Agenda — Desert Hot Springs City Council, January 21, 2025 (part 1 of 5)

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City of Desert Hot Springs
AGENDA

REGULAR MEETING OF THE CITY COUNCIL
and the City Council Serving as the Successor Agency to the Former Redevelopment Agency Board
Tuesday, January 21, 2025
4:30 PM - Closed Session
5:30 PM - Presentations
6:00 PM - Regular Session
Council Chambers/City Hall
11-999 Palm Drive
Desert Hot Springs, California, 92240

Page
CLOSED SESSION - 4:30 P.M.

CALL TO ORDER

ROLL CALL

PUBLIC COMMENTS
At this time, item(s) on the Closed Session agenda may be discussed during Public Comments. PLEASE STATE YOUR NAME FOR THE RECORD.

CLOSED SESSION:

1. CONFERENCE WITH LABOR NEGOTIATORS
Pursuant to Government Code §54967.6
Agency Designated Representatives: City Manager, Frank Luckino City Attorney, Tuan-Anh Vu
Employee Organization: Desert Hot Springs Police Officers' Association (DHSPOA)

2. CONFERENCE WITH LABOR NEGOTIATORS
Pursuant to Government Code §54967.6
Agency Designated Representatives: City Manager, Frank Luckino City Attorney, Tuan-Anh Vu
Employee Organization: Desert Hot Springs Employees' Union (DHSEU)

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3. CONFERENCE WITH LABOR NEGOTIATORS
Pursuant to Government Code §54967.6
Agency Designated Representatives: City Manager, Frank Luckino City Attorney, Tuan-Anh Vu
Employee Group: Unrepresented Employee Positions

4. CONFERENCE WITH LEGAL COUNSEL -ANTICIPATED LITIGATION Significant exposure to litigation pursuant to subdivision (d)(2) of Section 54956.9: The facts and circumstances involve transactional occurrence that might result in litigation
RECESS
PRESENTATIONS - 5:30 P.M.

Certificates of Recognition Presented to DHS Eagles Youth Football, Tiny Mites
REGULAR SESSION - 6:00 P.M.

CALL TO ORDER

ROLL CALL

INVOCATION

PLEDGE OF ALLEGIANCE

CITY ATTORNEY REPORT ON CLOSED SESSION

APPROVAL OF AGENDA
At this time the City Council may amend the order of the agenda, approve the Consent Calendar, remove items from the Consent Calendar for separate discussion and action, and add Urgency Items.

Urgency Items ("Added Starters"): The Brown Act, which governs public meetings, permits the City Council to take action on any item that does not appear on the agenda only if 2/3 of the City Council (if all are present) or all members of the City Council (if fewer than all members are present) determine there is a need to take immediate action on the item, and the need to take immediate action came to the City Council's attention after the agenda was posted.

PUBLIC COMMENTS
At this time, pursuant to the Brown Act, any person may comment on matters of general interest within the subject matter jurisdiction of the City Council, NOT listed on the agenda. Under the Brown Act, the City Council should not take action on or discuss matters raised during Public Comment portion of the agenda that are not listed on the agenda.

Comments are limited to the first ten (10) speakers at three (3) minutes per speaker. Speakers may not yield their time to others without consent of the Mayor. All comments are to be directed to the City Council and shall be devoid

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of any personal attacks. Members of the public are expected to maintain a professional, courteous decorum during public comments.

Please complete and submit a "speaker card" to the City Clerk. You will be asked to STATE YOUR NAME AND CITY OF RESIDENCE FOR THE RECORD.

CITY MANAGER REPORT

MAYOR AND COUNCIL MEMBER REPORTS
PUBLIC HEARINGS:

5. Formation of Community Facilities District No. 2025-1 (Skyborne Village)
Geoffrey Buchheim, Administrative Services Director
Recommendation:
1) Staff Report;
2) Entertain questions from Staff and from the City Council; 3) Open the Public Hearing;
4) Take public testimony from those in favor;
5) Take public testimony from those opposed;
6) Take public testimony from those in a neutral position; 7) Close the Public Hearing;
8) City Council discussion;
9) Adopt a Resolution of the City Council establishing CFD No. 2025-1; 10) Adopt a Resolution of the City Council declaring the necessity to incur bond indebtedness within CFD No. 2025-1;
11) Hold the election;
12) Canvass the election;
13) Adopt a Resolution of the City Council certifying election results; and 14) Introduce for first reading and read by title only: " An Ordinance of the City Council of the City of Desert Hot Springs acting in its capacity as the legislative body of Community Facilities District No. 2025-1 (Skyborne Village) of the City of Desert Hot Springs authorizing the levy of special taxes within Improvement Area No. 1 and Improvement Area No. 2 and in territory annexed to the District in the future.

Staff Report - SR-25-008 - Pdf
9 - 175
ADMINISTRATIVE CALENDAR:

6. City Council Appointments to City Commissions
Jerryl Soriano, City Clerk
Recommendation:

Appoint five (5) members to each of the following Commissions for a twoyear term expiring in January 2027.

A) Planning Commission:
1) Ratify Mayor Matas' appointment of James Nindel;
2) Ratify Mayor Pro Tem Gardner's appointment of Chris Wagstaff; 3) Ratify Councilmember Pitts' appointment of Theodore Parker; 4) Ratify Councilmember Pye's appointment of Robert Rowe; and 5) Ratify Councilmember Voss' appointment of Joseph Lombardo. 177 - 212

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B) Public Safety Commission:
1) Ratify Mayor Matas' appointment of Donna Lozano;
2) Ratify Mayor Pro Tem Gardner's appointment of Mirna Flores; 3) Ratify Councilmember Pitts' appointment of Micheline Anderson; 4) Ratify Councilmember Pye's appointment of Michael Rizzio; and 5) Ratify Councilmember Voss' appointment of Reynaldo Sanchez.

Staff Report - SR-25-010 - Pdf

7. Municipal Identification Card Ordinance
Christina Newsom, Compliance Director
Recommendation:

Introduce for first reading and read by title only: "An Ordinance of the City Council of the City of Desert Hot Springs, California, adding chapter 2.70, “Municipal Identification Cards” and Adding Various Subsections of the Desert Hot Springs Municipal Code."
Staff Report - SR-24-218 - Pdf
213 - 225

8. Corporate Yard Park Naming Contest
Mayor Pro Tem, Gary Gardner; and Councilmember, Jan Pye Recommendation:

Concur in recommendation of the subcommittee (Mayor Pro Tem Gardner and Councilmember Pye) to name the park "Golden Eagle Sports Park."
Staff Report - SR-25-011 - Pdf
227 - 231

9. Mayor's Appointments to Various Intergovernmental and Regional Boards and Committees
Jerryl Soriano, City Clerk
Recommendation:

Ratify Mayor Matas' appointments to the various intergovernmental and regional boards and committees.

Staff Report - SR-25-009 - Pdf
233 - 237
CONSENT CALENDAR:

Matters on the "Consent Calendar" are considered routine and may be acted upon by one motion under "Approval of the Agenda." Individual items may also be removed by the City Council for separate discussion under "Approval of the Agenda." The title is deemed to be read and further reading waived on any ordinance listed on the Consent Calendar for second reading and adoption.

10. Selection of Consultants to Provide Staff Augmentation for Planning Services
Travis Clark, Community Development Director
239 - 391

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Recommendation: Authorize the City Manager to execute a Professional Services Agreement with The Altum Group and MNS, Engineers, Inc. for a period of 5 years not to exceed $100,000 per year. The term would be for three (3) years with an option to renew for two (2) additional years.

Staff Report - SR-24-216 - Pdf

11. Approve Professional Services Agreement with Exhibit B State and Federal Requirements for Engineering Design of HSIP Cycle 11 - Citywide Pedestrian Safety Project, City Project No. 3027 Cycle 11 - Citywide Pedestrian Safety Project, City Project No. 3027.

Daniel Porras, Assistant City Manager
Recommendation:
1) Authorize the City Manager to cancel the original Professional Services Agreement between the City of Desert Hot Springs and Minagar and Associates; and
2) Approve the Professional Services Agreement between the City of Desert Hot Springs and Minagar and Associates to include Exhibit B – State and Federal Requirement and: 3. Authorize the City Manager to execute the Professional Services Agreement with Exhibit B, for Engineering Design for HSIP Cycle 11 – Citywide Pedestrian Safety Project, City Project No. 3027 with Minagar and Associates, Inc. in the amount not to exceed $62,373.00 with a contingency of $6,237.30 (10%) for any additional work as approved by the City, which brings a total budget of $68,610.30.

Staff Report - SR-25-015 - Pdf
393 - 483

12. Approval of Parcel Map No. 38435, for Desert Gateway Project Daniel Porras, Assistant City Manager
Recommendation:
1) Find that the Parcel Map No. 38435 is in substantial conformance with the previously approved tentative map;
2) Approve Parcel Map No. 38435 in accordance with the Conditions of Approval;
3) Accept any and all dedications as offered on the map for street and public utility purposes, and sidewalk easements;
4) Accept the Subdivision Improvement Agreement, Performance Bond and Labor and Materials Bond, any substantive changes shall be approved by the City Manager and the City Attorney;
5) Authorize the City Clerk and City Engineer to sign the map evidencing the City Council's approval; and
6) Authorize staff to process and file the map and subdivision agreement with the County Recorder's Office.

Staff Report - SR-25-012 - Pdf
485 - 516

13. Regional Early Action Planning Grant Program (REAP 2.0) Notice of Funding Availability (NOFA) For Lasting Affordability Program – SCAG Resolution
Daniel Porras, Assistant City Manager
517 - 541

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Recommendation:

Adopt a Resolution of the City Council of the City of Desert Hot Springs approving the execution of an agreement to receive funding from the Regional Early Action Planning Grant Program of 2021 Notice of Funding Availability For Lasting Affordability Program.

Staff Report - SR-25-013 - Pdf

14. Regional Early Action Planning Grant Program (REAP 2.0) Regional Utilities Supporting Housing (RUSH) Pilot Program – SCAG Resolution
Daniel Porras, Assistant City Manager
Recommendation:

Adopt a Resolution of the City Council of the City of Desert Hot Springs approving the execution of an agreement to receive funding from the Regional Early Action Planning Grant Program of 2021 Regional Utilities Supporting Housing (RUSH) Pilot Program
Staff Report - SR-25-014 - Pdf
543 - 565

15. Notice of Completion – HSIP 9-1 Palm Drive Safety Improvement Project, Federal Project No. HSIPL-5384(023), City Project No. 3019 Nicholas Haecker, Public Works Director
Recommendation:

Approve the work, accept the project, and direct the City Manager to file the Notice of Completion for the HSIP 9-1 - Palm Drive Safety Improvement Project, Federal Project No. HSIPL-5384(023), City Project No. 3019.

Staff Report - SR-25-016 - Pdf
567 - 569

16. Payment Register and City Council Expenditures for the Period of December 1, 2024 to December 31, 2024
Geoffrey Buchheim, Administrative Services Director
Recommendation:

Receive and file.

Staff Report - SR-25-007 - Pdf
571 - 758

PUBLIC COMMENTS
Opportunity is given to those members of the public who have NOT addressed the City Council on an item which is NOT on the agenda. Comments are limited to three (3) minutes per speaker. PLEASE STATE YOUR NAME AND CITY OF RESIDENCE FOR THE RECORD.

ADJOURN

UPCOMING MEETING DATES

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*Please refer to the City website calendar at www.cityofdhs.org for meeting locations and the most up to date information.

February 4 City Council Regular Meeting 6:00 p.m.

February 11 Planning Commission 6:00 p.m.

February 13 Public Safety Commission 6:00 p.m.

February 18 City Council Regular Meeting 6:00 p.m.
________________________________________________________________________________________

NOTICES
In accordance with California Government Code Section 54957.5, any writing or document that is a public record, relates to an open session agenda item, and is distributed less than 72 hours prior to a regular meeting will be made available for public inspection in the Office of the City Clerk at City Hall during normal business hours at 11999 Palm Drive, Desert Hot Springs, CA 92240.

If, however, the document or writing is not distributed until the regular meeting to which it relates, then the document or writing will be made available to the public at the location of the meeting, as listed on this agenda at 11999 Palm Drive, Desert Hot Springs, CA 92240.

Americans with Disabilities Act
In an effort to comply with the requirements of Title 2 of the Americans with Disabilities Act of 1990, the City of Desert Hot Springs requires that any person in need of any type of special equipment, assistance, or accommodation(s) in order to communicate at a City public meeting, must inform the City Clerk a minimum of 72 hours prior to the scheduled meeting to enable the City to make reasonable arrangements.

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SR-25-008
City of Desert Hot Springs
City Council

AGENDA ITEM REPORT
To: City Council
Date: January 21, 2025
Department: Administrative Services
Prepared by: Geoffrey Buchheim, Administrative Services Director Subject: Formation of Community Facilities District No. 2025-1 (Skyborne Village) RECOMMENDATION:
1) Staff Report;
2) Entertain questions from Staff and from the City Council; 3) Open the Public Hearing;
4) Take public testimony from those in favor;
5) Take public testimony from those opposed;
6) Take public testimony from those in a neutral position; 7) Close the Public Hearing;
8) City Council discussion;
9) Adopt a Resolution of the City Council establishing CFD No. 2025-1; 10) Adopt a Resolution of the City Council declaring the necessity to incur bond indebtedness within CFD No. 2025-1;
11) Hold the election;
12) Canvass the election;
13) Adopt a Resolution of the City Council certifying election results; and 14) Introduce for first reading and read by title only: " An Ordinance of the City Council of the City of Desert Hot Springs acting in its capacity as the legislative body of Community Facilities District No. 2025-1 (Skyborne Village) of the City of Desert Hot Springs authorizing the levy of special taxes within Improvement Area No. 1 and Improvement Area No. 2 and in territory annexed to the District in the future.

BACKGROUND:

Skyborne Ventures LLC (the “Developer”) is the owner of certain property located within a developing master-planned community known as “Skyborne.” Such property is located in the northwestern part of the City, with Indian Canyon Road on the east, Pierson Ave on the south and Highway 62 to the east. The Developer requested that the City form a community facilities district (“CFD No. 2025-1”) with two initial improvement areas therein (“Improvement Area No. 1” and “Improvement Area No. 2” and together, the “Improvement Areas”) to encompass such property in accordance with the MelloRoos Community Facilities Act of 1982, as amended (the “Act”), to finance the costs of certain public improvements, and maintenance services through the levy of special taxes. Improvement Area No. 1 is planned to include approximately 286 residential units and Improvement Area No. 2 is planned to include approximately 182 residential units. Improvement Area No. 1 has been conveyed to Lennar Homes of California LLC (“Lennar”) (and its land banking entity) for development.

Item Number: 5.

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SR-25-008
Development of Skyborne commenced in early 2007 and is expected to include more than 2,300 single-family residences on approximately 622 acres. The formation of CFD No. 2025-1 is consistent with the development plan for Skyborne.

DISCUSSION:

On December 12, 2024, the City Council adopted Resolution No. 2024-047 (the “Resolution of Intention”), to initiate the proceedings to form CFD No. 2025-1, designate the Improvement Areas therein, designate area for future annexation to CFD No. 2025-1 and called for a public hearing at this January 21, 2025, City Council meeting on the formation of CFD No. 2025-1, the levy of the special taxes within the Improvement Areas, and the incurring of bonded indebtedness of CFD No. 2025-1.

In connection with the public hearing, Webb Municipal Finance, LLC has prepared a Public Hearing Report presented at this meeting. The Public Hearing Report describes and analyzes the facilities to be financed by CFD No. 2025-1 and the estimated costs of such facilities. Following the close of the public hearing, the City Council will be asked to adopt the Resolution Establishing CFD No. 2025-1 (the “Resolution of Formation”) and the Resolution Determining the Necessity to Incur Debt which, together, approve the formation of CFD No. 2025-1 and the levy of the special taxes within the Improvement Areas in accordance with the rate and method of apportionment for each Improvement Area that were attached to the Resolution of Intention (each a “RMA”) and determines the necessity for CFD No. 2025-1 to issue bonds in an amount not-to-exceed $13,000,000 for each Improvement Area. Such resolutions call for elections to submit to the qualified voters in each Improvement Area, ballot measures on the approval of the special taxes, the issuance of the bonds and an appropriations limit for CFD No. 2025-1.

The proposed CFD No. 2025-1 will establish two categories of special taxes in each Improvement Area. A “Special Tax A” will finance infrastructure benefitting CFD No. 2025-1. A “Special Tax B” will provide funds for maintenance of parks, parkways and open space, flood and storm protection services and the operation of storm drainage systems. With respect to each Improvement Area, the applicable RMA provides that the Fiscal Year 2025-26 Assigned Special Tax Rate A will range from $2,140 to $4,420 per parcel of residential property. The rates vary based upon the size of homes being constructed. The Special Tax A does not escalate. The Fiscal Year 2025-26 Maximum Special Tax Rate B will be $275 per parcel of single family residential property, escalating at the greater of the percentage change in the Consumer Price Index or 2% per year.

The Resolution of Formation approves the execution and delivery of a Acquisition, Construction and Funding Agreement for each of the Improvement Areas (the “Acquisition Agreements”) in the forms presented at this meeting. The Acquisition Agreements set forth the terms, among others, pursuant to which CFD No. 2025-1 will acquire from and reimburse the Developer or Lennar, as applicable, for completed public improvements benefitting CFD No. 2025-1. In addition, the Resolution of Formation approves a Joint Community Facilities Agreement with the Mission Springs Water District (“JCFA”), which will allow CFD No. 2025-1 to finance improvements to be owned and operated by Mission Springs Water District that benefit the development within CFD No. 2025-1.

On file with the City Clerk is a Certificate of the Registrar of Voters of Riverside County certifying that there are no registered voters residing within the boundaries of CFD No. 2025-1. Accordingly, under the Act, only landowners in the Improvement Areas are eligible to vote at the elections with each owner having one vote for each acre (or portion thereof) that they own within an Improvement Area.

Item Number: 5.

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SR-25-008
Each of the Developer, Lennar and Lennar’s land banking entity, as the landowners in the Improvement Areas, have executed a consent and waiver of certain election procedures for the elections within the Improvement Areas in accordance with the Act, including certain timing requirements with respect to the elections. Accordingly, if the City Council approves the Resolution of Formation and the Resolution Determining the Necessity to Incur Debt, the City Clerk will conduct the elections. The City Clerk will announce the elections results and the City Council will be asked to adopt the Resolution Certifying the Election Results. Based on upon certification that two thirds of the votes cast are in favor of the propositions voted upon, the Resolution Certifying the Election Results directs the City Clerk to record a notice of special tax lien on the property within each Improvement Area. The City Council will then be asked to introduce the Ordinance authorizing the levy of the special tax within the Improvement Areas in accordance with the applicable RMA.

FISCAL IMPACT:

The Developer has made a deposit of $80,000 to pay for the costs of the formation proceedings which may be reimbursed to the Developer in accordance with the Acquisition Agreement presented at this meeting. If established and subject to necessary Council and voter approvals, CFD No. 2025- 1 will annually levy special taxes on all of the taxable property within each Improvement Area in accordance with the applicable RMA. Any bonds issued by CFD No. 2025-1 are not obligations of the City and will be secured solely by the Special Taxes levied in the applicable improvement area within CFD No. 2025-1. Special Tax B levied within the Improvement Areas is estimated to produce $128,700 in annual revenues for maintenance services at buildout (based on the initial rate of $275/single-family residential unit).

ENVIRONMENTAL ANALYSIS:

Not Applicable
OPTIONAL:

Not approve the CFD
ATTACHMENTS:
1) Resolution of Formation - Skyborne CFD No. 2025-1
2) Resolution of Necessity to Incur Debt - Skyborne CFD No. 2025-1 3) Resolution Certifying Election Results - Skyborne CFD No. 2025-1 4) Ordinance - Skyborne CFD No. 2025-1
5) CFD 2025-1 Report
6) Acquisition Agreement (IA1) - Skyborne CFD No. 2025-1 7) Acquisition Agreement (IA2 and Annexation Area) - Skyborne CFD No. 2025-1 8) Joint Community Facilities Agreement with Mission Springs Water District (with Land Bank) Item Number: 5.

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4909-8572-6728v4/200812-0004
RESOLUTION NO. 2025-___

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

DESERT HOT SPRINGS ESTABLISHING COMMUNITY
FACILITIES DISTRICT NO. 2025-1 (SKYBORNE VILLAGE) OF

THE CITY OF DESERT HOT SPRINGS, AUTHORIZING THE

LEVY OF SPECIAL TAXES AND CALLING AN ELECTION
WITHIN IMPROVEMENT AREAS NOS. 1 AND 2 THEREIN AND

APPROVING AND AUTHORIZING CERTAIN ACTIONS

RELATED THERETO
Whereas, on December 12, 2024, the City Council (the “City Council”) of the City of Desert Hot Springs (the “City”) adopted Resolution No. 2024-047 (the “Resolution of Intention”) stating its intention to establish Community Facilities District No. 2025-1 (Skyborne Village) of the City of Desert Hot Springs (“Community Facilities District No. 2025-1” or the “District”), designate Improvement Area No. 1 (“Improvement Area No. 1”) and Improvement Area No. 2 (“Improvement Area No. 2” and together with Improvement Area No. 1, the “Improvement Areas”) therein, and designate territory proposed for annexation to the District in the future (the “Future Annexation Area”) as one or more future improvement areas (“Future Improvement Areas”), pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (the “Act”); and
Whereas, a copy of the Resolution of Intention setting forth a description of the proposed boundaries of Community Facilities District No. 2025-1, Improvement Area No. 1, Improvement Area No. 2 and the Future Annexation Area, the facilities, maintenance services and incidental expenses to be financed by the District and the rates and methods of apportionment of the special tax proposed to be levied within Improvement Area No. 1 and Improvement Area No. 2 are on file with the City Clerk; and Whereas, notice was published and mailed to all landowners of the land proposed to be included within the District as required by law relative to the intention of this City Council to form the proposed Community Facilities District No. 2025-1 and the Improvement Areas, to designate the Future Annexation Area proposed for annexation to the District in the future, to levy special taxes within the Improvement Areas, and to incur bonded indebtedness in one or more series in the maximum aggregate principal amount of $13,000,000 within Improvement Area No. 1 and of $13,000,000 within Improvement Area No. 2; and
Whereas, on January 21, 2025, this City Council conducted a noticed public hearing as required by law relative to the proposed formation of Community Facilities District No. 2025-1 and the Improvement Areas, the designation of the Future Annexation Area, and the rates and methods of apportionment of the special tax and the bonded indebtedness proposed for the District and the Improvement Areas; and
Whereas, at or before the January 21, 2025 public hearing there was filed with this City Council a report containing a description of the facilities necessary to meet the needs of the District (as currently configured and as expanded through annexation of the Future Annexation Area) and an estimate of the cost of such facilities and services as required by Section 53321.5 of the Act (the “CFD Report”); and
Item Number: 5.

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Whereas, at the January 21, 2025 public hearing all persons desiring to be heard on all matters pertaining to the formation of Community Facilities District No. 2025-1 and the Improvement Areas, the designation of the Future Annexation Area, and the rates and methods of apportionment of the special tax and the bonded indebtedness proposed for the District and the Improvement Areas, were heard and a full and fair hearing was held; and Whereas, following the public hearing, this City Council has determined to authorize the formation of the District to finance the facilities (the “Facilities”), the maintenance services (the “Maintenance Services”), the incidental expenses to be incurred in connection with financing the Facilities and forming and administering the District (the “Facilities Incidental Expenses”), and the incidental expenses to be incurred in connection with financing the Maintenance Services (the “Services Incidental Expenses” and together with the Facilities Incidental Expenses, the “Incidental Expenses”), set forth in Attachment “A” hereto, which are also described in the CFD Report; and
Whereas, at the public hearing evidence was presented to this City Council on the matters before it, and the proposed special tax to be levied within the Improvement Areas was not precluded by a majority protest of the type described in Section 53324 of the Act, and this City Council at the conclusion of the hearing was fully advised as to all matters relating to the formation of the District and the Improvement Areas, the designation of the Future Annexation Area and the levy of a special tax and the issuance of bonded indebtedness within the Improvement Areas; and
Whereas, this City Council has determined, based on a Certificate of Registrar of Voters on file in the office of the City Clerk, that no registered voters have been residing in the proposed boundaries of the Improvement Areas for each of the 90 days prior to January 21, 2025 and that the qualified electors in the Improvement Areas are the landowners within the Improvement Areas as of January 21, 2025; and
Whereas, on the basis of all of the foregoing, this City Council has determined to proceed with the establishment of Community Facilities District No. 2025-1 and the Improvement Areas and the designation of the Future Annexation Area, and to call an election within each of Improvement Area No. 1 and the Improvement Area No. 2 to authorize (i) the levy of special taxes within Improvement Area No. 1 pursuant to the rate and method of apportionment of the special tax, as set forth in Attachment “C” to the Resolution of Intention, (ii) the levy of special taxes within Improvement Area No. 2 pursuant to the rate and method of apportionment of the special tax, as set forth in Attachment “D” to the Resolution of Intention, (iii) the issuance of bonds within the Improvement Areas to finance the Facilities and the Facilities Incidental Expenses, and (iv) the establishment of an appropriations limit for the District; and
Whereas, in order to facilitate the funding of the Facilities, the legislative body of the District desires to enter into (i) an Acquisition, Construction and Funding Agreement (the “IA No. 1 Agreement”) with Lennar Homes of California, LLC and AG EHC II (LEN) CA 2, L.P. (collectively, the “IA No. 1 Owners”) and (ii) an Acquisition, Construction and Funding Agreement (the “IA No. 2 Agreement” and together with the IA No. 1 Agreement, the “Acquisition Agreements”) with Skyborne Ventures, LLC (the “IA No. 2 Owner” and together with the IA No. 1 Owners, the “Developers”), and the forms of the Acquisition Agreements are on file with the City Clerk; and
Item Number: 5.

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Whereas, in connection with the proposed formation of the District, the City proposes to enter into a Joint Community Facilities Agreement (the “JFCA”) with Mission Springs Water District (the “Water District”) and the Developers relating to certain facilities proposed to be financed by the District and owned and operated by the Water District and the form of the JCFA is on file with the City Clerk; and
Whereas, the property within proposed Community Facilities District No. 2025-1 is included within a portion of City of Desert Hot Springs Community Facilities District No. 2006-1 (“CFD No. 2006-1”) and upon the formation of Community Facilities District No. 2025-1, the City expects to record a notice of cancellation of the special tax lien of CFD No. 2006-1 on the property that is included in Community Facilities District No. 2025-1, including the property in the Future Annexation Area; and
Whereas, the property within proposed Community Facilities District No. 2025-1 is included within City of Desert Hot Springs Drainage Assessment District No. 1 and Lighting, Landscape and Maintenance District No. 2, and upon the formation of Community Facilities District No. 2025-1, the City expects to exclude the property in the District from the foregoing.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF DESERT HOT SPRINGS HEREBY FINDS, DETERMINES, RESOLVES, AND ORDERS AS FOLLOWS:

Section 1. Each of the above recitals is true and correct.

