Desert Hot Springs City Council
June 2, 2026

A-6
4898-5758-3009v3/200812-0006
[FORM OF TRUSTEE’S CERTIFICATE
OF AUTHENTICATION AND REGISTRATION]
This is one of the Bonds described in the within-defined Indenture.

Dated: ______, 2026 WILMINGTON TRUST, NATIONAL
ASSOCIATION, as Trustee
By:

Authorized Signatory
[FORM OF LEGAL OPINION]
The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth LLP, in connection with the issuance of, and dated as of the date of the original delivery of, the Bonds. A signed copy is on file in my office.

City Clerk of the City
[FORM OF ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto whose tax identification number is ,
the within-mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s) attorney to transfer the same on the books of the Trustee with full power of substitution in the premises.

Dated:

Signature guaranteed:

NOTE: Signature(s) must be guaranteed by an
eligible guarantor institution.

NOTE: The signatures(s) on this Assignment
must correspond with the name(s) as written on
the face of the within Bond in every particular
without alteration or enlargement or any change
whatsoever.

Item Number: 2.

B-1
4898-5758-3009v3/200812-0006
EXHIBIT B-1

FORM OF REQUISITION FOR DISBURSEMENT OF PROJECT COSTS
$_________
COMMUNITY FACILITIES DISTRICT NO. 2025-1
(SKYBORNE VILLAGE) OF THE CITY OF DESERT HOT SPRINGS
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2026
Wilmington Trust, National Association (the “Trustee”), is hereby requested to pay from the [City Facilities][Water Facilities] Account of the Community Facilities District No. 2025-1 (Skyborne Village) of the City of Desert Hot Springs Improvement Area No. 1 Acquisition and Construction Fund, established by the Bond Indenture, dated as of June 1, 2026, by and between the Trustee and Community Facilities District No. 2025-1 (Skyborne Village) of the City of Desert Hot Springs (the “District”), the amount specified to the payee named below for payment of the Project Costs set forth in Attachment No. 1 hereto.

Payee:

Address:

Purpose:

Amount: $
The amount is due and payable under purchase order, contract or other authorization and has not formed the basis of any prior request for payment. The conditions for the release of this amount from the [City Facilities][Water Facilities] Account, including those conditions in Section 3.9(b) of the Indenture have been satisfied.

There has not been filed with nor served upon the District notice of any lien, right to lien or attachment upon, or stop notice or claim affecting the right to receive payment of the amount specified above which has not been released or will not be released simultaneously with the payment of such amount, other than materialmen’s or mechanic’s liens accruing by mere operation of law.

Dated: COMMUNITY FACILITIES DISTRICT NO. 2025-1
(SKYBORNE VILLAGE) OF THE CITY OF

DESERT HOT SPRINGS
By:

Name:

Title: _____________________________________
Item Number: 2.

4926-6502-2127v1/200812-0006

CONTINUING DISCLOSURE CERTIFICATE
THIS CONTINUING DISCLOSURE CERTIFICATE (this “Disclosure Certificate”) dated as of June 1, 2026 is executed and delivered by Community Facilities District No. 2025-1 (Skyborne Village) of the City of Desert Hot Springs (the “District”) in connection with the issuance and delivery by the District of its $______ Improvement Area No. 1 Special Tax Bonds, Series 2026 (the “Bonds”). The Bonds are being issued pursuant to a Resolution of Issuance adopted on June 2, 2026, by the City Council of the City of Desert Hot Springs, acting as the legislative body of the District, and the Bond Indenture, dated as of June 1, 2026 (the “Indenture”), by and between the District and Wilmington Trust, National Association, as trustee. The District covenants as follows:

Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the District for the benefit of the Owners and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule.

Section 2. Definitions. In addition to the definitions set forth in the Indenture and the Rate and Method of Apportionment, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report provided by the District pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Beneficial Owner” shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income purposes.
“City” shall mean the City of Desert Hot Springs, County of Riverside, California. “Disclosure Representative” shall mean the Administrative Services Director of the City, or his or her designee, or such other officer or employee as the District shall designate in writing to the Dissemination Agent from time to time.
“Dissemination Agent” shall mean, initially, Webb Municipal Finance, LLC, or any successor Dissemination Agent designated in writing by the District and which has filed with the then current Dissemination Agent a written acceptance of such designation. “District” shall mean Community Facilities District No. 2025-1 (Skyborne Village) of the City of Desert Hot Springs.
“EMMA” shall mean the Electronic Municipal Market Access System of the Municipal Securities Rulemaking Board, which can be found at www.emma.msrb.org, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission in the future system of the MSRB.
“Financial Obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term Financial Obligation shall not include municipal Item Number: 2.

2 4926-6502-2127v1/200812-0006
securities as to which a final official statement has been provided to the MSRB consistent with the Rule.
“Improvement Area” means Improvement Area No. 1 of the District. “Listed Events” shall mean any of the events listed in Section 5 of this Disclosure Certificate. “MSRB” shall mean the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org. “Official Statement” shall mean that certain Official Statement for the Bonds dated _____, 2026.
“Owners” shall mean the registered owners of the Bonds as set forth in the registration books maintained by the Trustee.
“Participating Underwriter” shall mean Stifel, Nicolaus & Company, Incorporated. “Rate and Method of Apportionment” shall mean that certain Rate and Method of Apportionment of Special Tax for the Improvement Area approved pursuant to the Resolution of Formation.
“Resolution of Formation” shall mean the resolutions adopted by the City Council pursuant to which the City Council formed the District and designated the Improvement Area therein. “Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. “State” shall mean the State of California.
“Trustee” shall mean Wilmington Trust, National Association or such other entity appointed by the District pursuant to the Indenture to act as the trustee under the Indenture.

Section 3. Provision of Annual Reports.
(a) Not later than March 31 of each year commencing March 31, 2027, the District shall, or shall cause the Dissemination Agent to provide to EMMA an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. If the Dissemination Agent is other than the District, then not later than 15 business days prior to the date referred to in the prior sentence hereof, the District shall provide the Annual Report (in a form suitable for filing with EMMA) to the Dissemination Agent. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the District, if any exist, may be submitted separately from and later than the balance of the Annual Report if they are not available by the date required above for the filing of the Annual Report.

Item Number: 2.

3 4926-6502-2127v1/200812-0006
(b) In the event that the Dissemination Agent is an entity other than the District, then the provisions of this Section 3(b) shall apply. Not later than fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report, the District shall provide the Annual Report to the Dissemination Agent. If by fifteen (15) Business Days prior to the due date for an Annual Report the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the District to determine if the District will be filing the Annual Report in compliance with subsection (a). The District shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the District and shall have no duty or obligation to review such Annual Report.
(c) If the Dissemination Agent is other than the District and if the Dissemination Agent is unable to verify that an Annual Report has been provided to EMMA by the date required in subsection (a), the Dissemination Agent shall send, in a timely manner, a notice to EMMA of the failure to file the Annual Report in the form required by EMMA. If the District acts as its own Dissemination Agent, it shall file a notice with EMMA no later than the date specified in subsection (a) for filing an Annual Report if the District fails to file the Annual Report by that date. (d) If the Dissemination Agent is other than the District, the Dissemination Agent shall:
(i) determine each year prior to the date for providing the Annual Report the name and address of the repository if other than the MSRB through EMMA; and (ii) promptly after receipt of the Annual Report, file a report with the District certifying that the Annual Report has been provided to EMMA and the date it was provided. (e) Notwithstanding any other provision of this Disclosure Certificate, all filings shall be made in accordance with the MSRB’s EMMA system or in another manner approved under the Rule.

Section 4. Content of Annual Reports. The District’s Annual Report shall contain or include by reference the following:
(a) Financial Statements. The audited financial statements of the District for the prior fiscal year, if any have been prepared and which, if prepared, shall be prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the District’s audited financial statements, if any are prepared, are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.
(b) Financial and Operating Data. The Annual Report shall contain or incorporate by reference the following information:
(i) the principal amount of the Bonds outstanding as of the September 2 preceding the filing of the Annual Report;
Item Number: 2.

4 4926-6502-2127v1/200812-0006
(ii) the balance in each fund under the Indenture as of the September 2 preceding the filing of the Annual Report;
(iii) the aggregate assessed valuation of the Taxable Property within the Improvement Area;
(iv) any changes to the Rate and Method of Apportionment of Special Tax approved or submitted to the qualified electors for approval prior to the filing of the Annual Report;
(v) a table setting forth the annual Special Tax delinquency rate within the Improvement Area at June 30 of each fiscal year for which a delinquency exists, listing for each fiscal year, the total Special Tax levy, the amount delinquent and the percent delinquent; (vi) an update of the value-to-lien of the property within Improvement Area No. 1 based on the assessed value and the Special Tax levy for the then current fiscal year, which update may be provided in a form similar to Table 3 in the Official Statement; provided that such update need not include overlapping special tax, assessment or general obligation indebtedness; and
(vii) the status of any foreclosure actions being pursued by the District with respect to delinquent Special Taxes within the Improvement Area. (c) Any or all of the items listed in (a) or (b) above may be included by specific reference to other documents, including official statements of debt issues of the District or related public entities, which have been submitted to EMMA or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB through EMMA. The District shall clearly identify each such other document so included by reference.

Section 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the District shall give, or cause the Dissemination Agent to give, notice to EMMA in a timely manner not in excess of ten (10) business days after the occurrence of any of the following events with respect to the Bonds:

1. principal and interest payment delinquencies;

2. unscheduled draws on debt service reserves reflecting financial difficulties;

3. unscheduled draws on credit enhancements reflecting financial difficulties;

4. substitution of credit or liquidity providers, or their failure to perform;

5. adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds;

6. defeasances;
Item Number: 2.

5 4926-6502-2127v1/200812-0006

7. tender offers;

8. ratings changes; and

9. bankruptcy, insolvency, receivership or similar proceedings.

Note: for the purposes of the event identified in subparagraph (9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S.

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

10. default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the obligated person, any of which reflect financial difficulties.
(b) Additionally, the District shall give or cause the Dissemination Agent to give notice to EMMA in a timely manner not in excess of ten (10) business days after the occurrence of any of the following events with respect to the Bonds, if material:

1. mergers, consolidations, acquisitions, the sale of all or substantially all of the assets of the obligated persons or their termination;

2. appointment of a successor or additional fiscal agent or the change of the name of a fiscal agent;

3. nonpayment related defaults;

4. modifications to the rights of Bondholders;

5. bond calls;

6. release, substitution or sale of property securing repayment of the Bonds; and

7. incurrence of a Financial Obligation of the obligated person, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the obligated person, any of which affect security holders.
(c) In the event that the District’s fiscal year changes, the District shall report or shall instruct the Dissemination Agent to report such change in the same manner and to the same parties as Listed Events would be reported pursuant to this Section.

Item Number: 2.

6 4926-6502-2127v1/200812-0006
(d) The District hereby agrees that the undertaking set forth in this Disclosure Certificate is the responsibility of the District, and the Dissemination Agent, if other than the District, shall not be responsible for determining whether the District’s instructions to the Dissemination Agent under this Section comply with the requirements of the Rule.

