the Base Rental Payments scheduled to be paid by the City under and pursuant to the Lease and any and all of the other rights of the Authority under the Lease as may be necessary to enforce payment of such Base Rental Payments when due or otherwise to protect the interest of the Owners of the Bonds, including its leasehold title to the Leased Property leased to the City pursuant to the Lease with respect to the Base Rental Payments. The Trustee accepts such assignments. The Trustee shall be entitled to and shall receive all of the Revenues, and any Revenues collected or received by the Authority shall be deemed to be held, and to have been collected or received, by the Authority as the agent of the Trustee and shall forthwith be paid by the Authority to the Trustee.

Each of the Authority and the City covenant and agree to take such action as is necessary from time to time to preserve the priority of the pledge set forth in the Indenture under applicable law, and at the expense of the Authority or the City and the Trustee shall cooperate with the Authority and/or the City in taking such action.

Lease Revenue Fund; Receipt, Deposit and Application of Revenues. All Revenues shall be deposited by the Trustee in a special fund designated as the "Lease Revenue Fund," which C-10

the Trustee shall establish, maintain and hold in trust under the Indenture. In the event the City pays more than 100% of the Base Rental Payments coming due 15 Business Days prior to any Interest Payment Date, the Trustee shall deposit into the Lease Revenue Fund only that portion of the Base Rental Payments which the City is required to make under the Lease, and shall remit any excess to the City.

On or before each Interest Payment Date, the Trustee shall transfer from the Lease Revenue Fund and deposit into the following respective accounts (each of which the Trustee shall establish and maintain within the Lease Revenue Fund), the following amounts in the following order of priority, the requirements of each such account (including the making up of any deficiencies in any such account resulting from lack of Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any transfer is made to any account subsequent in priority:
2023 Interest Account. The Trustee shall establish and maintain a separate account to be known as the "2023 Interest Account" and a separate subaccount to be known as the "2023 Capitalized Interest Subaccount." On or before each Interest Payment Date, the Trustee shall deposit in the 2023 Interest Account an amount required to cause the aggregate amount on deposit in the 2023 Interest Account and the 2023 Capitalized Interest Subaccount to equal the amount of interest becoming due and payable on such Interest Payment Date on all respective Outstanding Bonds. No deposit shall be made into the 2023 Interest Account if the amount contained therein, together with the 2023 Capitalized Interest Subaccount, is at least equal to the interest becoming due and payable upon all respective Outstanding Bonds on each succeeding Interest Payment Date within the then current Bond Year. All moneys in the 2023 Interest Account, including the 2023 Capitalized Interest Subaccount, shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds redeemed prior to maturity); provided that on December 2, 2026 any amounts remaining in the 2023 Capitalized Interest Subaccount after the deposits required by this subsection shall be transferred to the 2023 Project Proceeds Account. 2023 Principal Account. The Trustee shall establish and maintain a separate account to be known as the "2023 Principal Account." On or before each Interest Payment Date, the Trustee shall deposit in the 2023 Principal Account an amount required to cause the aggregate amount on deposit in the 2023 Principal Account to equal the principal amount of the Bonds maturing on such Interest Payment Date pursuant to the Indenture or pursuant to a Supplemental Indenture, as the case may be. All moneys in the 2023 Principal Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Bonds.

Surplus. On or before June 1 and December 1 of each year the Trustee shall determine the Revenues, if any, remaining in the Lease Revenue Fund after making the deposits required by the paragraphs above, and shall apply such amount as a credit against the next following Base Rental Payment; provided that, until the 2023 Project Fund is closed in accordance with the Indenture, earnings on amounts in 2023 Interest Account, including the 2023 Capitalized Interest Subaccount, shall be retained in the respective account or fund until transferred as provided in the Indenture.

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2023 Insurance and Condemnation Fund. The Trustee shall establish and maintain a separate fund to be known as the "2023 Insurance and Condemnation Fund," into which shall be deposited Net Proceeds (as defined in the Lease) required to be deposited therein pursuant to the Lease. The Trustee shall disburse or transfer all amounts in the 2023 Insurance and Condemnation Fund, as stated in a Request of the City (as described below) for the payment of the cost of the reconstruction of the Leased Property (including reimbursement to the City for any such costs paid by it).

Investments. All moneys in any of the funds or accounts established with the Trustee pursuant to the Indenture shall be invested by the Trustee solely in Permitted Investments pursuant to the written direction of the Authority given to the Trustee two Business Days in advance of the making of such investments. In the absence of any such direction from the Authority, the Trustee shall invest any such moneys in money market funds described in subsection (g) of the definition of Permitted Investments; provided, however, that any such investment shall be made by the Trustee only if, prior to the date on which such investment is to be made, the Trustee shall have received a written direction of the Authority specifying a specific money market fund that satisfies the requirements of the subsection in which such investment is to be made and, if no such written direction is so received, the Trustee shall hold such moneys uninvested. Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account.

The Trustee shall retain all investment earnings on amounts in the 2023 Interest Account, including the 2023 Capitalized Interest Subaccount, respectively therein until the 2023 Project Fund is closed in accordance with the Indenture and thereafter all such investment earnings shall be transferred to the Lease Revenue Fund. All investment earnings on amounts in the 2023 Project Proceeds Account, the 2023 City Project Contribution Account, the 2023 Insurance and Condemnation Fund and the 2023 Principal Account shall be retained therein and applied in accordance herewith.

For purposes of acquiring any investments under the Indenture, the Trustee may commingle funds held by it under the Indenture. The Trustee, or any of its affiliates, may act as principal or agent in the acquisition of any investment and may impose its customary charges therefor. The Trustee may act as manager, sponsor, advisor or depository with respect to any Permitted Investment. The Trustee shall incur no liability for the selection (other than as provided in the Indenture) of investments or losses arising from any investments made pursuant to the Indenture. The Authority acknowledges that regulations of the Comptroller of the Currency grant the Authority the right to receive brokerage confirmations of security transactions to be effected by the Trustee under the Indenture as they occur, at no additional cost. The Authority specifically waives the right to receive such confirmation to the extent permitted by applicable law and agrees that it will instead receive periodic cash transaction statements which shall include detail for the investment transactions effected by the Trustee under the Indenture; provided, however, that the Authority retains its right to receive brokerage confirmation on any investment transaction requested by the Authority.

Valuation and Disposition of Investments. For the purpose of determining the amount in any fund or account, Permitted Investments credited to such fund or account shall be valued at least semiannually on or before each Interest Payment Date at cost (excluding any brokerage commissions and excluding any accrued interest) by the Authority.

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Payment on Business Days. Whenever in the Indenture any amount is required to be paid on a day that is not a Business Day, such payment shall be required to be made, without accruing additional interest thereby, on the Business Day immediately following such day.

Covenants of the Authority
Punctual Payment. The Authority shall punctually pay or cause to be paid the principal, interest and premium (if any) to become due in respect of all the Bonds, in strict conformity with the terms of the Bonds and of the Indenture, according to the true intent and meaning thereof, but only out of applicable Revenues and other assets pledged for such payment as provided in the Indenture.

Extension of Payment of Bonds. The Authority shall not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any claims for interest by the purchase of such Bonds or by any other arrangement, and in case the maturity of any of the Bonds or the time of payment of any such claims for interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any default under the Indenture, to the benefits of the Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest thereon which shall not have been so extended.

Against Encumbrances. The Authority shall not create, or permit the creation of, any pledge, lien, charge or other encumbrance upon the applicable Revenues and other assets pledged or assigned under the Indenture while any of the Bonds are Outstanding, except the pledge and assignment created by the Indenture and Supplemental Indenture. Subject to this limitation, the Authority expressly reserves the right to enter into one or more other indentures for any of its corporate purposes, including other programs under the Bond Law, and reserves the right to issue other obligations for such purposes.

Power to Issue Bonds and Make Pledge and Assignment. The Authority is duly authorized pursuant to law to issue the Bonds and to enter into the Indenture and to pledge and assign the Revenues, the Lease and other assets purported to be pledged and assigned, respectively, under the Indenture in the manner and to the extent provided in the Indenture. The Bonds and the provisions of the Indenture are and will be the legal, valid and binding special obligations of the Authority in accordance with their terms, and the Authority and the Trustee (subject to the provisions of the Indenture) shall at all times, to the extent permitted by law, defend, preserve and protect said pledge and assignment of Revenues and other assets and all the rights of the Bond Owners under the Indenture against all claims and demands of all persons whomsoever.

Accounting Records and Financial Statements. The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with corporate trust industry standards, in which complete and accurate entries shall be made of all transactions by the Trustee relating to the proceeds of Bonds, the Revenues, the Lease and all funds and accounts established pursuant to the Indenture. Such books of record and account shall be available for inspection by the Authority and the City during regular business hours with reasonable prior notice.

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No Additional Obligations. The Authority covenants that no additional bonds, notes or indebtedness shall be issued or incurred that are payable out of the Revenues in whole or in part.

Lease. The Trustee, as assignee of the Authority's rights under the Lease with respect to the Revenues pursuant to the Indenture and the Assignment Agreement(s), shall receive amounts due from the City pursuant to the Lease with respect to the Revenues. The Authority will faithfully comply with, keep, observe and perform all the agreements, conditions, covenants and terms contained in the Lease required to be complied with, kept, observed and performed by it and, together with the Trustee, will enforce the Lease against the City in accordance with its terms. So long as any Bond remain Outstanding, the Authority will not alter, amend or modify the Lease, except as pursuant to the Lease.

Tax Covenants. The Authority covenants as follows under the Indenture.

When used in this Section, the following terms have the following meanings:
"Computation Date" has the meaning set forth in section 1.148-1(b) of the Tax Regulations. "Gross Proceeds" means any proceeds as defined in section 1.148-1(b) of the Tax Regulations (referring to sales, investment and transferred proceeds), and any replacement proceeds as defined in section 1.148-1(c) of the Tax Regulations, of the Bonds. "Investment" has the meaning set forth in section 1.148-1(b) of the Tax Regulations. "Nonpurpose Investment" means any investment property, as defined in section 148(b) of the Code, in which Gross Proceeds of the Bonds are invested and that is not acquired to carry out the governmental purposes of the Bonds.
"Rebate Amount," has the meaning set forth in section 1.148-1(b) of the Tax Regulations. "Tax Regulations" means the United States Treasury Regulations promulgated pursuant to sections 103 and 141 through 150 of the Code, or section 103 of the 1954 Code, as applicable. "Yield" of any Investment has the meaning set forth in section 1.148-5 of the Tax Regulations; and of any issue of governmental obligations has the meaning set forth in section

1.148-4 of the Tax Regulations.
(a) Not to Cause Interest to Become Taxable. The Authority covenants that it shall not use, and shall not permit the use of, and shall not omit to use Gross Proceeds or any other amounts (or any property the acquisition, construction or improvement of which is to be financed directly or indirectly with Gross Proceeds) in a manner that if made or omitted, respectively, could cause the interest on any Bond to fail to be excluded pursuant to Section 103(a) of the Code from the gross income of the owner thereof for federal income tax purposes. Without limiting the generality of the foregoing, unless and until the Trustee receives a written opinion of Bond Counsel to the effect that failure to comply with such covenant will not adversely affect such exclusion of the interest on any Bond from the gross income of the owner thereof for federal income tax purposes, the Authority shall comply with each of the specific covenants in this Section.