Section 2. A community facilities district to be designated “Community Facilities District No. 2025-1 (Skyborne Village) of the City of Desert Hot Springs” is hereby established pursuant to the Act and the Improvement Areas are hereby designated within the District in accordance with Section 53350 of the Act. The City Council further designates the Future Annexation Area shown in Attachment “A” to the Resolution of Intention as property proposed for one or more annexations into the District in the future, by the unanimous consent and approval of the owner or owners of the parcel or parcels at the time of annexation (the “Unanimous Consent and Approval”) and approved by the City Council, acting as the legislative body of the District (the “Legislative Body”) and other procedures established by the Act.

The City Council hereby finds and determines that all prior proceedings taken with respect to the establishment of the District and the Improvement Areas and the designation of the Future Annexation Area were valid and in conformity with the requirements of law, including the Act. This finding is made in accordance with the provisions of Section 53325.1(b) of the Act.

Section 3. The boundaries of Community Facilities District No. 2025-1, the Improvement Areas and the Future Annexation Area are established as shown on the maps designated “Proposed Boundary Community Facilities District No. 2025-1 (Skyborne Village), City of Desert Hot Springs, County of Riverside, State of California”, and “Potential Future Annexation Area Community Facilities District No. 2025-1 (Skyborne Village), City of Desert Hot Springs, County of Riverside, State of California” which maps were recorded pursuant to Sections 3111 and 3112 of the Streets and Highways Code in the County of Riverside Book of Maps of Assessment and Community Facilities Districts in the County Recorder’s Office in: (i) Book No. 94 Page No. 95, on December 31, 2024 as Instrument No. 2024-0395898 and (ii) Book No. 94 Page No. 96, on December 31, 2024 as Instrument No. 2024-0395899.

Section 4. The Facilities, Maintenance Services and Incidental Expenses authorized to be financed by Community Facilities District No. 2025-1 (as currently configured and as Item Number: 5.

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expanded through annexation of the Future Annexation Area) are those set forth in Attachment “A” attached hereto. The estimated cost of the Facilities, Maintenance Services, and Incidental Expenses to be financed is set forth in the CFD Report, which estimates may change as the Facilities are designed and bid for construction and acquisition or the Maintenance Services are determined.

The City is authorized by the Act to contribute revenue to, or to construct or acquire the Facilities, all in accordance with the Act. The City Council finds and determines that the proposed Facilities are necessary to meet the increased demand that will be placed upon local agencies and public infrastructure as a result of new development within the District and that the Facilities to be financed, including those to be financed pursuant the JCFA to be entered into with the Water District and the Developers, benefit residents of the City and the future residents of the District.

Section 5. Except where funds are otherwise available, it is the intention of the City Council, subject to the approval of the eligible voters within Improvement Area No. 1 of the District, to levy annually Special Tax A (as defined in Attachment “C” to the Resolution of Intention) at the rates set forth therein on all non-exempt property within Improvement Area No. 1 of the District sufficient to pay for (i) all or any part of the Facilities and Facilities Incidental Expenses, and (ii) the principal and interest and other periodic costs on the bonds proposed to be issued by the District for Improvement Area No. 1 to finance the Facilities and Facilities Incidental Expenses, including the establishment and replenishment of reserve funds, any remarketing, credit enhancement and liquidity facility fees and other expenses of the type permitted by Section 53345.3 of the Act (including fees for instruments which serve as the basis of a reserve fund in lieu of cash). The rate and method of apportionment of special tax for Improvement Area No. 1 is described in detail in Attachment “C” to the Resolution of Intention and incorporated herein by this reference, and the City Council hereby finds that the rate and method of apportionment of special tax contains sufficient detail to allow each landowner within Improvement Area No. 1 to estimate the maximum amount that may be levied against each parcel within Improvement Area No. 1.

Except where funds are otherwise available, it is the intention of the City Council, subject to the approval of the eligible voters within Improvement Area No. 2 of the District, to levy annually Special Tax A (as defined in Attachment “D” to the Resolution of Intention) at the rates set forth therein on all non-exempt property within Improvement Area No. 2 of the District sufficient to pay for (i) all or any part of the Facilities and Facilities Incidental Expenses, and (ii) the principal and interest and other periodic costs on the bonds proposed to be issued by the District for Improvement Area No. 2 to finance the Facilities and Facilities Incidental Expenses, including the establishment and replenishment of reserve funds, any remarketing, credit enhancement and liquidity facility fees and other expenses of the type permitted by Section 53345.3 of the Act (including fees for instruments which serve as the basis of a reserve fund in lieu of cash). The rate and method of apportionment of special tax for Improvement Area No. 2 is described in detail in Attachment “D” to the Resolution of Intention and incorporated herein by this reference, and the City Council hereby finds that the rate and method of apportionment of special tax contains sufficient detail to allow each landowner within Improvement Area No. 2 to estimate the maximum amount that may be levied against each parcel within Improvement Area No. 2.

It is the intention of the City Council, subject to the receipt of the Unanimous Consent and Approval of the owners of the property of all or part of the Future Improvement Area at the time(s) such property is annexed to the District, and approval by the Legislative Body, to levy Item Number: 5.

Page 15 of 758 ends

annually a special tax at the rates to be set forth in the rate and method of apportionment approved for such Future Improvement Area by the Unanimous Consent and Approval and the Legislative Body on all non-exempt property within such Future Improvement Area sufficient to pay for (i) all or any part of the Facilities, Maintenance Services and Incidental Expenses, and (ii) the principal and interest and other periodic costs on the bonds proposed to be issued by the District for such Future Improvement Area to finance the Facilities and Facilities Incidental Expenses, including the establishment and replenishment of reserve funds, any remarketing, credit enhancement and liquidity facility fees and other expenses of the type permitted by Section 53345.3 of the Act (including fees for instruments which serve as the basis of a reserve fund in lieu of cash).

As described in greater detail in the CFD Report, which is incorporated by reference herein, the special tax to be levied within the Improvement Areas are based on, and the special tax to be levied within a Future Improvement Area, will be based on, the expected demand that each parcel of real property within Improvement Area No. 1, Improvement Area No. 2 and such Future Improvement Area will place on the Facilities, the Maintenance Services and on other factors and, accordingly, is hereby determined to be reasonable. With respect to Improvement Area No. 1, Special Tax A shall be levied until the final series of bonds for Improvement Area No. 1 has matured, provided that Special Tax A shall not be levied after Fiscal Year 2068-69.

With respect to Improvement Area No. 2, Special Tax A shall be levied until the final series of bonds for Improvement Area No. 2 has matured, provided that Special Tax A shall not be levied after Fiscal Year 2068-69.

The special tax is apportioned to each parcel within the Improvement Areas on the foregoing bases pursuant to Section 53325.3 of the Act and such special tax is not on or based upon the ownership of real property or the assessed value of real property. The special tax for a Future Improvement Area will be apportioned to each parcel therein on the foregoing bases pursuant to Section 53325.3 of the Act and such special tax will not be based upon the ownership of real property or the assessed value of real property.

The District expects to incur, and in certain cases has already incurred, Incidental Expenses in connection with the creation of the District, the issuance of bonds, the levying and collecting of the special taxes, the completion and inspection of the Facilities and the annual administration of the bonds and the District.

If Special Tax A is levied against any parcel used for private residential purposes within Improvement Area No. 1, (i) the maximum special tax rate shall be specified as a dollar amount which shall be calculated and established not later than the date on which the parcel is first subject to the special tax because of its use for private residential purposes and shall not be increased over time, (ii) Special Tax A shall be levied until the final series of bonds for Improvement Area No. 1 has matured, provided that Special Tax A shall not be levied after Fiscal Year 2068-69, and (iii) under no circumstances will Special Tax A levied against any such parcel used for private residential uses be increased as a consequence of delinquency or default by the owner or owners of any other parcel or parcels within Improvement Area No. 1 by more than ten percent above the amount that would have been levied in that fiscal year had there never been any such delinquencies or defaults.

If Special Tax A is levied against any parcel used for private residential purposes within Improvement Area No. 2, (i) the maximum special tax rate shall be specified as a dollar amount which shall be calculated and established not later than the date on which the parcel is first subject to the special tax because of its use for private residential purposes and shall not be Item Number: 5.

Page 16 of 758 ends

increased over time, (ii) Special Tax A shall be levied until the final series of bonds for Improvement Area No. 2 has matured, provided that Special Tax A shall not be levied after Fiscal Year 2068-69, and (iii) under no circumstances will Special Tax A levied against any such parcel used for private residential uses be increased as a consequence of delinquency or default by the owner or owners of any other parcel or parcels within Improvement Area No. 2 by more than ten percent above the amount that would have been levied in that fiscal year had there never been any such delinquencies or defaults.

If Special Tax A is levied against any parcel used for private residential purposes within a Future Improvement Area, for such period as set forth in the rate and method of apportionment of special tax for such Future Improvement Area approved by the Unanimous Consent and Approval, under no circumstances will the special tax levied against any parcel in a Future Improvement Area used for private residential uses be increased as a consequence of delinquency or default by the owner or owners of any other parcel or parcels within such Future Improvement Area by more than ten percent above the amount that would have been levied in such Future Improvement Area in that fiscal year had there never been any such delinquencies or defaults.

Section 6. Except where funds are otherwise available, it is the intention of the City Council, subject to the approval of the eligible voters within the Improvement Areas, to levy annually Special Tax B (as defined in Attachments “C” and “D” to the Resolution of Intention) at the rates set forth therein on all non-exempt property within the Improvement Areas of the District sufficient to pay for all or any part of the Maintenance Services and Services Incidental Expenses.

Section 7. Calculated separately for Improvement Area No. 1 and Improvement Area No. 2, in the event that a portion of the property within Improvement Area No. 1 or Improvement Area No. 2 shall become for any reason exempt, wholly or partially, from the levy of Special Tax A specified on Attachment “C” or Attachment “D,” to the Resolution of Intention, as applicable, the City Council shall, on behalf of Community Facilities District No. 2025-1, cause the levy to be increased, subject to the limitation of the maximum Special Tax A for a parcel as set forth in Attachment “C” or Attachment “D,” to the Resolution of Intention, as applicable, to the extent necessary upon the remaining property within the proposed Improvement Area No. 1 and Improvement Area No. 2 which is not exempt in order to yield the required debt service payments on any outstanding bonds issued by the District for Improvement Area No. 1 and Improvement Area No. 2, as applicable, or to prevent the District from defaulting on any other obligations or liabilities payable from Improvement Area No. 1 and Improvement Area No. 2, as applicable; provided, however, under no circumstances will the special tax levied against any parcel used for private residential uses be increased as a consequence of delinquency or default by the owner or owners of any other parcel or parcels within Improvement Area No. 1 or Improvement Area No. 2, as applicable, by more than ten percent above the amount that would have been levied in that fiscal year had there never been any delinquencies or defaults in special tax payments. The obligation to pay Special Tax A for Improvement Area No. 1 may be prepaid only as set forth in Section E of Attachment “C” to the Resolution of Intention. The obligation to pay Special Tax A for Improvement Area No. 2 may be prepaid only as set forth in Section E of Attachment “D” to the Resolution of Intention.

In the event that a portion of the property within a Future Improvement Area shall become for any reason exempt, wholly or partially, from the levy of the special tax applicable thereto, or in the event of delinquencies in the payment of special taxes levied therein, the City Council shall, on behalf of Community Facilities District No. 2025-1, increase the levy to the Item Number: 5.

Page 17 of 758 ends

extent necessary and permitted by law and these proceedings, and subject to the maximum special tax set forth in the rate and method of apportionment of the special tax for such Future Improvement Area, upon the remaining property within such Future Improvement Area which is not exempt or delinquent in order to yield the required debt service payments on any outstanding bonds issued by the District for such Future Improvement Area, or to prevent the District from defaulting on any other obligations or liabilities payable from special taxes of such Future Improvement Area; provided, however, under no circumstances will the special tax levied against any parcel used for private residential uses be increased as a consequence of delinquency or default by the owner or owners of any other parcel or parcels within such Future Improvement Area by more than ten percent above the amount that would have been levied in that fiscal year had there never been any delinquencies or defaults in special tax payments.

The amount of the special tax for parcels within a Future Improvement Area will be set in accordance with the rate and method of apportionment of the special tax approved for such Future Improvement Area in the Unanimous Consent and Approval.

Section 8. Calculated separately for Improvement Area No. 1 and Improvement Area No. 2, in the event that a portion of the property within Improvement Area No. 1 or Improvement Area No. 2 shall become for any reason exempt, wholly or partially, from the levy of Special Tax B specified on Attachment “C” or Attachment “D,” to the Resolution of Intention, as applicable, the City Council shall, on behalf of Community Facilities District No. 2025-1, cause the levy to be increased, subject to the limitation of the maximum special tax for a parcel as set forth in Attachment “C” or Attachment “D,” to the Resolution of Intention, as applicable, the extent necessary upon the remaining property within the proposed Improvement Area No. 1 and Improvement Area No. 2 which is not exempt in order to yield the Special Tax B revenues required for the Maintenance Services and the Services Incidental Expenses for Improvement Area No. 1 or Improvement Area No. 2, as applicable, or to prevent the District from defaulting on any other obligations or liabilities payable from the Improvement Area No. 1 or Improvement Area No. 2 Special Tax B, as applicable. Special Tax B may not be prepaid.

Section 9. The Administrative Services Director of the City, or his or her designee, will be responsible for preparing annually, or authorizing a designee to prepare, a current roll of special tax levy obligations by assessor’s parcel number and will be responsible for estimating future special tax levies pursuant to Section 53340.2 of the Act.

Section 10. Upon recordation of a notice of special tax lien for Improvement Area No. 1 pursuant to Section 3114.5 of the Streets and Highways Code, a continuing lien to secure each levy of the special tax shall attach to all non-exempt real property in Improvement Area No. 1 and this lien shall continue in force and effect until the special tax obligation is prepaid and permanently satisfied and the lien is canceled in accordance with law or until collection of the special tax ceases.

Upon recordation of a notice of special tax lien for Improvement Area No. 2 pursuant to Section 3114.5 of the Streets and Highways Code, a continuing lien to secure each levy of the special tax shall attach to all non-exempt real property in Improvement Area No. 2 and this lien shall continue in force and effect until the special tax obligation is prepaid and permanently satisfied and the lien is canceled in accordance with law or until collection of the special tax ceases.

Section 11. Consistent with Section 53325.6 of the Act, the City Council finds and determines that the land within Community Facilities District No. 2025-1, if any, devoted primarily to agricultural, timber or livestock uses and being used for the commercial production Item Number: 5.

Page 18 of 758 ends

of agricultural, timber or livestock products is contiguous to other land within Community Facilities District No. 2025-1 and will be benefited by the Facilities proposed to be provided within Community Facilities District No. 2025-1.

Section 12. It is hereby further determined that there is no ad valorem property tax currently being levied on property within proposed Community Facilities District No. 2025-1 for the exclusive purpose of paying the principal of or interest on bonds or other indebtedness incurred to finance the construction of capital facilities which provide the same services to the territory of Community Facilities District No. 2025-1 as are proposed to be provided by the Facilities to be financed by Community Facilities District No. 2025-1.

Section 13. The District may accept advances of funds or work-in-kind from any source, including, but not limited to, private persons or private entities, for any authorized purpose, including, but not limited to, paying any cost incurred in establishing Community Facilities District No. 2025-1. The District may enter into an agreement with the person or entity advancing the funds or work-in-kind, to repay all or a portion of the funds advanced, or to reimburse the person or entity for the value, or cost, whichever is less, of the work-in-kind, as determined by the City Council, with or without interest.

Section 14. Section 53314.9 of the Act provides that, either before or after formation of the District, the City may accept work in-kind from any source, including, but not limited to, private persons or private entities, and may provide, by resolution, for the use of that work inkind for any authorized purpose and the City Council may enter into an agreement, by resolution, with the person or entity advancing the work in-kind, to reimburse the person or entity for the value, or cost, whichever is less, of the work in-kind, as determined by the City Council, with or without interest, under the conditions specified in the Act. Any work in-kind must be performed or constructed as if the work had been performed or constructed under the direction and supervision, or under the authority of, the City.

Section 15. Written protests against the establishment of the District, and the designation of the Improvement Areas have not been filed by one-half or more of the registered voters within the boundaries of the District or the Improvement Areas or by the property owners of one-half (1/2) or more of the area of land within the District or the Improvement Areas. The City Council hereby finds that establishment of the District, the designation of the Improvement Areas, and the proposed special taxes for the Improvement Areas have not been precluded by a majority protest pursuant to Section 53324 of the Act. Further, written protests against the designation of the Future Annexation Area have not been filed by one-half or more of the registered voters within the boundaries of the District or by one-half or more of the registered voters within the boundaries of the Future Annexation Area or by the property owners of onehalf (1/2) or more of the area of land within the District or by property owners of one-half (1/2) or more of the area of land within Future Annexation Area. The City Council hereby finds that the designation of the Future Improvement Area has not been precluded by a majority protest pursuant to Section 53339.6 of the Act.

Section 16. An election is hereby called for Improvement Area No. 1 on the propositions of levying the special tax on the property within Improvement Area No. 1 and establishing an appropriations limit for the District pursuant to Section 53325.7 of the Act and shall be consolidated with the election on the proposition of incurring bonded indebtedness for Improvement Area No. 1, pursuant to Sections 53351 and 53353.5 of the Act. The language of the propositions to be placed on the ballot for the election within Improvement Area No. 1 is attached hereto as Attachment “B.”
Item Number: 5.

Page 19 of 758 ends

An election is hereby called for Improvement Area No. 2 on the propositions of levying the special tax on the property within Improvement Area No. 2 and establishing an appropriations limit for the District pursuant to Section 53325.7 of the Act and shall be consolidated with the election on the proposition of incurring bonded indebtedness for Improvement Area No. 2, pursuant to Sections 53351 and 53353.5 of the Act. The language of the propositions to be placed on the ballot for the election within Improvement Area No. 2 is attached hereto as Attachment “C.”
Section 17. The date of the elections for the Improvement Areas on the propositions of incurring the bonded indebtedness, authorizing the levy of the special taxes and establishing an appropriations limit for the District shall be January 21, 2025, or such later date as is consented to by the City Clerk; provided that, if the elections are to take place sooner than 90 days after January 21, 2025, then the unanimous written consent of the qualified electors within the Improvement Areas to such election date must be obtained. The polls shall be open for said election immediately following the close of the public hearing on January 21, 2025. The election shall be conducted by the City Clerk. Except as otherwise provided by the Act, the election shall be conducted in accordance with the provisions of law regulating elections of the City insofar as such provisions are determined by the City Clerk to be applicable. The City Clerk is authorized to conduct the election following the adoption of this resolution, and all ballots shall be received by, and the City Clerk shall close the election by, 11:00 p.m. on the election day; provided the election shall be closed at such earlier time as all qualified electors have voted as provided in Section 53326(d) of the Act. Pursuant to Section 53326 of the Act, the ballots for the special election shall be distributed in person, or by mail with return postage prepaid, to the qualified electors within the Improvement Areas. The City Clerk has secured a certificate from the Registrar of Voters of the County of Riverside certifying that there were no registered voters within the District. Accordingly, since there were fewer than 12 registered voters within the District for each of the 90 days preceding January 21, 2025, the qualified electors shall be the landowners within the Improvement Areas and each landowner, or the authorized representative thereof, shall have one vote for each acre or portion thereof that such landowner owns within Improvement Area No. 1 or Improvement Area No. 2, as applicable, as provided in Section 53326 of the Act. The landowners within the Improvement Areas have each executed and delivered waivers of certain election law requirements and consenting to the holding of the election on January 21, 2025, which waivers are on file with the City Clerk.

Section 18. The preparation of the CFD Report is hereby ratified. The CFD Report, as submitted, is hereby approved and was made a part of the record of the public hearing regarding the formation of Community Facilities District No. 2025-1. The CFD Report is ordered to be kept on file with the transcript of these proceedings and open for public inspection.

Section 19. The forms of the Acquisition Agreements on file with the City Clerk are approved as to form, and each of the City Manager, Administrative Services Director, and their written designees, is authorized to execute the Acquisition Agreements in substantially the forms on file with the City Clerk, together with such changes as are approved by the officer executing the same, with the approval of such changes to be conclusively evidenced by the execution and delivery thereof.

Item Number: 5.

Page 20 of 758 ends

Section 20. The form of the JCFA on file with the City Clerk is approved as to form, and each of the City Manager, Administrative Services Director, and their written designees, is authorized to execute the JCFA in substantially the form on file with the City Clerk, together with such changes as are approved by the officer executing the same, with the approval of such changes to be conclusively evidenced by the execution and delivery thereof.

Section 21. This Resolution shall be effective upon its adoption.

Passed and Adopted on this 21st day of January, 2025.
_____________________________
Scott Matas, Mayor
Attest:
_____________________________
Jerryl Soriano, CMC
City Clerk
Item Number: 5.

Page 21 of 758 ends

STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.

CITY OF DESERT HOT SPRINGS )
I, Jerryl Soriano, CMC, City Clerk of the City of Desert Hot Springs, California, do hereby certify that Resolution No. 2025-______ was adopted by the City Council of the City of Desert Hot Springs, California, at the Regular meeting of January 21, 2025 and that the same was adopted by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
________________________________
Jerryl Soriano, CMC
City Clerk
Item Number: 5.

Page 22 of 758 ends

A-1
4909-8572-6728v4/200812-0004
ATTACHMENT “A”
Types of Facilities and Maintenance Services To Be
Financed By
City of Desert Hot Springs (Skyborne Village)
of the Community Facilities District No. 2025-1
The proposed types of public facilities and expenses to be financed by the District include:

The construction, purchase, modification, expansion, rehabilitation and/or improvement of (i) drainage, library, park, roadway, traffic, administration and general government facilities, animal shelter facilities, fire and safety, and other public facilities of the City, including the foregoing public facilities which are included in the City’s fee programs with respect to such facilities and authorized to be financed under the Mello-Roos Community Facilities Act of 1982, as amended (the “City Facilities”); (ii) water and sewer facilities including the acquisition of capacity in the sewer system and/or water system of Mission Springs Water District which are included in Mission Springs Water District’s water and sewer capacity and connection fee programs (the “Water District Facilities” and together, with the City Facilities, the “Facilities”), and all appurtenances and appurtenant work in connection with the foregoing Facilities, including the cost of engineering, planning, designing, materials testing, coordination, construction staking, construction management and supervision for such Facilities, and to finance the incidental expenses to be incurred, including:
a. The cost of engineering, planning and designing the Facilities; b. All costs, including costs of the property owner petitioning to form the District, associated with the creation of the District, the issuance of the bonds, the determination of the amount of special taxes to be levied and costs otherwise incurred in order to carry out the authorized purposes of the District; and
c. Any other expenses incidental to the construction, acquisition, modification, rehabilitation, completion and inspection of the Facilities.

The proposed types of public maintenance services and expenses to be financed by the District include, services permitted under the Mello-Roos Community Facilities Act of 1982, as amended, including, without limitation, maintenance of parks, parkways and open space, flood and storm protection services, and the operation of storm drainage systems, the determination of the amount of special taxes to be levied and costs otherwise incurred in order to carry out the authorized purposes of the District.

Item Number: 5.

Page 23 of 758 ends

B-1
4909-8572-6728v4/200812-0004
ATTACHMENT “B”

BALLOT PROPOSITIONS

CITY OF DESERT HOT SPRINGS
COMMUNITY FACILITIES DISTRICT NO. 2025-1
(SKYBORNE VILLAGE)
IMPROVEMENT AREA NO. 1

SPECIAL TAX AND SPECIAL BOND ELECTION
January 21, 2025
PROPOSITION A: Shall Community Facilities District
No. 2025-1 (Skyborne Village) of the City of Desert Hot Springs (the “District”) incur an indebtedness and issue one or more series of bonds in the maximum aggregate
principal amount of $13,000,000 for Improvement Area
No. 1 therein (the “Improvement Area”), with interest at a rate or rates not to exceed the maximum interest rate permitted by law, to finance the Facilities and the
Facilities Incidental Expenses described in the
resolution of the City Council of the City of Desert Hot Springs adopted on January 21, 2025, establishing the
District (the “Resolution of Formation”)?
PROPOSITION B: Shall a special tax with a rate and
method of apportionment for the Improvement Area as
provided in the Resolution of Formation be levied to pay for the Facilities, Maintenance Services, Incidental
Expenses and other purposes described in the
Resolution of Formation, including the payment of the
principal of and interest on bonds issued by the District for the Improvement Area to finance the Facilities and
Facilities Incidental Expenses?
YES______
NO_______
YES______
NO_______
PROPOSITION C: For each year commencing with
Fiscal Year 2025-26, shall the appropriations limit, as defined by subdivision (h) of Section 8 of Article XIII B of the California Constitution, for the District be an
amount equal to $50,000,000?
YES______
NO_______
Item Number: 5.

Page 24 of 758 ends

C-1
4909-8572-6728v4/200812-0004
ATTACHMENT “C”

BALLOT PROPOSITIONS

CITY OF DESERT HOT SPRINGS
COMMUNITY FACILITIES DISTRICT NO. 2025-1
(SKYBORNE VILLAGE)
IMPROVEMENT AREA NO. 2

SPECIAL TAX AND SPECIAL BOND ELECTION
January 21, 2025
PROPOSITION D: Shall Community Facilities District
No. 2025-1 (Skyborne Village) of the City of Desert Hot Springs (the “District”) incur an indebtedness and issue one or more series of bonds in the maximum aggregate
principal amount of $13,000,000 for Improvement Area
No. 2 therein (the “Improvement Area”), with interest at a rate or rates not to exceed the maximum interest rate permitted by law, to finance the Facilities and the
Facilities Incidental Expenses described in the
resolution of the City Council of the City of Desert Hot Springs adopted on January 21, 2025, establishing the
District (the “Resolution of Formation”)?
PROPOSITION E: Shall a special tax with a rate and
method of apportionment for the Improvement Area as
provided in the Resolution of Formation be levied to pay for the Facilities, Maintenance Services, Incidental
Expenses and other purposes described in the
Resolution of Formation, including the payment of the
principal of and interest on bonds issued by the District for the Improvement Area to finance the Facilities and
Facilities Incidental Expenses?
YES______
NO_______
YES______
NO_______
PROPOSITION F: For each year commencing with
Fiscal Year 2025-26, shall the appropriations limit, as defined by subdivision (h) of Section 8 of Article XIII B of the California Constitution, for the District be an
amount equal to $50,000,000?
YES______
NO_______
Item Number: 5.