Section 6. Termination of Reporting Obligation. The obligations of the District and the Dissemination Agent under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the District shall give notice of such termination in the same manner as for a Listed Event under Section 5.

Section 7. Dissemination Agent. The District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent, if other than the District, shall not be responsible in any manner for the content of any notice or report prepared by the District pursuant to this Disclosure Certificate.

The initial Dissemination Agent shall be Webb Municipal Finance, LLC. The Dissemination Agent may resign by providing (i) thirty (30) days written notice to the District and the Trustee and (ii) upon appointment of a new Dissemination Agent hereunder.

Section 8. Amendment; Waiver.
(a) This Disclosure Certificate may be amended, by written agreement of the parties, without the consent of the Owners, and any provision of this Disclosure Certificate may be waived, if all of the following conditions are satisfied: (1) such amendment or waiver is made in connection with a change in circumstances that arises from a change in legal (including regulatory) requirements, a change in law, or a change in the identity, nature or status of the District or the type of business conducted thereby, (2) the undertakings in this Disclosure Certificate as so amended or waived would, in the opinion of a nationally recognized bond counsel, have complied with the requirements of the Rule as of the date of this Disclosure Certificate, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances, and (3) the amendment or waiver either (i) is approved by the Owners of the Bonds in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Owners or (ii) does not, in the determination of the District, materially impair the interests of the Owners or Beneficial Owners of the Bonds.
(b) To the extent any amendment to this Disclosure Certificate results in a change in the type of financial information or operating data provided pursuant to this Disclosure Certificate, the first Annual Report provided thereafter shall include a narrative explanation of the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.
(c) If an amendment is made to the basis on which financial statements are prepared, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Such comparison shall include a quantitative and, to the extent reasonably feasible, qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information.

Item Number: 2.

7 4926-6502-2127v1/200812-0006
Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the District from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the District chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the District shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

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

Section 11. Duties, Immunities and Liabilities of Dissemination Agent. Where an entity other than the District is acting as the Dissemination Agent, the Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the District agrees to indemnify and save the Dissemination Agent and its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of their powers and duties hereunder, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. Any Dissemination Agent shall be paid (i) compensation by the District for its services provided hereunder in accordance with a schedule of fees to be mutually agreed to; and (ii) all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the District pursuant to this Disclosure Certificate. The obligations of the District under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. No person shall have any right to commence any action against the Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Certificate. The Dissemination Agent shall not be liable under any circumstances for monetary damages to any person for any breach under this Disclosure Certificate.

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

District: Community Facilities District No. 2025-1 (Skyborne Village) City of Desert Hot Springs
11999 Palm Drive
Desert Hot Springs, CA 92240
Attn: Administrative Services Director
Item Number: 2.

8 4926-6502-2127v1/200812-0006
Underwriter: Stifel, Nicolaus & Company, Incorporated
2121 Avenue of the Stars, Suite 2150
Los Angeles, CA 90067
Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s) to which subsequent notice or communications should be sent.

Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the District, the Trustee, the Dissemination Agent, the Participating Underwriter and Owners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.

Section 14. Merger. Any person succeeding to all or substantially all of the Dissemination Agent’s business shall be the successor Dissemination Agent without the filing of any paper or any further act.

This Disclosure Certificate is executed as of the date and year first set forth above.

COMMUNITY FACILITIES DISTRICT NO. 2025-1
(SKYBORNE VILLAGE) OF THE CITY OF

DESERT HOT SPRINGS
By:

Disclosure Representative
Item Number: 2.

1 $___________
COMMUNITY FACILITIES DISTRICT NO. 2025-1
(SKYBORNE VILLAGE) OF THE CITY OF DESERT HOT SPRINGS
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2026

BOND PURCHASE AGREEMENT
[BPA Date]
City of Desert Hot Springs
Community Facilities District No. 2025-1 (Skyborne
Village) of the City of Desert Hot Springs
11999 Palm Drive
Desert Hot Springs, CA 92240
Ladies and Gentlemen:

Stifel, Nicolaus & Company, Incorporated, as underwriter (the “Underwriter”), acting not as a fiduciary or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Agreement (this “Purchase Agreement”) with Community Facilities District No. 2025-1 (Skyborne Village) of the City of Desert Hot Springs (the “Community Facilities District”) on behalf of Improvement Area No. 1 (the “Improvement Area”), which upon acceptance will be binding upon the Underwriter and the Community Facilities District. The agreement of the Underwriter to purchase the Bonds (as hereinafter defined) is contingent upon the Community Facilities District satisfying all of the obligations imposed upon them under this Purchase Agreement. This offer is made subject to the Community Facilities District’s acceptance by the execution of this Purchase Agreement and its delivery to the Underwriter at or before 11:59 P.M., local time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the Community Facilities District at any time prior to the acceptance hereof by the Community Facilities District. All capitalized terms used herein, which are not otherwise defined, shall have the meaning provided for such terms in the Bond Indenture, dated as of June 1, 2026 (the “Indenture”), by and between the Community Facilities District and Wilmington Trust, National Association, as trustee (the “Trustee”).

1. Purchase, Sale and Delivery of the Bonds.

Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein: (i) the Underwriter hereby agrees to purchase from the Community Facilities District and the Community Facilities District hereby agrees to sell to the Underwriter all (but not less than all) of the $___________ aggregate principal amount of the Community Facilities District No. 2025-1 (Skyborne Village) of the City of Desert Hot Springs Improvement Area No. 1 Special Tax Bonds, Series 2026 (the “Bonds”), dated the Closing Date (as hereinafter defined), bearing interest at the rates and maturing on the dates and in the principal amounts set forth in Exhibit A hereto. The purchase price for the Bonds shall be $________ (being 100% of the aggregate Item Number: 2.

2 principal amount thereof, plus an original issue premium of $______ and less an Underwriter’s discount of $_______).

The Underwriter agrees to make a bona fide public offering of all of the Bonds initially at the public offering prices (or yields) set forth in Exhibit A attached hereto and incorporated herein by reference. Subsequent to the initial public offering, the Underwriter reserves the right to change the public offering prices (or yields) as it deems necessary in connection with the marketing of the Bonds subject to Section 2 hereof, provided that the Underwriter shall not change the interest rates set forth in Exhibit A. The Bonds may be offered and sold to certain dealers at prices lower than such initial offering prices.

The Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of, and shall be payable from the Net Taxes as provided in the Indenture, the Preliminary Official Statement (as hereinafter defined), and the Mello-Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the Government Code of the State of California) (the “Community Facilities District Act”). The issuance of the Bonds has been duly authorized by the City Council of the City of Desert Hot Springs (the “City”), as the legislative body for the Community Facilities District (for and on behalf of the Improvement Area within the Community Facilities District), pursuant to a resolution (the “Community Facilities District Resolution of Issuance”) adopted on June 2, 2026.

The proceeds of the Bonds will be used to: (i) finance certain public improvements needed with respect to the development of property located within the Community Facilities District, including public improvements to be owned by the City and water and sewer facilities to be owned and operated by the Mission Springs Water District, (ii) fund a reserve account for the Bonds; and (iii) pay costs of issuance for the Bonds.

The Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of, and shall be payable from special taxes as provided in the Indenture (the “Special Taxes”).

A. The Community Facilities District hereby acknowledges that the Underwriter is entering into this Purchase Agreement in reliance on the representations, warranties and agreements made by the Community Facilities District herein, and the Community Facilities District shall take all action necessary to enforce its rights hereunder for the benefit of the Underwriter and shall immediately notify the Underwriter if it becomes aware that any representation, warranty or agreement made by the Community Facilities District herein is incorrect in any material respect.

The Community Facilities District acknowledges and agrees that (i) the purchase and sale of the Bonds pursuant to this Purchase Agreement is an arm’s-length commercial transaction between the Community Facilities District and the Underwriter, (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as principal and not as the agent or fiduciary of the Community Facilities District, (iii) the Underwriter has not assumed an advisory or fiduciary responsibility in favor of the Community Facilities District with respect to (a) the offering of the Bonds or the process leading thereto (whether or not the Underwriter, or any affiliate of the Underwriter, has advised or is currently advising the Community Facilities District on other matters) or (b) any other obligations to the Community Facilities District with respect to the offering contemplated hereby, except the obligations expressly set forth in this Purchase Agreement or Item Number: 2.

3 otherwise imposed by law, (iv) the Underwriter has financial interests that differ from those of the Community Facilities District and (v) the Community Facilities District has consulted with their own legal, financial and other advisors to the extent they have deemed appropriate in connection with this transaction. The Community Facilities District acknowledges that it has previously provided the Underwriter with an acknowledgement of receipt of the required Underwriter disclosure under Rule G-17 of the Municipal Securities Rulemaking Board (“MSRB”). The Community Facilities District acknowledges and represents that it has engaged Urban Futures, Inc. as its municipal advisor (the “Municipal Advisor”) (as defined in Securities and Exchange Commission Rule 15Ba1) and will rely solely on the financial advice of Urban Futures, Inc. with respect to the Bonds.

B. Pursuant to the authorization of the Community Facilities District, the Underwriter has distributed copies of the Preliminary Official Statement dated [POS Date], relating to the Bonds, which, together with the cover page, inside cover page and appendices thereto is herein called the “Preliminary Official Statement.” By its acceptance of this Purchase Agreement, the Community Facilities District hereby ratifies the use by the Underwriter of the Preliminary Official Statement, and the Community Facilities District agrees to execute a final official statement relating to the Bonds (including any supplements and/or amendments thereto, the “Official Statement”) which will consist of the Preliminary Official Statement with such changes as may be made thereto, with the approval of Stradling Yocca Carlson & Rauth LLP, Bond Counsel (“Bond Counsel”), Stradling Yocca Carlson & Rauth LLP, Disclosure Counsel (“Disclosure Counsel”), and the Underwriter, and to provide copies thereof to the Underwriter as set forth herein. The Community Facilities District hereby authorizes and requires the Underwriter to use and promptly distribute, in connection with the offer and sale of the Bonds, the Preliminary Official Statement, the Official Statement and any supplement or amendment thereto. The Community Facilities District further authorizes the Underwriter to use and distribute, in connection with the offer and sale of the Bonds, the Indenture, the Continuing Disclosure Certificate executed by the Community Facilities District in connection with the Bonds (the “Continuing Disclosure Certificate”), this Purchase Agreement and all information contained herein, and all other documents, certificates and statements furnished by or on behalf of the Community Facilities District to the Underwriter in connection with the transactions contemplated by this Purchase Agreement.

C. To assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2-12(b)(5) (the “Rule”), the Community Facilities District will undertake pursuant to the Continuing Disclosure Certificate, in the form attached to the Official Statement as Appendix F, to provide annual reports and notices of certain enumerated events. A description of this undertaking is set forth in the Preliminary Official Statement and will also be set forth in the Official Statement.

D. Except as the Underwriter and the Community Facilities District may otherwise agree, the Community Facilities District will deliver to the Underwriter, at the offices of Bond Counsel in Newport Beach, California, or at such other location as may be mutually agreed upon by the Underwriter and the Community Facilities District, the documents hereinafter mentioned; and the Community Facilities District will deliver to the Underwriter through the facilities of The Depository Trust Company (“DTC”), the Bonds, in definitive form (all Bonds bearing CUSIP numbers), duly executed by the Community Facilities District and authenticated by the Trustee in the manner provided for in the Indenture and the Community Facilities District Act at 8:00 a.m. California time, on [Closing Date] (the “Closing Date”), and the Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in paragraph (A) of this Section by wire transfer, payable in federal or other immediately available funds (such delivery and payment Item Number: 2.