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(b) Private Use and Private Payments. Except as would not cause any Bond to become a "private activity bond" within the meaning of section 141 of the Code and the Tax Regulations, the Authority shall take all actions necessary to assure that the Authority at all times prior to the fmal cancellation of the last of the Bonds to be retired:
(1) exclusively owns, operates and possesses all property the acquisition, construction or improvement of which is to be financed or refinanced directly or indirectly with Gross Proceeds of the Bonds and not use or permit the use of such Gross Proceeds (including through any contractual arrangement with terms different than those applicable to the general public) or any property acquired, constructed or improved with such Gross Proceeds in any activity carried on by any person or entity (including the United States or any agency, department and instrumentality thereof) other than a state or local government, unless such use is solely as a member of the general public; and (2) does not directly or indirectly impose or accept any charge or other payment by any person or entity (other than a state or local government) who is treated as using any Gross Proceeds of the Bonds or any property the acquisition, construction or improvement of which is to be financed or refinanced directly or indirectly with such Gross Proceeds.
(c) No Private Loan. Except as would not cause any Bond to become a "private activity bond" within the meaning of section 141 of the Code and the Tax Regulations and rulings thereunder, the Authority shall not use or permit the use of Gross Proceeds of the Bonds to make or finance loans to any person or entity other than a state or local government. For purposes of the foregoing covenant, such Gross Proceeds are considered to be "loaned" to a person or entity if: (i) property acquired, constructed or improved with such Gross Proceeds is sold or leased to such person or entity in a transaction that creates a debt for federal income tax purposes; (ii) capacity in or service from such property is committed to such person or entity under a take -or -pay, output or similar contract or arrangement; or (iii) indirect benefits of such Gross Proceeds, or burdens and benefits of ownership of any property acquired, constructed or improved with such Gross Proceeds, are otherwise transferred in a transaction that is the economic equivalent of a loan. (d) Not to Invest at Higher Yield. Except as would not cause the Bonds to become "arbitrage bonds" within the meaning of section 148 of the Code and the Tax Regulations and rulings thereunder, the Authority shall not (and shall not permit any person to), at any time prior to the final cancellation of the last Bond to be retired, directly or indirectly invest Gross Proceeds in any Investment, if as a result of such investment the Yield of any Investment acquired with Gross Proceeds, whether then held or previously disposed of, would materially exceed the Yield of the Bonds within the meaning of said section 148.
(e) Not Federally Guaranteed. Except to the extent permitted by section 149(b) of the Code and the Tax Regulations and rulings thereunder, the Authority shall take or omit to take (and shall not permit any person to take or omit to take) any action that would cause any Bond to be "federally guaranteed" within the meaning of section 149(b) of the Code and the Tax Regulations and rulings thereunder.

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(f) Information Report. The Authority shall timely file any information required by section 149(e) of the Code with respect to Bonds with the Secretary of the Treasury on Form 8038- G or such other form and in such place as the Secretary may prescribe. (g) Rebate of Arbitrage Profits. Except to the extent otherwise provided in section 148(f) of the Code and the Tax Regulations:
(1) The Authority shall account for all Gross Proceeds (including all receipts, expenditures and investments thereof) on its books of account separately and apart from all other funds (and receipts, expenditures and investments thereof) and shall retain all records of accounting for at least six years after the day on which the last Bond is discharged. However, to the extent permitted by law, the Authority may commingle Gross Proceeds of Bonds with its other monies, provided that it separately accounts for each receipt and expenditure of Gross Proceeds and the obligations acquired therewith. (2) Not less frequently than each Computation Date, the Authority shall calculate, the Rebate Amount in accordance with rules set forth in section 148(f) of the Code and the Tax Regulations and rulings thereunder. The Authority shall maintain a copy of the calculation with its official transcript of proceedings relating to the issuance of the Bonds until six years after the final Computation Date. The Trustee may rely conclusively upon the Authority's determinations, calculations and certifications. The Trustee shall have no responsibility to independently make any calculation or determination or to review the Authority's calculations. (3) To assure the excludability pursuant to section 103(a) of the Code of the interest on the Bonds from the gross income of the owners thereof for federal income tax purposes, the Authority shall pay to the United States the amount that when added to the future value of previous rebate payments made for the Bonds equals (i) in the case of the Final Computation Date as defined in section 1.148-3(e)(2) of the Tax Regulations, one hundred percent (100%) of the Rebate Amount on such date; and (ii) in the case of any other Computation Date, ninety percent (90%) of the Rebate Amount on such date. In all cases, such rebate payments shall be made by the Authority at the times and in the amounts as are or may be required by section 148(f) of the Code and the Tax Regulations and rulings thereunder, and shall be accompanied by Form 8038-T prepared by the Authority or such other forms and information as is or may be required by section 148(f) of the Code and the Tax Regulations and rulings thereunder for execution and filing by the Authority.
(4) The Authority shall exercise reasonable diligence to assure that no errors are made in the calculations and payments required by paragraphs (2) and (3), and if an error is made, to discover and promptly correct such error within a reasonable amount of time thereafter (and in all events within one hundred eighty (180) days after discovery of the error), including payment to the United States of any additional Rebate Amount owed to it, interest thereon, and any penalty imposed under Section 1.148 3(h) of the Regulations.

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(h) Not to Divert Arbitrage Profits. Except to the extent permitted by section 148 of the Code and the Tax Regulations and rulings thereunder, the Authority shall not and shall not permit any person to, at any time prior to the final cancellation of the last of the Bonds to be retired, enter into any transaction that reduces the amount required to be paid to the United States pursuant to paragraph (g) of this Section because such transaction results in a smaller profit or a larger loss than would have resulted if the transaction had been at arm's length and had the Yields on the Bonds not been relevant to either party.
(i) Bonds Not Hedge Bonds.
(1) The Authority represents that none of the Bonds is or will become a "hedge bond" within the meaning of section 149(g) of the Code. (2) As of the date of issuance of the Bonds the Authority reasonably expects that at least 85% of the spendable proceeds of the Bonds will be expended within the three-year period commencing on such date of issuance, and (B) no more than 50% of the proceeds of the Bonds will be invested in Nonpurpose Investments having a substantially guaranteed yield for a period of four years or more.

The Trustee
Appointment of Trustee. U.S. Bank Trust Company, National Association, a national banking association duly organized and existing under and by virtue of the laws of the United States of America, is appointed Trustee by the Authority for the purpose of receiving all moneys required to be deposited with the Trustee under the Indenture and to allocate, use and apply the same as provided in the Indenture. The Authority agrees that it will maintain a Trustee which has (or which is a wholly -owned subsidiary of a corporation which has) a combined capital and surplus of at least $75,000,000, and which is subject to supervision or examination by Federal or State authority, so long as any Bonds are Outstanding. If such bank or trust company or such parent corporation publishes a report of condition at least annually pursuant to law or to the requirements of any supervising or examining authority above referred to, then the combined capital and surplus of such bank or trust company or such parent corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

The Trustee is authorized to pay the principal of and interest and redemption premium (if any) on the Bonds when duly presented for payment at maturity, or on redemption prior to maturity, and to cancel all Bonds upon payment thereof. The Trustee shall keep accurate records of all funds and accounts administered by it and of all Bonds paid and discharged.

Acceptance of Trusts. The Trustee accepts the trusts imposed upon it by the Indenture, and agrees to perform said trusts, but only upon and subject to the following express terms and conditions:
(a) The Trustee shall not be liable for any error of judgment made in good faith by a responsible officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts.

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(b) Whenever in the administration of the Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action under the Indenture, the Trustee (unless other evidence is specifically prescribed in the Indenture) may, in the absence of bad faith on its part, rely upon a Certificate of the Authority. (c) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by the Indenture at the request or direction of any of the Owners pursuant to the Indenture, unless such Owners shall have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.
(d) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond or other paper or document. (e) The Trustee, prior to the occurrence of an Event of Default and after the curing or waiving of all Events of Default that may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in the Indenture and no covenants of or against the Trustee shall be implied in the Indenture. In case an Event of Default under the Indenture or under the Lease has occurred (which has not been cured or waived), the Trustee may exercise such of the rights and powers vested in it by the Indenture and by the Lease, and shall use the same degree of care and skill in the exercise of such rights and powers as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (f) The Trustee may execute any of the trusts or powers under the Indenture and perform the duties required of it under the Indenture either directly or by or through attorneys, receivers or agents, shall not be liable for the acts or omissions of such attorneys, receivers or agents appointed with due care, and shall be entitled to advice of counsel concerning all matters of trust and its duties under the Indenture. The Trustee may conclusively rely on an opinion of counsel as full and complete authorization and protection for any action taken, suffered or omitted by it under the Indenture.
(g) The Trustee shall not be responsible for any recital in the Indenture, in the Lease, or in the Bonds, or for any of the supplements thereto or instruments of further assurance, or for the sufficiency of the security for the Bonds issued under the Indenture or intended to be secured by the Indenture and makes no representation as to the validity or sufficiency of the Bonds, the Indenture or the Lease. The Trustee shall not be bound to ascertain or inquire as to the observance or performance of any covenants, conditions or agreements on the part of the Authority under the Indenture or on the part of the Authority or the City under the Lease. The Trustee shall not be responsible for the application of the proceeds of the Bonds paid over by it to the Authority. (h) The Trustee may become the Owner or pledgee of Bonds secured by the Indenture with the same rights it would have if not the Trustee; may acquire and dispose of other bonds or evidences of indebtedness of the Authority with the same rights it would have if it were not the Trustee; and may act as a depositary for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of C-18

Owners of Bonds, whether or not such committee shall represent the Owners of the majority in aggregate principal amount of the Bonds then Outstanding. (i) The Trustee may rely and shall be protected in acting or refraining from acting, in good faith and without negligence, upon any notice, resolution, opinion, report, direction, request, requisition, consent, certificate, order, affidavit, letter, telegram or other paper or document believed by it to be genuine and to have been signed or presented by the proper person or persons.

Any action taken or omitted to be taken by the Trustee in good faith and without negligence pursuant to the Indenture or the Lease upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the Owner of any Bond, shall be conclusive and binding upon all future Owners of the same Bond and upon Bonds issued in exchange therefor or in place thereof. The Trustee shall not be bound to recognize any person as an Owner of any Bond or to take any action at his request unless the ownership of such Bond by such person shall be reflected on the Registration Books. (j) The permissive right of the Trustee to do things enumerated in the Indenture or in the Lease shall not be construed as a duty and it shall not be answerable for other than its negligence or willful default. The immunities and exceptions from liability of the Trustee shall extend to its officers, directors, employees and agents.
(k) The Trustee shall not be required to take notice or be deemed to have notice of any Event of Default under the Indenture or under the Lease except failure by the Authority or the City to make any of the payments to the Trustee required to be made by the Authority pursuant to the Indenture or thereto or failure by the Authority or the City to file with the Trustee any document required by the Indenture or the Lease to be so filed subsequent to the issuance of the Bonds by a certain date, unless the Trustee shall be specifically notified in writing of such default by the Authority or by the Owners of at least 25% in aggregate principal amount of the Bonds then Outstanding and all notices or other instruments required by the Indenture to be delivered to the Trustee must, to be effective, be delivered at the Trust Office of the Trustee, and in the absence of such notice so delivered the Trustee may conclusively assume there is no Event of Default under the Indenture except as aforesaid.
(1) At any and all reasonable times the Trustee and its duly authorized agents, attorneys, experts, accountants and representatives, shall have the right but shall not be required to inspect all books, papers and records of the Authority pertaining to the Bonds, and to make copies of any of such books, papers and records which are not privileged by statute or by law. (m) The Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises of the Indenture. (n) Notwithstanding anything elsewhere in the Indenture with respect to the execution of any Bonds, the withdrawal of any cash, the release of any property, or any action whatsoever within the purview of the Indenture, the Trustee shall have the right, but shall not be required, to demand any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, as may be deemed desirable for the purpose of establishing the right of the Authority to the execution of any Bonds, the withdrawal of any cash or the taking of any other action by the Trustee.