Page 25 of 758 ends

4904-8300-5192v3/200812-0004
RESOLUTION NO. 2025-___

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

DESERT HOT SPRINGS ACTING AS THE LEGISLATIVE BODY
OF COMMUNITY FACILITIES DISTRICT NO. 2025-1
(SKYBORNE VILLAGE) OF THE CITY OF DESERT HOT

SPRINGS DETERMINING THE NECESSITY TO INCUR

BONDED INDEBTEDNESS WITHIN SUCH DISTRICT AND
IMPROVEMENT AREAS NOS. 1 AND 2 THEREIN AND

CALLING ELECTIONS THEREIN
Whereas, on December 12, 2024, the City Council (the “City Council”) of the City of Desert Hot Springs (the “City”) adopted Resolution No. 2024-047 (the “Resolution of Intention”) stating its intention to establish Community Facilities District No. 2025-1 (Skyborne Village) of the City of Desert Hot Springs (“Community Facilities District No. 2025-1” or the “District”), Improvement Area No. 1 (“Improvement Area No. 1”) and Improvement Area No. 2 (“Improvement Area No. 2” and together with Improvement Area No. 1, the “Improvement Areas”) therein and designate territory proposed for annexation to the District in the future (the “Future Annexation Area”) as one or more future improvement areas (“Future Improvement Areas”), pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (the “Act”); and
Whereas, on December 12, 2024, the City Council also adopted Resolution No. 2024- 048 (the “Resolution of Intention to Incur Debt”) stating its intention to incur bonded indebtedness in one or more series for the District and with respect to the proposed Improvement Area No. 1, in the aggregate maximum principal amount of $13,000,000, and with respect to the proposed Improvement Area No. 2, in the aggregate maximum principal amount of $13,000,000, to finance (1) the purchase, construction, modification, expansion, improvement or rehabilitation of public facilities identified in Attachment “B” to the Resolution of Intention, and (2) the incidental expenses to be incurred in financing such public facilities and forming and administering the District, as identified in Attachment “B” to the Resolution of Intention; and Whereas, notice was published as required by law relative to the intention of the City Council to form the proposed Community Facilities District No. 2025-1, to designate the Improvement Areas therein, to designate the Future Annexation Area as property proposed for annexation to the District in the future, and to incur bonded indebtedness in one or more series within the District, and with respect to the proposed Improvement Area No. 1, in the aggregate maximum principal amount of $13,000,000, and with respect to the proposed Improvement Area No. 2, in the aggregate maximum principal amount of $13,000,000; and Whereas, on January 21, 2025, this City Council conducted a noticed public hearing to determine whether it should proceed with the formation of Community Facilities District No. 2025-1, the designation of the Improvement Areas, the designation of the Future Annexation Area as property proposed for annexation to the District in the future, the levy of a special tax within Improvement Area No. 1 in accordance with the rate and method of apportionment of a special tax for Improvement Area No. 1, the levy of a special tax within Improvement Area No. 2 in accordance with the rate and method of apportionment of a special tax for Improvement Area No. 2, and the issuance of bonds for the Improvement Areas to pay for a portion of the facilities and incidental expenses described in the Resolution of Intention; and Item Number: 5.

Page 26 of 758 ends

2 4904-8300-5192v3/200812-0004
Whereas, at said hearing all persons desiring to be heard on all matters pertaining to the formation of Community Facilities District No. 2025-1, the designation of the Improvement Areas, the designation of the Future Annexation Area as property proposed for annexation to the District in the future, the levy of a special tax and the issuance of bonds within the Improvement Areas to pay for a portion of the cost of the proposed facilities and incidental expenses were heard, and a full and fair hearing was held; and Whereas, the City Council subsequent to such hearing, on January 21, 2025, adopted a resolution (the “Resolution of Formation”) establishing Community Facilities District No. 2025-1, designating the Improvement Areas and the Future Annexation Area, and authorizing the financing of the public facilities (the “Facilities”) and the incidental expenses (the “Incidental Expenses”) described in Attachment “A” thereto; and
Whereas, the City Council desires to make the necessary findings to incur bonded indebtedness within the District and for the Improvement Areas, to declare the purpose for said debt, and to authorize the submittal of propositions to issue bonded indebtedness to the voters of the Improvement Areas, being the landowners therein, all as authorized and required by law.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF DESERT HOT SPRINGS HEREBY FINDS, DETERMINES, RESOLVES, AND ORDERS AS FOLLOWS:

Section 1. It is necessary to incur bonded indebtedness in one or more series in a maximum aggregate principal amount of $13,000,000 within Improvement Area No. 1 and in a maximum aggregate principal amount of $13,000,000 within Improvement Area No. 2.

From time to time, upon the annexation to the District of a parcel or parcels within the Future Annexation Area as one or more Future Improvement Areas as set forth in the Resolution of Formation, the maximum aggregate principal amount of bonded indebtedness necessary to be incurred by the District on behalf of each Future Improvement Area shall be set forth in each unanimous consent and approval of the owner or owners of such parcel or parcels (the “Unanimous Consent and Approval”) submitted for annexation and shall be approved by the City Council, acting as the legislative body of the District (the “Legislative Body”) at the time of such annexation in accordance with the Act.

Section 2. The indebtedness within the District and for the Improvement Areas and for any Future Improvement Area is to be incurred for the purpose of financing a portion of the costs of purchasing, constructing, modifying, expanding, improving, or rehabilitating the Facilities and financing the Incidental Expenses, as described in the Resolution of Formation, and carrying out the powers and purposes of Community Facilities District No. 2025-1, including, but not limited to, financing the costs of selling the bonds, establishing and replenishing bond reserve funds and paying remarketing, credit enhancement and liquidity facility fees and other expenses of the type authorized by Section 53345.3 of the Act.

Section 3. The whole of the property within Improvement Area No. 1, other than property exempted from the special tax pursuant to the provisions of the rate and method of apportionment for Improvement Area No. 1 attached to the Resolution of Intention as Attachment “C,” shall pay for the bonded indebtedness issued by the District for Improvement Area No. 1 pursuant to the levy of the special tax for Improvement Area No. 1 as authorized by the Resolution of Formation.

The whole of the property within Improvement Area No. 2, other than property exempted Item Number: 5.

Page 27 of 758 ends

3 4904-8300-5192v3/200812-0004
from the special tax pursuant to the provisions of the rate and method of apportionment for Improvement Area No. 2 attached to the Resolution of Intention as Attachment “D,” shall pay for the bonded indebtedness issued by the District for Improvement Area No. 2 pursuant to the levy of the special tax for Improvement Area No. 2 as authorized by the Resolution of Formation.

Section 4. The whole of the property within any Future Improvement Area other than property exempted from the special tax pursuant to the provisions for the rate and method of apportionment for such Future Improvement Area shall pay for the bonded indebtedness issued by the District for such Future Improvement Area pursuant to the levy of the special tax for such Future Improvement Area as authorized by the Unanimous Consent and Approval and as approved by the Legislative Body.

Section 5. The maximum term of each series of the bonds issued by the District for the Improvement Areas or any Future Improvement Area shall in no event exceed thirty-five (35) years from the date of issuance of the bonds of such series.

Section 6. The bonds shall bear interest at the rate or rates not to exceed the maximum interest rate permitted by law, payable annually or semiannually, or in part annually and in part semiannually, except the first interest payment may be for a period of less than six months, with the actual rate or rates and times of payment to be determined at the time or times of sale thereof.

Section 7. The bonds may bear a variable or fixed interest rate, provided that such variable rate or fixed rate shall not exceed the maximum rate of twelve percent (12%) per annum, or such higher rate as is permitted by any other applicable provision of law limiting the maximum interest rate on the bonds. The bonds may be issued as bonds the interest on which is either included or excluded from gross income for federal income tax purposes.

Section 8. Pursuant to Section 53351 of the Act, a special election is hereby called for Improvement Area No. 1 on the proposition of incurring the bonded indebtedness therein.

The proposition relative to incurring bonded indebtedness in the maximum aggregate principal amount of $13,000,000 shall be in the form of Proposition A set forth in Attachment “A” hereto.

In accordance with Sections 53351(h) and 53353.5 of the Act, the election shall be consolidated with the special election called on the proposition of levying a special tax within Improvement Area No. 1 as described in the Resolution of Formation, which proposition shall be in the form of Proposition B set forth in Attachment “A,” and on the proposition of establishing an appropriations limit for the District, which proposition shall be in the form of Proposition C set forth in Attachment “A.”
Pursuant to Section 53351 of the Act, a special election is hereby called for Improvement Area No. 2 on the proposition of incurring the bonded indebtedness therein. The proposition relative to incurring bonded indebtedness in the maximum aggregate principal amount of $13,000,000 shall be in the form of Proposition D set forth in Attachment “B” hereto.

Page 28 of 758 ends

4 4904-8300-5192v3/200812-0004
Section 9. The date of the special elections for the Improvement Areas on the propositions of incurring the bonded indebtedness, authorizing the levy of the special taxes and setting an appropriations limit as set forth in Attachment “A” and Attachment “B” hereto shall be January 21, 2025, or such later date as is consented to by the City Clerk; provided that, if the elections for the Improvement Areas are to take place sooner than 90 days after January 21, 2025, then the unanimous written consent of each qualified elector within the Improvement Areas to such election date must be obtained. The elections shall be conducted by the City Clerk. The City Clerk is authorized to conduct the election following the adoption of this resolution, and all ballots shall be received by, and the City Clerk shall close the election by, 11:00 p.m. on the election day; provided the election shall be closed at such earlier time as all qualified electors have voted as provided in Section 53326(d) of the Act. Except as otherwise provided by the Act, the elections shall be conducted in accordance with the provisions of law regulating elections of the City insofar as such provisions are determined by the City Clerk to be applicable. Pursuant to Section 53326 of the Act, the ballots for the special elections shall be distributed in person, or by mail with return postage prepaid, to the qualified electors within each of the Improvement Areas. The Registrar of Voters of the County of Riverside has certified in a certificate on file with the City Clerk that there were no registered voters within the District.

Accordingly, since there were fewer than 12 registered voters within the District for each of the 90 days preceding January 21, 2025, the qualified electors shall be the landowners within the Improvement Areas and each landowner, or the authorized representative thereof, shall have one vote for each acre or portion thereof that such landowner owns within Improvement Area No. 1 or Improvement Area No. 2, as applicable, as provided in Section 53326 of the Act.

Section 10. This Resolution shall be effective upon its adoption.

Passed and Adopted on this 21st day of January, 2025.
_____________________________
Scott Matas, Mayor
Attest:
_____________________________
Jerryl Soriano, CMC
City Clerk
Item Number: 5.

Page 29 of 758 ends

5 4904-8300-5192v3/200812-0004

STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.

AYES:

NOES:

ABSENT:

ABSTAIN:
________________________________
Jerryl Soriano, CMC
City Clerk
Item Number: 5.

Page 30 of 758 ends

A-1
4904-8300-5192v3/200812-0004
ATTACHMENT “A”

CITY OF DESERT HOT SPRINGS
COMMUNITY FACILITIES DISTRICT NO. 2025-1
(SKYBORNE VILLAGE)
IMPROVEMENT AREA NO. 1

SPECIAL TAX AND SPECIAL BOND ELECTION
January 21, 2025
PROPOSITION A: Shall Community Facilities District
No. 2025-1 (Skyborne Village) of the City of Desert Hot Springs (the “District”) incur an indebtedness and issue one or more series of bonds in the maximum aggregate
principal amount of $13,000,000 for Improvement Area
No. 1 therein (the “Improvement Area”), with interest at a rate or rates not to exceed the maximum interest rate
permitted by law, to finance the Facilities and the
Facilities Incidental Expenses described in the resolution of the City Council of the City of Desert Hot Springs
adopted on January 21, 2025, establishing the District
(the “Resolution of Formation”)?
PROPOSITION B: Shall a special tax with a rate and
method of apportionment for the Improvement Area as
provided in the Resolution of Formation be levied to pay for the Facilities, Maintenance Services, Incidental
Expenses and other purposes described in the
Resolution of Formation, including the payment of the
principal of and interest on bonds issued by the District for the Improvement Area to finance the Facilities and
Facilities Incidental Expenses?
YES______
NO_______
YES______
NO_______
PROPOSITION C: For each year commencing with
Fiscal Year 2025-26, shall the appropriations limit, as defined by subdivision (h) of Section 8 of Article XIII B of the California Constitution, for the District be an amount equal to $50,000,000?
YES______
NO_______
Item Number: 5.

Page 31 of 758 ends

B-1
4904-8300-5192v3/200812-0004
ATTACHMENT “B”

BALLOT PROPOSITIONS

CITY OF DESERT HOT SPRINGS
COMMUNITY FACILITIES DISTRICT NO. 2025-1
(SKYBORNE VILLAGE)
IMPROVEMENT AREA NO. 2

SPECIAL TAX AND SPECIAL BOND ELECTION
January 21, 2025
PROPOSITION A: Shall Community Facilities District
No. 2025-1 (Skyborne Village) of the City of Desert Hot Springs (the “District”) incur an indebtedness and issue one or more series of bonds in the maximum aggregate
principal amount of $13,000,000 for Improvement Area
No. 2 therein (the “Improvement Area”), with interest at a rate or rates not to exceed the maximum interest rate
permitted by law, to finance the Facilities and the
Facilities Incidental Expenses described in the resolution of the City Council of the City of Desert Hot Springs
adopted on January 21, 2025, establishing the District
(the “Resolution of Formation”)?
PROPOSITION B: Shall a special tax with a rate and
method of apportionment for the Improvement Area as
provided in the Resolution of Formation be levied to pay for the Facilities, Maintenance Services, Incidental
Expenses and other purposes described in the
Resolution of Formation, including the payment of the
principal of and interest on bonds issued by the District for the Improvement Area to finance the Facilities and
Facilities Incidental Expenses?
YES______
NO_______
YES______
NO_______
PROPOSITION C: For each year commencing with
Fiscal Year 2025-26, shall the appropriations limit, as defined by subdivision (h) of Section 8 of Article XIII B of the California Constitution, for the District be an amount equal to $50,000,000?
YES______
NO_______
Item Number: 5.

Page 32 of 758 ends

4934-5381-8376v3/200812-0004
RESOLUTION NO. 2025-___

RESOLUTION OF THE CITY COUNCIL OF

THE CITY OF DESERT HOT SPRINGS, CALIFORNIA ACTING

IN ITS CAPACITY AS THE LEGISLATIVE BODY OF
COMMUNITY FACILITIES DISTRICT NO. 2025-1 (SKYBORNE

VILLAGE) OF THE CITY OF DESERT HOT SPRINGS

CERTIFYING THE RESULTS OF ELECTIONS HELD WITHIN
IMPROVEMENT AREAS NOS. 1 AND 2
Whereas, the City Council of the City of Desert Hot Springs called and duly held elections on January 21, 2025 within the boundaries of Improvement Area No. 1 (“Improvement Area No. 1”) and within the boundaries of Improvement Area No. 2 (“Improvement Area No. 2”) of Community Facilities District No. 2025-1 (Skyborne Village) of the City of Desert Hot Springs (“Community Facilities District No. 2025-1” or the “District”) pursuant to Resolution Nos. 2025-__ and 2025-__ for the purpose of presenting to the qualified electors within Improvement Area No. 1, Propositions A, B and C, attached hereto as Attachment A, and to the qualified electors within Improvement Area No. 2, Propositions D, E and F, attached hereto as Attachment B; and Whereas, there has been presented to this City Council a certificate of the City Clerk canvassing the results of the election within Improvement Area No. 1 and the results of the election within Improvement Area No. 2, a copy of which are attached hereto as Attachment C.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF DESERT HOT SPRINGS HEREBY FINDS, DETERMINES, RESOLVES, AND ORDERS AS FOLLOWS:

Section 1. Each of the above recitals is true and correct and is adopted by the legislative body of the District.

Section 2. Propositions A, B and C set forth in Attachment A hereto presented to the qualified electors of Improvement Area No. 1 on January 21, 2025, were approved by more than two-thirds of the votes cast at said election and Propositions A, B and C each has carried. The City Council, acting as the legislative body of the District, is hereby authorized to levy on the land within Improvement Area No. 1 the special tax described in Proposition B set forth in Attachment A hereto for the purposes described therein and to take the necessary steps to levy the special tax authorized by Proposition B and to issue bonds in one or more series in the maximum aggregate principal amount of $13,000,000 specified in Proposition A set forth in Attachment A hereto.

Section 3. Propositions D, E and F set forth in Attachment B hereto presented to the qualified electors of Improvement Area No. 2 on January 21, 2025, were approved by more than two-thirds of the votes cast at said election and Propositions D, E and F each has carried. The City Council, acting as the legislative body of the District, is hereby authorized to levy on the land within Improvement Area No. 2 the special tax described in Proposition E set forth in Attachment B hereto for the purposes described therein and to take the necessary steps to levy the special tax authorized by Proposition E and to issue bonds in one or more series in the maximum aggregate principal amount of $13,000,000 specified in Proposition D set forth in Attachment B hereto.

Section 4. The City Clerk is hereby directed to record in the Assessor-County ClerkRecorder’s office of the County of Riverside within fifteen days of the date hereof a notice of Item Number: 5.

Page 33 of 758 ends

special tax lien with respect to Improvement Area No. 1 and a notice of special tax lien with respect to Improvement Area No. 2, which Bond Counsel to the District shall prepare in the form required by Streets and Highways Code Section 3114.5.

Section 5. The City Manager, the Administrative Services Director, or their designees are hereby authorized and directed to take such action as may be necessary to record a notice of cancellation of the special tax lien of City of Desert Hot Springs Community Facilities District No. 2006-1 (“CFD No. 2006-1”) with respect to the property that is included in the District. The City Manager, the Administrative Services Director, or their designees are hereby further authorized and directed to take such action as may be necessary to exclude the property within Improvement Areas Nos. 1 and 2 of the District from City of Desert Hot Springs Drainage Assessment District No. 1 and Lighting, Landscape and Maintenance District No. 2.

Section 6. This Resolution shall be effective upon its adoption.

Passed and Adopted on this 21st day of January, 2025.
_____________________________
Scott Matas, Mayor
Attest:
_____________________________
Jerryl Soriano, CMC
City Clerk
Item Number: 5.

Page 34 of 758 ends

STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.

AYES:

NOES:

ABSENT:

ABSTAIN:
________________________________
Jerryl Soriano, CMC
City Clerk
Item Number: 5.

Page 35 of 758 ends

Item Number: 5.

Page 36 of 758 ends

B-1
4934-5381-8376v3/200812-0004
ATTACHMENT “A”

BALLOT PROPOSITIONS

CITY OF DESERT HOT SPRINGS
COMMUNITY FACILITIES DISTRICT NO. 2025-1
(SKYBORNE VILLAGE)
IMPROVEMENT AREA NO. 1

Page 37 of 758 ends

4934-5381-8376v3/200812-0004
ATTACHMENT “B”

BALLOT PROPOSITIONS

CITY OF DESERT HOT SPRINGS
COMMUNITY FACILITIES DISTRICT NO. 2025-1
(SKYBORNE VILLAGE)
IMPROVEMENT AREA NO. 2

Page 38 of 758 ends

4934-5381-8376v3/200812-0004

CERTIFICATE OF CITY CLERK

AS TO THE RESULTS OF THE CANVASS OF THE ELECTION RETURNS I, Jerryl Soriano, CMC, City Clerk of the City of Desert Hot Springs, do hereby certify that I have examined the returns of the Special Tax and Bond Election for Improvement Area No. 1 of Community Facilities District No. 2025-1 (Skyborne Village) of the City of Desert Hot Springs (the “District”). The election was held in the City Council Chambers, 11-999 Palm Drive, Desert Hot Springs, California 92240, on January 21, 2025. I caused to be delivered ballots to each qualified elector. ___ (_) ballots were returned.

I further certify that the results of said election and the number of votes cast for and against Propositions A, B and C for Improvement Area No. 1 are as follows:

PROPOSITION A PROPOSITION B PROPOSITION C
YES: YES: YES:

NO: NO: NO:

TOTAL: TOTAL: TOTAL:

I further certify that I have examined the returns of the Special Tax and Bond Election for Improvement Area No. 2 of Community Facilities District No. 2025-1 (Skyborne Village) of the City of Desert Hot Springs. The election was held in the City Council Chambers, 11-999 Palm Drive, Desert Hot Springs, California 92240, on January 21, 2025. I caused to be delivered ballots to each qualified elector. ___ (_) ballots were returned.

I further certify that the results of said election and the number of votes cast for and against Propositions D, E and F for Improvement Area No. 2 are as follows:

PROPOSITION D PROPOSITION E PROPOSITION F
YES: YES: YES:

NO: NO: NO:

TOTAL: TOTAL: TOTAL:

Dated this 21st day of January, 2025.

Jerryl Soriano, CMC
City Clerk
City of Desert Hot Springs
Item Number: 5.

Page 39 of 758 ends

4938-1813-3512v3/200812-0004
ORDINANCE NO. 2025-___

ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DESERT HOT

SPRINGS, CALIFORNIA ACTING IN ITS CAPACITY AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 2025-1 (SKYBORNE

VILLAGE) OF THE CITY OF DESERT HOT SPRINGS AUTHORIZING THE LEVY OF SPECIAL TAXES WITHIN IMPROVEMENT AREA NO. 1 AND IMPROVEMENT AREA NO. 2 AND IN TERRITORY ANNEXED TO THE

DISTRICT IN THE FUTURE
Whereas, on December 12, 2024, the City Council (the “City Council”) of the City of Desert Hot Springs (the “City”) adopted Resolution No. 2024-047 (the “Resolution of Intention”) declaring its intention to form Community Facilities District No. 2025-1 (Skyborne Village) of the City of Desert Hot Springs (the “District”) and Improvement Area No. 1 (“Improvement Area No. 1”) and Improvement Area No. 2 (“Improvement Area No. 2” and together with Improvement Area No. 1, the “Improvement Areas” and each an “Improvement Area”) therein, and designate territory proposed for annexation to the District in the future (“Future Annexation Area”) as one or more future improvement areas (“Future Improvement Areas”) pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, comprising Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (the “Act”), and its Resolution No. 2024-048 declaring its intention to incur bonded indebtedness in one or more series within the District, and with respect to Improvement Area No. 1 in the maximum aggregate principal amount of $13,000,000, and with respect to Improvement Area No. 2 in the maximum aggregate principal amount of $13,000,000; and
Whereas, on January 21, 2025, after providing all notice required by the Act, the City Council conducted a noticed public hearing required by the Act relative to: (i) the proposed formation of the District, the designation of Improvement Area No. 1 and Improvement Area No. 2 and the designation of the Future Annexation Area; (ii) the proposed levy of a special tax within Improvement Area No. 1 and Improvement Area No. 2 to finance certain facilities and services described in the Resolution of Intention and to secure the payment of any bonded indebtedness of the District for Improvement Area No. 1 and Improvement Area No. 2, and the maximum aggregate principal amount of $13,000,000 of bonded indebtedness for Improvement Area No. 1 and the maximum aggregate principal amount of $13,000,000 of bonded indebtedness for Improvement Area No. 2; and (iii) the proposed levy of a special tax in any Future Improvement Area annexed to the District to finance certain facilities and services described in the Resolution of Intention and to secure the payment of any bonded indebtedness of the District for such Future Improvement Area, subject to the receipt of the unanimous consent and approval of the owner or owners of the parcel or parcels at the time of annexation (the “Unanimous Consent and Approval”) and approval by the City Council, in accordance with the Act, all as described in the Resolution of Intention; and Whereas, at the January 21, 2025 public hearing, all persons desiring to be heard on the foregoing matters were heard, and a full and fair hearing was held; and Whereas, on January 21, 2025, the City Council adopted Resolution Nos. 2025- __ (the “Resolution of Formation”) and 2025-___ (the “Resolution to Incur Bonded Indebtedness”) which formed the District, designated Improvement Area No. 1, Improvement Area No. 2 and the Future Annexation Area, and called a special election within Improvement Area No. 1 and Improvement Area No. 2 on January 21, 2025 on three propositions for Improvement Area No. 1 relating to the levy of a special tax within Improvement Area No. 1, on three propositions for Item Number: 5.

Page 40 of 758 ends

Improvement Area No. 2 relating to the levy of a special tax within Improvement Area No. 2, the issuance of the bonds by the District for Improvement Area No. 1 and Improvement Area No. 2 and the establishment of an appropriations limit within the District; and Whereas, on January 21, 2025, a special election was held within Improvement Area No. 1 at which the qualified electors therein approved by more than a two-thirds vote Propositions A, B and C as set forth in Attachment “B” to the Resolution of Formation authorizing the levy of a special tax within Improvement Area No. 1 for the purposes described in the Resolution of Formation, the issuance of the bonds for Improvement Area No. 1 as described in the Resolution to Incur Bonded Indebtedness and establishing an appropriations limit for the District; and
Whereas, on January 21, 2025, a special election was held within Improvement Area No. 2 at which the qualified electors therein approved by more than a two-thirds vote Propositions D, E and F as set forth in Attachment “C” to the Resolution of Formation authorizing the levy of a special tax within Improvement Area No. 2 for the purposes described in the Resolution of Formation, the issuance of the bonds for Improvement Area No. 2 as described in the Resolution to Incur Bonded Indebtedness and establishing an appropriations limit for the District.

NOW, THEREFORE, the City Council of the City of Desert Hot Springs acting in its capacity as the legislative body of Community Facilities District No. 2025-1 (Skyborne Village) of the City of Desert Hot Springs ORDAINS as follows:

Section 1. The above recitals are all true and correct.

Section 2. By the passage of this Ordinance, the City Council authorizes and levies special taxes within Improvement Area No. 1 and Improvement Area No. 2 pursuant to Sections 53328 and 53340 of the Act at the rates and in accordance with the rate and method of apportionment set forth in Attachment ”C” and Attachment “D,” respectively, to the Resolution of Intention, which are incorporated by reference herein (the “Improvement Area No. 1 Rate and Method” and the “Improvement Area No. 2 Rate and Method”).

The Special Tax A (as defined in the Improvement Area No. 1 Rate and Method) are hereby levied within Improvement Area No. 1 commencing in the fiscal year specified in the Improvement Area No. 1 Rate and Method and in each fiscal year thereafter until payment in full of the bonds issued by the District for Improvement Area No. 1 (including any bonds issued to refund such bonds), payment of all costs of the facilities authorized to be financed by the District for Improvement Area No. 1, and payment of all costs of administering the District allocable to Improvement Area No. 1. The Special Tax A (as defined in the Improvement Area No. 2 Rate and Method) are hereby levied within Improvement Area No. 2 commencing in the fiscal year specified in the Improvement Area No. 2 Rate and Method and in each fiscal year thereafter until payment in full of the bonds issued by the District for Improvement Area No. 2 (including any bonds issued to refund such bonds), payment of all costs of the facilities authorized to be financed by the District for Improvement Area No. 2, and payment of all costs of administering the District allocable to Improvement Area No. 2.