4 being herein referred to as the “Closing”). The Bonds shall be in fully registered book-entry form (which may be typewritten) and shall be registered in the name of Cede & Co., as nominee of DTC.

2. Establishment of Issue Price.

A. The Underwriter agrees to assist the Community Facilities District in establishing the issue price of the Bonds and shall execute and deliver to the Community Facilities District at Closing an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit D, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Community Facilities District and Bond Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds.

B. Except as otherwise set forth in Exhibit A attached hereto, the Community Facilities District will treat the first price at which 10% of each maturity of the Bonds (the “10% test”) is sold to the public as the issue price of that maturity (if different interest rates apply within a maturity, each separate CUSIP number within that maturity will be subject to the 10% test). At or promptly after the execution of this Purchase Agreement, the Underwriter shall report to the Community Facilities District the price or prices at which it has sold to the public each maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the Community Facilities District the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until the 10% test has been satisfied as to the Bonds of that maturity or until all Bonds of that maturity have been sold to the public.

C. The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Agreement at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in Exhibit A attached hereto. Exhibit A also sets forth, as of the date of this Purchase Agreement, the maturities, if any, of the Bonds for which the Underwriter represents that (i) the 10% test has been satisfied (assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement) and (ii) the 10% test has not been satisfied and for which the Community Facilities District and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Community Facilities District to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold-the-offering-price rule”). So long as the hold-theoffering-price rule remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following:

1. the close of the fifth (5th) business day after the sale date; or

2. the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.

The Underwriter shall promptly advise the Community Facilities District when it has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public, if that occurs prior to the close of the fifth (5th) business day after the sale date.

Item Number: 2.

5 D. The Underwriter confirms that:
(i) any selling group agreement and any third-party distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such third-party distribution agreement, as applicable:
(A)(i) to report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter and (ii) to comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter,
(B) to promptly notify the Underwriter of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below), and (C) to acknowledge that, unless otherwise advised by the dealer or broker-dealer, the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public.
(ii) any selling group agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer that is a party to a third-party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker-dealer that is a party to such third-party distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires.

E. The Community Facilities District acknowledges that, in making the representation set forth in this section, the Underwriter will rely on (i) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the requirements for establishing the issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-theoffering-price rule, if applicable to the Bonds, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a third-party distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the requirements for establishing the issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in the third-party distribution agreement and the related pricing wires.

Item Number: 2.

6 F. The Underwriter acknowledges that sales of any Bonds to any person that is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below) shall not constitute sales to the public for purposes of this section.

Further, for purposes of this section:

1. “public” means any person other than an underwriter or a related party;

2. “underwriter” means (A) any person that agrees pursuant to a written contract with the Community Facilities District (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Bonds to the public);

3. a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (A) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (B) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (C) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other); and

4. “sale date” means the date of execution of this Purchase Agreement by all parties.

3. Representations, Warranties and Covenants of the Community Facilities District.

The Community Facilities District represents, warrants and covenants to the Underwriter on behalf of itself and the City that:

A. The City is duly organized and validly existing as a general law city under the Constitution and laws of the State of California and has duly authorized the formation of the Community Facilities District pursuant to resolutions duly adopted by the City Council (the “Community Facilities District Formation Resolution” and, together with the Community Facilities District Resolution of Issuance, the “Community Facilities District Resolutions”) and the Community Facilities District Act. The City Council, as the legislative body of the City and the Community Facilities District, has duly adopted the Community Facilities District Formation Resolution, and has caused to be recorded in the real property records of the County of Riverside, notice of special tax lien, and any required amendments thereof (collectively, the “Notice of Special Tax Lien”) (the Community Facilities District Formation Resolution and Notice of Special Tax Lien being collectively referred to herein as the “Formation Documents”), and has duly adopted the Community Facilities District Resolution of Issuance on behalf of the Improvement Area. Each of its Formation Documents remains in full force and effect as of the date hereof and has not been amended. The Community Facilities District is duly organized and validly existing as a Community Facilities District under the laws of the State of California. The Community Facilities District has, and at the Closing Date will have, as the case may be, full legal right, power and authority: (i) to Item Number: 2.

7 execute, deliver and perform its obligations under this Purchase Agreement, the Continuing Disclosure Certificate and the Indenture, and to carry out all transactions contemplated by each of such agreements; (ii) to issue, sell and deliver the Bonds as provided herein; and (iii) to carry out, give effect to and consummate the transactions contemplated by the Formation Documents, the Indenture, the Bonds, the Continuing Disclosure Certificate, this Purchase Agreement and the Official Statement.

This Purchase Agreement, the Indenture, the Bonds and the Continuing Disclosure Certificate are collectively referred to herein as the “Community Facilities District Documents.” B. The Community Facilities District and the City, as applicable, have each complied, and will at the Closing Date be in compliance in all material respects, with the Formation Documents and the Community Facilities District Documents, and any immaterial noncompliance by the Community Facilities District and the City, if any, will not impair the ability of the Community Facilities District and the City, as applicable, to carry out, give effect to or consummate the transactions contemplated by the foregoing. From and after the date of issuance of the Bonds, the Community Facilities District will continue to comply with the covenants of the Community Facilities District contained in the Community Facilities District Documents.

C. The information in the Preliminary Official Statement and in the Official Statement relating to the Community Facilities District and the Bonds (other than information under the captions “PROPERTY OWNERSHIP AND THE DEVELOPMENT,” CONTINUING DISCLOSURE — Developer Continuing Disclosure and “UNDERWRITING,” Appendix D and Appendix H, information provided by Lennar Homes of California, LLC (the “Developer”), the Appraiser and the Special Tax Consultant (as each such terms are defined herein) and statements pertaining to the book entry system, as to which no view is expressed), is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and, upon delivery and up to and including 25 days after the End of the Underwriting Period (as defined in paragraph (D) below), the Official Statement will be amended and supplemented so as to contain no misstatement of any material fact or omission of any statement necessary to make the statements contained therein, in the light of the circumstances in which such statements were made, not misleading.

D. Up to and including 25 days after the End of the Underwriting Period (as defined below), the Community Facilities District will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter, which consent will not be unreasonably withheld. The Community Facilities District will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise materially affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds. As used herein, the term “End of the Underwriting Period” means the later of such time as: (i) the Bonds are delivered to the Underwriter; or (ii) the Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Unless the Underwriter gives notice to the contrary, the End of the Underwriting Period shall be deemed to be the Closing Date. Any notice delivered pursuant to this provision shall be written notice delivered to the Community Facilities District at or prior to the Closing Date and shall specify a date (other than the Closing Date) to be deemed the “End of the Underwriting Period.” Item Number: 2.

8 E. Except as described in the Preliminary Official Statement and Official Statement, the Community Facilities District is not, in any respect material to the transactions referred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a party or is otherwise subject or bound, and the performance of its obligations under the Community Facilities District Documents and compliance with the provisions of each thereof, or the performance of the conditions precedent to be performed by the Community Facilities District pursuant to this Purchase Agreement, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a party or is otherwise subject or bound, in any manner which would materially and adversely affect the performance by the Community Facilities District of its obligations under the Community Facilities District Documents or the performance of the conditions precedent to be performed by the Community Facilities District pursuant to this Purchase Agreement.

F. Except as may be required under the “blue sky” or other securities laws of any jurisdiction, all approvals, consents, authorizations, elections and orders of, or filings or registrations with, any governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the Community Facilities District of its obligations under the Community Facilities District Documents, and the performance of the conditions precedent to be performed by the Community Facilities District pursuant to this Purchase Agreement, have been or will be obtained at the Closing Date and are or will be in full force and effect at the Closing Date.

G. The Community Facilities District Documents conform as to form and tenor to the descriptions thereof contained in the Official Statement.

H. The Bonds are payable from the Special Tax of the Improvement Area, as set forth in the Indenture, the levy of which has been duly and validly authorized pursuant to the Community Facilities District Act and the Community Facilities District will covenant in the Indenture to levy the Special Taxes within the Improvement Area in an amount which, together with other available funds, is required for the payment of the principal of, and interest on, the Bonds when due and payable, all as provided in the Indenture.

I. The Indenture creates a valid pledge of, first lien upon and security interest in, the Net Taxes, and in the moneys in the Special Tax Fund (other than the Administrative Expenses Account therein) established pursuant to the Indenture, on the terms and conditions set forth in the Indenture.

J. Except as disclosed in the Preliminary Official Statement, there are, to the best of the Community Facilities District’s knowledge, no entities with outstanding assessment or special tax liens against any of the properties within the Improvement Area or which are senior to or on a parity with the Special Taxes of the Improvement Area referred to in paragraph (I) hereof.

Item Number: 2.

9 K. The Preliminary Official Statement was deemed final by a duly authorized officer of the Community Facilities District prior to its delivery to the Underwriter, except for the omission of such information as is permitted to be omitted in accordance with paragraph (b)(1) of the Rule. The Community Facilities District hereby covenants and agrees that, within seven (7) business days from the date hereof, or upon reasonable written notice from the Underwriter within sufficient time to accompany any confirmation requesting payment from any customers of the Underwriter, the Community Facilities District shall cause a final printed form of the Official Statement to be delivered to the Underwriter in sufficient quantity to comply with paragraph (b)(4) of the Rule and Rules G-12, G-15, G-32 and G-36 of the Municipal Securities Rulemaking Board.

L. At the time of acceptance hereof there is and as of the Closing there will be no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body (collectively and individually, an “Action”) pending (notice of which has been served on the Community Facilities District) or to the best knowledge of the Community Facilities District or the City threatened, in which any such Action: (i) in any way questions the existence of the Community Facilities District or the titles of the officers of the Community Facilities District to their respective offices; (ii) affects, contests or seeks to prohibit, restrain or enjoin the issuance or delivery of the Bonds or the payment or collection of Special Taxes or any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contests or affects the validity of the Community Facilities District Documents or the consummation of the transactions on the part of the Community Facilities District contemplated thereby; (iii) contests the exemption of interest on the Bonds from federal or State income taxation or contests the powers of the Community Facilities District which may result in any material adverse change relating to the financial condition of the Community Facilities District; or (iv) contests the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserts that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and as of the time of acceptance hereof there is and, as of the Closing Date, there will be no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) of this sentence.

M. Any certificate signed on behalf of the Community Facilities District by any officer or employee of the Community Facilities District authorized to do so shall be deemed a representation and warranty by the Community Facilities District to the Underwriter on behalf of itself and the Community Facilities District as to the statements made therein.

N. At or prior to the Closing the Community Facilities District will have duly authorized, executed and delivered the Continuing Disclosure Certificate in substantially the form attached as Appendix F to the Official Statement. Based upon a review of its previous undertakings, and except as disclosed in the Preliminary Official Statement, the Community Facilities District has not failed to comply in all respects with any previous undertakings with regard to the Rule to provide annual reports or notices of enumerated events in the last five years.