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(o) All moneys received by the Trustee shall, until used or applied or invested as provided in the Indenture, be held in trust for the purposes for which they were received but need not be segregated from other funds except to the extent required by law. (p) Whether or not expressly provided therein, every provision of the Indenture, the Site Lease, the Assignment Agreement, and the Lease relating to the conduct or affecting the liability of the Trustee shall be subject to the provisions of the Indenture. (q) The Trustee shall have no responsibility with respect to any information, statement, or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Bonds.
(r) The Trustee shall not be liable to the parties to the Indenture or deemed in breach or default under the Indenture if and to the extent its performance under the Indenture is prevented by reason of force majeure. The term "force majeure" means an occurrence that is beyond the control of the Trustee and could not have been avoided by exercising due care. Force majeure shall include but not be limited to acts of God, terrorism, war, riots, strikes, fire, floods, earthquakes, epidemics, pandemics, quarantine restrictions, acts of military or civil authority or other similar occurrences.
(s) The Trustee is authorized and directed to enter into the Assignment Agreement in its capacity as Trustee.
(t) The Trustee shall have the right to accept and act upon instructions, including funds transfer instructions ("Instructions") given pursuant to the Indenture and delivered using Electronic Means ("Electronic Means" shall mean the following communications methods: e-mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Trustee, or another method or system specified by the Trustee as available for use in connection with its services under the Indenture); provided, however, that the Authority and City shall provide to the Trustee an incumbency certificate listing officers with the authority to provide such Instructions ("Authorized Officers") and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended by the Authority and City whenever a person is to be added or deleted from the listing. If the Authority and City elect to give the Trustee Instructions using Electronic Means and the Trustee in its discretion elects to act upon such Instructions, the Trustee's understanding of such Instructions shall be deemed controlling. The Authority and City understand and agrees that the Trustee cannot determine the identity of the actual sender of such Instructions and that the Trustee shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Trustee have been sent by such Authorized Officer. The Authority and City shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Trustee and that the Authority and City and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the Authority and City.

The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee's reliance upon and compliance with such Instructions notwithstanding such directions conflict or are inconsistent with a subsequent written instruction. The Authority and City agree:
(i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the C-20

Trustee, including without limitation the risk of the Trustee acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Trustee and that there may be more secure methods of transmitting Instructions than the method(s) selected by the Authority and City; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Trustee immediately upon learning of any compromise or unauthorized use of the security procedures.

In acting or omitting to act pursuant to the Site Lease, the Lease, the Assignment Agreement or any other documents executed in connection with the Indenture or therewith, the Trustee shall be entitled to all of the rights, immunities and indemnities accorded to it under the Indenture and the Lease.

Fees, Charges and Expenses of Trustee. The Trustee shall be paid and reimbursed by the Authority for reasonable fees for its services rendered under the Indenture and all advances (with interest on such advances at the maximum rate allowed by law), counsel fees (including expenses) and other expenses reasonably and necessarily made or incurred by the Trustee in connection with such services. Upon the occurrence of an Event of Default under the Indenture, but only upon an Event of Default, the Trustee shall have a first lien with right of payment prior to payment of any Bond upon the amounts held under the Indenture for the foregoing fees, charges and expenses incurred by it. When the Trustee incurs expenses or renders services after the occurrence of an Event of Default, such expenses and the compensation for such services are intended to constitute expenses of administration under any federal or state bankruptcy, insolvency, arrangement, moratorium, reorganization or other debtor relief law.

Notice to Bond Owners of Default. If an Event of Default under the Indenture or under the Lease occurs with respect to any Bonds of which the Trustee has been given or is deemed to have notice, as provided in the Indenture, then the Trustee shall, within 30 days of the receipt of such notice, give written notice thereof by first class mail to the Owner of each such Bond, unless such Event of Default shall have been cured before the giving of such notice; provided, however, that unless such Event of Default consists of the failure by the Authority to make any payment when due, the Trustee may elect not to give such notice if and so long as the Trustee in good faith determines that it is in the best interests of the Bond Owners not to give such notice.

Intervention by Trustee. In any judicial proceeding to which the Authority or the City is a party that, in the opinion of the Trustee and its counsel, has a substantial bearing on the interests of Owners of any of the Bonds, the Trustee may intervene on behalf of such Bond Owners, and subject to the Indenture, shall do so if requested in writing by the Owners of at least 25% in aggregate principal amount of such Bonds then Outstanding and indemnified to its satisfaction.

Removal of Trustee. The Trustee may be removed at any time by an instrument or concurrent instruments in writing, filed with the Trustee and signed by the Owners of a majority in aggregate principal amount of the Outstanding Bonds. The Authority may also remove the Trustee at any time upon 30 days' notice, except during the existence of an Event of Default. The Trustee may be removed at any time for any breach of the Trustee's duties set forth in the Indenture.

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Resignation by Trustee. The Trustee and any successor Trustee may at any time give written notice of its intention to resign as Trustee under the Indenture, such notice to be given to the Authority and the City by registered or certified mail. Upon receiving such notice of resignation, the Authority shall promptly appoint a successor Trustee. Any resignation or removal of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. Upon such acceptance, the Authority shall cause notice thereof to be given by first class mail, postage prepaid, to the Bond Owners at their respective addresses set forth on the Registration Books.

Appointment of Successor Trustee. In the event of the removal or resignation of the Trustee pursuant to the Indenture, the Authority shall promptly appoint a successor Trustee. In the event the Authority shall for any reason whatsoever fail to appoint a successor Trustee within 60 days following the delivery to the Trustee of the instrument described in the Indenture or within 60 days following the receipt of notice by the Authority pursuant to the Indenture, the Trustee may, at the expense of the Authority, apply to a court of competent jurisdiction for the appointment of a successor Trustee meeting the requirements of the Indenture. Any such successor Trustee appointed by such court shall become the successor Trustee under the Indenture notwithstanding any action by the Authority purporting to appoint a successor Trustee following the expiration of such 60 -day period.

Merger or Consolidation. Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided that such company shall meet the requirements set forth in the Indenture, shall be the successor to the Trustee and vested with all of the title to the trust estate and all of the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any paper or further act, anything in the Indenture to the contrary notwithstanding.

Indemnification; Limited Liability of Trustee. The Authority further covenants and agrees, to the extent permitted by law, to indemnify and save the Trustee and its officers, directors, agents and employees, harmless against any loss, expense, action, suit, claim, judgment and liabilities arising out of or in the exercise and performance of its powers and duties under the Indenture and under the Assignment Agreement, the Site Lease and the Lease, including the costs and expenses of defending against any claim of liability and fees and expenses of its attorneys, but excluding any and all losses, expenses and liabilities that are due to the negligent or willful misconduct of the Trustee, its officers, directors or employees. No provision in the Indenture shall require the Trustee to risk or expend its own funds or otherwise incur any financial liability under the Indenture. The Trustee shall not be liable for any action taken or omitted to be taken by it in accordance with the direction of the Owners of at least 25% in aggregate principal amount of Bonds Outstanding relating to the time, method and place of conducting any proceeding or remedy available to the Trustee under the Indenture or exercising any power conferred upon the Trustee under the Indenture. The obligations of the Authority under the Indenture shall survive the termination of the Indenture and the resignation or removal of the Trustee under the Indenture.

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Modification and Amendment of the Indenture
Amendment. The Indenture and the rights and obligations of the Authority, the Owners may be modified or amended at any time by a Supplemental Indenture, which shall become binding to the extent permitted by law upon adoption, without consent of any Owner, but only for any one or more of the following purposes:
(a) to add to the covenants and agreements of the Authority in the Indenture contained, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or powers reserved in the Indenture to or conferred upon the Authority so long as such limitation or surrender of such rights or powers shall not materially adversely affect the Owners; (b) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in the Indenture, or in any other respect whatsoever as the Authority may deem necessary or desirable; or (c) for any other purpose that does not materially adversely affect the interests of the Owners, as evidenced by the opinion of counsel delivered under the Indenture.

Except as set forth in the preceding paragraph, the Indenture and the rights and obligations of the Authority and of the Owners may only be modified or amended at any time by a Supplemental Indenture, which shall become binding when the written consent of the Owners of a majority in aggregate principal amount of the affected Bonds then Outstanding are filed with the Trustee. No such modification or amendment shall (a) extend the maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Authority to pay the principal, interest or redemption premiums (if any) at the time and place and at the rate and in the currency provided therein of any Bond without the express written consent of the Owner, (b) reduce the percentage of Bonds required for the written consent to any such amendment or modification, or (c) modify any of the rights or obligations of the Trustee without its written consent thereto.

Effect of Supplemental Indenture. From and after the time any Supplemental Indenture becomes effective, the Indenture shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations of the parties to the Indenture or thereto and all Owners of Outstanding Bonds, as the case may be, shall thereafter be determined, exercised and enforced under the Indenture subject in all respects to such modification and amendment, and all the terms and conditions of any Supplemental Indenture shall be deemed to be part of the terms and conditions of the Indenture for any and all purposes. Prior to entering into any Supplemental Indenture, the Authority shall deliver to the Trustee an opinion of Bond Counsel to the effect that such Supplemental Indenture has been adopted in accordance with the requirements of the Indenture.

Events of Default and Remedies of Bond Owners
Events of Default. The following events shall be Events of Default under the Indenture:
(a) Default in the due and punctual payment of the principal of or premium on any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, or by proceedings for redemption.

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(b) Default in the due and punctual payment of any installment of interest on any Bond when and as such interest installment shall become due and payable. (c) Failure by the Authority to observe and perform any of the covenants, agreements or conditions on its part in the Indenture or in the Bonds contained, other than as referred to in the preceding clauses (a) and (b), for a period of thirty (30) days after written notice, specifying such failure and requesting that it be remedied has been given to the Authority by the Trustee, or to the Authority and the Trustee by the Owners of not less than 50% in aggregate principal amount of the Outstanding Bonds; provided, that if such default is such that it cannot be corrected within the applicable period, it shall not constitute an Event of Default if corrective action is instituted by the Authority within the applicable period and diligently pursued until the default is corrected, which period shall not be longer than sixty (60) days from the date of written notice specifying the failure. (d) The filing by the Authority of a petition or answer seeking reorganization or arrangement under the Federal bankruptcy laws or any other applicable law of the United States of America, or if a court of competent jurisdiction shall approve a petition, filed with or without the consent of the Authority, seeking reorganization under the Federal bankruptcy laws or any other applicable law of the United States of America, or if, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Authority or of the whole or any substantial part of its property. (e) Default under the Lease and such default shall not have been remedied within any applicable grace period thereunder.

Remedies; No Acceleration. Upon the occurrence of an Event of Default the Trustee shall have the right:
(a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the Authority or any member, officer or employee thereof, to compel the Authority or any such member, officer or employee to perform and carry out its or his or her duties under law and the agreements and covenants required to be performed by it or him contained in the Indenture or in the Lease;
(b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Trustee; or
(c) by suit in equity upon the happening of an Event of Default to require the Authority and its members, officers and employees to account as the trustee of an express trust.

If an Event of Default shall have occurred and be continuing and if requested so to do by the Owners of a majority in aggregate principal amount of Outstanding Bonds and indemnified as provided in the Indenture, the Trustee shall be obligated to exercise such one or more of the rights and powers conferred by the Indenture, as the Trustee, being advised by counsel, shall deem most expedient in the interests of the Owners.

No remedy by the terms of the Indenture conferred upon or reserved to the Trustee (or to the Owners) is intended to be exclusive of any other remedy, but each and every such remedy shall C-24

be cumulative and shall be in addition to any other remedy given to the Trustee or the Owners under the Indenture or now or thereafter existing at law or in equity.

No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver or any such Event of Default or acquiescence therein; such right or power may be exercised from time to time as often as may be deemed expedient.

The Trustee shall have no right to declare the principal of or interest on the Bonds to be due and payable immediately.

Nothing in the Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Owner any plan of reorganization, arrangement, adjustment, or composition affecting the Bonds or the rights of any Owner thereof, or to authorize the Trustee to vote in respect of the claim of any Owner in any such proceeding without the approval of the Owners so affected.

Application of Revenues and Other Funds After Default. All amounts received by the Trustee pursuant to any right given or action taken by the Trustee under the provisions of the Indenture shall be applied by the Trustee in the following order of priority:

First, to the payment of the fees, costs and expenses of the Trustee, including reasonable compensation to its agents, attorneys and counsel; Second, to the payment of the whole amount of interest on and principal of the Bonds then due and unpaid, provided, however, that if such amounts shall be insufficient to pay in full the full amount of such interest and principal, then such amounts shall be applied to the payment of such principal and interest without preference or priority of principal over interest, or interest over principal, or of any installment of interest over any other installment of interest, ratably to the aggregate of such principal and interest.