The Special Tax B (each as defined in the Improvement Area No. 1 Rate and Method and the Improvement Area No. 2 Rate and Method) are hereby levied within each Improvement Area commencing in the fiscal year specified in therein and in each fiscal year thereafter until terminated in with the accordance Improvement Area No. 1 Rate and Method and the Improvement Area No. 2 Rate and Method, as applicable.

Item Number: 5.

Page 41 of 758 ends

The City Council further authorizes and levies special taxes within any Future Improvement Area pursuant to Sections 53328 and 53340 of the Act at the rates and in accordance with the rate and method of apportionment to be approved by the Unanimous Consent and Approval of the owners of the property within such Future Improvement Area and the City Council. The special taxes shall be levied within such Future Improvement Area in each fiscal year until the special tax is terminated in accordance with the rate and method of apportionment for such Future Improvement Area, payment in full of the bonds issued by the District for such Future Improvement Area (including any bonds issued to refund such bonds), payment of all costs of the facilities authorized to be financed by the District for such Future Improvement Area, and payment of all costs of administering the District allocable to such Future Improvement Area.

Section 3. Each of the City Manager and the Administrative Services Director of the City (each, an “Authorized Officer”), acting alone, is hereby authorized and directed each fiscal year to determine the specific special tax rates and amounts to be levied in such fiscal year on each parcel of real property within Improvement Area No. 1 and Improvement Area No. 2, in the manner and as provided in the Improvement Area No. 1 Rate and Method and in the Improvement Area No. 2 Rate and Method, respectively, and within any Future Improvement Area in the manner and as provided in the rate and method of apportionment of special tax for such Future Improvement Area. The special tax rate levied on a parcel pursuant to the Improvement Area No. 1 Rate and Method with respect to Improvement Area No. 1, pursuant to the Improvement Area No. 2 Rate and Method with respect to Improvement Area No. 2, and pursuant to a rate and method of special tax for any Future Improvement Area shall not exceed the maximum rate set forth therein for such parcel, but the special tax may be levied at a lower rate. Each Authorized Officer is hereby authorized and directed to provide all necessary information to the Treasurer-Tax Collector of the County of Riverside and to otherwise take all actions necessary in order to effect proper billing and collection of the special tax within Improvement Area No. 1, Improvement Area No. 2 and any Future Improvement Area, so that the special tax shall be levied and collected in sufficient amounts and at times necessary to satisfy the financial obligations of the District for Improvement Area No. 1, Improvement Area No. 2 and any Future Improvement Area in each fiscal year.

Section 4. Properties or entities of the state, federal or other local governments shall be exempt from the special tax for Improvement Area No. 1, except as otherwise provided in Sections 53317.3 and 53317.5 of the Act and Section I of the Improvement Area No. 1 Rate and Method. Properties or entities of the state, federal or other local governments shall be exempt from the special tax for Improvement Area No. 2, except as otherwise provided in Sections 53317.3 and 53317.5 of the Act and Section I of the Improvement Area No. 2 Rate and Method. No other properties or entities within Improvement Area No. 1 and Improvement Area No. 2 are exempt from the special tax unless the properties or entities are expressly exempted in the Resolution of Formation, or in a resolution of consideration to levy a new special tax or special taxes or to alter the Improvement Area No. 1 Rate and Method or the Improvement Area No. 2 Rate and Method or an existing special tax as provided in Section 53334 of the Act. The properties exempt from the special tax levy with respect to any Future Improvement Area shall be those set forth in the rate and method of apportionment of special tax for such Future Improvement Area as approved by the Unanimous Consent and Approval and by the City Council.

Section 5. All of the collections of the special tax within Improvement Area No. 1 shall be used as provided for in the Act, the Improvement Area No. 1 Rate and Method, and the Resolution of Formation. All of the collections of the special tax within Improvement Area No. 2 shall be used as provided for in the Act, the Improvement Area No. 2 Rate and Method, and the Resolution of Formation. All of the collections of the special tax within any Future Improvement Item Number: 5.

Page 42 of 758 ends

Area shall be used as provided for in the Act, the rate and method of apportionment of special tax for such Future Improvement Area and the Resolution of Formation.

Section 6. The special tax within Improvement Area No. 1, Improvement Area No. 2 and in any Future Improvement Area shall be collected in the same manner as ordinary ad valorem property taxes are collected and shall be subject to the same penalties and the same procedure, sale and lien priority in case of delinquency as is provided for ad valorem taxes (which such procedures include the exercise of all rights and remedies permitted by law to make corrections, including, but not limited to, the issuance of amended or supplemental tax bills), as such procedure may be modified by law or by the City Council from time to time.

Section 7. Determined separately for each Improvement Area, as a cumulative remedy, if any parcel is delinquent in the amount levied as a special tax for payment of the interest or principal of the bonds issued by the District for Improvement Area No. 1, Improvement Area No. 2 and any Future Improvement Area (including any bonds issued to refund such bonds), together with any penalties and other charges accruing under this Ordinance, are not paid when due, the City Council may, not later than four years after the due date of the last installment of principal on such bonds (including any bonds issued to refund such bonds), order that the same be collected by an action brought in the superior court to foreclose the lien of such special tax on the delinquent property within Improvement Area No. 1, Improvement Area No. 2 or any Future Improvement Area, as applicable, as authorized by the Act.

Section 8. The Mayor of the City shall sign this Ordinance and the City Clerk shall attest to the Mayor’s signature and then cause the same to be published within fifteen (15) days after its passage at least once in The Press Enterprise, a newspaper of general circulation published and circulated in the City.

Section 9. The specific authorization for adoption of this Ordinance is pursuant to the provisions of Section 53340 of the Act.

Section 10. The City Clerk is hereby authorized to transmit a certified copy of this ordinance to the Treasurer-Tax Collector of the County of Riverside, and to perform all other acts which are required by the Act, this Ordinance or by law in order to accomplish the purpose of this Ordinance.

Section 11. A full reading of this Ordinance is dispensed with prior to its final passage, a written or printed copy having been available to the City Council and the public a day prior to its final passage.

Section 12. This Ordinance shall take effect thirty days after its final passage.

Item Number: 5.

Page 43 of 758 ends

This Ordinance was introduced and read on the 21st day of January, 2025 and APPROVED AND ADOPTED this ___ day of ____________, 2025.
___________________________
Scott Matas, Mayor
Attest:
___________________________
Jerryl Soriano, CMC, City Clerk
Item Number: 5.

Page 44 of 758 ends

-
City of Desert Hot Springs
Community Facilities District No. 2025-1
Improvement Area No. 1 and Improvement Area No. 2
Prepared for:

January 2025
Community Facilities District Report
Item Number: 5.

Page 45 of 758 ends

Table of Contents
Sections
Section 1. Introduction _________________________________________________ 1 Section 2. Description of Facilities/Improvements and Services _________________ 2 Section 3. Cost Estimate ________________________________________________ 4 Section 5. Rate and Method of Apportionment ______________________________ 8 Tables
Table 3-1. Cost Estimate ________________________________________________ 4 Appendices
Appendix A. Rate and Method of Apportionment
Appendix B. Recorded Boundary Map and Future Annexation Area

Item Number: 5.

Page 46 of 758 ends

1. Introduction
City of Desert Hot Springs Community Facilities District Report CFD 2025-1 (Skyborne Village) 1
AGENCY: CITY OF DESERT HOT SPRINGS
PROJECT: COMMUNITY FACILITIES DISTRICT NO. 2025-1
(SKYBORNE VILLAGE)
TO: CITY COUNCIL

CITY OF DESERT HOT SPRINGS

RIVERSIDE COUNTY

STATE OF CALIFORNIA
Whereas, the City Council of the CITY OF DESERT HOT SPRINGS, RIVERSIDE COUNTY, CALIFORNIA (hereinafter referred to as the “City Council”), did, pursuant to the provisions of the “Mello-Roos Community Facilities Act of 1982”, being chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California, and specifically Section 53321.5 thereof, (the “Act”) expressly ordered the filing of a written Public Report (the “Report”) for a proposed COMMUNITY FACILITIES DISTRICT NO. 2025-1 (SKYBORNE VILLAGE). This Community Facilities District shall be referred to as COMMUNITY FACILITIES DISTRICT NO. 2025-1 (SKYBORNE VILLAGE) of the CITY OF DESERT HOT SPRINGS (hereinafter referred to as the “District” and “CFD No. 2025-1”); and, Whereas, on December 12, 2024, the City Council adopted Resolution No. 2024-047 (the “Resolution”), and the Resolution ordering said Report, did direct that said Report generally contain the following:
• A description of the public facilities and services by type proposed to be financed by CFD No. 2025-1; • An estimate setting forth costs of providing such facilities and services; • The rate and method of apportionment of the Special Tax in sufficient detail to allow each landowner or resident within the proposed District to estimate the annual amount of payment thereof.

NOW, THEREFORE, the undersigned, authorized representative of WEBB MUNICIPAL FINANCE, LLC, the appointed Special Tax Consultant and responsible officer or person directed to prepare the Report, pursuant to the provisions of the Act, does hereby submit the following data:

Item Number: 5.

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2. Description of Facilities/Improvements and Services
City of Desert Hot Springs Community Facilities District Report CFD 2025-1 (Skyborne Village) 2
Pursuant to Section 53340 of the Act, the proceeds of any Special Tax levied and collected by CFD No. 2025-1 may be used only to pay for the cost of providing public facilities, services, and incidental expenses. As defined by the Act, incidental expenses include, but are not limited to, the annual cost associated with determination of the amount of Special Taxes, collection of Special Taxes, payment of Special Taxes, or costs otherwise incurred in order to carry out the authorized purposes of the community facilities district.

A general description of the proposed facilities and services for the District is as follows:

Facilities/Improvements
The types of Facilities that are proposed by CFD No. 2025-1 and financed with the proceeds of special taxes and bonds issued by CFD No. 2025-1 consist of The construction, purchase, modification, expansion, rehabilitation and/or improvement of (i) drainage, library, park, roadway, traffic, administration and general government facilities, animal shelter facilities, fire and safety, and other public facilities of the City, including the foregoing public facilities which are included in the City’s fee programs with respect to such facilities and authorized to be financed under the Mello-Roos Community Facilities Act of 1982, as amended (the “City Facilities”); (ii) water and sewer facilities including the acquisition of capacity in the sewer system and/or water system of Mission Springs Water District which are included in Mission Springs Water District’s water and sewer capacity and connection fee programs (the “Water District Facilities” and together, with the City Facilities, the “Facilities”), and all appurtenances and appurtenant work in connection with the foregoing Facilities, including the cost of engineering, planning, designing, materials testing, coordination, construction staking, construction management and supervision for such Facilities, and to finance the incidental expenses to be incurred, including:
a. The cost of engineering, planning and designing the Facilities; b. All costs, including costs of the property owner petitioning to form the District, associated with the creation of the District, the issuance of the bonds, the determination of the amount of special taxes to be levied and costs otherwise incurred in order to carry out the authorized purposes of the District; and
c. Any other expenses incidental to the construction, acquisition, modification, rehabilitation, completion and inspection of the Facilities, including any other facilities that are necessary for development of the property within the boundaries of CFD No. 2025-1.

The description of Facilities described above is general in nature. The final nature and location of the Facilities will be determined upon preparation of final plans and specifications.

Services
The services which may be funded with proceeds of the special tax of CFD No. 2025-1, as provided by Section 53313 of the Act, include the following (collectively, the “Services”):
(i) maintenance of parks, parkways and open space;
(ii) flood and storm protection services;
(iii) the operation of storm drainage systems;
(iv) maintenance and operation of any real property or other tangible property with an estimated useful life of five or more years that is owned by the City of Desert Hot Springs.

In addition to payment of the cost and expense of the forgoing services, proceeds of the special tax may be expended to pay “Administrative Expenses” as said term is defined in the Rate and Method of Apportionment and to establish an operating reserve for the costs of services as determined by the CFD Administrator.

Item Number: 5.

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2. Description of Facilities/Improvements and Services
City of Desert Hot Springs Community Facilities District Report CFD 2025-1 (Skyborne Village) 3
Capitalized terms used and not defined herein shall have the meanings set forth in the Rate and Method of Apportionment of Special Tax for CFD No. 2025-1.

Incidental Expenses
The Incidental Expenses to be paid from bond proceeds and/or Special Taxes include: all costs associated with the creation of CFD No. 2025-1, the issuance of bonds (which may include, but is not limited to, funding the reserve fund, capitalized interest, underwriter discount, underwriter premium, and cost of issuance), the determination of the amount of Special Taxes to be levied, costs otherwise incurred in order to carry out the authorized purposes of CFD No. 2025-1, including legal fees, fees of consultants, engineering, planning, designing and the annual administration cost of CFD No. 2025-1.

The description of the eligible public facilities, services and incidental expenses above are preliminary and general in nature. The final plans and specifications approved by the applicable public agency may show substitutes or modifications in order to accomplish the work or serve the new development and any such substitution or modification shall not constitute a change or modification in the proceedings relating to CFD No. 2025-1.

Based upon the preceding, it is my opinion that the facilities and services being funded are those that are necessary to meet certain increased demands placed upon the City of Desert Hot Springs, as a result of development and/or rehabilitation occurring within the boundaries of the District.

DATED: January 21, 2025 WEBB MUNICIPAL FINANCE, LLC
By: _______________________________

SPECIAL TAX CONSULTANT FOR

CITY OF DESERT HOT SPRINGS

RIVERSIDE COUNTY

STATE OF CALIFORNIA
Item Number: 5.

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3. Cost Estimate
City of Desert Hot Springs Community Facilities District Report CFD 2025-1 (Skyborne Village) 4

1. The cost estimate, including Incidental Expenses, to be financed through the issuance of CFD No. 2025-1 Bonds is estimated to be $9,110,000 for Improvement Area 1 and $8,395,000 for Improvement Area 2 based upon current dollars (Fiscal Year 2024-25).

2. For further particulars, reference is made to Table 3-1 on the following pages and incorporated herein by reference.

3. Pursuant to Section 53340 of the Act, the proceeds of any Special Tax levied and collected by CFD No. 2025- 1 may be used only to pay for the cost of providing public facilities, services, and incidental expenses. As defined by the Act, incidental expenses include, but are not limited to, the annual costs associated with determination of the amount of Special Taxes, collection of Special Taxes, payment of Special Taxes, or costs otherwise incurred in order to carry out the authorized purposes of the Community Facilities District. The incidental expenses associated with the annual administration of CFD No. 2025-1 are estimated to be $30,000 in the initial Fiscal Year. However, it is anticipated that the incidental expenses will vary due to inflation and other factors that may not be foreseen today, and the actual incidental expenses may exceed these amounts accordingly.

Table 3-1
Cost Estimate (1)
Improvement Area 1 (Village 3)
Item CFD No. 2025-1
City of Desert Hot Springs Development Impact Fees Total Law Enforcement Facilities $161,590
Fire Protection Facilities $166,738
Circulation (Streets, Traffic Signals, and Bridges) $1,277,276 Storm Drain Collection $655,798
General Facilities $199,914
Public Use (Community Center) Facilities $293,722
Aquatics $54,626
Parks and Recreation $633,204
Subtotal Eligible Development Impact Fees $3,442,868
City of Desert Hot Springs Improvements
Fire Station Improvement (80.27% of Unfunded Reimbursement of $3,209,245) (a) $2,576,142 Total City Fees $6,019,010
Mission Springs Water District Improvements
Well 35 Contribution and Required Pressure Zone Improvements $3,000,000 Grand Total Eligible Fees and Improvements $9,019,010
Improvement Area No. 1 Estimated Bond Issuance Amount $9,110,000 Improvement Area No. 1 Estimated Project Fund $7,791,461 Improvement Area No. 1 Estimated Incidentals $1,318,539 Improvement Area No. 1 Estimated Unfunded Fees and Improvements $1,227,539 Item Number: 5.

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3. Cost Estimate
City of Desert Hot Springs Community Facilities District Report CFD 2025-1 (Skyborne Village) 5
Footnotes:
(a) Represents the unreimbursed portion of the fire station improvements from the City of Desert Hot Springs CFD No. 2006-1. If the future bond issuance for Improvement Area 1 of CFD No. 2025-1 is unable to fully reimburse the $2,576,142 then the remaining amount will be re-allocated to Villages 4 - 10.

Improvement Area 2 (Village 10) & Future Annexations (Villages 4-9) Item CFD No. 2025-1
City of Desert Hot Springs Development Impact Fees Total Law Enforcement Facilities $791,565
Fire Protection Facilities $816,783
Circulation (Streets, Traffic Signals, and Bridges) $6,256,866 Storm Drain Collection $3,212,493
General Facilities $979,299
Public Use (Community Center) Facilities $1,438,827
Aquatics $267,591
Parks and Recreation $3,101,814
Subtotal Eligible Development Impact Fees $16,865,238
City of Desert Hot Springs Karen Ave. Park Contribution Karen Avenue Park Contribution $1,199,997
City of Desert Hot Springs Traffic Mitigation Contribution Off-Site Traffic Mitigation Contribution $600,066
City of Desert Hot Springs Traffic Signal Contribution
Traffic Signal at Mission Lakes Blvd. & Karen Ave. (25% Fair Share Contribution) $150,000
Traffic Signal at Pierson Blvd. & Hwy. 62 (25% Fair Share Contribution) $150,000 Total City of Desert Hot Springs Traffic Signal Contribution $300,000 City of Desert Hot Springs Improvements
Off-Site Backbone Street Improvements $3,867,751
Off-Site Backbone Street Landscaping $1,888,693
Backbone Storm Drain $1,149,396
Backbone Dry Utilities $4,625,241
Prevailing Wage (35% of Above Costs) $4,035,878
Off-Site Backbone Street Improvements (Prevailing Wage Included) $535,940 Total City of Desert Hot Springs Facilities Improvements Costs $16,102,899 Facilities Completed Prior to Adoption of ROF for CFD 2006-1 (a) Traffic Signals $397,771
Landscaping $519,888
Street Improvements $2,214,835
Dry Utilities $1,996,390
Engineering & Construction Mgmt. (15% of above costs) $769,333 Traffic Control $8,565
Total City of Desert Hot Springs Facilities Completed Prior to ROF for CFD 2006-1 $5,906,782
City of Desert Hot Springs Fire Station Improvement(a)
Fire Station Improvement $3,209,245
Item Number: 5.

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3. Cost Estimate
City of Desert Hot Springs Community Facilities District Report CFD 2025-1 (Skyborne Village) 6
Allocated to Improvement Area 1 (Village 3) ($2,576,142) Total City of Desert Hot Springs Fire Station Improvement Reimbursement Remaining $633,103

TOTAL CITY FEES AND FACILITIES
Mission Springs Water District
Backbone Domestic Water $224,480
Backbone Sewer $891,550
Well 1630/1700 Water Pressure Zone $4,999,875
Intertie 1630/1700 Water Pressure Zone $1,399,965
Water Tank 1630/1700 Water Pressure Zone $1,799,955
Booster Pump 1630/1700 Water Pressure Zone $799,980
Prevailing Wage (35% of Above Costs) $3,540,532
Zone 1530 Improvements $2,500,000
Well 35 Contribution and Required Pressure Zone Improvements $4,274,484 Allocated to Improvement Area 1 (Village 3) ($3,000,000) Well 36 Contribution $5,000,392
Total MSWD Contributions & Improvements $22,431,213
TOTAL CITY AND MSWD FEES AND FACILITIES $64,039,298
Improvement Area No. 2 Estimated Bond Issuance Amount $8,395,000 Improvement Area No. 2 Estimated Project Funds Available $7,160,000 Improvement Area No. 2 Estimated Incidentals $1,234,660 Improvement Area No. 2 Estimated Unfunded Eligible Improvements $56,879,298 Footnotes:
(a) Represents the unreimbursed portion of the fire station improvements from the City of Desert Hot Springs CFD No. 2006-1.

DATED: January 21, 2025 WEBB MUNICIPAL FINANCE, LLC
By: _______________________________

SPECIAL TAX CONSULTANT FOR

CITY OF DESERT HOT SPRINGS

RIVERSIDE COUNTY

STATE OF CALIFORNIA
Item Number: 5.

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4. Proposed Development
City of Desert Hot Springs Community Facilities District Report CFD 2025-1 (Skyborne Village) 7
Improvement Area 1, known as Village 3, is planned to contain approximately 42.82 net taxable acres within Tract Number 32030-3. Improvement Area 1 is planned to be developed into 286 single-family detached units and is located in the northwestern part of the City of Desert Hot Springs, with Indian Canyon Road on the east, Pierson Boulevard on the south and Highway 62 to the east. The proposed Improvement Area 1 boundaries include the following Assessor Parcel Numbers: 667-100-043, 667- 300-001 through 667-300-058, 667-320-001 through 667-320-083, and 667-330-001 through 667-330- 076.

Improvement Area 2, known as Village 10, is planned to contain approximately 39.27 net taxable acres within Tract Number 32030-10. Improvement Area 2 is planned to be developed into 182 single-family detached units and is located in the northwestern part of the City of Desert Hot Springs, with Indian Canyon Road on the east, Pierson Boulevard on the south and Highway 62 to the east. The proposed Improvement Area 2 boundaries include the following Assessor Parcel Numbers: 667-340-001 through 667-340-051, 667-350-001 through 667-350-076, 667-350-078 through 667-350-080, and 667-360-001 through 667-360-064.

The Boundary Map for CFD No. 2025-1 is attached hereto as Appendix B (the “Boundary Map”).

Item Number: 5.

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5. Rate and Method of Apportionment
City of Desert Hot Springs Community Facilities District Report CFD 2025-1 (Skyborne Village) 8

1. The Rate and Method of Apportionment for each Improvement Area allows each property owner within the proposed District to estimate the annual amount that would be required for payment. The Rate and Method of Apportionment for each Improvement Area of the Special Tax for the District, established pursuant to these proceedings, is attached hereto as Appendix A (the “Rate and Method of Apportionment” for each Improvement Area). The Special Tax will be collected in the same manner and at the same time as ad valorem property taxes and subject to the same penalties and provisions; however, the Special Tax may be collected at a different time or in a different manner if necessary for CFD No. 2025-1 to meet its financial obligations and may covenant to foreclose on delinquent parcels as permitted by the Act.

2. All of the property located within CFD No. 2025-1, unless exempted by law or by the Special Tax proposed for CFD No. 2025-1, shall be taxed for the purpose of providing necessary facilities and services to serve the District. The Boundary Map for CFD No. 2025-1 is attached hereto as Appendix B. Pursuant to Section 53325.3 of the Act, the tax imposed “is a Special Tax and not a special assessment, and there is no requirement that the tax be apportioned on the basis of benefit to any property.” The Special Tax may be based on benefit received by property, the cost of making facilities or authorized services available or other reasonable basis as determined by the City Council, although the Special Tax may not be apportioned on an ad valorem basis pursuant to Article XIIIA of the California Constitution. A property owner within the District may choose to prepay in whole or in part the Special Tax A. The available method for so doing is described in Section G and H of the Rate and Method (“Prepayment of Special Tax A”). Special Tax B may not be prepaid.

For each year that any Bonds are outstanding, the Special Tax for each Improvement Area shall be levied on all Parcels in accordance with this Rate and Method of Apportionment. If any delinquent Special Taxes remain uncollected prior to or after all Bonds are retired, the Special Tax may be levied to the extent necessary to reimburse the CFD for uncollected Special Taxes and costs associated with the levy of such Special Taxes, but the Special Tax shall not be levied after the 2068-2069 Fiscal Year, for each Improvement Area.

3. For particulars as to the Rate and Method of Apportionment for each Improvement Area, see the attached and incorporated Appendix A.

It is my opinion that the Rate and Method of Apportionment, described above and set forth in Appendix A, is fair and reasonable.

This Report has been prepared and consolidated by the Special Tax Consultant, Webb Municipal Finance, LLC, and is herewith submitted to the Board pursuant to the applicable provisions of the Mello-Roos Community Facilities Act of 1982.

DATED January 21, 2025 WEBB MUNICIPAL FINANCE, LLC
By: _______________________________

SPECIAL TAX CONSULTANT FOR

CITY OF DESERT HOT SPRINGS

RIVERSIDE COUNTY

STATE OF CALIFORNIA
Item Number: 5.

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APPENDIX A
Rate and Method of Apportionment
Item Number: 5.

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APPENDIX A

RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX FOR
IMPROVEMENT AREA NO. 1 OF
COMMUNITY FACILITIES DISTRICT NO. 2025-1 (SKYBORNE VILLAGE)

OF THE CITY OF DESERT HOT SPRINGS
An Annual Special Tax A and an Annual Special Tax B (all capitalized terms are defined in Section A, “Definitions”, below) shall be applicable to each Parcel of Taxable Property located within the boundaries of Improvement Area No. 1 of Community Facilities District No. 2025-1 (Skyborne Village). The amount of Annual Special Tax A and Annual Special Tax B to be levied in each Fiscal Year, on a Parcel, shall be determined by the City Council of The City of Desert Hot Springs (“City”), acting in its capacity as the legislative body of the CFD by applying the appropriate Annual Special Tax A and Annual Special Tax B for Developed Property, Approved Property, Undeveloped Property and Public Property and/or Property Owners’ Association Property that is not Exempt Property as set forth in Sections B, C, D, F and G, below.

All of the real property within Improvement Area No. 1, unless exempted by law or by the provisions hereof in Section I, shall be taxed for the purposes, to the extent and in the manner herein provided.

A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
“Acre” or “Acreage” means the acreage of a Parcel as indicated on the most recent Assessor’s Parcel Map, or if the land area is not shown on the Assessor’s Parcel Map, the land area shown on the applicable Final Map, parcel map, condominium plan, or other similar instrument. “Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1 of Division 2 of Title 5 of the California Government Code of the State of California. “Administrative Expenses” means all actual or reasonably estimated costs and expenses of the CFD related to Improvement Area No. 1 including but not limited to the following: (i) the costs of computing Special Tax A and Special Tax B (the “Special Taxes”) and of preparing the annual Special Tax A and Special Tax B collection schedules (whether by the Administrator or designee thereof, or both); (ii) the costs of collecting the Special Taxes (whether by the County, City, or otherwise); (iii) the costs of remitting the Special Taxes to the fiscal agent or trustee for any Bonds; (iv) the costs of commencing and pursuing to completion any foreclosure action arising from delinquent Special Tax A; (v) the costs of the fiscal agent or trustee (including its legal counsel) in the discharge of the duties required of it under any Indenture; (vi) the costs of the City, or designee of complying with arbitrage rebate, mandated reporting and disclosure requirements of applicable federal and State of California laws, and responding to property owner or Bond owner inquiries regarding the Special Taxes; (vii) the costs associated with the release of funds from any escrow account; (viii) the costs of the City, or designee related to any appeal of a Special Tax; and (ix) an allocable share of the salaries of the City staff and City overhead expense directly relating to the foregoing. Administrative Expenses shall also include amounts advanced by the City for any administrative purposes of the CFD. “Administrator” means an official of the City, or designee thereof, responsible for determining the annual amount of the levy and collection of the Special Taxes.