O. The Community Facilities District will apply the proceeds of the Bonds in accordance with the Indenture and as described in the Official Statement.

P. Until such time as moneys have been set aside in an amount sufficient to pay all then outstanding Bonds at maturity or to the date of redemption if redeemed prior to maturity, Item Number: 2.

10 plus unpaid interest thereon and premium, if any, to maturity or to the date of redemption if redeemed prior to maturity, the Community Facilities District will faithfully perform and abide by all of the covenants, undertakings and provisions contained in the Indenture.

Q. Between the date of this Purchase Agreement and the date of Closing, the Community Facilities District will not offer or issue any bonds, notes or other obligations for borrowed money not previously disclosed to the Underwriter.

The Community Facilities District hereby approves the preparation and distribution of the Official Statement, consisting of the Preliminary Official Statement with such changes as are noted thereon and as may be made thereto, with the approval of Bond Counsel, Disclosure Counsel and the Underwriter, from time to time prior to the Closing Date.

The execution and delivery of this Purchase Agreement by the Community Facilities District shall constitute a representation by the Community Facilities District to the Underwriter that the representations and warranties contained in this Section 3 with respect to the Community Facilities District are true as of the date hereof.

4. Conditions to the Obligations of the Underwriter. The obligation of the Underwriter to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the representations and warranties on the part of the Community Facilities District contained herein, to the accuracy in all material respects of the statements of the officers and other officials of the Community Facilities District made in any certificates or other documents furnished pursuant to the provisions hereof, to the performance by the Community Facilities District of its obligations to be performed hereunder at or prior to the Closing Date, and in reliance upon the representations and covenants of the Developer contained in the certificates delivered as of the Closing Date, and to the following additional conditions:

A. At the Closing Date, the Community Facilities District Resolutions and the Community Facilities District Documents shall be in full force and effect, and shall not have been amended, modified or supplemented, except as may have been agreed to in writing by the Underwriter, and there shall have been taken in connection therewith, with the issuance of the Bonds and with the Bonds, and with the transactions contemplated thereby, and by this Purchase Agreement, all such actions as, in the opinion of Bond Counsel, shall be necessary and appropriate.

B. At the Closing Date, except as described in the Official Statement, the City shall not be, in any respect material to the transactions referred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound, and the performance of the conditions precedent to be performed hereunder will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound, in any manner which would materially and adversely affect the performance of the conditions precedent to be performed by the City hereunder.

Item Number: 2.

11 C. At the Closing Date, except as described in the Official Statement, the Community Facilities District shall not be, in any respect material to the transactions referred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a party or is otherwise subject or bound, and the performance by the Community Facilities District of its obligations under the Bonds, the Community Facilities District Resolutions, the Indenture, and any other instruments contemplated by any of such documents, and compliance with the provisions of each thereof, or the performance of the conditions precedent to be performed hereunder, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a party or is otherwise subject or bound, in any manner which would materially and adversely affect the performance by the Community Facilities District of its obligations under the Indenture, the Bonds or the performance of the conditions precedent to be performed by the Community Facilities District hereunder.

D. The information contained in the Official Statement is, as of the Closing Date and as of the date of any supplement or amendment thereto pursuant hereto, will be true and correct in all material respects and does not, as of the Closing Date or as of the date of any supplement or amendment thereto, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

E. Between the date hereof and the Closing Date, the market price or marketability, at the initial offering prices set forth on the inside cover page of the Official Statement, of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds, shall not have been materially adversely affected, in the judgment of the Underwriter (evidenced by a written notice to the Community Facilities District terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds), by reason of any of the following:

1. Legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America or recommended to the Congress by the President of the United States, the Department of the Treasury, the Internal Revenue Service, or any member of Congress, or favorably reported for passage to either House of Congress by any committee of such House to which such legislation had been referred for consideration, or a decision rendered by a court established under Article III of the Constitution of the United States of America or by the Tax Court of the United States of America, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Treasury Department of the United States of America or the Internal Revenue Service, with the purpose or effect, directly or indirectly, of imposing federal income taxation upon such interest as would be received by any owners of the Bonds beyond the extent to which such interest is subject to taxation as of the date hereof; or

2. Legislation introduced in or enacted (or resolution passed) by the Congress or an order, decree or injunction issued by any court of competent jurisdiction, or an order, Item Number: 2.

12 ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds, including any or all underlying arrangements, are not exempt from registration under or other requirements of the Securities Act of 1933, as amended, or that the Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligations of the general character of the Bonds, including any or all underlying arrangements, as contemplated hereby or by the Official Statement or otherwise is or would be in violation of the federal securities laws as amended and then in effect; or

3. A general suspension of trading on the New York Stock Exchange or other major exchange shall be in force, or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on any such exchange, whether by virtue of determination by that exchange or by order of the SEC or any other governmental authority having jurisdiction; or

4. The introduction, proposal or enactment of any amendment to the Federal or California Constitution or any action by any Federal or California court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the Community Facilities District, its property, income, securities (or interest thereon), the validity or enforceability of Special Taxes, or the ability of the Community Facilities District to issue the Bonds as contemplated by the Indenture and the Official Statement; or

5. Any event occurring, or information becoming known which, in the judgment of the Underwriter, makes untrue in any material respect any statement or information contained in the Preliminary Official Statement or in the Official Statement, or has the effect that the Preliminary Official Statement or the Official Statement contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; or

6. Any national securities exchange, the Comptroller of the Currency, or any other governmental authority, shall impose as to the Bonds, or obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, the Underwriter; or

7. There shall have occurred (1) an outbreak or escalation of hostilities or the declaration by the United States of a national emergency or war or (2) any other calamity or crisis in the financial markets of the United States or elsewhere or the escalation of such calamity or crisis; or

8. Except as disclosed in or contemplated by the Official Statement, any material adverse change in the affairs of the City or Community Facilities District shall have occurred; or

9. Any event or circumstance shall exist that either makes untrue or incorrect in any material respect any statement or information in the Official Statement (other than any statement provided by the Underwriter) or is not reflected in the Official Statement but should be reflected therein in order to make the statements therein, in the light of the circumstances under Item Number: 2.

13 which they were made, not misleading and, in either such event, the Community Facilities District refuses to permit the Official Statement to be supplemented to supply such statement or information, or the effect of the Official Statement as so supplemented is to materially adversely affect the market price or marketability of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; or

10. A general banking moratorium shall have been declared by federal or State authorities having jurisdiction and be in force; or

11. A material disruption in securities settlement, payment or clearance services affecting the Bonds shall have occurred; or

12. Any new restriction on transactions in securities materially affecting the market for securities (including the imposition of any limitation on interest rates) or the extension of credit by, or a charge to the net capital requirements of, underwriters shall have been established by the New York Stock Exchange, the SEC, any other federal or State agency or the Congress of the United States, or by Executive Order; or

13. A decision by a court of the United States shall be rendered, or a stop order, release, regulation or no-action letter by or on behalf of the SEC or any other governmental agency having jurisdiction of the subject matter shall have been issued or made, to the effect that the issuance, offering or sale of the Bonds, including the underlying obligations as contemplated by this Purchase Agreement or by the Official Statement, or any document relating to the issuance, offering or sale of the Bonds, is or would be in violation of any provision of the federal securities laws at the Closing Date, including the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Trust Indenture Act of 1939, as amended; or

14. Any proceeding shall have been commenced or be threatened in writing by the Securities and Exchange Commission against the City or the Community Facilities District; or

15. The commencement of any Action.

F. At or prior to the Closing Date, the Underwriter shall have received a counterpart original or certified copy of the following documents, in each case satisfactory in form and substance to the Underwriter:

1. The Official Statement, executed on behalf of the Community Facilities District by an authorized officer;

2. The Indenture, duly executed and delivered by the Community Facilities District and the Trustee;

3. The Community Facilities District Resolution, the Community Facilities District Documents and the Formation Documents, together with a certificate dated as of the Closing Date of the City Clerk to the effect that the Community Facilities District Resolutions are true, correct and complete copies of the ones duly adopted by the City Council;

4. The Continuing Disclosure Certificate executed and delivered by an authorized officer the Community Facilities District;
Item Number: 2.

14 5. An unqualified approving opinion for the Bonds, dated the Closing Date and addressed to the Community Facilities District, of Bond Counsel, to the effect that the Bonds are the valid, legal and binding obligations of the Community Facilities District and that the interest thereon is excluded from gross income for federal income tax purposes and exempt from personal income taxes of the State of California, in substantially the form included as Appendix C to the Official Statement, together with a letter of Bond Counsel, dated the Closing Date and addressed to the Underwriter, to the effect that such opinion addressed to the Community Facilities District may be relied upon by the Underwriter to the same extent as if such opinion was addressed to it;

6. A supplemental opinion or opinions, dated the Closing Date and addressed to the Underwriter, of Bond Counsel, to the effect that:
(i) this Purchase Agreement and the Continuing Disclosure Certificate have been duly authorized, executed and delivered by the Community Facilities District and, assuming due authorization, execution and delivery by the other parties thereto, as applicable, constitutes the legal, valid and binding obligations of the Community Facilities District and are enforceable in accordance with their terms, except to the extent that enforceability may be limited by moratorium, bankruptcy, reorganization, insolvency or other similar laws affecting creditors’ rights generally or by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases and by limitations on legal remedies against public agencies in the State;
(ii) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended;
(iii) the information contained in the Official Statement on the cover and under the captions “THE BONDS” (other than the caption “Debt Service Schedule”), “SOURCES OF PAYMENT FOR THE BONDS,” “TAX MATTERS” and “LEGAL OPINION” and in Appendices C and E to the Official Statement, are accurate insofar as such statements purport to summarize certain provisions of the Bonds, the Indenture, and Bond Counsel’s final approving opinion.

7. The letter of Disclosure Counsel, dated the Closing Date and addressed to the Community Facilities District and to the Underwriter, to the effect that, without having undertaken to determine independently the accuracy or completeness of the statements contained in the Official Statement, but on the basis of their participation in conferences with representatives of the Community Facilities District, the Special Tax Consultant and others, and their examination of certain documents, nothing has come to their attention which has led them to believe that the Preliminary Official Statement as of its date and the date of this Purchase Agreement and the Official Statement as of its date and as of the Closing Date contained or contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except that no opinion or belief need be expressed as to any financial statements or other financial, statistical or engineering data or forecasts, numbers, charts, estimates, projections, assumptions, or expressions of opinion, any information about valuation, appraisals, absorption, archeological or environmental matters, or any information with respect to the City, or any information with respect to prior compliance by the Developer with continuing disclosure undertakings under the Rule or about DTC or the book-entry-only system); Item Number: 2.