Power of Trustee to Control Proceedings. If the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties under the Indenture, whether upon its own discretion or upon the request of the Owners of at least a majority in aggregate principal amount of the Bonds then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Owners of the Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the Owners of a majority in aggregate principal amount of the Outstanding Bonds opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation and if the Trustee is indemnified as provided in the Indenture. Any suit, action or proceeding which any Owner shall have the right to bring to enforce any right or remedy under the Indenture may be brought by the Trustee for the equal benefit and protection of all Owners similarly situated and the Trustee is appointed (and the successive respective Owners issued under the Indenture by taking and holding the same, shall be conclusively deemed so to have appointed it) the true and lawful C-25

attorney -in -fact of the respective Owners for the purpose of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the respective Owners as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney -in -fact.

Appointment of Receivers. Upon the occurrence of an Event of Default under the Indenture, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Trustee and of the Owners under the Indenture, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the Revenues and other amounts pledged under the Indenture, pending such proceedings, with such powers as the court making such appointment shall confer.

Non -Waiver. A waiver of any default or breach of duty or contract by the Trustee or any Owners shall not affect any subsequent default or breach of duty or contract, or impair any rights or remedies on any such subsequent default or breach. No delay or omission of the Trustee or any Owner to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy conferred upon the Trustee or Owners by the Bond Law or by the Indenture may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee or the Owners, as the case may be.

Rights of Owners. No Owner shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon the Indenture, unless (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority in aggregate principal amount of all the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers granted by the Indenture or to institute such action, suit or proceeding in its own name; (c) said Owners shall have tendered to the Trustee indemnity reasonably acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of 60 days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee. Such notification, request, tender of indemnity and refusal or omission are declared, in every case, to be conditions precedent to the exercise by any Owner of any remedy under the Indenture; it being understood and intended that no one or more Owners shall have any right in any manner whatever by his or their action to enforce any right under the Indenture, except in the manner provided in the Indenture, and that all proceedings at law or in equity to enforce any provision of the Indenture shall be instituted, had and maintained in the manner provided in the Indenture and for the equal benefit of all Owners.

The right of any Owner to receive payment of the principal of and interest and premium (if any) on such Bond as provided in the Indenture or to institute suit for the enforcement of any such payment, shall not be impaired or affected without the written consent of such Owner, notwithstanding the foregoing provisions or any other provision of the Indenture.

Termination of Proceedings. In case the Trustee shall have proceeded to enforce any right under the Indenture by the appointment of a receiver or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely, C-26

then and in every such case, the Authority, the Trustee and the Owners shall be restored to their former positions and rights under the Indenture, respectively, with regard to the property subject to the Indenture, and all rights, remedies and powers of the Trustee shall continue as if no such proceedings had been taken.

Limited Liability of Authority
Limited Liability of Authority. Notwithstanding anything in the Indenture contained, the Authority shall not be required to advance any moneys derived from any source of income other than the Revenues for the payment of the principal of or interest on the Bonds, or any premiums upon the redemption thereof, or for the performance of any covenants contained in the Indenture (except to the extent any such covenants are expressly payable under the Indenture from the Revenues or otherwise from amounts payable under the Lease). The Authority may, however, advance funds for any such purpose, provided that such funds are derived from a source legally available for such purpose and may be used by the Authority for such purpose without incurring indebtedness.

The Bonds shall be revenue bonds, payable exclusively from the Revenues and other funds as in the Indenture provided. The general fund of the Authority is not liable, and the credit of the Authority is not pledged, for the payment of the interest and premiums (if any) on or principal of the Bonds. The Owners shall never have the right to compel the forfeiture of any property of the Authority except the Revenues and other funds pledged to the payment of the Bonds as provided in the Indenture. The principal of and interest on the Bonds, and any premiums upon the redemption of any thereof, shall not be a legal or equitable pledge, charge, lien or encumbrance upon any property of the Authority or upon any of its income, receipts or revenues except the Revenues and other funds pledged to the payment thereof as provided in the Indenture.

Benefits of Indenture Limited to Parties. Nothing in the Indenture, expressed or implied, is intended to give to any person other than the Authority, the Trustee, the City and the Owners, any right, remedy or claim under or by reason of the Indenture. Any covenants, stipulations, promises or agreements in the Indenture contained by and on behalf of the Authority shall be for the sole and exclusive benefit of the Trustee, the City and the Owners.

Defeasance; Discharge of Indenture. If the Authority shall pay and discharge any or all of the Outstanding Bonds in any one or more of the following ways:
(a) by well and truly paying or causing to be paid the principal of and interest and premiums (if any) on such Bonds, as and when the same become due and payable; (b) by irrevocably depositing with the Trustee, in trust, at or before maturity, money which, together with the available amounts then on deposit in the funds and accounts established with the Trustee pursuant to the Indenture, is fully sufficient to pay such Bonds, including all principal, interest and redemption premiums (if any); or (c) by irrevocably depositing with the Trustee or an escrow agent, in trust pursuant to an escrow deposit agreement, Defeasance Securities in such amount as an Independent Certified Public Accountant shall determine in a written report acceptable in form and substance to the Authority, and addressed, to the Authority and the Trustee, filed with the Trustee (upon which C-27

report the Trustee may conclusively rely) will, together with the interest to accrue thereon and available moneys then on deposit in the funds and accounts established with the Trustee pursuant to the Indenture, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates; (d) by delivering an opinion of Bond Counsel acceptable in form and substance to the Authority, and addressed, to the Authority and the Trustee to the effect that the Bonds are no longer Outstanding under the Indenture, and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been mailed pursuant to the Indenture or provision satisfactory to the Trustee shall have been made for the mailing of such notice, then, at the Request of the Authority, and notwithstanding that any of such Bonds shall not have been surrendered for payment, the pledge of the Revenues and other funds provided for in the Indenture with respect to such Bonds, and all other pecuniary obligations of the Authority under the Indenture with respect to all such Bonds, shall cease and terminate, except only the obligation of the Authority to pay or cause to be paid to the Owners not so surrendered and paid all sums due thereon from amounts set aside for such purpose as aforesaid, and all amounts due the Trustee. Any funds held by the Trustee following any payment or discharge of the Outstanding Bonds pursuant to the Indenture, which are not required for said purposes, shall after payment of amounts due the Trustee under the Indenture be paid over to the Authority.

Execution of Documents by Owners. Any request, consent or other instrument required by the Indenture to be signed and executed by Owners may be in any number of concurrent writings of substantially similar tenor and may be signed or executed by such Owners in person or by their agent or agents duly appointed in writing. Proof of the execution of any such request, consent or other instrument or of a writing appointing any such agent, shall be sufficient for any purpose of the Indenture and shall be conclusive in favor of the Trustee and of the Authority if made in the manner provided in the Indenture.

The fact and date of the execution by any person of any such request, consent or other instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that the person signing such request, consent or other instrument or writing acknowledged to him the execution thereof.

The ownership of Bonds shall be proved by the Registration Books. Any request, consent or vote of the Owner shall bind every future Owner with respect to the same Bond and the Owner with respect to any Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the Authority in pursuance of such request, consent or vote. In lieu of obtaining any demand, request, direction, consent or waiver in writing, the Trustee may call and hold a meeting of the Owners upon such notice and in accordance with such rules and obligations as the Trustee considers fair and reasonable for the purpose of obtaining any such action.

Disqualified Bonds. In determining whether the Owners of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under the Indenture, unless all Bonds are then so owned, Bonds that are owned or held by or for the account of the City or the Authority (but excluding Bonds held in any employees' retirement C-28

fund) shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, provided, however, that for the purpose of determining whether the Trustee shall be protected in relying on any such demand, request, direction, consent or waiver, only Bonds which the Trustee actually knows to be so owned or held shall be disregarded, and if 100% of the Bonds are so owned, such Bonds shall be deemed Outstanding and shall not be disregarded.

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THE LEASE
Term
Pursuant to the Lease, the Authority leases to the City and the City leases from the Authority, on the terms and conditions set forth in the Lease, the Leased Property. The term of the Lease shall commence on the Closing Date.

The term of the leasehold interest created by the Lease shall expire on the earliest of (i) the Expiration Date; (ii) the date the last Base Rental Payment is made under the provisions of the Lease; or (iii) the date of discharge of all of the Bonds pursuant to the Indenture. Notwithstanding the foregoing, the term of the Lease shall automatically be extended for a period of ten (10) years, if, on the Expiration Date, the Bonds have not been fully discharged, and shall terminate on the date when the Bonds have been fully discharged.

Rental
Subject to the provisions of the Lease, the City agrees to pay to the Authority, its successors or assigns, as rental for the use and possession of the Leased Property, the following amounts at the following times:
(a) Base Rental Payments; Additional Base Rental Payments. The City shall pay the Base Rental Payments to the Trustee, as assignee of the Authority, as provided in the Lease, in accordance with the Base Rental Payment Schedule attached to the Lease, less any amounts credited against the Base Rental Payments pursuant to the Indenture. The City shall pay to the Trustee the Base Rental Payments coming due fifteen (15) Business Days prior to the next succeeding June 1 and December 1, respectively, as set forth in the Lease and such payments shall constitute payment in arrears in consideration for the City's use and possession of the Leased Property for the six-month period preceding the due date of such Base Rental Payments. (b) Additional Rental Payments. The City shall also pay, as "Additional Rental Payments" under the Lease, in addition to the Base Rental Payments, to the Trustee, as assignee of the Authority, as provided in the Lease, such amounts in each year as shall be required for the payment of all costs and expenses (not otherwise paid for or provided for out of the proceeds of sale of the Bonds) incurred by the Authority or the Trustee in connection with the execution, performance or enforcement of the Lease or the assignment of the Lease, the Indenture, or the Authority's or the Trustee's interest in the Leased Property, including, but not limited to, all fees, costs and expenses, all administrative costs of the Authority relating to the Leased Property (including, without limiting the generality of the foregoing, salaries and wages of employees, overhead, insurance premiums, taxes and assessments (if any), expenses, compensation and indemnification of the Trustee payable by the Authority under the Indenture), fees of auditors, accountants, attorneys or engineers, all other reasonable and necessary administrative costs of the Authority or charges required to be paid by it to comply with the terms of the Bonds or of the Indenture. Such Additional Rental Payments shall be billed to the City by the Authority or the Trustee from time to time. Amounts so billed shall be paid by the City within sixty (60) days after receipt of the bill by the City.

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(c) Fair Rental Value. Such payments of Base Rental Payments and Additional Rental Payments for each rental payment period shall constitute the total rental for such rental payment period, and shall be paid by the City in each rental payment period for and in consideration of the right of the use and possession of, and the continued quiet use and enjoyment of, the Leased Property during each such period for which said rental is to be paid. The City represents and covenants that the useful life of the Leased Property is not shorter than the final maturity of the Bonds. The parties to the Lease specifically acknowledge that the annual fair rental value of the Leased Property is in excess of the maximum annual Base Rental Payments. In making such determination, consideration has been given to other obligations of the parties under the Lease, the uses and purposes which may be served by the Leased Property and the benefits therefrom which will accrue to the City and the general public. The determination of fair rental value of the Leased Property shall not be deemed to be controlling in connection with a determination of fair value of the Leased Property by the parties to the Lease for any other purpose. (d) Payment of Base Rental Payments. Each installment of Base Rental Payments payable under the Lease shall be paid in lawful money of the United States of America to the order of the Trustee at the corporate trust office of the Trustee in Los Angeles, California, or such other place as the Trustee shall designate. The Base Rental Payments shall be made on a pari passu basis with each other. Notwithstanding any dispute between the City and the Authority, the City shall make all Base Rental Payments when due, without deduction or offset of any kind, and shall not withhold any Base Rental Payments pending the final resolution of any such dispute.

In the event of a determination that the City was not liable for said Base Rental Payments or any portion thereof, said Base Rental Payments or excess of payments, as the case may be, shall, at the option of the City, be credited against subsequent Base Rental Payments due under the Lease or be refunded at the time of such determination.
(e) Increases in Aggregate Base Rental Payments. The City covenants that it shall not permit an increase in the Base Rental Payments without first obtaining an opinion of Bond Counsel to the effect that the incurring of such increased Base Rental Payments will not impair the validity and enforceability of the Lease.
(f) Covenant to Budget and Appropriate. The City covenants to take such action as may be necessary to include all Base Rental Payments and Additional Rental Payments due under the Lease in its annual budget and to make the necessary annual appropriations for all such Base Rental Payments and Additional Rental Payments, subject only to abatement as provided in the Lease. The City will furnish to the Authority and the Trustee annually, on or before June 1, a certificate stating that it has complied with the covenant set forth in the Lease. The covenants on the part of the City contained in the Lease shall be deemed to be and shall be construed to be duties imposed by law and it shall be the duty of each and every public official of the City to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in the Lease agreed to be carried out and performed by the City.