Item Number: 5.

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A-2
“Annual Special Tax A” means for each Assessor’s Parcel, the Special Tax A actually levied in a given Fiscal Year on any Assessor’s Parcel.
“Annual Special Tax B” means for each Assessor’s Parcel, the Special Tax B actually levied in a given Fiscal Year on any Assessor’s Parcel.
“Appraisal” a report prepared by a MAI Certified Appraiser setting forth at least the minimum market value of Residential Units within each Land Use Category of Residential Property. “Approved Property” means all Parcels of Taxable Property: (i) that are included in a Final Map that was recorded prior to the January 1st preceding the Fiscal Year in which the Special Tax A is being levied, and (ii) that have not been issued a Building Permit on or prior to the April 1st preceding the Fiscal Year in which the Special Tax A is being levied. “Assessor’s Parcel Map” means an official map of the Assessor of the County of Riverside designating parcels by Assessor’s Parcel number.
“Assigned Annual Special Tax A” means the Special Tax for each Land Use Category of Developed Property, as determined in accordance with Section C.1.a., below. “Backup Special Tax A” means the Special Tax amount set forth in Section C.1.b., below. “Bonds” means any bonds or other indebtedness (as defined in the Act), whether in one or more series, issued by the CFD and secured by the levy of Special Tax A in Improvement Area No. 1 of the CFD.
“Boundary Map” means a recorded map, as amended, of the CFD which indicates the boundaries of Improvement Area No. 1 of the CFD.
“Building Permit” means the first legal document issued by a local agency giving official permission for new construction within Improvement Area No. 1. For purposes of this definition, “Building Permit” may or may not include any subsequent building permits issued or changed after the first issuance, as determined by the Administrator.
“CFD” means Community Facilities District No. 2025-1 (Skyborne Village) of the The City of Desert Hot Springs established pursuant to the Act.
“City” means The City of Desert Hot Springs.
“City Council” means the City Council of The City of Desert Hot Springs. “Consumer Price Index” or “CPI” means the index published monthly by the U.S. Department of Labor, Bureau of Labor Statistics for all urban consumers in the Riverside-San Bernardino-Ontario area. In the event this index ceases to be published, the Consumer Price Index shall be another index as determined by the Administrator that is reasonably comparable to the Consumer Price Index for the Riverside-San Bernardino-Ontario area.
“County” means the County of Riverside.
“Developed Property” means all Parcels of Taxable Property that are included in a Final Map that was recorded prior to January 1st preceding the Fiscal Year in which the Special Tax A and Special Tax B Item Number: 5.

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A-3
are being levied and for which a Building Permit for new construction has been issued on or prior to April 1st preceding the Fiscal Year in which the Special Taxes are being levied. “Dwelling Unit” or “(D/U)” means a residential unit that is used or permitted to be used as a domicile by one or more persons, as determined by the Administrator. “Exempt Property” means any Parcel which is exempt from Special Taxes pursuant to Section I below. “Final Map” means a subdivision of property by recordation of a final map, parcel map, or lot line adjustment, pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or recordation of a condominium plan pursuant to California Civil Code 4285 that creates individual lots for which Building Permits may be issued without further subdivision. “Fiscal Year” means the 12 month period starting on July 1 of any calendar year and ending on the following June 30.
“Improvement Area No. 1” or “IA No. 1” means the property in the CFD designated as Improvement Area No. 1 on the Boundary Map.
“Indenture” means the bond indenture, fiscal agent agreement, trust agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. “Land Use Category” means any of the categories listed in Table 1 under Section C below. “Maximum Special Tax A” means for each Parcel, the maximum Special Tax A, determined in accordance with Section C, which can be levied in any Fiscal Year on such Parcel. “Maximum Special Tax B” means for each Parcel, the maximum Special Tax B, determined in accordance with Section F, which can be levied in any Fiscal Year on such Parcel. “Minimum Sale Price” means the minimum price at which Residential Units of a given Land Use Category have sold or are expected to be sold in a normal marketing environment and shall not include prices for such Residential Units that are sold at a discount to expected sales prices for the purpose of stimulating the initial sales activity with respect to such Land Use Category. “Multifamily Residential Property” means all Parcels of Developed Property for which a Building Permit has been issued for the purpose of constructing a building or buildings comprised of attached Dwelling Units available for rental by the general public, not for sale to an end user, and under common management, as determined by the Administrator.
“Non-Residential Property” means all Parcels of Developed Property for which a Building Permit was issued for any type of non-residential use.
“Parcel(s)” means a lot or parcel shown on an Assessor’s Parcel Map with an assigned parcel number valid as of July 1st for the Fiscal Year for which the Special Tax is being levied. “Price Point Determination” means the determination of the Minimum Sales Price of Residential Units in Improvement Area No. 1 using actual sales price data; provided, however, if there is no actual sales price data within the Improvement Area, then a Price Point Study will be conducted to determine the Minimum Sales Price. In utilizing actual sales price data, if there are not actual sales prices Item Number: 5.

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A-4
available for certain products or product types, then the base pricings for such product or product types as set forth in the appraisal report to be used in connection with the sale of Bonds shall apply. “Property Owners’ Association Property” means all Parcels which, as of July 1st of the Fiscal Year in which the Special Tax is being levied, have been conveyed, dedicated to, or irrevocably offered for dedication to a property owner association, including any master or sub-association. “Proportionately” means for Special Tax A that the ratio of the Annual Special Tax A levy to the applicable Assigned Annual Special Tax A is equal for all applicable Assessor’s Parcels. In the case of Special Tax B, “Proportionately” means that the ratio of the Annual Special Tax B levy to the applicable Maximum Special Tax B is equal for all applicable Assessor’s Parcels. In the case of Developed Property subject to the apportionment of the Annual Special Tax A under Step Four of Section F “Public Property” means all Parcels which, as of July 1st of the Fiscal Year in which the Special Tax is being levied, are used for rights-of-way or any other purpose and is owned by, dedicated to, or irrevocably offered for dedication to the federal government, the State of California, the County, or any other local jurisdiction, provided, however, that any property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified according to its use.
“Residential Floor Area” means all of the square footage of living area of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio or similar area on a Parcel.

The determination of Residential Floor Area shall be made by reference to the original Building Permit issued for the Parcel or, if the Building Permit is not available by reference to a similar official document as selected by the Administrator.
“Residential Property” means all Parcels of Developed Property for which a Building Permit has been issued for purposes of constructing one or more Dwelling Units. “Residential Unit” means each separate residential dwelling unit that comprises an independent facility capable of conveyance or rental, separate from adjacent residential dwelling units. "Services" means services permitted under the Mello-Roos Community Facilities Act of 1982 including, without limitation, maintenance of parks, parkways and open space; flood and storm protection services; and the operation of storm drainage systems. All of the services financed must be provided within the boundaries of or for the benefit of CFD No. 2025-1. “Single Family Property” means all Parcels of Residential Property, other than Multifamily Residential Property.
“Special Tax A” means any of the Special Taxes authorized to be levied on Taxable Property within Improvement Area No. 1 and by the CFD pursuant to the Act to fund the Special Tax A Requirement. “Special Tax B” means any of the Special Taxes authorized to be levied on Taxable Property within Improvement Area No. 1 and by the CFD pursuant to the Act to fund the Special Tax B Requirement. “Special Tax A Requirement” means that amount required in any Fiscal Year: (i) to pay annual debt service on all outstanding Bonds due in the calendar year which commences in such Fiscal Year; (ii) to pay periodic costs on the Bonds, including but not limited to, credit enhancement and rebate payments on the Bonds; (iii) to pay Administrative Expenses; (iv) to pay any anticipated shortfall due Item Number: 5.

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based on Special Tax delinquencies in the prior Fiscal Year; (v) to establish or replenish any reserve funds for the outstanding Bonds or with respect to Bonds expected to be issued in such Fiscal Year; (vi) until the final series of Bonds are issued as determined by the Board, to pay directly for acquisition or construction of the facilities eligible under the Act, provided that the inclusion of such amount does not increase the levy of Special Tax on Approved Property or Undeveloped Property as set forth in Step 2 or Step 3 of section D below; less (vii) a credit for funds available to reduce the annual Special Tax levy as determined pursuant to the Indenture as determined by the Administrator. “Special Tax B Requirement” means, subject to the Maximum Special Tax B, that amount to be collected in any Fiscal Year to pay for certain Services as required to meet the needs of the CFD. The costs of Services to be covered shall be the direct costs for (i) Services, and (ii) Administrative Expenses (apportioned between Special Tax A and Special Tax B); less (iii) a credit for funds available to reduce the Annual Special Tax B levy, if any, as determined by the Administrator. Under no circumstances shall the Special Tax B Requirement include funds for Bonds. “Special Tax” or “Special Taxes” means, as applicable, either or both of Special Tax A and/or Special Tax B.
“Taxable Property” means all Parcels for which the Special Taxes have not been prepaid in full pursuant to Section E. or that are not exempt from the Special Tax pursuant to law or Section I. “Taxable Unit” means either a Dwelling Unit or an Acre, as shown in Table 1. “Total Tax Burden” means for any Residential Unit, the annual Special Tax, together with ad valorem property taxes, special assessments, special taxes for any overlapping community facilities district, and any other taxes, fees, and charges which are levied on the County secured tax roll and imposed on such Residential Unit and the real property on which it is located and collected by the County on ad valorem tax bills and which are secured by such Residential Unit and the real property on which it is located, assuming such Residential Unit had been completed, sold, and subject to such levies and impositions, excluding (i) PACE Charges (or any other charge entered into voluntarily by the property owner), (ii) homeowners association assessments, and (iii) service charges such as those related to sewer and trash that may be collected on the County secured tax roll. “Undeveloped Property” means all Parcels of Taxable Property not classified as Developed Property, Approved Property, Public Property or Property Owners’ Association Property.

B. ASSIGNMENT TO LAND USE CATEGORY
Each Fiscal Year, commencing with the 2025-2026 Fiscal Year, all Parcels of Taxable Property shall be classified as Developed Property, Approved Property, Undeveloped Property, Public Property and/or Property Owners’ Association Property, and subject to the levy of Special Taxes in accordance with this Rate and Method of Apportionment as determined pursuant to Sections C, D, F, and G.

Parcels of Developed Property shall further be classified as Residential Property or Non-Residential Property. Parcels of Residential Property shall further be classified as Single Family Property or Multifamily Residential Property. Parcels of Single Family Property shall be further categorized into the applicable Land Use Category based on the Residential Floor Area for such Parcel.

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C. MAXIMUM SPECIAL TAX A RATE

1. Developed Property
The Maximum Special Tax A for each Parcel of Single Family Property shall be the greater of: (i) the applicable Assigned Annual Special Tax A described in Table 1 or (ii) the amount derived by application of the Backup Special Tax A.

The Maximum Special Tax A for each Parcel of Non-Residential Property or Multifamily Residential Property shall be the Assigned Annual Special Tax A described in Table 1. a. Assigned Annual Special Tax A
The Assigned Annual Special Tax A for each Parcel of Developed Property is shown in Table 1.

TABLE 1
Assigned Annual Special Tax A for Developed Property
Land Use Category
Taxable
Unit Residential Floor Area
Assigned Annual
Special Tax A Per
Taxable Unit

1. Single Family Property D/U Less than 1,450 sq. ft. $2,140

2. Single Family Property D/U 1,450 sq. ft. – 1,599 sq. ft. $2,255

3. Single Family Property D/U 1,600 sq. ft. – 1,749 sq. ft. $2,370

4. Single Family Property D/U 1,750 sq. ft. – 1,899 sq. ft. $2,485

5. Single Family Property D/U 1,900 sq. ft. – 2,049 sq. ft. $2,600

6. Single Family Property D/U 2,050 sq. ft. – 2,199 sq. ft. $2,715

7. Single Family Property D/U 2,200 sq. ft. – 2,349 sq. ft. $2,830

8. Single Family Property D/U 2,350 sq. ft. – 2,499 sq. ft. $2,945

9. Single Family Property D/U Greater than 2,499 sq. ft. $3,060

10. Multifamily Residential Property Acre N/A $16,917

11. Non-Residential Property Acre N/A $16,917
b. Backup Special Tax A
When a Final Map is recorded, the Backup Special Tax A for a Parcel classified or to be classified as Single Family Property within such Final Map shall be determined by multiplying the Undeveloped Property Maximum Special Tax A per Acre by the total Acreage of Taxable Property within such Final Map, excluding the Acreage associated with Non-Residential Property, Multifamily Residential Property, Public Property and/or Property Owners’ Association Property that is not Exempt Property pursuant to Section I and dividing such amount by the number of Parcels within such Final Map classified as either (i) Single Family Property or (ii) Approved Property for which a Building Permit is expected to be issued for Single Family Property (i.e., the number of residential lots).

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the Backup Special Tax A shall be recalculated using the methodology described in the preceding paragraph but only for the area that has been changed or modified.

The Backup Special Tax A shall not apply to Multifamily Residential Property, Non-Residential Property, Public Property, or Property Owners’ Association Property.

2. Approved Property
The Maximum Special Tax A for each Parcel of Approved Property expected to be classified as Single Family Property shall be the Backup Special Tax A computed pursuant to Section C.1.b above.

The Maximum Special Tax A for each Parcel of Approved Property expected to be classified as Multifamily Residential Property or Non-Residential Property shall be $16,917 per Acre.

3. Undeveloped Property
The Maximum Special Tax A for each Parcel of Undeveloped Property is shown in Table 2 below.

TABLE 2
Undeveloped Property Maximum Special Tax A
Maximum Special Tax A Per
Acre
$16,917

4. Public Property and/or Property Owners’ Association Property that is not Exempt Property pursuant to the provisions of Section I.

The Maximum Special Tax A for each Parcel of Public Property and/or Property Owners’ Association Property that is not Exempt Property shall be equal to the product of the applicable Undeveloped Property Maximum Special Tax A rate per Acre in Table 2 multiplied by the Acreage of such Parcel.

5. Prior to the issuance of the Bonds, the CFD shall determine the Minimum Sales Price of Residential Units within each Land Use Category through a Price Point Determination. If, based upon such Price Point Determination, the Administrator calculates that the Total Tax Burden applicable to Residential Units within one or more Land Use Categories of Residential Property to be constructed within Improvement Area No. 1 exceeds 2.00% of the Minimum Sale Price of such Residential Units, the Special Tax A shall be reduced to the extent necessary to cause the Total Tax Burden applicable to Residential Units within such Land Use Category(ies) not to exceed 2.00% of the Minimum Sale Price of such Residential Units. Each Special Tax A reduction for a Land Use Category shall be calculated by the Administrator separately, and it shall not be required that such reduction be proportionate among Land Use Categories.

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of the products of the number of Residential Units constructed or expected to be constructed in each Land Use Category multiplied by the percentage change in the Special Tax A for each Land Use Category (or 0 for Land Use Categories that are not changing). This amount is then divided by the total number of Residential Units constructed or expected to be constructed and converted to a percentage. The reduced Maximum Special Tax A shall be used to compute the reduced Backup Special Tax A.

The Special Tax A reductions, if required pursuant to this section, shall be reflected in an amended notice of Special Tax lien, which CFD No. 2025-1 shall cause to be recorded by executing a certificate in substantially the form attached herein as Exhibit A.

D. METHOD OF APPORTIONMENT OF THE ANNUAL SPECIAL TAX A
Commencing with Fiscal Year 2025-2026 and for each following Fiscal Year, the City Council shall levy the Special Tax A on all Taxable Property until the amount of Special Tax A equals the applicable Special Tax A Requirement in accordance with the following steps:

First: The Special Tax A shall be levied Proportionately on each Parcel of Developed Property at up to 100% of the applicable Assigned Annual Special Tax A rate as needed to satisfy the Special Tax A Requirement;
Second: If additional moneys are needed to satisfy the Special Tax A Requirement after the first step has been completed, the Special Tax A shall be levied Proportionately on each Parcel of Approved Property at up to 100% of the Maximum Special Tax A for Approved Property; Third: If additional moneys are needed to satisfy the Special Tax A Requirement after the first two steps have been completed, the Special Tax A shall be levied Proportionately on each Parcel of Undeveloped Property at up to 100% of the Maximum Special Tax A for Undeveloped Property; Fourth: If additional moneys are needed to satisfy the Special Tax A Requirement after the first three steps have been completed, the Special Tax A to be levied on each Parcel of Developed Property for which the Maximum Special Tax A is derived by the application of the Backup Special Tax A shall be increased in equal percentages from the Assigned Annual Special Tax A up to the Maximum Special Tax A for such Parcel;
Fifth: If additional moneys are needed to satisfy the Special Tax A Requirement after the first four steps have been completed, the Special Tax A shall be levied Proportionately on each Parcel of Taxable Property that is Public Property or Property Owners’ Association Property at up to 100% of the Maximum Special Tax A for such Parcel.

Notwithstanding the above, under no circumstances will the Special Tax A levied in any Fiscal Year against any Parcel of Residential Property as a result of a delinquency in the payment of the Special Tax A applicable to any other Parcel be increased by more than ten percent (10%) above the amount that would have been levied in that Fiscal Year had there never been any such delinquency or default.

E. PREPAYMENT OF SPECIAL TAX A
The following definitions apply to this Section E:

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“CFD Public Facilities” means $8,140,436, expressed in 2024 dollars, which shall increase by the Construction Inflation Index on July 1, 2025, and on each July 1 thereafter, or such lower number as (i) shall be determined by the Administrator as sufficient to provide the public facilities under the authorized bonding program, or (ii) shall be determined by the City Council concurrently with a covenant that the CFD will not issue any more Bonds.
“Construction Fund” means, collectively, an account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct public facilities eligible under the Act and any account established prior to the issuance of Bonds for such purpose. “Construction Inflation Index” means the annual percentage change in the Engineering News-Record Building Cost Index for the City of Los Angeles, measured as of the calendar year which ends in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the Administrator that is reasonably comparable to the Engineering News-Record Building Cost Index for the City of Los Angeles. “Future Facilities Costs” means the CFD Public Facilities minus (i) Bond proceeds deposited in Construction Funds and accounts and (ii) other amounts (Special Tax A, interest earnings, etc.) allocated to Construction Funds and accounts that were available to fund such CFD Public Facilities prior to the date of prepayment.
“Outstanding Bonds” means all previously issued Bonds, which will remain outstanding after the payment of principal from the amount of Special Tax A that have been levied, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayments of Maximum Special Tax A.

1. Prepayment in Full
The Maximum Special Tax A obligation may be prepaid and permanently satisfied for (i) Parcels of Developed Property, (ii) Parcels of Approved Property or Undeveloped Property for which a Building Permit has been issued, (iii) Approved Property or Undeveloped Property for which a Building Permit has not been issued, and (iv) Parcels of Public Property or Property Owners’ Association Property that are not Exempt Property pursuant to Section I. The Maximum Special Tax A obligation applicable to a Parcel may be fully prepaid and the obligation to pay the Special Tax A for such Parcel permanently satisfied as described herein; provided that a prepayment may be made only if there are no delinquent Special Taxes with respect to such Parcel at the time of prepayment. An owner of a Parcel intending to prepay the Maximum Special Tax A obligation for such Parcel shall provide the Administrator with written notice of intent to prepay, and within 5 business days of receipt of such notice, the Administrator shall notify such owner of the amount of the non-refundable deposit determined to cover the cost to be incurred by the CFD in calculating the Prepayment Amount (as defined below) for the Parcel. Within 15 days of receipt of such non-refundable deposit, the Administrator shall notify such owner of the Prepayment Amount for the Parcel. Prepayment must be made not less than 60 days prior to the redemption date for any Bonds to be redeemed with the proceeds of such prepaid Special Tax A.

The Prepayment Amount shall be calculated as follows (capitalized terms are defined below):

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Bond Redemption Amount
plus Redemption Premium
plus Future Facilities Amount
plus Defeasance Amount
plus Administrative Fees and Expenses
less Reserve Fund Credit
Equals: Prepayment Amount
The Prepayment Amount shall be determined as of the proposed prepayment date as follows:

1. Confirm that no Special Tax A delinquencies apply to such Parcel.

2. For a Parcel of Developed Property, compute the Maximum Special Tax A for the Parcel. For a Parcel of Approved Property or Undeveloped Property for which a Building Permit has been issued, compute the Maximum Special Tax A for the Parcel as though it was already designated as Developed Property, based upon the Building Permit which has been issued for the Parcel. For a Parcel of Approved Property or Undeveloped Property for which a Building Permit has not been issued, and for a Parcel of Public Property or Property Owners’ Association Property to be prepaid, compute the Maximum Special Tax A for the Parcel.

3. Divide the Maximum Special Tax A derived pursuant to paragraph 2 by the total amount of Special Tax A that could be levied at the Maximum Special Tax A at build out of all Parcels of Taxable Property based on the applicable Maximum Special Tax A for Parcels of Developed Property not including any Parcels for which the Special Tax A obligation has been previously prepaid.

4. Multiply the quotient derived pursuant to paragraph 3 by the principal amount of the Outstanding Bonds to determine the amount of Outstanding Bonds to be redeemed with the Prepayment Amount (the “Bond Redemption Amount”).

5. Multiply the Bond Redemption Amount by the applicable redemption premium, if any, on the Outstanding Bonds to be redeemed (the “Redemption Premium”).

6. Determine the Future Facilities Costs.

7. Multiply the quotient derived pursuant to paragraph 3 by the amount determined pursuant to paragraph 6 to determine the amount of Future Facilities Costs for the Parcel (the “Future Facilities Amount”).

8. Determine the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Outstanding Bonds on which Bonds can be redeemed from Special Tax A prepayments.

9. Determine the Special Tax A levied on the Parcel in the current Fiscal Year which have not yet been paid.

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10. Determine the amount the Administrator reasonably expects to derive from the investment of the Bond Redemption Amount and the Redemption Premium from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the Prepayment Amount.

11. Add the amounts derived pursuant to paragraphs 8 and 9 and subtract the amount derived pursuant to paragraph 10 (the “Defeasance Amount”).

12. Verify the administrative fees and expenses of the CFD, including the cost of computation of the Prepayment Amount, the cost to invest the Prepayment Amount, the cost of redeeming the Outstanding Bonds, and the cost of recording notices to evidence the prepayment of the Maximum Special Tax A obligation for the Parcel and the redemption of Outstanding Bonds (the “Administrative Fees and Expenses”).

13. The reserve fund credit (the “Reserve Fund Credit”) shall equal the lesser of: (a) the expected reduction in the reserve requirement (as defined in the Indenture), if any, associated with the redemption of Outstanding Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirement (as defined in the Indenture) in effect after the redemption of Outstanding Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero.

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

15. From the Prepayment Amount, the Bond Redemption Amount, the Redemption Premium, and Defeasance Amount shall be deposited into the appropriate fund as established under the Indenture and be used to redeem Outstanding Bonds or make debt service payments. The Future Facilities Amount shall be deposited into the Construction Fund. The Administrative Fees and Expenses shall be retained by the CFD.

The Prepayment Amount may be sufficient to redeem other than a $5,000 increment of Bonds. In such event, the increment above $5,000 or an integral multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next redemption from other Special Tax A prepayments of Outstanding Bonds or to make debt service payments.

As a result of the payment of the current Fiscal Year’s Special Tax A levy as determined pursuant to paragraph 9 above, the Administrator shall remove the current Fiscal Year’s Special Tax A levy for the Parcel from the County tax roll. With respect to any Parcel for which the Maximum Special Tax A obligation is prepaid, the City Council shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of Maximum Special Tax A obligation and the release of the Special Tax A lien for the Parcel, and the obligation to pay the Special Tax A for such Parcel shall cease.

Notwithstanding the foregoing, no Special Tax A prepayment shall be allowed unless the amount of Maximum Special Tax A that may be levied on all Parcels of Taxable Property after the proposed prepayment will be at least 1.1 times maximum annual debt service on the Bonds that will remain outstanding after the prepayment plus the estimated annual Administrative Expenses.

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Tenders of Bonds in prepayment of the Maximum Special Tax A obligation may be accepted upon the terms and conditions established by the City Council pursuant to the Act. However, the use of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by the City Council.

2. Prepayment in Part
The Maximum Special Tax A obligation for a Parcel of Developed Property, Approved Property or Undeveloped Property may be partially prepaid. For purposes of determining the partial prepayment amount, the provisions of Section E.1 shall be modified as provided by the following formula:

PP = ((PE –A) x F) +A
These terms have the following meaning:

PP = Partial Prepayment
PE = the Prepayment Amount calculated according to Section E.1 F = the percent by which the owner of the Parcel(s) is partially prepaying the Maximum Special Tax A obligation
A = the Administrative Fees and Expenses determined pursuant to Section E.1 The owner of a Parcel who desires to partially prepay the Maximum Special Tax A obligation for the Parcel shall notify the Administrator of (i) such owner’s intent to partially prepay the Maximum Special Tax A obligation, (ii) the percentage of the Maximum Special Tax A obligation such owner wishes to prepay, and (iii) the company or agency that will be acting as the escrow agent, if any. Within 5 days of receipt of such notice, the Administrator shall notify such property owner of the amount of the non-refundable deposit determined to cover the cost to be incurred by the CFD in calculating the amount of a partial prepayment. Within 15 business days of receipt of such non-refundable deposit, the Administrator shall notify such owner of the amount of the Partial Prepayment for the Parcel. A Partial Prepayment must be made not less than 60 days prior to the redemption date for the Outstanding Bonds to be redeemed with the proceeds of the Partial Prepayment.

With respect to any Parcel for which the Maximum Special Tax A obligation is partially prepaid, the Administrator shall (i) distribute the Partial Prepayment as provided in Paragraph 15 of Section E.1, and (ii) indicate in the records of the CFD that there has been a Partial Prepayment for the Parcel and that a portion of the Special Tax A obligation equal to the remaining percentage (1.00 - F) of Special Tax A obligation will continue on the Parcel pursuant to Section D.

F. MAXIMUM SPECIAL TAX B RATE

1. Developed Property
The Maximum Special Tax B for Fiscal Year 2025-2026 for each Parcel of Single Family Property, NonResidential Property or Multifamily Residential Property, classified as Developed Property, shall be shall be the Maximum Special Tax B described in Table 3.

TABLE 3
Maximum Special Tax B for Developed Property
(Fiscal Year 2025-2026)
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Land Use Category
Taxable
Unit
Maximum Special
Tax B Per Taxable
Unit
(FY 2025-2026)

1. Single Family Property D/U $275.00

2. Multifamily Residential Property Acre $1,836.76

3. Non-Residential Property Acre $1,836.76
On each July 1, commencing July 1, 2026, the Maximum Special Tax B shall be increased by an amount equal to CPI or two percent (2%), whichever is greater, of the amount in effect for the previous Fiscal Year.