15 8. A certificate dated the Closing Date and signed by an authorized representative of the Community Facilities District or an authorized designee, on behalf of the Community Facilities District to the effect that: (i) the representations and warranties made by the Community Facilities District contained herein are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date; (ii) to the best knowledge of such officer, no event has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purpose for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; and (iii) the Community Facilities District has complied with all the agreements and satisfied all the conditions on its part to be satisfied under this Purchase Agreement, the Community Facilities District Resolutions, and the Community Facilities District Documents at or prior to the Closing Date;

9. An opinion of the City Attorney dated the date of Closing and addressed to the Underwriter and the City, to the effect that:
(i) The City is a municipal corporation and general law city, duly organized and existing under the Constitution and laws of the State of California; (ii) The Community Facilities District Resolutions have been duly adopted at meetings of the City Council, which were called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the Community Facilities District Resolutions are in full force and effect and have not been modified, amended, rescinded or repealed since the respective dates of their adoption; (iii) The Community Facilities District Documents and the Official Statement have been duly authorized, executed and delivered by the City and the Community Facilities District Documents constitute the legal, valid and binding obligations of the Community Facilities District enforceable against the Community Facilities District in accordance with their terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights, to the application of equitable principles where equitable remedies are sought and to the exercise of judicial discretion in appropriate cases; (iv) Except as may be stated in the Official Statement, there is no action, suit, proceeding or investigation before or by any court, public board or body pending (notice of which has been served on the City or the Community Facilities District) or, to such counsel’s knowledge, threatened wherein an unfavorable decision, ruling or finding would: (a) affect the creation, organization, existence or powers of the City, or the titles of its members and officers to their respective offices; or (b) affect the validity of the Community Facilities District Documents or restrain or enjoin the repayment of the Bonds or in any way contest or affect the validity of the Community Facilities District Documents or contest the authority of the Community Facilities District to enter into or perform its obligations under any of the Community Facilities District Documents, questions the right of the Community Facilities District to use Special Taxes levied within the Improvement Area for the repayment of the Bonds or affects in any manner the right or ability of the Community Facilities District to collect the Special Taxes or pledge the Net Taxes levied within the Improvement Area for the repayment of the Bonds;

10. A certificate dated the Closing Date from Integra Realty Resources (the “Appraiser”) to the effect that: (i) the statements in the Official Statement provided by the Item Number: 2.

16 Appraiser and all information supplied by it for use in the Official Statement were as of the date of the Official Statement and are as of the Closing Date true and correct, and do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading and (ii) no events or occurrences have been ascertained by the Appraiser or have come to the Appraiser’s attention since April 1, 2026 that would materially change the opinion set forth in the Appraisal;

11. A certificate dated the Closing Date from Webb Municipal Finance, LLC (the “Special Tax Consultant”) to the effect that: (i) the Special Tax if collected in the maximum amounts permitted pursuant to the Rate and Method of Apportionment of Special Taxes of the Improvement Area as of the Closing Date would generate at least 110% of the annual debt service payable with respect to the Bonds plus the Administrative Expenses Cap in each year, based on such assumptions and qualifications as shall be acceptable to the Underwriter; and (ii) the statements in the Official Statement provided by the Special Tax Consultant concerning Special Taxes in the Improvement Area and all information supplied by it for use in the Official Statement were as of the date of the Official Statement and are as of the Closing Date true and correct, and do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;

12. Certified copies of the general resolution of the Trustee authorizing the execution and delivery of certain documents by certain officers of the Trustee, which resolution authorizes the execution of the Indenture and the authentication of the Bonds;

13. A certificate of the Trustee, dated the Closing Date, to the effect that:
(i) the Trustee is authorized to carry out corporate trust powers, and has full power and authority to perform its duties under the Indenture; (ii) the Trustee is duly authorized to execute and deliver the Indenture, to accept the obligations created by the Indenture and to authenticate the Bonds pursuant to the terms of the Indenture; (iii) no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Trustee that has not been obtained is or will be required for the authentication of the Bonds or the consummation by the Trustee of the other transactions contemplated to be performed by the Trustee in connection with the authentication of the Bonds and the acceptance and performance of the obligations created by the Indenture; and (iv) to the best of its knowledge, compliance with the terms of the Indenture will not conflict with, or result in a violation or breach of, or constitute a default under, any loan agreement, indenture, bond, note, resolution or any other agreement or instrument to which the Trustee is a party or by which it is bound, or any law or any rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over the Trustee or any of its activities or properties;

14. An opinion of counsel to the Trustee dated the Closing Date, addressed to the Underwriter, and the Community Facilities District to the effect that the Trustee is a national banking association duly organized and validly existing under the laws of the United States having full power and being qualified to enter into, accept and agree to the provisions of the Indenture, and that such documents has been duly authorized, executed and delivered by the Trustee, and, assuming due execution and delivery by the other parties thereto, constitutes the legal, valid and binding obligation of the Trustee, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors’ rights in general and except as such enforceability may be limited by the application of equitable principles if equitable remedies are sought;
Item Number: 2.

17 15. A certificate of the Community Facilities District dated the Closing Date, in a form acceptable to Bond Counsel and the Underwriter, that the Bonds are not arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended;

16. An opinion of counsel to the Developer, dated the date of the Closing, addressed to the Underwriter and the Community Facilities District, in form and substance acceptable to the Underwriter and Bond Counsel;

17. A Letter of Representations from the Developer, dated the date of the Preliminary Official Statement, substantially in the form attached hereto as Exhibit B;

18. A Closing Certificate of the Developer, dated the date of the Closing, substantially in the form attached as Exhibit C hereto or as such Closing Certificate may be modified with the approval of the Underwriter and Disclosure Counsel;

19. The Continuing Disclosure Certificate executed and delivered by the Developer in substantially the form attached as Appendix G to the Official Statement;

20. An opinion of Kutak Rock LLP, counsel to the Underwriter (“Underwriter’s Counsel”), dated the date of Closing and addressed to the Underwriter in form and substance acceptable to the Underwriter; and

21. Such additional legal opinions, certificates, instruments and other documents as the Underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the Closing Date, of the material representations and warranties of the Community Facilities District contained herein, and of the statements and information contained in the Official Statement and the due performance or satisfaction by the Community Facilities District at or prior to the Closing of all agreements then to be performed and all conditions then to be satisfied by the Community Facilities District in connection with the transactions contemplated hereby and by the Indenture and the Official Statement.

If the Community Facilities District shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds contained in this Purchase Agreement, or if the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds shall be terminated for any reason permitted by this Purchase Agreement, this Purchase Agreement shall terminate and neither the Community Facilities District nor the Underwriter shall be under any further obligation hereunder, except that the respective obligations of the Underwriter and the Community Facilities District set forth in Section 5 hereof shall continue in full force and effect.

5. Expenses. Whether or not the transactions contemplated by this Purchase Agreement are consummated, the Underwriter shall be under no obligation to pay, and the Community Facilities District shall pay only from the proceeds of the Bonds, or any other legally available funds of the City, or the Community Facilities District, but only as the Community Facilities District and such other party providing such services may agree, all expenses and costs of the Community Facilities District incident to the performance of its obligations in connection with the authorization, execution, sale and delivery of the Bonds to the Underwriter, including, without limitation, printing costs, rating agency fees and charges, initial fees of the Trustee, including fees and disbursements of its counsel, if any, fees and disbursements of Bond Counsel, Disclosure Counsel and other professional advisors employed by the City, costs of preparation, printing, signing, transportation, delivery and safekeeping Item Number: 2.

18 of the Bonds and for expenses (included in the expense component of the Underwriter’s discount) incurred by the Underwriter on behalf of the City’s employees which are incidental to implementing this Purchase Agreement, including, but not limited to, meals, transportation, lodging, and entertainment of those employees. The Underwriter shall pay all out-of-pocket expenses of the Underwriter, including, without limitation, advertising expenses, the California Debt and Investment Advisory Commission fee, CUSIP Services Bureau charges, regulatory fees imposed on new securities issuers and any and all other expenses incurred by the Underwriter in connection with the public offering and distribution of the Bonds, including fees and disbursements of Underwriter’s Counsel. Any meals in connection with or adjacent to meetings, rating agency presentations, pricing activities or other transaction-related activities shall be considered an expense of the transaction and included in the expense component of the Underwriter’s discount.

6. Notices. Any notice of other communication to be given to the Community Facilities District or the City under this Purchase Agreement may be given by delivering the same in writing to the City of Desert Hot Springs, 11999 Palm Drive, Desert Hot Springs, California 92240, Attention:

City Manager; any notice or other communication to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in writing to Stifel, Nicolaus & Company, Incorporated, 2121 Avenue of the Stars, Suite 2150, Los Angeles, California 90067, Attention: Public Finance Department.

7. Parties In Interest. This Purchase Agreement is made solely for the benefit of the Community Facilities District and Underwriter (including any successors or assignees of the Underwriter) and no other person shall acquire or have any right hereunder or by virtue hereof.

8. Survival of Representations and Warranties. The representations and warranties of the Community Facilities District under this Purchase Agreement shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing and regardless of any investigations made by or on behalf of the Underwriter (or statements as to the results of such investigations) concerning such representations and statements of the Community Facilities District and regardless of delivery of and payment for the Bonds.

9. Execution in Counterparts. This Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

10. No Prior Agreements. This Purchase Agreement supersedes and replaces all prior negotiations, agreements and understanding among the parties hereto in relation to the sale of the Bonds by the Community Facilities District.

11. Governing Law. This Purchase Agreement shall be governed by the laws of the State of California.

Item Number: 2.

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12. Effective Date. This Purchase Agreement shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the Community Facilities District and shall be valid and enforceable as of the time of such acceptance.

Very truly yours,

STIFEL, NICOLAUS & COMPANY,

INCORPORATED
By:

Its: Authorized Officer
The foregoing is hereby agreed to and accepted as of the date first above written:

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

THE CITY OF DESERT HOT SPRINGS
By:

Authorized Officer
Time of Execution: _____________ California time
Item Number: 2.

A-1

EXHIBIT A
COMMUNITY FACILITIES DISTRICT NO. 2025-1
(SKYBORNE VILLAGE) OF THE CITY OF DESERT HOT SPRINGS
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2026

MATURITY SCHEDULE
Maturity
(September 1)
Principal
Amount
Interest
Rate Yield Price
10% Test
Satisfied*
10% Test
Not
Satisfied
Subject to
Hold-TheOfferingPrice Rule
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
20__(T)
20__(T)
_________________
(T) Term Bond.
(C) Priced to optional call at [par] on September 1, 20___. * At the time of execution of this Purchase Agreement and assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement.

Item Number: 2.

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EXHIBIT B
COMMUNITY FACILITIES DISTRICT NO. 2025-1
(SKYBORNE VILLAGE) OF THE CITY OF DESERT HOT SPRINGS
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2026

LETTER OF REPRESENTATIONS OF LENNAR HOMES OF CALIFORNIA, LLC [POS Date]
City of Desert Hot Springs
Community Facilities District No. 2025-1 (Skyborne Village) of the City of Desert Hot Springs
11999 Palm Drive
Desert Hot Springs, CA 92240
Stifel, Nicolaus & Company, Incorporated
2121 Avenue of the Stars, Suite 2150
Los Angeles, California 90067
Ladies and Gentlemen:

The undersigned certifies and represents that he or she is duly authorized on behalf of Lennar Homes of California, LLC, a California limited liability company (the “Developer”), to execute and deliver this Letter of Representations of Lennar Homes of California, LLC (this “Letter of Representations”) in connection with the issuance, sale and delivery by Community Facilities District No. 2025-1 (Skyborne Village) of the City of Desert Hot Springs (the “Community Facilities District”) of the Bonds captioned above (the “Bonds”).