The obligation of the City to make Base Rental Payments or Additional Rental Payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. Neither the Bonds nor the obligation of the City to make Base Rental Payments or Additional Rental Payments C-31

constitutes an indebtedness of the City, the State or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction.

Certain Covenants to Maintain Tax -Exempt Status of the Bonds S Decial Definitions. The following terms have the following meanings under the Lease:
"Computation Date" has the meaning set forth in section 1.148-1(b) of the Tax Regulations.
"Gross Proceeds" means any proceeds as defined in section 1.148-1(b) of the Tax Regulations (referring to sales, investment and transferred proceeds), and any replacement proceeds as defined in section 1.148-1(c) of the Tax Regulations, of the Bonds. "Investment" has the meaning set forth in section 1.148-1(b) of the Tax Regulations.
"Nonpurpose Investment" means any investment property, as defined in section 148(b) of the Code, in which Gross Proceeds of the Bonds are invested and that is not acquired to carry out the governmental purposes of that Series of Bonds. "Rebate Amount" has the meaning set forth in section 1.148-1(b) of the Tax Regulations.
"Tax Regulations" means the United States Treasury Regulations promulgated pursuant to sections 103 and 141 through 150 of the Code, or section 103 of the 1954 Code, as applicable.
"Yield" of any Investment has the meaning set forth in section 1.148-5 of the Tax Regulations; and of any issue of governmental obligations has the meaning set forth in section

1.148-4 of the Tax Regulations.
(a) Not to Cause Interest to Become Taxable. The City covenants that it shall not use, and shall not permit the use of, and shall not omit to use Gross Proceeds or any other amounts (or any property the acquisition, construction or improvement of which is to be financed directly or indirectly with Gross Proceeds) in a manner that if made or omitted, respectively, could cause the interest on any Bond to fail to be excluded pursuant to Section 103(a) of the Code from the gross income of the owner thereof for federal income tax purposes. Without limiting the generality of the foregoing, unless and until the Trustee receives a written opinion of Bond Counsel to the effect that failure to comply with such covenant will not adversely affect such exclusion of the interest on any Bond from the gross income of the owner thereof for federal income tax purposes, the City shall comply with each of the specific covenants in this Section. (b) Private Use or Private Payments. Except as would not cause any Bond to become a "private activity bond" within the meaning of section 141 of the Code and the Tax Regulations, the City shall take all actions necessary to assure that the City at all times prior to the final cancellation of the last of the Bonds to be retired:

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a. exclusively owns, operates and possesses all property the acquisition, construction or improvement of which is to be financed or refinanced directly or indirectly with Gross Proceeds of the Bonds and not use or permit the use of such Gross Proceeds (including through any contractual arrangement with terms different than those applicable to the general public) or any property acquired, constructed or improved with such Gross Proceeds in any activity carried on by any person or entity (including the United States or any agency, department and instrumentality thereof) other than a state or local government, unless such use is solely as a member of the general public; and b. does not directly or indirectly impose or accept any charge or other payment by any person or entity (other than a state or local government) who is treated as using any Gross Proceeds of the Bonds or any property the acquisition, construction or improvement of which is to be financed or refinanced directly or indirectly with such Gross Proceeds.
(c) No Private Loan. Except as would not cause any Bond to become a "private activity bond" within the meaning of section 141 of the Code and the Tax Regulations and rulings thereunder, the City shall not use or permit the use of Gross Proceeds of the Bonds to make or finance loans to any person or entity other than a state or local government. For purposes of the foregoing covenant, such Gross Proceeds are considered to be "loaned" to a person or entity if: (i) property acquired, constructed or improved with such Gross Proceeds is sold or leased to such person or entity in a transaction that creates a debt for federal income tax purposes; (ii) capacity in or service from such property is committed to such person or entity under a take -or -pay, output or similar contract or arrangement; or (iii) indirect benefits of such Gross Proceeds, or burdens and benefits of ownership of any property acquired, constructed or improved with such Gross Proceeds, are otherwise transferred in a transaction that is the economic equivalent of a loan. (d) Not to Invest at Higher Yield. Except as would not cause the Bonds to become "arbitrage bonds" within the meaning of section 148 of the Code and the Tax Regulations and rulings thereunder, the City shall not (and shall not permit any person to), at any time prior to the final cancellation of the last Bond to be retired, directly or indirectly invest Gross Proceeds in any Investment, if as a result of such investment the Yield of any Investment acquired with Gross Proceeds, whether then held or previously disposed of, would materially exceed the Yield of the Bonds within the meaning of said section 148.
(e) Not Federally Guaranteed. Except to the extent permitted by section 149(b) of the Code and the Tax Regulations and rulings thereunder, the City shall take or omit to take (and shall not permit any person to take or omit to take) any action that would cause any Bond to be "federally guaranteed" within the meaning of section 149(b) of the Code and the Tax Regulations and rulings thereunder.
(f) Information Report. The Authority shall timely file any information required by section 149(e) of the Code with respect to Bonds with the Secretary of the Treasury on Form 8038-G or such other form and in such place as the Secretary may prescribe. (g) Rebate of Arbitrage Profits. Except to the extent otherwise provided in section 148(f) of the Code and the Tax Regulations:

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a. The City shall account for all Gross Proceeds (including all receipts, expenditures and investments thereof) on its books of account separately and apart from all other funds (and receipts, expenditures and investments thereof) and shall retain all records of accounting for at least six years after the day on which the last Bond is discharged. However, to the extent permitted by law, the City may commingle Gross Proceeds of Bonds with its other monies, provided that it separately accounts for each receipt and expenditure of Gross Proceeds and the obligations acquired therewith. b. Not less frequently than each Computation Date, the City shall calculate, the Rebate Amount in accordance with rules set forth in section 148(f) of the Code and the Tax Regulations and rulings thereunder. The City shall maintain a copy of the calculation with its official transcript of proceedings relating to the issuance of the Bonds until six years after the final Computation Date. The Trustee may rely conclusively upon the City's determinations, calculations and certifications. The Trustee shall have no responsibility to independently make any calculation or determination or to review the City's calculations.
c. In order to assure the excludability pursuant to section 103(a) of the Code of the interest on the Bonds from the gross income of the owners thereof for federal income tax purposes, the City shall pay to the United States the amount that when added to the future value of previous rebate payments made for the Bonds equals (i) in the case of the Final Computation Date as defined in section 1.148-3(e)(2) of the Tax Regulations, one hundred percent (100%) of the Rebate Amount on such date; and (ii) in the case of any other Computation Date, ninety percent (90%) of the Rebate Amount on such date. In all cases, such rebate payments shall be made by the City at the times and in the amounts as are or may be required by section 148(f) of the Code and the Tax Regulations and rulings thereunder, and shall be accompanied by Form 8038-T prepared by the City or such other forms and information as is or may be required by section 148(f) of the Code and the Tax Regulations and rulings thereunder for execution and filing by the City. d. The City shall exercise reasonable diligence to assure that no errors are made in the calculations and payments required by paragraphs (2) and (3), and if an error is made, to discover and promptly correct such error within a reasonable amount of time thereafter (and in all events within one hundred eighty (180) days after discovery of the error), including payment to the United States of any additional Rebate Amount owed to it, interest thereon, and any penalty imposed under Section 1.148 3(h) of the Regulations. (h) Not to Divert Arbitrage Profits. Except to the extent permitted by section 148 of the Code and the Tax Regulations and rulings thereunder, the City shall not and shall not permit any person to, at any time prior to the final cancellation of the last of the Bonds to be retired, enter into any transaction that reduces the amount required to be paid to the United States pursuant to paragraph (h) of this Section because such transaction results in a smaller profit or a larger loss than would have resulted if the transaction had been at arm's length and had the Yields on the Bonds not been relevant to either party.
(i) Bonds Not Hedge Bonds. The City represents that none of the Bonds is or will become a "hedge bond" within the meaning of section 149(g) of the Code. As of the date of C-34

issuance of the Bonds the City reasonably expects that at least 85% of the spendable proceeds of the Bonds will be expended within the three-year period commencing on such date of issuance, and (B) no more than 50% of the proceeds of the Bonds will be invested in Nonpurpose Investments having a substantially guaranteed yield for a period of four years or more. (j) Elections. The City hereby directs and authorizes any City Representative to make elections permitted or required pursuant to the provisions of the Code or the Tax Regulations, as such Representative (after consultation with Bond Counsel) deems necessary or appropriate in connection with the Bonds, in the Tax Certificate or similar or other appropriate certificate, form or document.
(k) Closing Certificate. The City agrees to execute and deliver in connection with the issuance of the Bonds a Tax Certificate, or similar document containing additional representations and covenants pertaining to the exclusion of interest on the Bonds from the gross income of the owners thereof for federal income tax purposes, which representations and covenants are incorporated as though expressly set forth herein.

The City shall at all times do and perform all acts and things permitted by law and the Lease which are necessary or desirable in order to assure that interest paid on the Bonds (or any of them) will be excluded from gross income for federal income tax purposes and shall take no action that would result in such interest not being so excluded. Without limiting the generality of the foregoing, the City agrees to comply with the provisions of the Tax Certificate. This covenant shall survive payment in full or defeasance of the Bonds.

Substitution, Addition and Release of Property
The parties to the Lease specifically acknowledge that the annual fair rental value of the Leased Property is in excess of the maximum annual Base Rental Payments. The City shall have, so long as the Lease is in effect, and is granted, the option at any time and from time to time, to substitute other real property (the "Substitute Property") for any portion of the Leased Property (the "Former Property"), add to or release any identifiable real property and/or improvements currently constituting all or any portion of the Leased Property (in such case, Substitute Property shall mean the Former Property less any portion released pursuant to the Lease); provided, that the City shall satisfy all of the following requirements, which are conditions precedent to such substitution:
(a) No default under the Lease or Event of Default shall have occurred and be continuing;
(b) The City shall file with the Authority and the Trustee, and cause to be recorded in the office of the County Recorder, sufficient memorialization of amendments to the Lease and the Site Lease with a description of such Substitute Property which deletes therefrom the description of the Former Property;
(c) The City shall obtain an extended California Land Title Association ("CLTA") policy of title insurance insuring the City's fee or leasehold estate in such Substitute Property, the City's leasehold estate under the Lease, and the Authority's leasehold estate under the Site Lease in such Substitute Property, subject only to Permitted Encumbrances, in an amount C-35

not less than the aggregate principal amount of the Outstanding Bonds; provided, however, that this requirement shall not apply to Substitute Property that consists only of Former Property less any released portion;
(d) The City shall provide a Certificate of the City to the Authority and to the Trustee that such Substitute Property constitutes property which the City is permitted to lease under the laws of the State of California;
(e) The substitution of the Substitute Property shall not cause the City to violate any of its covenants, representations and warranties made in the Lease; (f) The City shall file with the Authority and the Trustee a Certificate of the City or other evidence which establishes that the annual fair rental value of the Substitute Property after substitution or release will be at least equal to 100% of the maximum amount of the Base Rental Payments becoming due in the then current fiscal year or in any subsequent fiscal year and the useful economic life of the Substitute Property shall be at least equal to the maximum remaining term of the Lease;
(g) The City shall furnish to the Trustee an opinion of Bond Counsel addressed to the Trustee, the City and the Authority to the effect that the substitution or release is permitted under the Lease; and
Upon the satisfaction of all such conditions precedent, and upon the City delivering to the Authority and the Trustee a Certificate of the City certifying that the conditions set forth in the Lease have been satisfied, the Term of the Lease shall thereupon end as to the Leased Property and shall thereupon commence as to the Substitute Property, and all references to the Leased Property shall apply with full force and effect to the Substitute Property. The City shall not be entitled to any reduction, diminution, extension or other modification of the Base Rental Payments whatsoever as a result of any substitution or removal under the Lease.