2. Approved Property
The Maximum Special Tax B for Fiscal Year 2025-2026 for each Parcel of Single Family Property, NonResidential Property or Multifamily Residential Property, classified as Approved Property, shall be the Maximum Special Tax B described in Table 4.

TABLE 4
Maximum Special Tax B for Approved Property
(Fiscal Year 2025-2026)
Land Use Category
Taxable
Unit
Maximum Special
Tax B Per Taxable
Unit
(FY 2025-2026)

1. Single Family Property D/U $196.94

2. Multifamily Residential Property Acre $1,315.39

3. Non-Residential Property Acre $1,315.39
On each July 1, commencing July 1, 2026, the Maximum Special Tax B shall be increased by an amount equal to CPI or two percent (2%), whichever is greater, of the amount in effect for the previous Fiscal Year.

3. Undeveloped Property
No Special Tax B shall be levied on Undeveloped Property.

G. METHOD OF APPORTIONMENT OF THE ANNUAL SPECIAL TAX B
Commencing Fiscal Year 2025-2026 and for each subsequent Fiscal Year, the City Council shall levy Special Tax B on all Taxable Property until the amount of Special Tax B equals the Special Tax B Requirement in accordance with the following steps:

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

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

H. PREPAYMENT OF SPECIAL TAX B
No prepayments of Annual Special Tax B are permitted.

I. EXEMPTIONS
The Administrator shall classify as Exempt Property all Parcels of (i) Public Property or (ii) Property Owners’ Association Property; provided that such classification shall not reduce the Acreage of all Taxable Property within Improvement Area No. 1 to fewer than 42.82 Acres. The Administrator shall not classify a Parcel of Public Property or Property Owners’ Association Property as Exempt Property if such classification would reduce the Acreage of all Parcels of Taxable Property to fewer than 42.82 Acres. Such Parcels that cannot be classified as Exempt Property because such classification would reduce the Acreage of all Parcels of Taxable Property to fewer than 42.82 Acres will be classified as Property Owners’ Association Property or Public Property, and will continue to be subject to Special Tax A. The Administrator shall classify such Parcels as Exempt Property in the chronological order in which property becomes Public Property or Property Owners’ Association Property.

I. MANNER OF COLLECTION
The Special Tax A and Special Tax B shall be collected in the same manner and at the same time as ordinary ad valorem property taxes and shall be subject to the same penalties, the same procedure, sale and lien priority in the case of delinquency; provided, however, that the Administrator may directly bill the Special Tax A and Special Tax B, may collect Special Tax A and Special Tax B at a different time or in a different manner if necessary to meet the financial obligations of Improvement Area No. 1, and provided further that the CFD may covenant to foreclose and may actually foreclose on Parcels having delinquent Special Tax A and Special Tax B as permitted by the Act.

J. APPEALS
Any taxpayer may file a written appeal of the Special Tax on his/her Parcel(s) with the Administrator, provided that the appellant is current in his/her payments of Special Tax. During pendency of an appeal, all Special Taxes previously levied must be paid on or before the payment date established when the levy was made. The appeal must specify the reasons why the appellant claims the Special Tax is in error. The Administrator shall review the appeal, meet with the appellant if the Administrator deems necessary, and advise the appellant of its determination. If the Administrator agrees with the appellant, the Administrator shall grant a credit to eliminate or reduce future Special Tax on the appellant’s Parcel(s). No refunds of previously paid Special Taxes shall be made.

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The Administrator shall interpret this Rate and Method of Apportionment and make determinations relative to the annual levy and administration of the Special Taxes and any taxpayer who appeals, as herein specified.

The City Council may interpret this Rate and Method of Apportionment of Special Tax for purposes of clarifying any ambiguity and make determinations relative to the amount of Administrative Expenses.

K. TERM OF THE SPECIAL TAX A AND SPECIAL TAX B
For each year that any Bonds are outstanding the Special Tax A shall be levied on all Parcels subject to Special Tax A. If any delinquent Special Taxes remain uncollected prior to or after all Bonds are retired, the Special Tax A may be levied to the extent necessary to reimburse the CFD for uncollected Special Tax A associated with the levy of such Special Tax A, but the Special Tax A shall not be levied after 2068-2069 Fiscal Year.

For each Fiscal Year, Special Tax B shall be levied in perpetuity as long as the Services are being provided.

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EXHIBIT A

CERTIFICATE OF MODIFICATION OF SPECIAL TAX A
(PAGE 1 OF 2)
THE CITY OF DESERT HOT SPRINGS AND COMMUNITY FACILITES DISTRICT NO. 2025-1 CERTIFICATE

I. Pursuant to Section C of the Rate and Method of Apportionment of Special Tax for Improvement Area No. 1 of Community Facilities District No. 2025-1 (Skyborne Village) of The City of Desert Hot Springs (“CFD No. 2025-1”), the Special Tax A for Residential Property and Non-Residential Property within CFD No. 2025-1 has been modified.

The information in Sections C.1 through C.4 of the Rate and Method of Apportionment, has been modified and is restated as follows:

TABLE 1
Assigned Annual Special Tax A for Developed Property
Land Use Category
Taxable
Unit Residential Floor Area
Assigned Annual
Special Tax A Per
Taxable Unit

1. Single Family Property D/U Less than 1,450 sq. ft. $______

2. Single Family Property D/U 1,450 sq. ft. – 1,599 sq. ft. $______

3. Single Family Property D/U 1,600 sq. ft. – 1,749 sq. ft. $______

4. Single Family Property D/U 1,750 sq. ft. – 1,899 sq. ft. $______

5. Single Family Property D/U 1,900 sq. ft. – 2,049 sq. ft. $______

6. Single Family Property D/U 2,050 sq. ft. – 2,199 sq. ft. $______

7. Single Family Property D/U 2,200 sq. ft. – 2,349 sq. ft. $______

8. Single Family Property D/U 2,350 sq. ft. – 2,499 sq. ft. $______

9. Single Family Property D/U Greater than 2,499 sq. ft. $______

10. Multifamily Residential Property Acre N/A $______

11. Non-Residential Property Acre N/A $______
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b. Backup Special Tax A
When a Final Map is recorded, the Backup Special Tax A for a Parcel classified or to be classified as Single Family Property within such Final Map shall be determined by multiplying the Undeveloped Property Maximum Special Tax A per Acre by the total Acreage of Taxable Property within such Final Map, excluding the Acreage associated with Non-Residential Property, Multifamily Residential Property, Public Property and/or Property Owners’ Association Property that is not Exempt Property pursuant to Section I and dividing such amount by the number of Parcels within such Final Map classified as either (i) Single Family Property or (ii) Approved Property for which a Building Permit is expected to be issued for Single Family Property (i.e., the number of residential lots).

Notwithstanding the forgoing, if Parcels classified or to be classified as Single Family Property are subsequently changed or modified by recordation of a lot line adjustment or similar instrument, then the Backup Special Tax A shall be recalculated using the methodology described in the preceding paragraph but only for the area that has been changed or modified.

The Backup Special Tax A shall not apply to Multifamily Residential Property, Non-Residential Property, Public Property, or Property Owners’ Association Property.

The Maximum Special Tax A for each Parcel of Approved Property expected to be classified as Multifamily Residential Property or Non-Residential Property shall be $________ per Acre.

3. Undeveloped Property
The Maximum Special Tax A for each Parcel of Undeveloped Property is shown in Table 2 below.

TABLE 2
Undeveloped Property Maximum Special Tax A
Maximum Special Tax A Per
Acre
$________

4. Public Property and/or Property Owners’ Association Property that is not Exempt Property pursuant to the provisions of Section I.

II. The Special Tax A may only be modified prior to the first issuance of CFD No. 2025-1 Bonds.

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III. Upon execution of this certificate by CFD No. 2025-1, CFD No. 2025-1 shall cause an amended notice of Special Tax A lien for CFD No. 2025-1 to be recorded reflecting the modifications set forth herein.

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CERTIFICATE OF MODIFICATION OF SPECIAL TAX A
(PAGE 2 OF 2)
By execution hereof, the undersigned acknowledge, on behalf of the District and CFD No. 2025-1, receipt of this certificate and modification of the Rate and Method of Apportionment of Special Tax A as set forth in this certificate.

IMPROVEMENT AREA NO. 1 OF COMMUNITY FACILITIES DISTRICT NO. 2025-1 (SKYBORNE VILLAGE) OF

THE CITY OF DESERT HOT SPRINGS
By:_________________________________ Date:______________________ Item Number: 5.

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APPENDIX A

RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX FOR
IMPROVEMENT AREA NO. 2 OF
COMMUNITY FACILITIES DISTRICT NO. 2025-1 (SKYBORNE VILLAGE)

OF THE CITY OF DESERT HOT SPRINGS
An Annual Special Tax A and an Annual Special Tax B (all capitalized terms are defined in Section A, “Definitions”, below) shall be applicable to each Parcel of Taxable Property located within the boundaries of Improvement Area No. 2 of Community Facilities District No. 2025-1 (Skyborne Village). The amount of Annual Special Tax A and Annual Special Tax B to be levied in each Fiscal Year, on a Parcel, shall be determined by the City Council of The City of Desert Hot Springs (“City”), acting in its capacity as the legislative body of the CFD by applying the appropriate Annual Special Tax A and Annual Special Tax B for Developed Property, Approved Property, Undeveloped Property and Public Property and/or Property Owners’ Association Property that is not Exempt Property as set forth in Sections B, C, D, F and G, below.

All of the real property within Improvement Area No. 2, unless exempted by law or by the provisions hereof in Section I, shall be taxed for the purposes, to the extent and in the manner herein provided.

A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
“Acre” or “Acreage” means the acreage of a Parcel as indicated on the most recent Assessor’s Parcel Map, or if the land area is not shown on the Assessor’s Parcel Map, the land area shown on the applicable Final Map, parcel map, condominium plan, or other similar instrument. “Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1 of Division 2 of Title 5 of the California Government Code of the State of California. “Administrative Expenses” means all actual or reasonably estimated costs and expenses of the CFD related to Improvement Area No. 2 including but not limited to the following: (i) the costs of computing Special Tax A and Special Tax B (the “Special Taxes”) and of preparing the annual Special Tax A and Special Tax B collection schedules (whether by the Administrator or designee thereof, or both); (ii) the costs of collecting the Special Taxes (whether by the County, City, or otherwise); (iii) the costs of remitting the Special Taxes to the fiscal agent or trustee for any Bonds; (iv) the costs of commencing and pursuing to completion any foreclosure action arising from delinquent Special Tax A; (v) the costs of the fiscal agent or trustee (including its legal counsel) in the discharge of the duties required of it under any Indenture; (vi) the costs of the City, or designee of complying with arbitrage rebate, mandated reporting and disclosure requirements of applicable federal and State of California laws, and responding to property owner or Bond owner inquiries regarding the Special Taxes; (vii) the costs associated with the release of funds from any escrow account; (viii) the costs of the City, or designee related to any appeal of a Special Tax; and (ix) an allocable share of the salaries of the City staff and City overhead expense directly relating to the foregoing. Administrative Expenses shall also include amounts advanced by the City for any administrative purposes of the CFD. “Administrator” means an official of the City, or designee thereof, responsible for determining the annual amount of the levy and collection of the Special Taxes.

Item Number: 5.

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“Annual Special Tax A” means for each Assessor’s Parcel, the Special Tax A actually levied in a given Fiscal Year on any Assessor’s Parcel.
“Annual Special Tax B” means for each Assessor’s Parcel, the Special Tax B actually levied in a given Fiscal Year on any Assessor’s Parcel.
“Appraisal” a report prepared by a MAI Certified Appraiser setting forth at least the minimum market value of Residential Units within each Land Use Category of Residential Property. “Approved Property” means all Parcels of Taxable Property: (i) that are included in a Final Map that was recorded prior to the January 1st preceding the Fiscal Year in which the Special Tax A is being levied, and (ii) that have not been issued a Building Permit on or prior to the April 1st preceding the Fiscal Year in which the Special Tax A is being levied. “Assessor’s Parcel Map” means an official map of the Assessor of the County of Riverside designating parcels by Assessor’s Parcel number.
“Assigned Annual Special Tax A” means the Special Tax for each Land Use Category of Developed Property, as determined in accordance with Section C.1.a., below. “Backup Special Tax A” means the Special Tax amount set forth in Section C.1.b., below. “Bonds” means any bonds or other indebtedness (as defined in the Act), whether in one or more series, issued by the CFD and secured by the levy of Special Tax A in Improvement Area No. 2 of the CFD.
“Boundary Map” means a recorded map, as amended, of the CFD which indicates the boundaries of Improvement Area No. 2 of the CFD.
“Building Permit” means the first legal document issued by a local agency giving official permission for new construction within Improvement Area No. 2. For purposes of this definition, “Building Permit” may or may not include any subsequent building permits issued or changed after the first issuance, as determined by the Administrator.
“CFD” means Community Facilities District No. 2025-1 (Skyborne Village) of The City of Desert Hot Springs established pursuant to the Act.
“City” means The City of Desert Hot Springs.
“City Council” means the City Council of The City of Desert Hot Springs. “Consumer Price Index” or “CPI” means the index published monthly by the U.S. Department of Labor, Bureau of Labor Statistics for all urban consumers in the Riverside-San Bernardino-Ontario area. In the event this index ceases to be published, the Consumer Price Index shall be another index as determined by the Administrator that is reasonably comparable to the Consumer Price Index for the Riverside-San Bernardino-Ontario area.
“County” means the County of Riverside.
“Developed Property” means all Parcels of Taxable Property that are included in a Final Map that was recorded prior to January 1st preceding the Fiscal Year in which the Special Tax A and Special Tax B Item Number: 5.

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are being levied and for which a Building Permit for new construction has been issued on or prior to April 1st preceding the Fiscal Year in which the Special Taxes are being levied. “Dwelling Unit” or “(D/U)” means a residential unit that is used or permitted to be used as a domicile by one or more persons, as determined by the Administrator. “Exempt Property” means any Parcel which is exempt from Special Taxes pursuant to Section I below. “Final Map” means a subdivision of property by recordation of a final map, parcel map, or lot line adjustment, pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or recordation of a condominium plan pursuant to California Civil Code 4285 that creates individual lots for which Building Permits may be issued without further subdivision. “Fiscal Year” means the 12 month period starting on July 1 of any calendar year and ending on the following June 30.
“Improvement Area No. 2” or “IA No. 2” means the property in the CFD designated as Improvement Area No. 2 on the Boundary Map.
“Indenture” means the bond indenture, fiscal agent agreement, trust agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. “Land Use Category” means any of the categories listed in Table 1 under Section C below. “Maximum Special Tax A” means for each Parcel, the maximum Special Tax A, determined in accordance with Section C, which can be levied in any Fiscal Year on such Parcel. “Maximum Special Tax B” means for each Parcel, the maximum Special Tax B, determined in accordance with Section F, which can be levied in any Fiscal Year on such Parcel. “Minimum Sale Price” means the minimum price at which Residential Units of a given Land Use Category have sold or are expected to be sold in a normal marketing environment and shall not include prices for such Residential Units that are sold at a discount to expected sales prices for the purpose of stimulating the initial sales activity with respect to such Land Use Category. “Multifamily Residential Property” means all Parcels of Developed Property for which a Building Permit has been issued for the purpose of constructing a building or buildings comprised of attached Dwelling Units available for rental by the general public, not for sale to an end user, and under common management, as determined by the Administrator.
“Non-Residential Property” means all Parcels of Developed Property for which a Building Permit was issued for any type of non-residential use.
“Parcel(s)” means a lot or parcel shown on an Assessor’s Parcel Map with an assigned parcel number valid as of July 1st for the Fiscal Year for which the Special Tax is being levied. “Price Point Determination” means the determination of the Minimum Sales Price of Residential Units in Improvement Area No. 2 using actual sales price data; provided, however, if there is no actual sales price data within the Improvement Area, then a Price Point Study will be conducted to determine the Minimum Sales Price. In utilizing actual sales price data, if there are not actual sales prices Item Number: 5.

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The determination of Residential Floor Area shall be made by reference to the original Building Permit issued for the Parcel or, if the Building Permit is not available by reference to a similar official document as selected by the Administrator.
“Residential Property” means all Parcels of Developed Property for which a Building Permit has been issued for purposes of constructing one or more Dwelling Units. “Residential Unit” means each separate residential dwelling unit that comprises an independent facility capable of conveyance or rental, separate from adjacent residential dwelling units. "Services" means services permitted under the Mello-Roos Community Facilities Act of 1982 including, without limitation, maintenance of parks, parkways and open space; flood and storm protection services; and the operation of storm drainage systems. All of the services financed must be provided within the boundaries of or for the benefit of CFD No. 2025-1. “Single Family Property” means all Parcels of Residential Property, other than Multifamily Residential Property.
“Special Tax A” means any of the Special Taxes authorized to be levied on Taxable Property within Improvement Area No. 2 and by the CFD pursuant to the Act to fund the Special Tax A Requirement. “Special Tax B” means any of the Special Taxes authorized to be levied on Taxable Property within Improvement Area No. 2 and by the CFD pursuant to the Act to fund the Special Tax B Requirement. “Special Tax A Requirement” means that amount required in any Fiscal Year: (i) to pay annual debt service on all outstanding Bonds due in the calendar year which commences in such Fiscal Year; (ii) to pay periodic costs on the Bonds, including but not limited to, credit enhancement and rebate payments on the Bonds; (iii) to pay Administrative Expenses; (iv) to pay any anticipated shortfall due Item Number: 5.

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Item Number: 5.

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C. MAXIMUM SPECIAL TAX A RATE

TABLE 1
Assigned Annual Special Tax A for Developed Property
Land Use Category
Taxable
Unit Residential Floor Area
Assigned Annual
Special Tax A Per
Taxable Unit

1. Single Family Property D/U Less than 2,200 sq. ft. $2,940

2. Single Family Property D/U 2,200 sq. ft. – 2,499 sq. ft. $3,310

3. Single Family Property D/U 2,500 sq. ft. – 2,799 sq. ft. $3,680

4. Single Family Property D/U 2,800 sq. ft. – 3,099 sq. ft. $4,050

5. Single Family Property D/U Greater than 3,099 sq. ft. $4,420

6. Multifamily Residential Property Acre N/A $17,027

7. Non-Residential Property Acre N/A $17,027
b. Backup Special Tax A
When a Final Map is recorded, the Backup Special Tax A for a Parcel classified or to be classified as Single Family Property within such Final Map shall be determined by multiplying the Undeveloped Property Maximum Special Tax A per Acre by the total Acreage of Taxable Property within such Final Map, excluding the Acreage associated with Non-Residential Property, Multifamily Residential Property, Public Property and/or Property Owners’ Association Property that is not Exempt Property pursuant to Section I and dividing such amount by the number of Parcels within such Final Map classified as either (i) Single Family Property or (ii) Approved Property for which a Building Permit is expected to be issued for Single Family Property (i.e., the number of residential lots).

The Backup Special Tax A shall not apply to Multifamily Residential Property, Non-Residential Property, Public Property, or Property Owners’ Association Property.

Item Number: 5.

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The Maximum Special Tax A for each Parcel of Approved Property expected to be classified as Multifamily Residential Property or Non-Residential Property shall be $17,027 per Acre.

3. Undeveloped Property
The Maximum Special Tax A for each Parcel of Undeveloped Property is shown in Table 2 below.

TABLE 2
Undeveloped Property Maximum Special Tax A
Maximum Special Tax A Per
Acre
$17,027

4. Public Property and/or Property Owners’ Association Property that is not Exempt Property pursuant to the provisions of Section I.

5. Prior to the issuance of the Bonds, the CFD shall determine the Minimum Sales Price of Residential Units within each Land Use Category through a Price Point Determination. If, based upon such Price Point Determination, the Administrator calculates that the Total Tax Burden applicable to Residential Units within one or more Land Use Categories of Residential Property to be constructed within Improvement Area No. 2 exceeds 2.00% of the Minimum Sale Price of such Residential Units, the Special Tax A shall be reduced to the extent necessary to cause the Total Tax Burden applicable to Residential Units within such Land Use Category(ies) not to exceed 2.00% of the Minimum Sale Price of such Residential Units. Each Special Tax A reduction for a Land Use Category shall be calculated by the Administrator separately, and it shall not be required that such reduction be proportionate among Land Use Categories.

If the Special Tax A for any Land Use Category is reduced pursuant to the preceding paragraph, the Administrator shall calculate a reduced Maximum Special Tax A for Non-Residential, Approved and Undeveloped Property, as well as a reduced Backup Special Tax A for Developed Property. The revised Maximum Special Tax A shall be equal to the Maximum Special Tax A as set forth in Table 1 above, reduced by a percentage equal to the weighted average percentage reduction in the Special Tax A for all Land Use Categories of Residential Property. The weighted average percentage will be calculated by taking the sum of the products of the number of Residential Units constructed or expected to be constructed in each Land Use Category multiplied by the percentage change in the Special Tax A for each Land Use Category (or 0 for Land Use Categories that are not changing). This amount is then divided by the total number of Residential Units constructed or expected to be constructed and converted to a percentage. The reduced Maximum Special Tax A shall be used to compute the reduced Backup Special Tax A.

Item Number: 5.

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The Special Tax A reductions, if required pursuant to this section, shall be reflected in an amended notice of Special Tax lien, which CFD No. 2025-1 shall cause to be recorded by executing a certificate in substantially the form attached herein as Exhibit A.

E. PREPAYMENT OF SPECIAL TAX A
The following definitions apply to this Section E:
“CFD Public Facilities” means $7,475,014, expressed in 2024 dollars, which shall increase by the Construction Inflation Index on July 1, 2025, and on each July 1 thereafter, or such lower number as (i) shall be determined by the Administrator as sufficient to provide the public facilities under the authorized bonding program, or (ii) shall be determined by the City Council concurrently with a covenant that the CFD will not issue any more Bonds.

Item Number: 5.

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“Construction Fund” means, collectively, an account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct public facilities eligible under the Act and any account established prior to the issuance of Bonds for such purpose. “Construction Inflation Index” means the annual percentage change in the Engineering News-Record Building Cost Index for the City of Los Angeles, measured as of the calendar year which ends in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the Administrator that is reasonably comparable to the Engineering News-Record Building Cost Index for the City of Los Angeles. “Future Facilities Costs” means the CFD Public Facilities minus (i) Bond proceeds deposited in Construction Funds and accounts and (ii) other amounts (Special Tax A, interest earnings, etc.) allocated to Construction Funds and accounts that were available to fund such CFD Public Facilities prior to the date of prepayment.
“Outstanding Bonds” means all previously issued Bonds, which will remain outstanding after the payment of principal from the amount of Special Tax A that have been levied, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayments of Maximum Special Tax A.

The Prepayment Amount shall be calculated as follows (capitalized terms are defined below):

Bond Redemption Amount
plus Redemption Premium
plus Future Facilities Amount
plus Defeasance Amount
plus Administrative Fees and Expenses
less Reserve Fund Credit
Equals: Prepayment Amount
Item Number: 5.

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The Prepayment Amount shall be determined as of the proposed prepayment date as follows:

1. Confirm that no Special Tax A delinquencies apply to such Parcel.

5. Multiply the Bond Redemption Amount by the applicable redemption premium, if any, on the Outstanding Bonds to be redeemed (the “Redemption Premium”).

6. Determine the Future Facilities Costs.

9. Determine the Special Tax A levied on the Parcel in the current Fiscal Year which have not yet been paid.

11. Add the amounts derived pursuant to paragraphs 8 and 9 and subtract the amount derived pursuant to paragraph 10 (the “Defeasance Amount”).

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Special Tax A obligation for the Parcel and the redemption of Outstanding Bonds (the “Administrative Fees and Expenses”).

Tenders of Bonds in prepayment of the Maximum Special Tax A obligation may be accepted upon the terms and conditions established by the City Council pursuant to the Act. However, the use of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by the City Council.

PP = ((PE –A) x F) +A
Item Number: 5.

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These terms have the following meaning:

F. MAXIMUM SPECIAL TAX B RATE

TABLE 3
Maximum Special Tax B for Developed Property
(Fiscal Year 2025-2026)
Land Use Category
Taxable
Unit
Maximum Special
Tax B Per Taxable
Unit
(FY 2025-2026)

1. Single Family Property D/U $275.00

2. Multifamily Residential Property Acre $1,274.51

3. Non-Residential Property Acre $1,274.51
Item Number: 5.

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On each July 1, commencing July 1, 2026, the Maximum Special Tax B shall be increased by an amount equal to CPI or two percent (2%), whichever is greater, of the amount in effect for the previous Fiscal Year.

TABLE 4
Maximum Special Tax B for Approved Property
(Fiscal Year 2025-2026)
Land Use Category
Taxable
Unit
Maximum Special
Tax B Per Taxable
Unit
(FY 2025-2026)

1. Single Family Property D/U $196.94

2. Multifamily Residential Property Acre $912.74

3. Non-Residential Property Acre $912.74
On each July 1, commencing July 1, 2026, the Maximum Special Tax B shall be increased by an amount equal to CPI or two percent (2%), whichever is greater, of the amount in effect for the previous Fiscal Year.

3. Undeveloped Property
No Special Tax B shall be levied on Undeveloped Property.

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

H. PREPAYMENT OF SPECIAL TAX B
Item Number: 5.

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No prepayments of Annual Special Tax B are permitted.

I. EXEMPTIONS
The Administrator shall classify as Exempt Property all Parcels of (i) Public Property or (ii) Property Owners’ Association Property; provided that such classification shall not reduce the Acreage of all Taxable Property within Improvement Area No. 2 to fewer than 39.27 Acres. The Administrator shall not classify a Parcel of Public Property or Property Owners’ Association Property as Exempt Property if such classification would reduce the Acreage of all Parcels of Taxable Property to fewer than 39.27 Acres. Such Parcels that cannot be classified as Exempt Property because such classification would reduce the Acreage of all Parcels of Taxable Property to fewer than 39.27 Acres will be classified as Property Owners’ Association Property or Public Property, and will continue to be subject to Special Tax A. The Administrator shall classify such Parcels as Exempt Property in the chronological order in which property becomes Public Property or Property Owners’ Association Property.

I. MANNER OF COLLECTION
The Special Tax A and Special Tax B shall be collected in the same manner and at the same time as ordinary ad valorem property taxes and shall be subject to the same penalties, the same procedure, sale and lien priority in the case of delinquency; provided, however, that the Administrator may directly bill the Special Tax A and Special Tax B, may collect Special Tax A and Special Tax B at a different time or in a different manner if necessary to meet the financial obligations of Improvement Area No. 2, and provided further that the CFD may covenant to foreclose and may actually foreclose on Parcels having delinquent Special Tax A and Special Tax B as permitted by the Act.