Capitalized terms used but not defined in this Letter of Representations have the same meanings as are set forth in the Bond Purchase Agreement with respect to the Bonds between Stifel, Nicolaus & Company, Incorporated, as underwriter (the “Underwriter”), and the Community Facilities District (the “Bond Purchase Agreement”).

This Letter of Representations is delivered pursuant to and in satisfaction of Section 4(F)(17) of the Bond Purchase Agreement.

As used in this Letter of Representations, the phrase “Actual Knowledge of the Undersigned” means, as of the date of this Letter of Representations, the actual (as opposed to constructive) knowledge that the undersigned currently has or has obtained through (i) interviews with such current officers and responsible employees of the Developer as the undersigned has reasonably determined are likely, in the ordinary course of their respective duties, to have knowledge of the matters set forth in this Letter of Representations, and/or (ii) review of documents reasonably available to the undersigned and which the undersigned reasonably deemed necessary for the undersigned to obtain knowledge of the matters set forth in this Letter of Representations. The Item Number: 2.

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undersigned has not conducted any extraordinary inspection or inquiry other than such inspections or inquiries as are prudent and customary in connection with the ordinary course of the Developer’s current business and operations. The undersigned has not contacted individuals who are no longer employed by the Developer or its Affiliates.

As used in this Letter of Representations, the term “Affiliate” of the Developer means any other Person (i) who presently directly, or indirectly through one or more intermediaries, is currently controlling, controlled by or under common control with the Developer, and (ii) for whom information, including financial information or operating data concerning such Person is material to potential investors in their evaluation of the Community Facilities District and investment decision regarding the Bonds (i.e., information regarding such Person’s assets or funds that would materially affect the Developer’s ability to develop the Property as described in the Preliminary Official Statement or to pay its Special Tax (as defined herein) on the portion of the Property then owned by, or under option to, the Developer (to the extent the responsibility of the Developer) prior to delinquency). “Person” means an individual, a corporation, a partnership, a limited liability company, an association, a joint stock company, a trust, any unincorporated organization, or a government or political subdivision thereof. For purposes hereof, the term “control” (including the terms “controlling,” “controlled by,” or “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise. In addition, AG EHC II (LEN) CA 2, L.P., a Delaware limited partnership (“AG EHC II”), the land bank under an option agreement (the “Option Agreement”) with the Developer, is not an Affiliate of the Developer.

As used in this Letter of Representations, the term “Property” means the property currently owned by, or under option to, the Developer within Improvement Area No. 1 of the Community Facilities District, as further described in the Preliminary Official Statement.

The undersigned certifies that he or she is familiar with the facts herein certified and is authorized and qualified to certify the same as an authorized officer or representative of the Developer, and the undersigned, on behalf of the Developer, further certifies as follows:

1. The Developer is duly organized and validly existing under the laws of the State of California and in good standing under the laws of the State of California, and has all requisite limited liability company right, power, and authority: (i) to execute and deliver this Letter of Representations; (ii) to execute and deliver the Continuing Disclosure Certificate (Lennar Homes of California, LLC) to be executed by the Developer (the “Continuing Disclosure Certificate”); and (iii) to undertake all of the transactions on its part described in the Preliminary Official Statement.

2. As set forth in the Preliminary Official Statement, title to the Property within Improvement Area No. 1 of the Community Facilities District is held in the name of the Developer and AG EHC II (the land bank under the Option Agreement with the Developer). The undersigned, on behalf of the Developer, makes the representations herein with respect to all such Property. Except as otherwise described in the Preliminary Official Statement (including, but not limited to, the discussion of the Option Agreement and the land bank arrangement with AG EHC II), the Developer is and the Developer’s current expectations are that the Developer shall remain the party responsible for the development of the Property. The Developer has not entered into an agreement for development or management of the Property by any other entity, Item Number: 2.

B-3
except such subcontracts, consultant agreements, and similar agreements for land development activities associated with the Developer’s development plan as are entered into in the ordinary course of business.

3. Except as set forth in the Preliminary Official Statement, no action, suit, proceeding, inquiry, or investigation at law or in equity, before or by any court, regulatory agency, or public board, or body is pending against the Developer (with proper service of process to the Developer having been accomplished) or, to the Actual Knowledge of the Undersigned, is pending against any current Affiliate (with proper service of process to such Affiliate having been accomplished) or to the Actual Knowledge of the Undersigned is threatened in writing against the Developer or any such Affiliate (a) to restrain or enjoin the collection of Special Taxes or other sums pledged or to be pledged to pay the principal of and interest on the Bonds (e.g., a reserve account established under the Indenture), (b) to restrain or enjoin the development of the Property as described in the Preliminary Official Statement, (c) in any way contesting or affecting the validity of the Special Taxes, or (d) which, if successful, is reasonably likely to materially and adversely affect the Developer’s ability to develop and sell the Property as described in the Preliminary Official Statement or to pay the Special Taxes levied against the portion of the Property then owned by, or under option to, the Developer (to the extent the responsibility of the Developer) prior to delinquency or which challenges or questions the validity or enforceability of the Bonds or the Continuing Disclosure Certificate to be executed by the Developer in connection with the issuance of the Bonds.

4. As of the date of the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, the information contained therein solely with respect to the Developer, its Affiliates, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Affiliates (including, if material to the Developer’s development plan or the Developer’s financing plan, other loans of such Affiliates) as set forth under the sections of the Preliminary Official Statement captioned “INTRODUCTION – The District and Improvement Area No. 1” (third, fourth, and fifth paragraphs only), “THE DISTRICT AND IMPROVEMENT AREA NO. 1 – General Description of the District and Improvement Area No. 1” (third and fourth paragraphs only), “PROPERTY OWNERSHIP AND THE DEVELOPMENT” and “CONTINUING DISCLOSURE – Developer Continuing Disclosure” (excluding therefrom in all cases information regarding the Appraisal Report (as defined herein), market value ratios and annual special tax ratios, and information which is identified as having been provided by a source other than the Developer), is true and correct in all material respects and did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

5. Except as described in the Preliminary Official Statement, there are no material loans outstanding and unpaid and no material lines of credit of the Developer or its Affiliates, that are secured by an interest in the Property. Neither the Developer nor, to the Actual Knowledge of the Undersigned, any of its Affiliates is currently in material default on any loans, lines of credit, or other obligation to repay borrowed money related to the development of the Property or any other project which default is reasonably likely to materially and adversely affect the Developer’s ability to develop the Property as described in the Preliminary Official Statement or to pay the Special Taxes levied against the portion of the Property then owned by, or under option to, the Developer (to the extent the responsibility of the Developer) prior to delinquency.

Item Number: 2.

B-4

6. To the Actual Knowledge of the Undersigned, the Developer is not aware that any of the Property has a current liability with respect to the presence of a substance presently classified as hazardous under the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 or applicable California law or is adversely affected by the presence of endangered or threatened species or habitat for endangered or threatened species.

7. The Developer covenants that, while the Bonds or any refunding obligations related thereto are outstanding, the Developer and its Affiliates which it controls will not bring any action, suit, proceeding, inquiry, or investigation at law or in equity, before any court, regulatory agency, public board, or body, that in any way seeks to challenge or overturn the formation of the Community Facilities District, to challenge the adoption of the ordinance of the Community Facilities District levying Special Taxes within Improvement Area No. 1 of the Community Facilities District, to invalidate the Community Facilities District or any of the Bonds or any refunding bonds related thereto, or to invalidate the special tax liens imposed under Section 3115.5 of the Streets and Highways Code based on recordation of the notices of special tax lien relating thereto. The foregoing covenant shall not prevent the Developer and its Affiliates in any way from bringing any other action, proceeding, inquiry, or investigation at law or in equity, before any court, regulatory agency, public board, or body including, without limitation, (a) an action or suit contending that the Special Tax has not been levied in accordance with the methodologies contained in the Rate and Method of Apportionment of Special Taxes pursuant to which Special Taxes are levied, (b) an action or suit with respect to the application or use of the Special Taxes levied and collected, or (c) an action or suit to enforce the obligations of the City and/or the Community Facilities District under the Community Facilities District Resolution of Issuance, the Indenture, the Continuing Disclosure Certificate or any other agreements among the Developer or its Affiliates, the City and/or the Community Facilities District or to which the Developer or its Affiliates is a party or beneficiary.

8. The Developer consents to the issuance of the Bonds. The Developer expects that the proceeds of the Bonds will be used as described in the Preliminary Official Statement.

9. The Developer intends to comply with the provision of the Mello-Roos Community Facilities Act of 1982, as amended relating to the Notice of Special Tax described in Government Code Section 53341.5 in connection with the sale of the Property, or portions thereof.

10. To the Actual Knowledge of the Undersigned, the Developer is able to pay its bills as they become due and no legal proceedings are pending against the Developer (with proper service of process having been accomplished) or, to the Actual Knowledge of the Undersigned, threatened in writing in which the Developer may be adjudicated as bankrupt or discharged from any and all of its debts or obligations, or granted an extension of time to pay its debts or obligations, or be allowed to reorganize or readjust its debts, or be subject to control or supervision of the Federal Deposit Insurance Corporation.

11. To the Actual Knowledge of the Undersigned, Affiliates of the Developer are able to pay their bills as they become due and no legal proceedings are pending against any Affiliate of the Developer (with proper service of process having been accomplished) or to the Actual Knowledge of the Undersigned, threatened in writing in which the Affiliates of the Developer may be adjudicated as bankrupt or discharged from any or all of their debts or obligations, or granted an extension of time to pay their debt or obligations, or be allowed to reorganize or readjust their debts or obligations, or be subject to control or supervision of the Federal Deposit Item Number: 2.

B-5
Insurance Corporation, which is reasonably likely to materially and adversely affect the Developer’s ability to develop the Property as described in the Preliminary Official Statement or to pay the Special Taxes levied against the portion of the Property then owned by, or subject to an option in favor of, the Developer (to the extent the responsibility of the Developer) prior to delinquency.

12. The Developer has been developing or has been involved in the development of numerous projects over an extended period of time. It is likely that the Developer has been delinquent at one time or another in the payment of ad valorem property taxes, special taxes, or special assessments. However, to the Actual Knowledge of the Undersigned, during the last five years, neither the Developer nor any current Affiliate has, during the period of its ownership, been delinquent to any material extent in the payment of any ad valorem property tax, special assessment, or special tax on property in California owned by, or under option to, the Developer or any such Affiliate (during the period of their ownership and to the extent the responsibility of the Developer) included within the boundaries of a community facilities district or an assessment district in California that (a) caused a draw on a reserve fund relating to such assessment district or community facilities district financing or (b) resulted in a foreclosure action being commenced against the delinquent Developer or Affiliate by a court filing.

13. The Developer has not filed for the reassessment of the assessed value of portions of the Property, other than in connection with the sale of homes to individual homebuyers.