Insurance
The City shall secure and maintain or cause to be secured and maintained at all times with insurers of recognized responsibility or through a program of self-insurance to the extent specifically permitted in the Lease, all coverage on the Leased Property required by the Lease.

Such insurance shall consist of:
(1) Comprehensive general liability coverage against claims for damages including death, personal injury, bodily injury or property damage arising from operations involving the Leased Property. Such insurance shall afford protection with a combined single limit of not less than $1,000,000 per occurrence with respect to bodily injury, death or property damage liability, or such greater amount as may from time to time be recommended by the City's risk management officer or an independent insurance consultant retained by the City for that purpose, subject to a deductible clause of not to exceed $500,000. The City's obligations under this clause (1) may be satisfied by self- insurance;
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(2) The City shall maintain or cause to be maintained, throughout the term of the Lease, casualty insurance against loss or damage to any or all of the Leased Property by fire and lightning, with extended coverage and vandalism and malicious mischief insurance, and against loss of Leased Property by theft. Such extended coverage insurance shall, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance. The insurance required by this paragraph shall be in an amount not less than the principal amount of the Outstanding Bonds. The City's obligations under this clause (2) may be satisfied by self-insurance;
(3) Workers' compensation insurance issued by a responsible carrier authorized under the laws of the State to insure employers against liability for compensation under the Labor Code of the State, or any act enacted as an amendment or supplement thereto or in lieu thereof, such workers' compensation insurance to cover all persons employed by the City in connection with the Leased Property and to cover full liability for compensation under any such act; provided, however, that the City's obligations under this clause (3) may be satisfied by self-insurance; (4) Rental interruption insurance in an amount not less than the maximum remaining scheduled Base Rental Payments in any twenty-four (24) month period, by an insurance provider rated at least "A" by A.M. Best & Company, to insure against loss of use of the Leased Property caused by perils covered by the insurance required in the Lease. Such insurance may be maintained as part of or in conjunction with any other rental interruption insurance carried by the City and must list the Authority and the Trustee as additional insured parties. Such insurance shall be in place as of the Closing Date. The net proceeds of such insurance shall be paid to the Trustee and credited toward the payment of the Base Rental Payments in the order in which such Base Rental Payments come due and payable; and
(5) Builders' risk insurance in an amount equal to the lesser of the Outstanding principal amount of the Bonds, or the replacement cost of the Project, which insurance shall be outstanding for the construction period until Final Completion of the Project.

All policies or certificates issued by the respective insurers for insurance, with the exception of workers' compensation insurance, shall provide that such policies or certificates shall not be canceled or materially changed without at least 30 days' prior written notice to the Authority and the Trustee. Certificates of comprehensive general liability and workers' compensation insurance shall be furnished by applicable insurers to the City, and, at least ten days prior to the expiration dates of such policies, if any, evidence of renewals shall be deposited with the Trustee.

If the City elects to provide self-insurance pursuant to clauses (1), (2) and/or (3) above, the City shall annually cause to be delivered to the Trustee, upon request, a certificate of an Insurance Consultant certifying to the adequacy of the City's reserves for such insurance.

All policies or certificates of insurance provided for in the Lease shall name the City as a named insured and the Trustee as an additional insured. All proceeds of insurance C-37

maintained under clauses (1) and (3) shall be deposited with the City and under clause (2) shall be deposited with the Trustee.

Notwithstanding the generality of the foregoing, the City shall not be required to maintain or cause to be maintained more insurance than is specifically referred to above or any policies of insurance other than standard policies of insurance with standard deductibles offered by reputable insurers at a reasonable cost on the open market.

Form of Policies. The City shall deliver to the Trustee on or before the Closing Date and each anniversary of the Closing Date a Certificate of the City that all insurance required under the Lease is in full force and effect. If the City obtains insurance through a pooled insurance program of governmental entities, an annual statement or memorandum of coverage delivered to the Authority and the Trustee will satisfy the requirements of the Lease. The Trustee and the Authority shall not be responsible for the sufficiency of any insurance required in the Lease or payment of premium and shall be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss agreed to by the City.

Advances. If the City shall fail to perform any of its obligations under the Lease, then the Authority or the Trustee may, but shall not be obligated to, take such action as may be necessary to cure such failure, including the advancement of money on behalf of the City, and the City shall be obligated to repay all such advances as soon as possible.

Damage, Destruction and Condemnation; Application of Net Proceeds; Assignment of Liquidated Damages
If prior to the termination of the term of the Lease (a) the Leased Property is destroyed (in whole or in part) or is damaged by fire of other casualty, or (b) title to, or the temporary use of, any portion of the Leased Property or the estate of the Authority or the City in the Leased Property or any portion shall be taken under the exercise of the power of eminent domain by any governmental body or by any person or firm or corporation acting under governmental authority, then the City and the Authority shall, as expeditiously as possible, continuously and diligently prosecute or cause to be prosecuted the repair or replacement thereof, unless the City elects not to repair or replace the Leased Property or portion thereof, in accordance with the provisions of the Lease. If Net Proceeds are insufficient to repair or replace the Leased Property or portion thereof, the City shall, to the extent permitted by law, use its best efforts to fund any deficiency from any legally available funds.

If there is an abatement of rental payments pursuant to the Lease as a result of such casualty or event, and the City elects pursuant to the Lease to apply such insurance proceeds and such other sums as are deposited by the City pursuant to the Lease to the prepayment of Base Rental Payments rather than replacing or repairing the destroyed or damaged portion of the Leased Property, then the Lease shall terminate with respect to the destroyed or damaged portion of the Leased Property as of the later of the date of such election by the City or the date the amount required by the Lease is received by the Trustee.

The provisions of Section 1932, Subdivision 2, and Section 1933, Subdivision 4, of the California Civil Code, including any amendments thereto and any other law which may be in force C-38

during the term of the Lease which authorizes the termination of the Lease upon the partial or complete destruction of the Leased Property, are waived by the City.

The City covenants and agrees, to the extent it may lawfully do so, that so long as any of the Bonds remain outstanding and unpaid, the City will not exercise the power of condemnation with respect to the Leased Property. The City further covenants and agrees, to the extent it may lawfully do so, that if for any reason the foregoing covenant is determined to be unenforceable or if the City should fail or refuse to abide by such covenant and condemns the Leased Property, the value of the Leased Property shall not be less than the greater of (i) if Outstanding Bonds are then subject to redemption, the principal and interest due on the Outstanding Bonds through the date of their redemption, or (ii) if such Outstanding Bonds are not then subject to redemption, the amount necessary to defease such Outstanding Bonds to the first available redemption date in accordance with the Indenture.

The City shall deposit any proceeds received from insurance and condemnation awards with respect to the destruction or partial destruction of Leased Property with the Trustee for deposit into the: (a) 2023 Insurance and Condemnation Fund if the City elects to repair the Leased Property or (b) the Lease Revenue Fund if the City elects to redeem the Outstanding Bonds. The City shall have forty-five (45) days from the date of any such destruction or partial destruction to determine whether to repair the Leased Property or use insurance and condemnation award proceeds received to redeem such bonds. To the extent that the City determines not to repair the Leased Property and cannot use insurance and condemnation award proceeds to redeem such bonds, the City shall and covenants to substitute property for such Leased Property of equivalent or greater value in accordance with the provisions of the Lease. If the City determines to repair the Leased Property, disbursements by the Trustee shall only be made upon presentation of a requisition in a form substantially similar to the form set forth in the Indenture. If the City determines to cause the redemption of less than the full amount of the Outstanding Bonds, such redemption shall only be made to the extent the remaining fair rental value of the Leased Property is sufficient to support the remaining Base Rental Payments supporting debt service on the Outstanding Bonds.

The City assigns and transfers to the Authority all of the City's right, title, and interest in, to, and under any payments under Section 7.2(b) and Section 8.13 of the Development Agreement, the proceeds of which shall be deposited in the Lease Revenue Fund.

As provided in Section 21.1 of the Development Agreement, the Developer and the City shall assign all insurance proceeds which the Developer or the City may be entitled to receive prior to Final Acceptance of the Project with respect to damage or destruction to the Project to the Trustee for deposit into the 2023 Insurance and Condemnation Proceeds Fund established under the Indenture.

The Authority and the City agree that, upon the written request of the Trustee, each will take such actions as may be reasonably requested by the Trustee and to the extent permitted by law to enforce the obligations of the Developer under Section 7.2(b) and Section 8.13 of the Development Agreement to the extent of the Authority's, the City's, the Trustee's or the Authority's interest therein, including, but not limited, to bringing an action against the Developer for payments thereunder.

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The City agrees to assign, or to cause the assignment, to the Authority certain of its rights under the Development Agreement, as further described and provided in Section 25.5 of the Development Agreement. Subject to the terms of the Development Agreement, the Authority shall be deemed a third party beneficiary of the Development Agreement.

Default
(a) Each of the following events constitutes an Event of Default under the Lease:
(1) Failure by the City to pay any Base Rental Payment or other payment (including Additional Rental Payments) required to be paid under the Lease at the time specified in the Lease.
(2) Failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or performed under the Lease, other than as referred to in the preceding subsection (1), for a period of thirty (30) days after written notice specifying such failure and requesting that it be remedied has been given to the City by the Authority. However, if the City notifies the Authority that in its reasonable opinion the failure stated in the notice can be corrected, but not within such thirty (30) day period, the failure will not constitute an Event of Default if the City commences to cure the failure within such thirty (30) day period and thereafter diligently and in good faith cures such failure in a reasonable period of time; provided, that such cure period shall not extend beyond sixty (60) days.
(3) The filing by the City of a voluntary petition in bankruptcy, or failure by the City promptly to lift any execution, garnishment or attachment, or adjudication of the City as a bankrupt, or assignment by the City for the benefit of creditors, or the entry by the City into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the City in any proceedings instituted under the provisions of the Federal Bankruptcy Code, as amended, or under any similar acts which may be enacted.
(b) If default shall be made by the City in the observance or performance of any agreement, condition, covenant or term contained in the Lease required to be observed or performed by it (including, without limitation, the payment of any Base Rental Payments or Additional Rental Payments due), subject to the provisions of subsection (a)(2) above, the Authority may at any time thereafter (with or without notice and demand and without limiting any other rights or remedies the Authority may have) recover rent and other monetary charges as they become due without terminating the City's right to possession of the Leased Property, regardless of whether or not the City has abandoned the Leased Property, and the Authority shall have the right and the City hereby irrevocably appoints the Authority as its agent and attorney in fact for such purpose to attempt to sublet or re -let the Leased Property at such rent, upon such conditions and for such term, and to do all other acts to maintain or preserve the Leased Property, including the removal of persons therefrom or taking possession thereof or the removal of property therefrom to a storage facility located elsewhere in the City, as the Authority deems desirable or necessary, and the City hereby waives any and all claims for any damages that may result to the Leased C-40

Property thereby except for such damages caused by the gross negligence or intentional misconduct of the person taking such actions; provided, that no such actions shall be deemed to terminate the Lease and the City shall continue to remain liable for any deficiency that may arise out of such re -letting, taking into account expenses incurred by the Authority due to such re -letting, payable at the same time and manner as provided for Base Rental Payments. In the event the Leased Property is re -let, the City shall cooperate with the Authority to provide reasonable parking access for the Leased Property. In the event the Leased Property is re -let, the City shall cooperate with the Authority to provide reasonable parking access for the Leased Property.

The Authority expressly waives the right to receive any amount from the City pursuant to Section 1951.2(a)(3) of the California Civil Code.
(c) Upon the occurrence and during the continuance of any Event of Default, the Authority may exercise each and every one of the following remedies:
(1) Proceedings at Law or In Equity. If an Event of Default occurs and continues under the Lease, the Authority may take whatever action at law or in equity may appear necessary or desirable to collect the amounts then due and thereafter to become due under the Lease or to enforce any other of its rights under the Lease. (2) Remedies under the Site Lease. If an Event of Default occurs and continues under the Lease, the Authority may exercise its rights under the Site Lease. (d) Notwithstanding any other provision of the Lease or the Indenture, in no event shall the Authority have the right to accelerate the payment of any Base Rental Payments under the Lease.