The Administrator shall interpret this Rate and Method of Apportionment and make determinations relative to the annual levy and administration of the Special Taxes and any taxpayer who appeals, as herein specified.

The City Council may interpret this Rate and Method of Apportionment of Special Tax for purposes of clarifying any ambiguity and make determinations relative to the amount of Administrative Expenses.

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Special Tax A associated with the levy of such Special Tax A, but the Special Tax A shall not be levied after 2068-2069 Fiscal Year.

For each Fiscal Year, Special Tax B shall be levied in perpetuity as long as the Services are being provided.

Item Number: 5.

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EXHIBIT A

CERTIFICATE OF MODIFICATION OF SPECIAL TAX A
(PAGE 1 OF 2)
THE CITY OF DESERT HOT SPRINGS AND COMMUNITY FACILITES DISTRICT NO. 2025-1 CERTIFICATE

I. Pursuant to Section C of the Rate and Method of Apportionment of Special Tax for Improvement Area No. 2 of Community Facilities District No. 2025-1 (Skyborne Village) of The City of Desert Hot Springs (“CFD No. 2025-1”), the Special Tax A for Residential Property and Non-Residential Property within CFD No. 2025-1 has been modified.

The information in Sections C.1 through C.4 of the Rate and Method of Apportionment, has been modified and is restated as follows:

TABLE 1
Assigned Annual Special Tax A for Developed Property
Land Use Category
Taxable
Unit Residential Floor Area
Assigned Annual
Special Tax A Per
Taxable Unit

1. Single Family Property D/U Less than 2,200 sq. ft. $______

2. Single Family Property D/U 2,200 sq. ft. – 2,499 sq. ft. $______

3. Single Family Property D/U 2,500 sq. ft. – 2,799 sq. ft. $______

4. Single Family Property D/U 2,800 sq. ft. – 3,099 sq. ft. $______

5. Single Family Property D/U Greater than 3,099 sq. ft. $______

6. Multifamily Residential Property Acre N/A $______

7. Non-Residential Property Acre N/A $______
Item Number: 5.

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The Backup Special Tax A shall not apply to Multifamily Residential Property, Non-Residential Property, Public Property, or Property Owners’ Association Property.

The Maximum Special Tax A for each Parcel of Approved Property expected to be classified as Multifamily Residential Property or Non-Residential Property shall be $________ per Acre.

3. Undeveloped Property
The Maximum Special Tax A for each Parcel of Undeveloped Property is shown in Table 2 below.

TABLE 2
Undeveloped Property Maximum Special Tax A
Maximum Special Tax A Per
Acre
$________

4. Public Property and/or Property Owners’ Association Property that is not Exempt Property pursuant to the provisions of Section I.

II. The Special Tax A may only be modified prior to the first issuance of CFD No. 2025-1 Bonds.

Item Number: 5.

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Item Number: 5.

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IMPROVEMENT AREA NO. 2 OF COMMUNITY FACILITIES DISTRICT NO. 2025-1 (SKYBORNE VILLAGE) OF

THE CITY OF DESERT HOT SPRINGS
By:_________________________________ Date:______________________ Item Number: 5.

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APPENDIX B
Recorded Boundary Map
Item Number: 5.

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Item Number: 5.

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Item Number: 5.

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Corporate Headquarters
3750 McCray Street
Riverside, CA 92506
951.686.1070
Murrieta Office
41870 Kalmia Street #160
Murrieta, CA 92562
951.686.1070
Item Number: 5.

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4934-0488-2953v3/200812-0004
COMMUNITY FACILITIES DISTRICT NO. 2025-1 (SKYBORNE VILLAGE)

OF THE CITY OF DESERT HOT SPRINGS
(IMPROVEMENT AREA NO. 1)

ACQUISITION, CONSTRUCTION AND FUNDING AGREEMENT
THIS ACQUISITION, CONSTRUCTION AND FUNDING AGREEMENT (the “Agreement”) is made and entered into by and between CITY OF DESERT HOT SPRINGS (the “City”), acting for and on behalf of itself and COMMUNITY FACILITIES DISTRICT NO. 2025-1 (SKYBORNE VILLAGE) OF THE CITY OF DESERT HOT SPRINGS (the “Community Facilities District” or “CFD”) and LENNAR HOMES OF CALIFORNIA, LLC, a California limited liability company (the “Developer”), each individually a “Party” and collectively the “Parties.” WHEREAS, the City has formed the District pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended (the “Act”), and undertaken proceedings for the authorization of special taxes and issuance of bonded indebtedness for the payment of the construction and/or acquisition of certain improvements to be owned, operated or maintained by the City and Mission Springs Water District (the “Water District”), and incidental expenses in accordance with the Act; and
WHEREAS, in order to proceed in a timely way with development of the property within Improvement Area No. 1 of the CFD (the “Improvement Area”) which is described in the attached Exhibit “A” (the “Developer Property”), Developer desires to fund through the Community Facilities District (i) the City’s acquisition or construction of certain improvements that are to be owned, operated and maintained by the City (“City Improvements”), as more particularly set forth and described in the Description of Cost Estimates attached hereto as Exhibit “B,” (ii) improvements included in the City’s fee programs (the “City Fee Facility Improvements”), as more particularly set forth and described in Exhibit “B,” and (iii) the improvements of the Water District described in Exhibit “C” hereto (the “Miscellaneous Improvements” and together with the City Improvements and the City Fee Facilities Improvements, collectively the “Improvements”); and WHEREAS, the Developer entered into an Option Agreement dated _______, 20__ (the “Option Agreement”) with the AG EHC II (LEN) CA 2, L.P., a Delaware limited partnership (the “AG Land Bank”). Under the Option Agreement, the Developer has the option to acquire various lots of the Developer Property according to a takedown schedule; and WHEREAS, the City is authorized by the Act to form the CFD and to issue bonds secured by Special Taxes (as defined in Section 1.2) of the Improvement Area (the “Bonds”) to fund the Improvements; and
WHEREAS, the purpose of this Agreement is to constitute a formal understanding between Developer and the City (pursuant to the requirements of Government Code Section 53313.51 and other provisions of the Act) concerning financial and other obligations and responsibilities related to the Improvements to be financed by the Community Facilities District, to the extent funds are available, and to set forth the conditions upon which (1) the Community Facilities District will reimburse Developer or its designee for the cost of the City Improvements constructed by or on behalf of the Developer and (2) the Community Facilities District will fund the City Fee Facility Improvements thereby satisfying corresponding City fees; and (3) the Community Facilities District will also fund the Miscellaneous Improvements described in Exhibit “C.” Item Number: 5.

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NOW, THEREFORE, it is mutually agreed between the respective Parties as follows:

1. Sale of Bonds.

1.1 Credit Requirements. The Parties hereby agree that, unless waived by the City, at the time of issuance of the Bonds, the ratio of the value of all parcels of property for which the Bonds are being issued to the amount of outstanding community facilities district or assessment district bonds attributable to such parcels (the “Value-to-Lien Ratio”) may not be less than four-toone (4:1). Unless waived by the City, the Fair Market Value of the property within the Improvement Area for purposes of determining the foregoing ratio will be determined based on the appraised value of the property based on the appraisal made by an appraiser selected by the City with a valuation date within three (3) months of the issuance of the Bonds, or, with respect to developed projects (as determined in the sole discretion of the City) or issuance of refunding bonds, the assessed value of the property, or some combination thereof. Subject to satisfaction of the requirements of this Agreement, the City shall use reasonable efforts to issue and sell the Bonds in one or more series in an amount sufficient to fund the Improvements in accordance with the schedule for development of the Developer Property. The ultimate decision as to issuance and sizing lies in the sole legislative discretion of the City.

1.2 Security for Payment of Special Taxes.
(a) Concurrently with the issuance and sale of each series of the Bonds, the owner of any land within the Improvement Area which the City has determined, in its sole discretion, to use in the sizing of such series of Bonds (the “Sizing Property”), together with any Sizing Property owned by any affiliate (collectively, an “Account Party”), for which the Maximum Special Tax A for the then-current fiscal year (as defined in the Rate and Method of Apportionment of Special Tax for the Improvement Area (the “Rate and Method”) and such Special Tax referred to herein as the “Special Tax” or “Special Taxes”), are equal to or exceed 20% of the aggregate Maximum Special Tax A authorized to be levied on the Sizing Property in such fiscal year, shall deliver to the City either (i) a renewable irrevocable instrument of credit from a financial institution (rated “A” or better) and approved by the City, or (ii) cash in-lieu thereof (a “Security”). The Security shall be in an amount calculated by multiplying the Special Tax A Requirement (as defined in the Rate and Method) for the then current and following fiscal year, by the percentage of the Maximum Special Tax A for the current fiscal year allocable to the Developer Property owned by the Account Party (or owned by the AG Land Bank during the term of the Option Agreement if the Account Party is the Developer) (the “Stated Amount). The Security shall be maintained by the Account Party in each fiscal year until terminated in accordance with Section 1.2(c) below. While the Security is still required the Stated Amount of such Security shall be reduced as set forth in a Certificate of Reduction or Termination (as defined in Section 1.2(c) below).

The Security shall name the Fiscal Agent as a beneficiary and shall provide that the Fiscal Agent may draw an amount equal to any delinquencies in payment of semiannual installments of the Special Taxes levied on property owned by the Account Party (or owned by the AG Land Bank during the term of the Option Agreement if the Account Party is the Developer) in the Improvement Area. The total amount to be drawn under the Security shall not exceed an amount equal to the Special Taxes owed by the Account Party with respect to property within the Improvement Area that is delinquent at the time the draw is made. The amount drawn on the Security shall be applied in the same manner and for the same purposes as the delinquent Special Taxes would have been applied; Item Number: 5.

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provided, however the payment of a draw under the Security will not be deemed to cure the delinquency in payment of the Special Taxes.

If, subsequent to a draw on the Security and prior to the satisfaction of any reimbursements due to the institution providing the Security (the “Security Provider”) pursuant to this Agreement, the City receives payment of all or a portion of the delinquent Special Taxes or the proceeds of a sale of delinquent real property pursuant to foreclosure proceedings (“Delinquency Proceeds”) for a parcel for which the Security has been drawn, the Security Provider (or its designee, which may be the Developer) shall be reimbursed for such draws to the extent of Delinquency Proceeds net of the City’s costs of collection. The Security Provider is intended by the Parties to be a third party beneficiary of this Section 1.2.
(b) The Security shall be renewed, or a substitute Security reasonably satisfactory to the City (a “Substitute Security”) provided, not less than thirty (30) calendar days prior to the expiration of the Security or Substitute Security then in effect. If the Account Party provides a Substitute Security to the City, then the Fiscal Agent shall return any existing Security on the effective date of the Substitute Security to the Security Provider.

If the Security is not renewed within thirty (30) days prior to its expiration date and the requirements for release or termination of the Security as set forth in Section 1.2(c) below have not then been met, the full amount of the Security may be drawn by the Fiscal Agent and deposited in an account established under the Indenture (as hereinafter defined) or in such account established with a financial institution selected by the City. Thereafter, amounts in such account shall be held as security, and if Special Taxes owed by the Account Party with respect to property within the Improvement Area are not paid prior to delinquency, then such amounts in such account may be applied by the City to pay the delinquent Special Taxes owed by the Account Party with respect to such property on the same terms and conditions applicable hereunder to draws on the Security.

At such time as the Security is renewed, or a Substitute Security is accepted by the Fiscal Agent, or the requirement for the Security has been terminated pursuant to this section, the City or its designee, shall release all amounts in the Security account to the Security Provider (or its designee, which may be the Developer) within ten (10) calendar days from the date of renewal or acceptance. (c) Following the sale or transfer by the Account Party of any property to a person other than the Account Party, or upon the prepayment of the Special Tax obligation for a parcel owned by the Account Party (or owned by the AG Land Bank during the term of the Option Agreement if the Account Party is the Developer), the Account Party shall notify the Community Facilities District of such event, in writing, and, if requested by the Account Party, the Stated Amount of the Security shall be reduced and be recalculated in accordance with this Section 1.2; provided, however, that any costs associated with the recalculation and reduction shall be borne by the Account Party. Subject to Section 1.2(d) below, the Stated Amount may be reduced to an amount determined by the method of calculation set forth in Section 1.2(a) hereof. The Security shall be terminated upon the earlier of (i) when the Sizing Property owned by, or under option to, the Account Party is responsible for less than 20% of the Maximum Special Tax A applicable to all of the Sizing Property or (ii) when the Account Party has paid (or cause to be paid) all Special Taxes owed by the Account Party in the current fiscal year and the Sizing Property owned by, or under option to, the Account Party is expected to be responsible for less than 20% of the Maximum Special Tax A in the next fiscal year.

Item Number: 5.

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Reduction or termination of a Security shall occur automatically upon submission to the Security Provider by the Fiscal Agent of a “Certificate of Reduction or Termination” upon valuation of the Certificate of Reduction or Termination by the City. The City shall direct that the Fiscal Agent deliver to the Security Provider such Certificate of Reduction or Termination promptly upon receiving from the Account Party a certification which shall be made under penalty of perjury and which shall indicate (i) the legal description of all Sizing Property owned by the Account Party, and either (ii) a recalculation of the new Stated Amount that the Account Party proposes be applicable to the Security or (iii) if termination of the Security is requested, a statement that one of the requirements set forth in the preceding paragraph for termination of the Security has been satisfied.

The Account Party shall notify the City of any events that will result in a reduction of the Stated Amount of the Security and shall provide the City with verification of said events. The Account Party may provide the Fiscal Agent with a Substitute Security in the reduced amount, and the Fiscal Agent shall release and return to the Security Provider the Security then in effect. The Parties expressly acknowledge that the Account Party’s failure to so notify the City or to reduce the Security at the times prescribed herein shall in no way effect or invalidate sale or transfer of property, or recordation of maps on property.
(d) If the Sizing Property is sold or transferred by an Account Party with the result that the Sizing Property owned by the transferee or any of its affiliates (“Transferee”) is responsible for 20% or more of the aggregate Maximum Special Taxes of all Sizing Property, a Security on the same terms specified in Section 1.2(a) above will be furnished by Transferee with respect to all land owned by such Transferee with respect to the Sizing Property. Any applicable purchase and sale agreement and/or escrow instructions shall notify the Transferee of this Security requirement and obligate the Transferee to provide such Security, if applicable. The Security of the Account Party will not be reduced to reflect the sale or transfer of such Sizing Property until a Security is furnished by the Transferee and accepted by the Fiscal Agent. The issuing financial institution and the form and terms of said Security will be subject to reasonable prior approval by the City. All terms provided in this Section 1.2 are applicable to the Transferee by replacing the term “Account Party” at each place where it occurs in each section with the term “Transferee.” Each provider of a Security for a Transferee shall be an express third party beneficiary of the provisions of this Section 1.2. Notwithstanding the foregoing, the Developer shall not be considered a Transferee upon the sale of property to the Developer pursuant to the Option Agreement if the Developer is the Account Party for the property owned by the AG Land Bank.

Any costs related to the holding or maintaining the Security, including any fees of a fiscal agent, trustee or other depository shall be borne by the Account Party.

1.3 Major Landowner Initial and Continuing Disclosure. An owner of land which is responsible for twenty percent (20%) or more of the Maximum Special Taxes applicable to the Sizing Property in the fiscal year in which the Bonds are issued or in the fiscal year following the fiscal year in which the Bonds are issued (a “Major Landowner”) will be required to provide all information regarding the development of its property, including the financing plan for such development, which is necessary to ensure that the official statement for such Bonds complies with the requirements of Rule 15c2-12 of the Securities and Exchange Commission (the “Rule”) and all other applicable federal and state securities laws. Additionally, Developer acknowledges that, if it is a Major Landowner at the time of issuance of the Bonds, it will be necessary that Developer enter into a continuing disclosure agreement to provide such continuing disclosure pertaining to the development of the land owned by Developer within the CFD to assist in the marketing of the Bonds.

Item Number: 5.

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During the term of the Option Agreement, the Developer may enter into a continuing disclosure agreement to provide information on the property owned by, or under option to, the Developer, and, in such case, the AG Land Bank will not be required to enter into any continuing disclosure agreement pursuant to this Section 1.3.

1.4 Bond Issuance Parameters. The terms and conditions upon which each series of the Bonds shall be issued and sold, the method of sale of the Bonds and the pricing of the Bonds shall be determined solely by the City in its legislative discretion in conformance with the Act and this Agreement. Each series of Bonds shall be issued with a term not to exceed 35 years from the date of issuance of the Bonds. The proceeds of the Bonds shall be used in the following priority to (1) fund a reserve fund for the payment of principal and interest with respect to the Bonds in an amount equal to the least of (i) ten percent (10%) of the total bond issue, (ii) maximum annual debt service on Bonds, or (iii) 125% of average annual debt service; (2) fund capitalized interest through the interest payment date on the Bonds for which Special Taxes are not available for payment of debt service on the Bonds or such longer period as requested by the Developer and approved by the City, subject to the Act; (3) reimburse the Developer or its designee for CFD formation costs advanced by the Developer which have not already been reimbursed to the Developer from collected Special Tax; (4) pay for costs of issuance of the Bonds including, without limitation, underwriter’s discount, bond counsel and disclosure counsel fees, appraisal and special tax consultant fees, printing, fiscal agent fees, and reasonable Developer legal and financial consultant costs; (5) pay for the costs of forming the Community Facilities District; and (6) pay for the actual costs of the Improvements. The Community Facilities District shall maintain records relating to the disbursements of proceeds of the sale of the Bonds. The Indenture or Resolution or Fiscal Agent Agreement (hereinafter “Indenture”) for the Bonds shall establish an acquisition and construction fund or improvement fund (herein, the “Improvement Fund”) to be held by the fiscal agent (“Fiscal Agent”) into which shall be deposited initially the proceeds of the Bonds net of the amount of proceeds required to fund items (1) through (5) in the second preceding sentence. The Indenture shall also establish separate accounts of the Improvement Fund designated the “City Improvements Account,” “City Fee Facility Improvements Account,” and any Miscellaneous Improvement Account(s) for the Miscellaneous Improvements described in Exhibit “C,” into which shall be deposited such portions of the Improvement Fund as agreed by the Parties and directed by the City in writing at or subsequent to the closing of the sale of the Bonds consistent with the following priorities:
(a) An amount sufficient to fund the reasonable, current estimated cost of the City Fee Facility Improvements anticipated to be funded out of the Bonds being issued shall be deposited in the City Fee Facility Improvements Account (any Special Taxes levied in the Improvement Area and collected by the CFD remaining after the payment of administrative expenses of the CFD allocable to the Improvement Area and the reimbursement of the Developer for CFD formation costs shall be deposited into the City Fee Facility Improvements Account at the time of Bond issuance, unless otherwise directed in writing by the Developer); (b) If applicable, an amount to be agreed upon between Developer and the CFD prior to the issuance of Bonds sufficient to fund the reasonable, current estimated costs of the City Improvements shall be deposited, or later transferred, to the City Improvements Account; and (c) If applicable, an amount to be agreed upon between Developer and the CFD prior to the issuance of Bonds sufficient to fund the reasonable, current estimated cost of the Miscellaneous Improvements described in Exhibit “C” hereto, anticipated to be funded out of the Item Number: 5.

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Bonds being issued shall be deposited, or later transferred, to the applicable Miscellaneous Improvement Account(s).

Interest earned on moneys deposited in each of the City Fee Facility Improvements Account, the City Improvements Account and the Miscellaneous Improvement Account(s) shall remain in such accounts until such time as all of the Improvements have been funded. Additionally, the Developer may direct the CFD to transfer excess moneys in any of the City Fee Facility Improvements Account, the City Improvements Account or the Miscellaneous Improvement Account(s) to another Account.

The Indenture shall provide that amounts remaining in the Improvement Fund after funding all proposed Improvements (such completion of funding to be agreed by the City and the Developer) shall be deposited in the special tax fund or bond service fund and be applied to pay debt service on the Bonds and/or to call Bonds in advance of maturity.

2. Allocation of Special Taxes. Prior to the issuance of Bonds, the City Council of the City, acting as the legislative body of the Community Facilities District, may levy Special Taxes on all parcels classified as Developed Property pursuant to the Rate and Method. Such Special Taxes collected by the City shall first be applied to fund annual administrative expenses of the Community Facilities District allocable to the Improvement Area and then to fund Improvements in the same manner as the proceeds of Bonds as set forth herein. Upon sale and delivery of the Bonds, the City shall annually levy the Special Tax as provided for in documents pursuant to which the Bonds were issued. Following the issuance of the last series of Bonds, the City shall have no obligation to levy Special Taxes to reimburse the Developer for the costs of any Improvements not paid for from Bond proceeds.

3. Notice of Special Tax. Developer shall provide written notice to all potential initial purchasers of lots advising of the special tax obligation applicable to the Developer Property in the form required by Section 53341.5 of the Government Code. Neither the Developer nor the AG Land Bank shall be required to provide notice under this section in connection with the ownership and takedown of property pursuant to the Option Agreement.

4. Design Plans and Specifications. The requirements of this Section shall not apply to any City Improvement that was complete (as determined by the City Council) prior to the adoption by the City Council of the resolution forming the CFD, but they shall apply to all other City Improvements. All plans, specifications and bid documents for the City Improvements (“Plans”) constructed or to be constructed by the Developer shall be prepared by the Developer at the Developer’s initial expense, subject to approval by the applicable public agency. Costs for preparation of the Plans will be eligible for reimbursement, conditioned upon the final approval of the applicable public agency and the availability of funds. Reimbursement of costs for plan revisions will be considered on a case by case basis. All facilities which were not complete prior to the formation of the District, as determined by the City, shall be bid in accordance with “public works” requirements of Section 6 to be eligible for reimbursement.

5. Construction of Improvements. The requirements of this Section shall not apply to any City Improvement that was complete (as determined by the City Council) prior to the adoption by the City Council of the resolution forming the CFD, but they shall apply to all other City Improvements.

5.1 Acquisition of City Improvements. Upon the approval of Plans for a City Improvement, the Developer will provide for construction of such City Improvement in accordance Item Number: 5.

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with Sections 5.2 and 6 of this Agreement. Sections 5.2 and 6 specify the requirements for construction of the City Improvements that the City believes are necessary to ensure that such City Improvements are constructed as if they had been constructed under the direction and supervision, or under the authority of the City.

5.2 Acquisition. With respect to City Improvements, a qualified engineering firm (the “Field Engineer”) shall be employed by the Developer to provide all field engineering surveys determined to be necessary by the City’s inspection personnel. Field Engineer shall promptly furnish to City a complete set of grade sheets listing all locations, offsets, etc., in accordance with good engineering practices, and attendant data and reports resulting from Field Engineer’s engineering surveys and/or proposed facility design changes. City shall have the right, but not the obligation, to review, evaluate and analyze whether such results comply with applicable specifications.

As necessary as determined by City, a full-time soil-testing firm, approved by City, shall be employed by the Developer to conduct soil compaction testing and certification. The Developer shall promptly furnish results of all such compaction testing to the City for its review, evaluation and decision as to compliance with applicable specifications. In the event the compaction is not in compliance with applicable specifications, the Developer shall be fully liable and responsible for the costs of achieving compliance. A final report certifying all required compaction in accordance with the specifications shall be a condition of final approval of facilities.

The costs of all surveying, testing and reports associated with the City Improvements furnished and constructed by the Developer’s contractor(s) shall be eligible to be paid from funds in the City Improvements Account.

The City shall not be responsible for conducting any environmental, archaeological, biological, or cultural studies or any mitigation requirements that may be requested by appropriate Federal, State, and/or local agencies. Any such work shall be paid for and conducted by the Developer and reimbursed out of the City Improvements Account.

Should the Developer notify the City that the Developer is unable to complete such City Improvement, the City shall have the right but not the obligation to require the Developer to make an irrevocable offer of dedication to the City of the land owned by the Developer for the City Improvement identified in the notice and to assume responsibility for the work to be performed thereunder. In the event the City elects to assume the responsibility for any work on a previously awarded contract as described in the preceding sentence, the following will occur: (i) the Developer will make an irrevocable offer of dedication to the City of the land owned by the Developer for such City Improvement identified in the notice; (ii) to the extent permitted by law and the applicable contract, the Developer will assign all of the contracts for the work performed to date on the City Improvement identified in the notice to the City, if requested to do so by the City Manager; the City will use its best efforts to complete the City Improvement within a reasonable time frame; and upon completion of the City Improvement, to the extent there are Special Taxes or proceeds of the Bonds available following payment to the City for the costs of completing such City Improvement, the Developer will be reimbursed for the lesser of the cost or value of the previously unreimbursed satisfactory work performed or paid for by the Developer. The cost of such work will be determined by taking the unreimbursed amounts expended by the Developer under the contract(s) taken over by the City and deducting any incremental cost incurred by the City to complete the work under the Item Number: 5.

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contracts in question. Incremental cost shall be costs in excess of the sum of the original contract cost plus change orders approved by the City.

6. Public Works Requirements.

6.1 City Requirements. In order that the City Improvements may be properly and readily acquired by the City, the Developer shall comply with all of the requirements in this Section 6.1 with respect to any such City Improvements to be acquired with funds in the City Improvements Account and the Developer shall provide such proof to the City as the City may reasonably require and at such intervals and in such form as the City may reasonably require, that the requirements under this Section 6.1 have been satisfied as to all such City Improvements.

Notwithstanding the foregoing, City Improvements shall only be eligible for financing by the CFD if the City determines that the conditions under Section 53313.5 have been satisfied with respect to such City Improvements.
(a) The Developer shall prepare a bid package for review, comment and approval by the City Manager or his designee (the “City Representative”) for any City Improvements bid after the effective date of this Agreement.
(b) For any City Improvements bid after the effective date of this Agreement, the Developer shall, after obtaining sealed bids for the construction of the City Improvements in conformance with the procedures and requirements of the City, submit to the City written evidence of such competitive bidding procedure, including evidence of the means by which bids were solicited, a listing of all responsive bids and their amounts, and the name or names of the contractor or contractors to whom the Developer proposes to award the contracts for such construction, which shall be the lowest responsible bidder.
(c) For any City Improvements bid after the effective date of this Agreement, the following provisions apply: the City Representative shall attend the bid opening for such City Improvements. If unable to attend the bid opening, the City Representative shall approve or disapprove of a contractor or contractors, in writing, within five (5) business days after receipt from the Developer of the name or names of such contractor or contractors recommended by the Developer. If the City Representative disapproves of any such contractor, the Developer shall select the next lowest responsible bidder from the competitive bids received who is acceptable to the City Representative.
(d) The specifications and bid and contract documents shall require all such contractors to pay prevailing wages and to otherwise comply with applicable provisions of the Labor Code, the Government Code and the Public Contract Code relating to public works projects and as required by the procedures and standards of the City with respect to the construction of its public works projects.
(e) The Developer shall submit faithful performance and payment bonds in form and substance reasonably acceptable to the City with respect to the City Improvements. (f) The Developer and its contractor and subcontractors shall be required to provide proof of insurance coverage throughout the term of the construction of the City Improvements, which they will construct in conformance with the City’s standard procedures and requirements. The City’s insurance requirements are set out in Section 20 herein.