14. To the Actual Knowledge of the Undersigned, there are no claims, disputes, suits, actions or contingent liabilities by and among the Developer, its Affiliates, or any contractors working on the development of the Property which is reasonably likely to materially and adversely affect the Developer’s ability to develop the Property as described in the Preliminary Official Statement or to pay the Special Taxes levied against the portion of the Property then owned by, or under option to, the Developer (to the extent the responsibility of the Developer) prior to delinquency.

15. Based upon the current development plans, including, without limitation, the current budget and subject to economic conditions and risks generally inherent in the development of real property, including, but not limited to, the risks described in the Preliminary Official Statement under the section entitled “SPECIAL RISK FACTORS,” to the Actual Knowledge of the Undersigned, the Developer presently anticipates that it will have sufficient funds to complete the development of the Property as described in the Preliminary Official Statement and to pay the Special Taxes levied against the portion of the Property then owned by, or under option to, the Developer (to the extent the responsibility of the Developer) prior to delinquency and does not anticipate that the City or the Community Facilities District will be required to resort to a draw on the reserve account for payment of principal of or interest on the Bonds due to the Developer’s nonpayment of Special Taxes. However, neither the Developer nor any of its Affiliates are obligated to pay the Special Taxes or to make any additional capital contribution or loan to the Developer at any time, and the Developer reserves the right to change its respective development plan and financing plan for the Property at any time without notice, and there is no recourse against the Developer for the failure to pay the Special Taxes other than the filing of a foreclosure action.

16. An appraisal of the taxable properties within Improvement Area No. 1 of the Community Facilities District, dated ______, 2026 (the “Appraisal Report”), with a date of Item Number: 2.

B-6
value of April 1, 2026 (the “Date of Value”), was prepared by Integra Realty Resources (the “Appraiser”). The Appraisal Report estimates the market value of the appraised taxable properties within Improvement Area No. 1 of the Community Facilities District as of the Date of Value. To Actual Knowledge of the Undersigned, all information submitted by, or on behalf of and authorized by, the Developer to the Appraiser and contained in the sections of the Appraisal Report highlighted in yellow or circled in Exhibit A attached hereto, was true and correct in all material respects as of the Date of Value.

17. If between the date hereof and the Closing Date any event relating to or affecting the Developer, its Affiliates, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Affiliates (including, if material to the Developer’s development plan or the Developer’s financing plan, other loans of such Affiliates) shall occur of which the Developer has actual knowledge which would cause the information under the sections of the Preliminary Official Statement indicated in paragraph 4 hereof (and subject to the limitations and exclusions contained in paragraph 4 hereof), to contain an untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Developer shall notify the City, the Community Facilities District and the Underwriter and if in the opinion of counsel to the City or the Underwriter such event requires the preparation and publication of a supplement or amendment to the information described in the section of the Preliminary Official Statement referenced in paragraph 4 hereof (and subject to the limitations and exclusions contained in paragraph 4 hereof), the Developer shall reasonably cooperate with the City and the Community Facilities District in the preparation of an amendment or supplement to the Preliminary Official Statement in form and substance satisfactory to counsel to the City, the Community Facilities District and to the Underwriter.

18. The Developer agrees to deliver a Closing Certificate dated the date of issuance of the Bonds at the time of issuance of the Bonds in substantially the form attached as Exhibit C to the Bond Purchase Agreement.

19. On behalf of the Developer, the undersigned has reviewed the contents of this Letter of Representations and has consulted with counsel to the Developer regarding the meaning of its contents. The undersigned acknowledges and understands that a variety of state and federal securities laws, including but not limited to the Securities Act of 1933 and Rule 10b-5 promulgated under the Securities Exchange Act of 1934, may apply to the Developer and that under some circumstances certification as to the matters set forth in this Letter of Representations, without additional disclosures or other action, may not fully discharge all duties and obligations of the Developer under such securities laws.

The undersigned has executed this Letter of Representations solely in his or her capacity as an authorized officer or representative of the Developer and he or she will have no personal liability arising from or relating to this Letter of Representations. Any liability arising from or relating to this Letter of Representations may only be asserted against the Developer.

Item Number: 2.

B-7

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

Name:

Title:

Item Number: 2.

B-8

EXHIBIT A

EXCERPTS FROM THE APPRAISAL REPORT
(to be attached)
Item Number: 2.

C-1

EXHIBIT C
$___________
COMMUNITY FACILITIES DISTRICT NO. 2025-1
(SKYBORNE VILLAGE) OF THE CITY OF DESERT HOT SPRINGS
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2026

CLOSING CERTIFICATE OF

LENNAR HOMES OF CALIFORNIA, LLC
[Closing Date]
City of Desert Hot Springs
Community Facilities District No. 2025-1 (Skyborne Village) of the City of Desert Hot Springs
11999 Palm Drive
Desert Hot Springs, CA 92240
Stifel, Nicolaus & Company, Incorporated
2121 Avenue of the Stars, Suite 2150
Los Angeles, California 90067
Ladies and Gentlemen:

Reference is made to the above-captioned bonds (the “Bonds”) and to the Bond Purchase Agreement, dated [BPA Date] (the “Bond Purchase Agreement”), entered into in connection therewith. This Closing Certificate of Lennar Homes of California, LLC (the “Closing Certificate”) is delivered pursuant to and in satisfaction of Section 4(F)(18) of the Bond Purchase Agreement.

Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Letter of Representations of Lennar Homes of California, LLC (the “Letter of Representations”), dated [POS Date], delivered by Lennar Homes of California, LLC, a California limited liability company (the “Developer”).

The undersigned certifies that he or she is familiar with the facts herein certified and is authorized and qualified to certify the same as an authorized officer or representative of the Developer, and the undersigned, on behalf of the Developer, further certifies as follows:

1. The Developer has received the final Official Statement relating to the Bonds, dated [BPA Date] (the “Official Statement”). To the Actual Knowledge of the Undersigned, each statement, representation and warranty made in the Letter of Representations is true and correct in all material respects on and as of the date hereof with the same effect as if made on the date hereof, except that all references therein to the Preliminary Official Statement shall be deemed to be references to the final Official Statement.

Item Number: 2.

C-2

2. To the Actual Knowledge of the Undersigned, no event has occurred since the date of the Preliminary Official Statement affecting the statements and information described in paragraph 4 of the Letter of Representations (and subject to the limitations and exclusions contained in paragraph 4 of the Letter of Representations) relating to the Developer, its Affiliates, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Affiliates (including, if material to the Developer’s development plan or the Developer’s financing plan, other loans of such Affiliates), which should be disclosed in the Official Statement for the purposes for which it is to be used in order to make such statements and information contained in the Official Statement not misleading in any material respect.

3. For the period through 25 days after the “end of the underwriting period” as defined in the Bond Purchase Agreement to mean the Closing Date unless the Underwriter gives notice to the contrary, if any event relating to or affecting the Developer, its Affiliates, the proposed development of the Property, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Affiliates (including, if material to the Developer’s development plan or the Developer’s financing plan, other loans of such Affiliates) shall occur as a result of which it is necessary, in the opinion of the Underwriter or counsel to the City or the Community Facilities District, to amend or supplement the Official Statement in order to make the information under the sections of the Official Statement indicated in paragraph 4 of the Letter of Representations (and subject to the limitations and exclusions contained in paragraph 4 of the Letter of Representations) not misleading in the light of the circumstances under which they were made, the Developer shall reasonably cooperate with the City, the Community Facilities District and the Underwriter in the preparation and publication of a supplement or amendment to the information described in the section of the Official Statement referenced in paragraph 4 of the Letter of Representations (and subject to the limitations and exclusions contained in paragraph 4 of the Letter of Representations), in form and substance satisfactory to the Underwriter and counsel to the City and the Community Facilities District which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

4. The Developer has duly executed and delivered the Continuing Disclosure Certificate.

The undersigned has executed this Closing Certificate solely in his or her capacity as an authorized officer or representative of the Developer and he or she will have no personal liability arising from or relating to this Closing Certificate. Any liability arising from or relating to this Closing Certificate may only be asserted against the Developer.

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

Name:

Title:

Item Number: 2.

D-1

EXHIBIT D
$___________
COMMUNITY FACILITIES DISTRICT NO. 2025-1
(SKYBORNE VILLAGE) OF THE CITY OF DESERT HOT SPRINGS
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2026

FORM OF ISSUE PRICE CERTIFICATE
The undersigned, on behalf of Stifel, Nicolaus & Company, Incorporated (“Stifel”) hereby certifies as set forth below with respect to the sale and issuance of the above-captioned bonds (the “Bonds”).

1. Sale of the Bonds. As of the date of this certificate, for each Maturity of the Bonds, the first price at which at least 10% of such Maturity was sold to the Public is the respective price listed in Schedule A.

2. Defined Terms.
(a) Issuer means the Community Facilities District No. 2025-1 (Skyborne Village) of the City of Desert Hot Springs.
(b) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate maturities.
(c) Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter.

The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (d) Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).

The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Stifel’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder.

The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by Stradling Yocca Carlson & Rauth LLP in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form Item Number: 2.

D-2
8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.

STIFEL, NICOLAUS & COMPANY,

INCORPORATED
By:

Name:

By:

Name:

Dated: [Closing Date]
Item Number: 2.

D-3

SCHEDULE A

SALE PRICES
(To be attached)
Item Number: 2.

Integra Realty Resources
Los Angeles
Appraisal of Real Property
Skyborne (Village 3)
Residential Subdivision
Rainbow Ln.

Desert Hot Springs, Riverside County, California 92240
Prepared For:

City of Desert Hot Springs
Date of the Report:

May 4, 2026
Report Format:

Appraisal Report
IRR - Los Angeles
File Number: 219-2026-0045
Item Number: 2.

Subject Photographs
Skyborne (Village 3)
Rainbow Ln.

Desert Hot Springs, California
Item Number: 2.

Aerial Photograph
Item Number: 2.

Integra Realty Resources 12100 Wilshire Boulevard T 213.984.4425 Los Angeles Suite 800 www.irr.com
Los Angeles, CA 90025
May 4, 2026
Mr. Geoffrey Buchheim
Director
City of Desert Hot Springs
11999 Palm Dr
Desert Hot Springs, CA 92240
SUBJECT: Market Value Appraisal
Skyborne (Village 3)
Rainbow Ln.

Desert Hot Springs, Riverside County, California 92240
IRR - Los Angeles File No. 219-2026-0045
Dear Mr. Buchheim:

Integra Realty Resources – Los Angeles is pleased to submit the accompanying appraisal of the referenced property. The purpose of the appraisal is to develop an opinion of the market value, by ownership, as well as the aggregate, or cumulative market value, subject to a hypothetical condition, pertaining to the fee simple interest in the property. The client for the assignment is the City of Desert Hot Springs and the intended use of the report is for bond underwriting purposes.

The subject property represents all of the City of Desert Hot Springs Community Facilities District (CFD) No. 2025-1 (Improvement Area No. 1) ("CFD No. 2025-01 (IA1)"). At build-out, CFD No. 2025-1 (IA 1) will consist of 286 single family residential units. Sitework is almost complete and vertical construction is underway. The project has a recorded final map with 289 individual Assessor's Parcel Numbers and is located north of Promenade Drive, west of Karen Avenue, within the city of Desert Hot Springs, Riverside County, California. The lots are being marketed by Lennar Homes as the Ara and Nova product lines within the Skyborne specific plan. A more detailed legal and physical description of the subject property is contained within the attached report.