Prepayment and Credits
(a) Prepayment From Net Proceeds.
(1) The City may prepay, from Net Proceeds of insurance or a condemnation award received by it pursuant to the Lease, the Principal Component of Base Rental Payments then unpaid (and corresponding Interest Component), in whole or in part on any date, pursuant to the Lease, at a prepayment price equal to the sum of the Principal Component prepaid plus accrued interest thereon to the date of prepayment. (2) Prepayments made pursuant to this subsection (a) shall be allocated pro rata among the Principal Components of Base Rental Payments relating to the Bonds. (b) Optional Prepayment. The City may at its option prepay from any source of available moneys for redemption of Bonds pursuant to the Indenture, all or any part (in an integral multiple of $5,000) of the Principal Component of Base Rental Payments (and corresponding Interest Component), so that the aggregate annual amounts of Principal Component of Base Rental Payments which shall be payable after such prepayment shall each be an integral multiple of C-41

$5,000, at a prepayment price equal to the principal amount to be redeemed, plus accrued but unpaid interest to the prepayment date, without premium.

Before making any prepayment, the City shall give written notice to the Trustee specifying the date on which the prepayment will be made, which date shall be not less than forty-five (45) days from the date such notice is given unless the Trustee agrees to a shorter period.

The Authority and the City agree that any prepayment in part under the Lease and the redemption of any Bonds by the Authority pursuant to the Indenture shall be credited towards the City's obligations under the Lease at the option of the City in any manner determined in writing delivered to the Trustee by the City. A prepayment made pursuant to the Lease shall not cause a defeasance of any Bonds unless the requirements the Indenture are satisfied.

In the event of prepayment in full of the Principal Component of all Base Rental Payments, such that the Lease shall be terminated by its terms, all amounts then on deposit under the Indenture which are to be credited to the City's obligations to make Base Rental Payments shall be credited towards the amounts then required to be so prepaid.

Abatement of Rental
The obligation of the City to pay Base Rental Payments and Additional Rental Payments shall be abated during any period in which by reason of any damage, destruction, condemnation or title defect there is substantial interference with the use by the City of the Leased Property or any portion thereof. Such abatement shall be in an amount such that the resulting Base Rental Payments in any year during which such interference continues does not exceed the fair rental value of the portions of the Leased Property as to which such damage, destruction, taking or title defect does not substantially interfere with the City's use and right of possession, as evidenced by a Certificate of the City. Such abatement shall continue for the period commencing with the date of interference resulting from such damage, destruction, condemnation, taking or title defect and, with respect to damage to or destruction of the Leased Property, ending with the substantial completion of the work of repair or replacement of the Leased Property, or the portion thereof so damaged or destroyed, and the term of the Lease shall be extended as provided in the Lease.

Notwithstanding the foregoing, to the extent that moneys are available for the payment of base rental payments in any of the funds and accounts established under the Indenture, such base rental payments shall not be abated but shall be payable by the City as a special obligation payable solely from such funds and accounts.

Net Lease
Subject to the provisions of the Lease relating to abatement of rental, the Lease shall be deemed and construed to be a "Triple -Net -Lease" and the City agrees that rental provided for in the Lease shall be an absolute net return to the Authority, free and clear of any expenses, taxes, fees, insurance premiums, rebate payments, Leased Property costs, reserve deposits, charges or setoffs whatsoever.

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Amendments
The Lease may be amended in writing as may be mutually agreed by the Authority and the City; provided, that no such amendment which materially adversely affects the rights of the Owners shall be effective unless it shall have been consented to by the Owners of more than a majority in aggregate principal amount of the affected Bonds then Outstanding, and provided further, that no such amendment shall (a) extend the payment date of any Base Rental Payment, without the prior written consent of the Owner of each Bond so affected, or (b) reduce the percentage of the Outstanding Bonds the consent of the Owners of which is required for the execution of any amendment thereof.

The Lease and the rights and obligations of the Authority and the City under the Lease may also be amended or supplemented at any time by an amendment hereof or supplement hereto which shall become binding upon execution by the Authority and the City without the written consents of any Owners, but only to the extent permitted by law and only for any one or more of the following purposes:
(a) to add to the agreements, conditions, covenants and terms required by the Authority or the City to be observed or performed therein and other agreements, conditions, covenants and terms thereafter to be observed or performed by the Authority or the City, or to surrender any right or power reserved herein to or conferred herein on the Authority or the City, and which in either case shall not materially adversely affect the interests of the Owners;
(b) to make such provisions for the purpose of curing any ambiguity of correcting, curing or supplementing any defective provision contained therein or in regard to questions arising thereunder which the Authority or the City may deem desirable or necessary and not inconsistent herewith, and which shall not materially adversely affect the interests of the Owners;
(c) to effect a substitution or release in accordance with the Lease; (d) to increase the amount of Base Rental Payment payable thereunder for the purpose of allowing the Authority to add any real property to be acquired and leased thereunder; or
(e) for any other purpose which shall not materially adversely affect the interests of the Owners.

THE SITE LEASE
Pursuant to the Site Lease, the City leases the Leased Property to the Authority and the Authority leases the Leased Property from the City, on the terms and conditions set forth in the Site Lease.

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THE ASSIGNMENT AGREEMENT
Pursuant to the Assignment Agreement, the Authority assigns and transfers to the Trustee all of the Authority's rights, title and interest in and to (but none of its obligations under) the Lease and the Site Lease (excepting only (i) the Authority's rights to give approvals and consents thereunder, including, without limitation, to amendments, and the Authority's rights to the payment of Additional Rental Payments pursuant to the Lease and to indemnification pursuant to the Lease, and (ii) the Authority's rights to receive lease payments other than the Base Rental Payments), including the Authority's rights to receive Base Rental Payments, as well as its rights to enforce payment of such Base Rental Payments when due or otherwise to protect its interests in the event of a default by the City under the Lease, in accordance with the terms thereof, in trust nonetheless and provided that should the Authority well and truly perform all of its obligations under the Indenture, the Assignment Agreement shall terminate and all interest in the Lease and the Site and Facilities Lease shall revert to the Authority. The Base Rental Payments shall be applied, and the rights of the Authority assigned under the Assignment Agreement shall be exercised by the Trustee, as provided in the Indenture.

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APPENDIX D

FORM OF CONTINUING DISCLOSURE AGREEMENT

CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the "Disclosure Agreement"), dated as of December 1, 2023, is executed and delivered by the City of Rialto, California (the "City"), and Willdan Financial Services, as dissemination agent, in connection with the issuance by the Rialto Public Financing Authority (the "Authority") of its $56,525,000 aggregate initial principal amount of Lease Revenue Bonds, 2023 Series A (Police Station Project) (the "Bonds"). The Bonds are being issued pursuant to an Indenture, dated as of December 1, 2023 (the "Indenture"), by and between the Authority and U.S. Bank Trust Company, National Association, as trustee. The City and the Dissemination Agent covenant and agree as follows:

Section 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the City and the Dissemination Agent for the benefit of the Holders (as defined below) and Beneficial Owners (as defined below) of the Bonds and in order to assist the Participating Underwriter (as defined below) in complying with the Rule (as defined below).

Section 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Agreement, unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.
"Beneficial Owner" shall mean any person who has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Bonds (including persons or entities holding Bonds through nominees, depositories or other intermediaries). "Dissemination Agent" shall mean Willdan Financial Services, or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation.
"EMMA" shall mean the Municipal Securities Rulemaking Board's Electronic Municipal Market Access System for Municipal Securities disclosures, maintained on the internet at http://emma.msrb.org . "Holder" shall mean the person in whose name any Bond shall be registered. "Listed Event" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement. "MSRB" shall mean the Municipal Securities Rulemaking Board established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934 or any other entity designated or authorized by the SEC to receive reports or notices pursuant to the Rule. Until otherwise designated by the MSRB or the U.S.

Securities and Exchange Commission, filings with the MSRB are to be made through the EMMA website. "Official Statement" shall mean the final Official Statement, dated December 12, 2023, related to the Bonds.
"Participating Underwriter" shall mean the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds.

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"Rule" shall mean Rule 15c2-12 adopted by the U.S. Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than March 31 of each year, commencing with March 31, 2024, with the report for the City's 2022-23 fiscal year, provide to the MSRB, an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. Each Annual Report must be provided in an electronic format and accompanied by identifying information as prescribed by the MSRB, The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited fmancial statements of the City may be submitted separately from the balance of the Annual Report, and later than the date required above for the filing of the Annual Report if not available by that date. If the City's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(b). (b) Not later than fifteen (15) business days prior to the date specified in subsection (a) above for providing the Annual Report to the MSRB, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by such date, the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the first sentence of this subsection (b). The City shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. (c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the MSRB by the date required in subsection (a), the Dissemination Agent shall send a notice, in electronic format, in a timely manner to the MSRB m substantially the form attached as Exhibit A, or in such other form as prescribed or acceptable to the MSRB. (d) The Dissemination Agent (if other than the City) shall, if and to the extent, the City has provided an Annual Report in final form to the Dissemination Agent for dissemination, file a report with the City certifying that the Annual Report has been provided to the MSRB pursuant to this Disclosure Agreement, and stating the date it was provided.

Section 4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference the following:
(a) Audited fmancial statements of the City prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the City's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited fmancial statements in a format similar to the financial statements contained in the Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) Financial information and operating data contained in the Official Statement presented on an annual basis for the immediately preceding fiscal year of the type set forth in Tables 1, 2, 5 and 6 contained in the body of the Official Statement.

Any or all of the items listed above may be included by specific reference to other documents, including the audited financial statements, official statements of debt issues of the City or related public D-2

entities, which have been available to the public on the MSRB's website or filed with the U.S. Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference in the applicable Annual Report.

Section 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the City shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the Bonds, which notice shall be given in a timely manner, not in excess of ten (10) business days after the occurrence of such Listed Event:
(1) Principal and interest payment delinquencies;
(2) Non-payment related defaults, if material;
(3) Unscheduled draws on debt service reserves reflecting financial difficulties;
(4) Unscheduled draws on credit enhancements reflecting financial difficulties;
(5) Substitution of credit or liquidity providers, or their failure to perform; (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security;
Modifications to rights of security holders, if material; Bond calls, if material, and tender offers;
Defeasances;
Release, substitution, or sale of property securing repayment of the securities, if material
(11) Rating changes;
(12) Bankruptcy, insolvency, receivership or similar event of the City; (13) The consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material;
(14) Appointment of a successor or additional trustee or the change of name of a trustee, if material;
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(15) Incurrence of a financial obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City, any of which affect security holders, if material; and
(16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the City, any of which reflect financial difficulties.

Note: For the purposes of the event identified in subparagraph (12), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S.

Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person.

The term "financial obligation" in subparagraphs (15) and (16) means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term "financial obligation" shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule.
(b) The City shall, in a timely manner not later than nine (9) business days after its occurrence, notify the Dissemination Agent in writing of the occurrence of a Notice Event. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (c). Such notice shall identify the Notice Event that has occurred, include the text of the disclosure that the City desires to make, contain the written authorization of the City for the Dissemination Agent to disseminate such information, and identify the date the Issuer desires for the Dissemination Agent to disseminate the information (provided that such date is not later than the tenth business day after the occurrence of the Notice Event). (c) The Dissemination Agent is under no obligation to notify the City or the Disclosure Representative of an event that may constitute a Notice Event. If the Dissemination Agent so notifies the Disclosure Representative, the Disclosure Representative will within two business days of receipt of such notice (but in any event not later than the tenth business day after the occurrence of the Notice Event, if the City determines that a Notice Event has occurred), instruct the Dissemination Agent that either (i) a Notice Event has not occurred and no filing is to be made or (ii) a Notice Event has occurred and the Dissemination Agent is to report the occurrence pursuant to subsection (d) of this Section 5. Such instruction shall identify the Notice Event that has occurred, include the text of the disclosure that the City desires to make, contain the written authorization of the City for the Dissemination Agent to disseminate such information, and identify the date the City desires for the Dissemination Agent to disseminate the information (provided that such date is not later than the tenth business day after the occurrence of the Notice Event). (d) If the Dissemination Agent has been instructed by the City as prescribed in subsection (b) or (c) of this Section 5 to report the occurrence of a Notice Event, the Dissemination Agent shall promptly file a notice of such occurrence with the MSRB.