Item Number: 5.

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(g) The Developer and all such contractors shall comply with such other requirements relating to the construction of the City Improvements which the City may impose by written notification delivered to the Developer and each such contractor at the time either prior to the receipt of bids by the Developer for the construction of such City Improvements or, to the extent required as a result of changes in applicable laws, during the progress of construction thereof; provided that such other requirements shall only be imposed to the extent the City reasonably determines they are required in order to comply with applicable law. In accordance with Section 6, the Developer shall be deemed the awarding body and shall be solely responsible for compliance and enforcement of the provisions of the Labor Code, Government Code, and Public Contract Code. (h) A “Change Order” is an order from the Developer to a contractor authorizing a change in the work to be performed and a “Significant Change Order” is an order from the Developer to a contractor authorizing a change in the work to be performed where such Change Order is larger than 10% of the contract amount for such City Improvement. After the effective date of this Agreement, the Developer shall receive comments from the City Representative prior to the Developer’s approval of any Significant Change Order. The City Representative shall comment on or deny the Significant Change Order request within fifteen (15) business days of receipt of all necessary information. The City’s comments to a Significant Change Order shall not be unreasonably delayed, conditioned or withheld. The Developer shall not be entitled to be compensated for costs associated with a Significant Change Order that has not been approved by the City Representative.

Developer shall provide proof to the City, at such intervals and in such form as the City may reasonably require, that the foregoing requirements have been satisfied as to all of the City Improvements which are funded through Bond proceeds.

7. Inspection; Completion of Construction. The requirements of this Section shall not apply to any City Improvement that was complete (as determined by the City Council) prior to the adoption by the City Council of the resolution forming the CFD, but they shall apply to all other City Improvements.

The City shall have primary responsibility for inspecting the City Improvements to assure that the work is being accomplished in accordance with the Plans. Such inspection does not include inspection for compliance with safety requirements by the Developer’s contractor(s). The City’s personnel shall be granted access to each construction site at all reasonable times for the purpose of accomplishing such inspection. Upon satisfaction of the City’s inspectors, the Developer shall notify the City in writing that a City Improvement has been completed in accordance with the Plans. Any actual costs reasonably incurred by the City for inspection not previously paid by the Developer shall be reimbursed from funds in the City Improvements Account.

Within three (3) business days of receipt of written notification from City inspectors that a City Improvement has been completed in accordance with the Plans, the City Representative shall notify the Developer in writing that such City Improvement has been satisfactorily completed. Upon receiving such notification, the Developer shall file a Notice of Completion with the County of Riverside Recorders Office, pursuant to the provisions of Section 3093 of the Civil Code. The Developer shall furnish to the City a duplicate copy of each such Notice of Completion showing thereon the date of filing with the County of Riverside (the “County”). City will in turn file a notice with the County for acceptance.

Item Number: 5.

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8. Liens. With respect to any City Improvement that was complete (as determined by the City Council) prior to the adoption by the City Council of the resolution forming the CFD, prior to any payment by the CFD to the Developer for such City Improvement, the Developer shall provide to the City such evidence or proof as the City shall require that all persons, firms and corporations supplying work, labor, materials, supplies and equipment for the construction of the City Improvements have been paid, and that no claims of liens have been recorded by or on behalf of any such person, firm or corporation. With respect to City Improvements, upon the earlier of (i) receipt of all applicable lien releases, or (ii) expiration of the time for the recording of claim of liens as prescribed by Sections 3115 and 3116 of the Civil Code the Developer shall provide to the City such evidence or proof as the City shall require that all persons, firms and corporations supplying work, labor, materials, supplies and equipment for the construction of the City Improvements have been paid, and that no claims of liens have been recorded by or on behalf of any such person, firm or corporation.

9. Acquisition; Acquisition Price; Source of Funds. The acquisition price of a City Improvement that was complete (as determined by the City Council) prior to the adoption by the City Council of the resolution forming the CFD shall be its fair market value, as determined by the City’s Administrative Services Director or his or her designee, as of the date of acquisition. The City shall consider input and data provided by the Developer prior to determining the final fair market value.

The Actual Cost (as defined below) of the City Improvement shall be presumed to be its fair market value unless there is reasonable evidence that a lower amount is the fair market value.

The costs eligible to be included in the acquisition price of a City Improvement that is not described in the preceding paragraph (the “Actual Costs”) shall include:
(i) The actual hard costs for the construction of such City Improvement as established by the City-approved construction contracts, Change Orders, and approved Significant Change Orders, including costs of payment, performance and maintenance bonds and insurance costs, pursuant to this Agreement;
(ii) The design and engineering costs of such City Improvement including, without limitation, the costs incurred in preparing the Plans; (iii) The costs of environmental evaluations and public agency permits and approvals attributable to the City Improvement;
(iv) Costs incurred by the Developer for construction management and supervision of such City Improvement, not to exceed five percent (5%) of the actual construction cost;
(v) Professional costs associated with the City Improvement such as engineering, inspection, construction staking, materials, testing and similar professional services; and (vi) Costs approved by the City in accordance with the Act of acquiring any real property or interests therein required for the City Improvement including, without limitation, temporary construction easements, temporary by-pass road and maintenance easements.

Provided the Developer has complied with the requirements of this Agreement, the City agrees to pay the acquisition price of a completed City Improvement to the Developer or its designee Item Number: 5.

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within thirty (30) days after the Developer’s satisfaction of the preconditions to such payment stated herein, but only to the extent there are sufficient funds available in the City Improvements Account.

Except in the case of a City Improvement described in the first paragraph of this Section, the acquisition price to be paid from Bond proceeds for the acquisition of a City Improvement by the City shall be the least of (1) the value of the City Improvement; or (2) the total of the Actual Costs of the City Improvement (“Acquisition Price”). The Actual Cost of the City Improvement shall be presumed to be its Acquisition Price unless there is reasonable evidence that a lower amount is the actual value.

As a condition to the payment of the Acquisition Price, the ownership of the completed City Improvement shall be transferred to the City by grant deed, bill of sale or such other documentation as such public agency may require free and clear of all taxes, liens, encumbrances, and assessments, but subject to any exceptions determined by the City to not interfere with the actual or intended use of the land or interest therein (including the lien of a community facilities district so long as the subject property is exempt from taxation or is otherwise not taxable by such community facilities district). Upon the transfer of ownership of City Improvements or any portion thereof to the City, the City shall be responsible for the maintenance of such City Improvements or the portion transferred.

Notwithstanding the foregoing, the Acquisition Price of a City Improvement may be paid prior to transfer of ownership and acceptance of the City Improvement if it is substantially completed at the time of payment. The City Improvement shall be considered “substantially complete” when it has been reasonably determined by the City to be usable, subject to final completion of such items as the final lift or any other items not essential to the primary use or operation of the City Improvement.

For purposes of determining the Acquisition Price to be paid by the Community Facilities District for the acquisition of the City Improvements by the City (other than City Improvements described in the first paragraph of this Section), the value of such City Improvements shall include the construction costs specified in the City-approved contracts (subject to the next sentence), Change Orders, and City-approved Significant Change Orders conforming to Section 6, as hereinbefore specified. City approval is a condition prior to initiation of contract work for City Improvements bid after the effective date of this Agreement. However, if the City reasonably determines that the additional Actual Costs are excessive and that the value of the City Improvements is less than the total amount of such Actual Costs and such construction costs, the price to be paid for the acquisition of the City Improvements shall be the value thereof as determined by the Engineer, subject, however, to the Developer’s right to appeal to the City Council.

Upon completion of the construction of a City Improvement, the Developer shall deliver or cause to be delivered to the City a Disbursement Request Form in substantially the form of Exhibit “D,” attached hereto, copies of the contract(s) with the contractor(s) who have constructed the City Improvement and other relevant documentation with regard to the payments made to such contractor(s) and each of them for the construction of the City Improvement, documentation evidencing payment of prevailing wages, and shall also provide to the City invoices and purchase orders with respect to all equipment, materials and labor purchased for the construction of the City Improvements. The City shall require the Engineer to complete its determination of the value of the City Improvements as promptly as is reasonably possible.

Notwithstanding the preceding provisions of this Section, the source of funds for the acquisition of the City Improvements or any portion thereof shall be funds in the City Improvements Account. If for any reason beyond the City’s control the Bonds are not sold, the City shall not be required to acquire the City Improvements from the Developer, except to the extent of funds from the Item Number: 5.

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collection of Special Taxes. In such event, the Developer shall complete the design and construction and offer to the City ownership of such portions of the City Improvements as are required to be constructed by the Developer as a condition to recordation of subdivision maps for the Developer Property (but only at such times as required by such condition), but need not construct any portion of the City Improvements which it is not so required to construct. Reimbursement for these facilities would be made from the collection of Special Taxes over time.

In addition to the foregoing, the City shall have the right to withhold payment for acquisition of a City Improvement, if:
(a) the Developer or any of its affiliates is delinquent in the payment of any Special Taxes levied by the Community Facilities District on properties then owned by the Developer or any of its affiliates within the Improvement Area, or (b) the Developer is not then in substantial compliance with a condition or obligation imposed upon the Developer Property by the City, including but not limited to, payment of all applicable fees, dedication of all applicable rights-of-way or other property and construction requirements.

The City shall immediately provide written notice to the Developer of the decision to withhold any such payment and shall specify the reason for such decision. If the payment is withheld as a result of the delinquency in the payment of Special Taxes, the notice shall identify the delinquent parcels and the amount of such delinquency. If the payment is withheld as a result of substantial non-compliance with a condition or obligation, the notice shall specify such condition or obligation and what action will be necessary by the Developer to substantially comply with such condition or obligation. Upon receipt of evidence reasonably satisfactory to the City that the Developer has paid the delinquent Special Taxes or complied with the subject condition or obligation, the City shall forthwith make all payments which have been withheld pursuant to the provisions of this Section.

10. Easements and/or Fee Title Ownership Deeds. Without limiting the Developer’s rights to reimbursement for such grants pursuant to Section 9 above, the Developer shall, at the time the City acquires the City Improvements as provided in Section 9 hereof, grant or cause to be granted to the City, by appropriate instruments prescribed by the City, all easements across private property and/or fee title ownership deeds which may be reasonably necessary for the proper operation and maintenance of such City Improvements, or any part thereof, but only to the extent located within the Developer Property.

11. Permits. The Developer shall be responsible for obtaining all necessary construction permits from the City and/or the County (as appropriate) covering construction and installation of the City Improvement.

12. Maintenance. Prior to the transfer of ownership of a City Improvement by the Developer to the City, as provided in Section 9 hereof, the Developer shall be responsible for the maintenance thereof and shall require its contractor(s) to repair all facilities damaged by any party other than the City, prior to acceptance by the City and/or make corrections determined to be necessary by the City’s inspection personnel. The City shall not be permitted to place any City Improvement in service prior to acceptance of the same, unless the Developer otherwise consents in writing.

Item Number: 5.

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13. Inspection of Records. The City shall have the right to review all books and records of the Developer pertaining to the costs and expenses incurred by the Developer for the design and construction of the City Improvements during normal business hours by making arrangements with the Developer. The Developer shall have the right to review all books and records of the City pertaining to costs and expenses incurred by the City for services of the Engineer by making arrangements with the City.

14. Ownership of Improvements. Notwithstanding the fact that some or all of the City Improvements may be constructed in dedicated street rights-of-way or on property which has been or will be dedicated to the City, each City Improvement shall be and remain the property of the Developer until acquired by the City as provided in this Agreement. The foregoing shall not apply to the Utility Undergrounding.

15. Materials and Workmanship Warranty. The requirements of this Section shall not apply to any City Improvement that was complete (as determined by the City Council) prior to the adoption by the City Council of the resolution forming the CFD, but they shall apply to all other City Improvements.

Upon the completion of the acquisition of a City Improvement by the City, the performance bond related to such individual City Improvement provided by the Developer pursuant to Section 6.1(e) hereof, shall be reduced by 90%, and the remaining 10% shall serve as a maintenance bond to guarantee that such City Improvement will be free from defects due to faulty workmanship or materials for a period of one year.

16. City Fee Facility Improvements. The Developer may be required pursuant to the conditions of development or the fee ordinance to pay certain City fees (the “City Fees”) relating to the City Fee Facility Improvements prior to the availability of proceeds of the Bonds to pay for such City Fee Facility Improvements. In the event such City Fees are paid prior to the availability of Bond proceeds, the amounts paid to the City shall be deemed to be deposits (each a “Deposit”) that are subject to refund by the City to the Developer in accordance with this Agreement. The City shall place each Deposit in a capital facilities account(s). If the Developer has made any Deposits to the City, then following deposit of Bond proceeds in the City Fee Facility Improvements Account, the City shall return to the Developer, from the capital account in which the Deposits were deposited the Deposits not previously returned, without interest or other earnings thereon. The City shall be so obligated to return such Deposits only to the extent that an equivalent amount of the Deposits to be returned is deposited in the City Fee Facility Improvements Account from Bond proceeds or Special Tax collections prior to the issuance of Bonds.

Bond proceeds used to finance City Fee Facility Improvements which relate to the City Fees shall be allocated first for return of all Deposits prior to being allocated to the payment of City Fees not previously deposited by the Developer. Any Deposits that have not been returned to the Developer at the time it is determined that there will be no further Bond proceeds available (i.e. the final series of Bonds to finance the Improvements have been issued) shall be retained by the City and may be used for the purposes for which the City Fee was required, and the unrefunded Deposits shall constitute full and final payment for such City Fees, without any increase of any kind.

17. Miscellaneous Improvements. Improvements unrelated to the City Improvements and the City Fee Facility Improvements are described in Exhibit “C” attached hereto. The amounts deposited in the applicable Miscellaneous Improvement Account(s), if any, will be disbursed for the Item Number: 5.

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acquisition or construction of Miscellaneous Improvements in accordance with the provisions in the applicable Joint Community Facilities Agreement. Any amounts in the applicable Miscellaneous Improvement Account(s) shall be disbursed at the written direction of the City upon Developer’s submittal of a payment request which will be based upon applicable entity’s payment request form as provided for in the applicable Joint Community Facilities Agreement. Upon receipt of such payment request, the City shall submit a written requisition for payment of the requested amount to the Fiscal Agent for the Bonds, who shall directly pay the amount requested to the applicable entity.

18. Independent Contractor. In performing this Agreement, Developer is an independent contractor and not the agent of the City. The City shall not have any responsibility for payment to any contractor or supplier of Developer. It is not intended by the Parties that this Agreement create a partnership or joint venture among them and this Agreement shall not otherwise be construed.

19. Indemnification. Developer shall assume the defense of, indemnify and save harmless, the City, its officers, employees and agents, and the Community Facilities District, its officers, employees and agents, from and against all actions, damages, claims, losses or expenses of every type and description to which they may be subject or put, by reason of, or resulting from such person’s or entity’s performance of its obligations under this Agreement and the construction of the City Improvements, the failure of the Developer to provide notice of the Special Tax to be levied by the Community Facilities District pursuant to Section 53341.5 of the Act (but only if the Developer is required by law to provide such notice), or arising out of any alleged misstatements of fact or alleged omission of a material fact made by the Developer, its officers, directors, employees or agents to the City, the Community Facilities District, the underwriter of the Bonds and its counsel, the appraiser, the special tax consultant, the market absorption consultant or bond counsel regarding the Developer, its proposed developments, its property ownership, and any contractual arrangement it may enter into in a disclosure document describing the Community Facilities District and the risks relating to the Bonds. No provision of this Agreement shall in any way limit the extent of Developer’s responsibility for payment of damages resulting from the operations of Developer and its contractors; provided, however that Developer shall not be required to assume the defense or indemnify and save harmless any person or entity as to actions, damages, claims, losses or expenses resulting from the breach of this Agreement, the negligence or willful misconduct of such person or entity or their officers, agents, consultants or employees.

20. Insurance Requirements. For City Improvements bid after the effective date of this Agreement, neither the Developer nor its contractor shall commence work on such City Improvement under this Agreement prior to obtaining insurance with a company or companies acceptable to the City, nor shall the Developer’s contractor allow any subcontractor to commence work on its subcontract until all insurance required of the subcontractor has been obtained.

The Developer shall during the life of this Agreement, notify the City in writing of any incident giving rise to any potential bodily injury or property damage claim and any resultant settlements, whether in conjunction with this or any other project which may affect the limits of the required coverage, as soon as is reasonable and practical.

21. Conflict With Other Agreements. Except as specifically provided herein, nothing contained herein shall be construed as releasing Developer from any condition of development or requirement imposed by any other agreement with City. In the event of a conflicting provision, such Item Number: 5.

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other agreement shall prevail unless such conflicting provision is specifically waived or modified in writing by City.

22. Notices. Any notice, payment or instrument required or permitted by this Agreement to be given or delivered to either Party shall be deemed to have been received when personally delivered or seventy-two (72) hours following deposit of the same in any United States Post Office in California, registered or certified, postage prepaid. Any notice to the Community Facilities District or the City shall be addressed to City of Desert Hot Springs, 11-999 Palm Drive, Desert Hot Springs, California 92240, Attention: City Manager. Any notice to Developer shall be addressed to Lennar Homes of California, LLC, 4140 Temescal Canyon Road, Suite 410, Corona, CA 92883, Attention:

Geoff Smith.

Each Party may change its address for delivery of notice by delivering written notice of such change of address to the other Party hereto.

23. No Gift or Waiver.

23.1 No Gift or Waiver for City Improvements. The Developer and the City acknowledge that:
(a) The Developer or its predecessor may have constructed or may be constructing City Improvements before funds that will be used to acquire them are available with the expectation that the Developer will be reimbursed for such City Improvements to the extent and in the manner set forth in this Agreement.
(b) The City may inspect City Improvements and process Disbursement Request Forms even if funds from the proceeds of Bonds available at the time of such inspection and processing do not exist or are not then sufficient to satisfy the Disbursement Request in full. (c) The Developer may convey City Improvements to the City and the City may accept such City Improvements even if funds from the proceeds of Bonds available at the time of such conveyance and acceptance do not exist or are not then sufficient to satisfy the Disbursement Request in full.
(d) If the City accepts City Improvements before a Disbursement Request is paid in full, the unpaid balance of the Disbursement Request will be paid from time to time, in any number of installments and irrespective of the length of time payment is deferred, as funds from the proceeds of Bonds become available.
(e) The Developer’s conveyance or dedication of City Improvements to the City before the availability of funds from the proceeds of Bonds to acquire the City Improvements is not and shall not be deemed, a gift or a waiver of the Developer’s right to payment of the purchase price of such City Improvements pursuant to this Agreement.

23.2 No Gift or Waiver for City Fees. The Developer and the City acknowledge that:
(a) Prior to the availability of funds from the proceeds of Bonds, the Developer or its predecessor may have been or may be required to deposit funds to assure payment of applicable City Fees of the City.

Item Number: 5.

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(b) The Developer or its predecessor has deposited or will be depositing such funds with the expectation that the Developer will be reimbursed for these Deposits to the extent and in the manner set forth in this Agreement.
(c) The reimbursement of such Deposits pursuant to Section 16 of this Agreement may occur from time to time, in any number of installments and irrespective of the length of time payment is deferred, as funds become available. (d) The Developer’s deposit of such funds to the City before the availability of funds to reimburse the Developer is not, and shall not be deemed, a gift or a waiver of the Developer’s right to reimbursement of such Deposits pursuant to this Agreement.

24. General Provisions.
(a) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the City and the Developer and their respective heirs, executors, legal representatives, successors, and authorized assigns.
(b) Amendment. This Agreement may be amended at any time but only in writing signed by each Party hereto.
(c) Entire Agreement. This Agreement, and the agreements referenced herein, contains the entire understanding and agreement between the Parties with respect to the matters provided for herein and supersedes all prior agreements and negotiations between the Parties with respect to the subject matter of this Agreement. There are no oral or written representations, understanding, undertakings or agreements which are not contained or expressly referred to herein, and any such representations, understandings or agreements are superseded by this Agreement.

Failure by a Party to insist upon the strict performance of any of the provisions of this Agreement by the other Parties hereto, or the failure by a Party to exercise its rights upon the default of another Party, shall not constitute a waiver of such Party’s right to insist and demand strict compliance by such other Parties with the terms of this Agreement thereafter. This Agreement shall be binding upon, and enforceable by and against the Community Facilities District upon the establishment of the Community Facilities District.
(d) Exhibits. All exhibits attached hereto are incorporated into this Agreement by reference.
(e) Severability. If any part of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible.
(f) Waiver. Failure by a Party to insist upon the strict performance of any of the provisions of this Agreement by the other Parties hereto, or the failure by a Party to exercise its rights upon the default of another Party, shall not constitute a waiver of such Party’s right to insist and demand strict compliance by such other Parties with the terms of this Agreement thereafter. (g) No Third Party Beneficiaries. Except as provided explicitly in this Agreement, no person or entity shall be deemed to be a third party beneficiary hereof, and nothing in this Agreement (either express or implied) is intended to confer upon any person or entity, other than Item Number: 5.

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the City, the Community Facilities District, the Developer, and the Security Provider (and their respective successors and assigns), any rights, remedies, obligations or liabilities under or by reason of this Agreement.
(h) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute but one instrument. (i) Assignment. Developer may assign all or any of its rights pursuant to this Agreement to a purchaser of all or any portion of the Developer Property. Such a purchaser and assignee shall, as a condition to taking an assignment of such rights, enter into an assignment and assumption agreement with the City and Developer, in a form reasonably acceptable to Developer and the City, whereby such rights assigned are specified and such purchaser agrees, except as may be otherwise specifically provided therein, to assume the obligations of Developer pursuant to this Agreement and to be bound thereby. A company that acquires all of the assets of the Developer, including ownership of the Developer itself, shall be deemed a successor and shall not require an assignment or assumption agreement to be bound by, and enjoy the benefits of, this Agreement. (j) Governing Law. This Agreement and any dispute arising hereunder shall be governed by and interpreted in accordance with the laws of the State of California. (k) Construction of Agreement. This Agreement has been reviewed by legal counsel for both the City and Developer and shall be deemed for all purposes to have been jointly drafted by the City and Developer. No presumption or rule that ambiguities shall be construed against the drafting Party shall apply to the interpretation or enforcement of this Agreement. (l) Termination. The provisions of this Agreement related to the acquisition and financing of the Improvements shall terminate and be of no further force or effect if the first series of Bonds for the Improvement Area are not sold within ten years from the date of this Agreement unless extended by agreement of all the Parties. If the City is unable to sell the first series of Bonds for the Improvement Area after diligent, commercially reasonable efforts to do so, this Agreement shall terminate and be of no further force and effect; provided, however, in such event, any collected Special Taxes remaining after the payment of administrative expenses of the CFD allocable to the Improvement Area and reimbursement to the Developer of CFD formation costs shall be used to pay for Improvements in accordance with this Agreement and Developer shall receive a credit against City Fees otherwise payable to City in the amount so used to pay for City Fee Facility Improvements. (m) Attorneys’ Fees. In the event of any action or proceeding, including an arbitration or a reference pursuant to Section 638 et seq., of the Code of Civil Procedure brought by any Party against any other under this Agreement, the prevailing Party shall be entitled to recover its actual attorneys’ fees and all fees, costs and expenses incurred for prosecution, defense, consultation, or advice in such action or proceeding. In addition to the foregoing, the prevailing Party shall be entitled to its actual attorneys’ fees and all fees, costs and expenses incurred in any post-judgment proceedings to collect or enforce the judgment. This provision is separate and several and shall survive the merger of this Agreement into any judgment on this Agreement. (n) Venue and Forum. Any action at law or in equity arising under this Agreement brought by any Party hereto for the purpose of enforcing, construing or determining the validity of any provision of this Agreement shall be filed and tried in the Superior Court of the Item Number: 5.

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County of Riverside, State of California, and the Parties waive all provisions of law providing for the filing removal or change of venue to any other Court.

Item Number: 5.

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and year written below.

DATED: January 21, 2025
CITY OF DESERT HOT SPRINGS, a political
subdivision of the State of California
By:

Frank Luckino, City Manager
ATTEST:

By:

Jerryl Soriano, CMC, City Clerk
APPROVED AS TO FORM:

CITY ATTORNEY FOR THE CITY OF

DESERT HOT SPRINGS
By:

Tuan-Anh Vu, City Attorney

LENNAR HOMES OF CALIFORNIA, LLC,
A California limited liability company
By:

Name:

Title:

Item Number: 5.

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4934-0488-2953v3/200812-0004

LIST OF EXHIBITS

EXHIBIT A - DESCRIPTION OF DEVELOPER PROPERTY

EXHIBIT B - DESCRIPTION OF COST ESTIMATES

EXHIBIT C - MISCELLANEOUS IMPROVEMENTS

EXHIBIT D - DISBURSEMENT REQUEST FORM
Item Number: 5.

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A-1
4934-0488-2953v3/200812-0004

EXHIBIT A

DESCRIPTION OF DEVELOPER PROPERTY
Real property in the City of Desert Hot Springs, County of Riverside, State of California, described as follows:

Assessor Parcel Nos.:
667-300-001 through 667-300-058
667-310-001 through 667-310-088
667-320-001 through 667-320-083
667-330-001 through 667-330-076
Item Number: 5.

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B-1
4934-0488-2953v3/200812-0004

EXHIBIT B
DESCRIPTION OF COST ESTIMATES OF THE IMPROVEMENTS (1)
No. of Units
City of Desert Hot Springs (Development Impact Fees) Unit Cost 286 Units Law Enforcement $ 565 $ 161,590
Fire 583 166,738
Circulation (Streets, Traffic Signals, and Bridges) 4,466 1,277,276 Storm Drainage 2,293 655,798
General Facilities 699 199,914
Community (Public Use) Centers 1,027 293,722
Aquatics Center 191 54,626
Parks and Recreation 2,214 633,204
Total City of Desert Hot Springs DIF $ 12,038 $ 3,442,868 Fire Station Improvement (80.27% of Unfunded Reimbursement of $3,209,245)(2) $ 9,007 $ 2,576,142 TOTAL CITY FEES AND FACILITIES $ 21,045 $ 6,019,010
(1) Amounts are estimates and subject to change.
(2) Represents the unreimbursed portion of the fire station improvements from City of Desert Hot Springs CFD No. 2006-1. If the future bond issuance for Improvement Area 1 of CFD No. 2025-1 is unable to fully reimburse the $2,576,142 then the remaining amount will be re- allocated to Villages 4 - 10.

Item Number: 5.

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Desert Hot Springs City CouncilJanuary 21, 2025

Desert Hot Springs City Council
January 21, 2025