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Section 6. Termination of Reporting Obligation. The City's obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(b).

Section 7. Dissemination Agent.
(a) The City hereby appoints and engages Willdan Financial Services as the Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the City pursuant to this Disclosure Agreement. The City may replace the Dissemination Agent with or without cause. If at the time there is no designated Dissemination Agent appointed by the City, the City shall be the Dissemination Agent and undertake or assume its obligations hereunder. Any company succeeding to all or substantially all of the Dissemination Agent's corporate trust business shall be the successor to the Dissemination Agent hereunder without the execution or filing of any paper or any further act. The Dissemination Agent may resign its duties hereunder by giving 30 -days written notice to the City. (b) The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees agreed to between the Dissemination Agent and the City from time to time and for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the City hereunder and shall not be deemed to be acting in any fiduciary capacity for the City, Holders or Beneficial Owners or any other party. The Dissemination Agent may rely and shall be protected in acting or refraining from acting upon any direction from the City or an opinion of nationally recognized bond counsel.

Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the City, and the Dissemination Agent may amend this Disclosure Agreement (and the Dissemination Agent shall agree to any amendment so requested by the City, provided the Dissemination Agent shall not be obligated to enter into any amendment increasing or affecting its duties or obligations), and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted;
(b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and
(c) the proposed amendment or waiver either (i) is approved by holders of the Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds.

In the event of any amendment or waiver of a provision of this Disclosure Agreement, the City shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver.

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If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or fmancial information being provided.

If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the City to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be sent to the MSRB in the same manner as for a Listed Event under Section 5(b).

No amendment to this Agreement which modifies the duties or rights of the Dissemination Agent shall be made without the prior written consent of the Dissemination Agent.

Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the City shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

Section 10. Default. In the event of a failure of the City, or the Dissemination Agent to comply with any provision of this Disclosure Agreement, any Participating Underwriter or any Holder or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City, or the Dissemination Agent, as the case may be, to comply with its respective obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the City, or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance.

Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the City agrees to indemnify and save the Dissemination Agent, and its, officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorney's fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The Dissemination Agent may rely and shall be protected in acting or refraining from acting upon any direction from the City or an opinion of nationally recognized bond counsel. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.

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Section 12. Notices. Any notices or communications to or among any of the parties to this Disclosure Agreement may be given as follows:

To the City:

To the Dissemination Agent:

City of Rialto
150 South Palm Avenue
Rialto, California 92376
Attention: Interim City Manager
Willdan Financial Services
27368 Via Industria, Suite 200
Temecula, CA 92590
Section 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the City the Dissemination Agent, the Participating Underwriter and Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.

Section 14. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. [Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Agreement as of the date first written above.

CITY OF RIALTO
Interim City Manager

APPROVED AS TO FORM
City Attorney
WILLDAN FINANCIAL SERVICES, as
Dissemination Agent
Authorized Representative
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EXHIBIT A

NOTICE TO MUNICIPAL SECURITIES RULEMAKING

BOARD OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: Rialto Public Financing Authority
Name of Bond Issue: $56,525,000 initial principal amount of Rialto Financing Authority Lease Revenue Bonds, 2023 Series A (Police Station Project)
Date of Issuance: December 20, 2023
NOTICE IS HEREBY GIVEN that the City of Rialto, California (the "City") has not provided an Annual Report with respect to the above -named Bonds as required by the Indenture, dated as of December 1, 2023, by and between the City and U.S. Bank Trust Company, National Association, as trustee. The City anticipates that the Annual Report will be filed by Date: , 20
as Dissemination Agent
By:

Title:
cc: City Manager, City of Rialto
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APPENDIX E

FORM OF OPINION OF BOND COUNSEL
[Closing Date]
Rialto Public Financing Authority
Rialto, California
City of Rialto
Rialto, California
$56,525,000
Rialto Public Financing Authority
Lease Revenue Bonds, 2023 Series A
(Police Station Project)
Ladies and Gentlemen:

We have acted as Bond Counsel to the Rialto Public Financing Authority (the "Authority") in connection with the issuance by the Authority of its $56,525,000 Lease Revenue Bonds, 2023 Series A (Police Station Project) (the "2023A Bonds"). The 2023A Bonds are being issued under the provisions of the Marks -Roos Local Bond Pooling Act of 1985, constituting Article 4 of Chapter 5 of Division 7 of Title 1 (commencing with Section 6584) of the California Government Code (the "Bond Law"), and pursuant to an Indenture, dated as of December 1, 2023 (the "Indenture"), by and between the Authority and U.S. Bank Trust Company, National Association, as trustee (the "Trustee").

The 2023A Bonds are limited obligations of the Authority secured under the Indenture by a pledge of Revenues and certain other moneys held under the Indenture. The Revenues consist of (i) all Base Rental Payments payable by the City pursuant to the Lease Agreement, dated as of December 1, 2023 (the "Lease"), by and between the Authority, as lessor, and the City, as lessee (including prepayments), (ii) any proceeds of 2023A Bonds deposited with the Trustee and all moneys on deposit in the funds and accounts established under the Indenture, (iii) investment income with respect to such moneys held by the Trustee, (iv) certain amounts payable to the City by the Developer as liquidated damages or damages due to delay in construction pursuant to the Development Agreement and (v) any insurance proceeds or condemnation awards received by or payable to the Trustee relating to the Base Rental Payments.

The City has leased certain real property and improvements (the "Leased Property") to the Authority pursuant to the Site and Facility Lease, dated as of December 1, 2023 (the "Site Lease"), by and between the City and the Authority. The Authority has leased the Leased Property back to the City pursuant to the Lease. Pursuant to the Assignment Agreement, dated as of December 1, 2023 (the "Assignment Agreement"), by and between the Authority and the Trustee, the Authority has assigned to the Trustee, for the benefit of the Owners, certain of the Authority's rights under the Site Lease and the Lease, including the right to receive Base Rental Payments under the Lease.

As Bond Counsel, we have reviewed relevant portions of the Bond Law, the Indenture, the Site Lease, the Lease, the Assignment Agreement and certifications of the Authority, the City, the Trustee and others, opinions of counsel to the Authority, the City and the Trustee, and such other documents, opinions and E-1

instruments as we deemed necessary to render the opinions set forth herein. Capitalized terms used and not otherwise defined herein shall have the meanings ascribed thereto in the Indenture.

Based upon the foregoing, we are of the opinion that:

1. The 2023A Bonds constitute valid and binding limited obligations of the Authority as provided in the Indenture, and are entitled to the benefits of the Indenture.

2. The Indenture has been duly and validly authorized, executed and delivered by the Authority and, assuming the enforceability thereof against the Trustee, constitutes the legally valid and binding obligation of the Authority, enforceable against the Authority in accordance with its terms. The Indenture creates a valid pledge, to secure the payment of principal of and interest on the 2023A Bonds, of the Revenues and certain other amounts held by the Trustee in certain funds and accounts established pursuant to the Indenture, subject to the provisions of the Indenture permitting the application thereof for other purposes and on the terms and conditions set forth therein.

3. The Lease and Site Lease have been duly and validly authorized, executed and delivered by the Authority and the City and constitute the legally valid and binding obligations of the Authority and the City, enforceable against the Authority and the City in accordance with their respective terms.

4. The Assignment Agreement has been duly and validly authorized, executed and delivered by the Authority and, assuming the enforceability thereof against the Trustee, constitutes the legally valid and binding obligation of the Authority, enforceable against the Authority in accordance with its terms.

5. Under existing law, and assuming compliance with the covenants mentioned below after the date hereof, interest on the 2023A Bonds is excluded pursuant to section 103(a) of the Internal Revenue Code of 1986 as amended to the date hereof (the "Code") from the gross income of the owners thereof for federal income tax purposes and will not be included in computing the alternative minimum taxable income of the owners thereof who are individuals. We are further of the opinion that interest on the 2023A Bonds is exempt from personal income taxes of the State of California under present state law.

The Code imposes certain requirements that must be met subsequent to the issuance and delivery of the 2023A Bonds for interest thereon to be and remain excluded pursuant to section 103(a) of the Code from the gross income of the owners thereof for federal income tax purposes. Non-compliance with such requirements could cause the interest on the 2023A Bonds to fail to be excluded from the gross income of the owners thereof retroactive to the date of issuance of the 2023A Bonds. Pursuant to the Indenture, the Lease and the Tax Certificate being delivered by the Authority and the City in connection with the issuance of the 2023A Bonds, the Authority and the City are making representations relevant to the determination of, and are undertaking certain covenants regarding or affecting, the exclusion of interest on the 2023A Bonds from the gross income of the owners thereof for federal income tax purposes. In reaching our opinions described in the immediately preceding paragraph, we have assumed the accuracy of and have relied upon such representations and the present and future compliance by the Authority and the City with such covenants. Further, except as stated in the preceding paragraph, we express no opinion as to any federal, state or local tax consequences of the receipt of interest with respect to, or the ownership or disposition of, the 2023A Bonds. Furthermore, we express no opinion as to any federal, state or local tax law consequences with respect to the 2023A Bonds, or the interest thereon, if any action is taken with respect to the 2023A Bonds or the proceeds thereof predicated or permitted upon the advice or approval of E-2

other counsel. Ownership of tax-exempt obligations such as the 2023A Bonds may result in collateral federal tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, certain foreign corporations doing business in the United States, S corporations with subchapter C earnings and profits, corporations subject to the alternative minimum tax on adjusted financial statement income, owners of an interest in a financial asset securitization investment trust, individual recipients of Social Security or Railroad Retirement benefits, individuals otherwise qualifying for the earned income tax credit, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax-exempt obligations.

The opinions expressed in paragraphs 1, 2, 3 and 4 above are qualified to the extent the enforceability of the 2023A Bonds, the Indenture, the Lease, the Site Lease and the Assignment Agreement may be limited by applicable bankruptcy, insolvency, debt adjustment, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors' rights generally or as to the availability of any particular remedy. The enforceability of the 2023A Bonds, the Indenture, the Lease, the Site Lease and the Assignment Agreement is subject to the effect of general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, to the possible unavailability of specific performance or injunctive relief, regardless of whether considered in a proceeding in equity or at law, and to the limitations on legal remedies against governmental entities in the State of California.

No opinion is expressed herein on the accuracy, completeness or fairness of the Official Statement or other offering material relating to the 2023A Bonds.

Our opinions are based on existing law, which is subject to change. Such opinions are further based on our knowledge of facts as of the date hereof. We assume no duty to update or supplement our opinions to reflect any facts or circumstances that may thereafter come to our attention or to reflect any changes in any law that may thereafter occur or become effective. Moreover, our opinions are not a guarantee of result and are not binding on the Internal Revenue Service or the State of California; rather, such opinions represent our legal judgment based upon our review of existing law that we deem relevant to such opinions and in reliance upon the representations and covenants referenced above.

Respectfully submitted,
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APPENDIX F

BOOK -ENTRY SYSTEM
The information in this section concerning DTC and DTC's book -entry only system has been provided by DTC for use in securities offering documents and the Authority and the City take no responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial ownership interests in the 2023A Bonds, payment of principal, premium, if any, and interest on the 2023A Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the 2023A Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC.

The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the 2023A Bonds. The 2023A Bonds will be issued as fully -registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully -registered 2023A Bond will be issued for each annual maturity of the 2023A Bonds, each in the aggregate principal amount of such maturity, and will be deposited through the facilities of DTC.

DTC, the world's largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.6 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has an S&P Global Ratings rating of "AA+." The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com . The information set forth on such website is not incorporated herein by reference.

Purchases of 2023A Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 2023A Bonds on DTC's records. The ownership interest of each actual purchaser of each 2023A Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase.

Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the 2023A Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive 2023A Bonds representing their ownership F-1