The appraisal conforms to the Uniform Standards of Professional Appraisal Practice (USPAP), the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute, and applicable state appraisal regulations. The Appraisal Report is also prepared in Item Number: 2.

Mr. Geoffrey Buchheim
City of Desert Hot Springs
May 4, 2026

accordance with the Appraisal Standards for Land Secured Financing published by the California Debt and Investment Advisory Commission (CDIAC) (2004).

Standards Rule 2-2 (Content of a Real Property Appraisal Report) contained in the Uniform Standards of Professional Appraisal Practice (USPAP) requires each written real property appraisal report to be prepared as either an Appraisal Report or a Restricted Appraisal Report. This report is prepared as an Appraisal Report as defined by USPAP under Standards Rule 2-2(a), and incorporates practical explanation of the data, reasoning, and analysis that were used to develop the opinion of value.

Based on the valuation analysis in the accompanying Appraisal Report, and subject to the hypothetical condition, definitions, assumptions, and limiting conditions expressed in the report, the concluded opinion of value, as of the date of value, April 1, 2026, is as follows:

Value ConclusionsValue Conclusions
Appraisal PremiseAppraisal Premise
No. of No. of
ParcelsParcels Value ConclusionValue Conclusion
Aggregate Value of Appraised PropertiesAggregate Value of Appraised Properties 281281 $65,343,000$65,343,000 Aggregate Value of Existing Homes based on Assessed ValueAggregate Value of Existing Homes based on Assessed Value 55 $2,108,122$2,108,122 Total Aggregate Value of Appraised and Assessed Properties in the DistrictTotal Aggregate Value of Appraised and Assessed Properties in the District 286286 $67,451,122$67,451,122 Extraordinary Assumptions and Hypothetical ConditionsExtraordinary Assumptions and Hypothetical ConditionsExtraordina NoneNoneNoneNone

1.1.The value derived herein is based on the hypothetical condition that proceeds financed by the CFD No. 2025-1 1.1. The value derived herein Revenue Bonds are available to reimburse the Developer for certain public improvements already completed.Revenue Bonds are availa The use of any extraordinary assumption or hypothetical condition may have affected the assignment results.The use of any extraordinary The value conclusions are based on the following hypothetical conditions. A hypothetical condition is a condition, The value conclusions a directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the directly related to a specific a effective date of the assignment results, but is used for the purpose of analysis.effective date of the assignment results, but is used for the p The value conclusions are subject to the following extraordinary assumptions. An extraordinary assumption is an The value conclusions a assignment-specific assumption as of the effective date regarding uncertain information used in an analysis which, assignment-specific as if found to be false, could alter the appraiser’s opinions or conclusions.if found to be false, could alter the appraiser’s opinions or conclu The opinions of value represent a "not-less-than" value due to the fact we were requested to provide a market value for the smallest floor plan in each community improved with a completed home without a complete assessed improvement value reflected on the County of Riverside Assessor's Tax Roll.

Please note the aggregate of the appraised values is not the market value of the appraised properties in bulk. As defined by The Dictionary of Real Estate Appraisal, an aggregate value is the "total of multiple market value conclusions." For purposes of this Appraisal Report, market value is estimated by ownership.

As a condition of this assignment, the Assessed Values for certain Assessor's Parcels with completed and sold homes with a complete Assessed Value for both Land and Item Number: 2.

Mr. Geoffrey Buchheim
City of Desert Hot Springs
May 4, 2026

Improvements is presented herein for illustration purposes only. As requested, these Assessor's Parcels are not appraised herein with a not-less-than market value; instead, the assigned County of Riverside Assessor's value will be relied upon for underwriting purposes.

If you have any questions or comments, please contact the undersigned. Thank you for the opportunity to be of service.

Respectfully submitted,
Integra Realty Resources - Los Angeles
Eric Segal, MAI
California Certified General Real Estate
Appraiser #AG026558
Telephone: 213.984.4425
Email: [email protected]
Noah Kauffman, MAI, R/W-AC
California Certified General Real Estate
Appraiser #3004618
Telephone: 916.302.2305
Email: [email protected]
Kari Tatton
California Certified General Real Estate
Appraiser #3002218
Telephone: 916.435.3883, ext. 229
Email: [email protected]
Item Number: 2.

Table of Contents
Skyborne (Village 3)
Executive Summary 1
Identification of the Appraisal Problem 2
Subject Description 2
Sale History 2
Pending Transactions 2
Appraisal Purpose 3
Value Type Definitions 3
Property Rights Definitions 3
Client and Intended User(s) 4
Intended Use 4
Applicable Requirements 4
Report Format 4
Prior Services 4
Appraiser Competency 5
Scope of Work 6
Economic Analysis 8
Riverside County Area Analysis 8
Transportation 14
Recreation & Culture 14
Surrounding Area Analysis 17
Residential Market Analysis 22
Property Analysis 28
Land Description and Analysis 28
Boundary Map 32
Site Plan 33
Parcel Maps 34
Aerial 35
Proposed Improvements Description 36
Real Estate Taxes 50
Highest and Best Use 51
Valuation 53
Valuation Methodology 53
Market Valuation – Floor Plans 54
Residential Lot Valuation 64
Extraction Analysis 64
Market Value by Ownership 71
Exposure Time 72
Marketing Time 72
Certification 73
Assumptions and Limiting Conditions 75
Addenda
A. Appraiser Qualifications
B. Definitions
C. Comparable Data
Land Sales
Item Number: 2.

Executive Summary 1
Skyborne (Village 3)
Executive Summary
Property Name
Address
Property Type
Owner of Record
Tax ID
Zoning Designation
Highest and Best Use
Exposure Time; Marketing Period 12 months; 12 months
Effective Date of the Appraisal April 1, 2026
Date of the Report May 4, 2026
Property Interest Appraised
Value Conclusion
Value Type & Appraisal Premise No. of Parcels Date of Value Value Conclusion Aggregate Value of Appraised Properties 281 April 1, 2026 $65,343,000 Aggregate Value of Existing Homes based on Assessed Value 5 April 1, 2026 $2,108,122 Total Aggregate Value of Appraised and Assessed Properties in the District 286 $67,451,122 R-L/SP, Residential Low Density (0-5 du/ac)/ Specific Plan (Skyborne) The values reported above are subject to the definitions, assumptions, and limiting conditions set forth in the accompanying report of which this summary is a part. No party other than City of Desert Hot Springs may use or rely on the information, opinions, and conclusions contained in the report. It is assumed that the users of the report have read the entire report, including all of the definitions, assumptions, and limiting conditions contained therein.

Single-family residential use
Fee Simple
Skyborne (Village 3)
Rainbow Ln.

Desert Hot Springs, Riverside County, California
Land - Finished SFR Lots
AG EHC II CA 2, Lennar Homes of California, LLC., and Individual Homeowners
667-300-001 to -054; 667-310-001 to -084; 667-320-001 to -026, 030 to -078, -081 to -083; 667-330-001 to -013, -016 to -072 Extraordinary Assumptions and Hypothetical ConditionsExtraordinary Assumptions and Hypothetical ConditionsExtraord NoneNoneNoneNone

1.1.The value derived herein is based on the hypothetical condition that proceeds financed by the CFD No. 2025-1 1.1. The value derived he Revenue Bonds are available to reimburse the Developer for certain public improvements already completed.Revenue Bonds are av The use of any extraordinary assumption or hypothetical condition may have affected the assignment results.The use of any extraordin The value conclusions are based on the following hypothetical conditions. A hypothetical condition is a condition, The value conclusio directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the directly related to a specif effective date of the assignment results, but is used for the purpose of analysis.effective date of the assignment results, but is used for The value conclusions are subject to the following extraordinary assumptions. An extraordinary assumption is an The value conclusio assignment-specific assumption as of the effective date regarding uncertain information used in an analysis which, assignment-specif if found to be false, could alter the appraiser’s opinions or conclusions.if found to be false, could alter the appraiser’s opinions or con Item Number: 2.

Subject Description 2
Skyborne (Village 3)
Identification of the Appraisal Problem
Subject Description
The subject property represents all of the City of Desert Hot Springs Community Facilities District (CFD) No. 2025-1 (Improvement Area No. 1) ("CFD No. 2025-01 (IA1)"). At build-out, CFD No. 2025-1 (IA 1) will consist of 286 single family residential units. Sitework is almost complete and vertical construction is underway. The project has a recorded final map with 289 individual Assessor's Parcel Numbers and is located north of Promenade Drive, west of Karen Avenue, within the city of Desert Hot Springs, Riverside County, California. The lots are being marketed by Lennar Homes as the Ara and Nova product lines within the Skyborne specific plan.

Property Identification
Property Name Skyborne (Village 3)
Address Rainbow Ln.

Desert Hot Springs, California 92240
Tax ID 667-300-001 to -054; 667-310-001 to -084; 667-320-001 to -026, 030 to -078, -081 to - 083; 667-330-001 to -013, -016 to -072
Owner of Record AG EHC II CA 2, Lennar Homes of California, LLC., and Individual Homeowners Sale History
To the best of our knowledge, no sale or transfer of ownership has taken place within a three-year period prior to the effective appraisal date and to the best of our knowledge the property is not currently being marketed for sale in bulk.

It’s worth noting, AG EHC II CA 2 is serving as the land bank for Lennar Homes of California, LLC, a California limited liability company (“Lennar Homes”). It is not uncommon for a merchant builder to use a land bank when acquiring lots. The land bank relationship allows a merchant builder the option to acquire lots over time pursuant to a takedown schedule. The takedown schedules give the merchant builder the option (but not the obligation) to acquire lots over a specified time period. This transfer of lots serves as a financing mechanism, which is relatively commonplace for transactions involving national homebuilders. These transactions are not considered arm’s length transfers of the subject lots, as defined; thus, a separate valuation per owner (merchant builder and land bank) is not warranted. For purposes of analysis herein, there is no delineation between Lennar Homes of California, LLC and AG EHC II CA 2 in the determination of market value, subject to a hypothetical condition.

Note the sale history of the completed homes to individuals is not presented, but each sale is believed to be consistent with the market at the time of the respective sale.

Pending Transactions
Based on discussions with the appropriate contacts, the property is not subject to an agreement of sale or an option to buy, nor is it listed for sale, as of the effective appraisal date. However, some Item Number: 2.

Appraisal Purpose 3
Skyborne (Village 3)
individual homes that are under construction are in contract from homebuilders to individual homeowners.

Appraisal Purpose
The purpose of this Appraisal Report is to estimate the market value (fee simple estate), by ownership, and the aggregate value of the appraised properties comprising City of Desert Hot Springs CFD No. 2025-1 (IA 1), subject to the hypothetical condition certain proceeds from the Special Tax Bonds will be available to reimburse the master developer for certain public improvements already completed, as of the effective date of the appraisal, April 1, 2026. The date of the report is May 4, 2026. The appraisal is valid only as of the stated effective date. The home values are based on a “not-less-than” value for the smallest floor plan, without consideration for upgrades and lot premiums. Further, the contributory value of unfinished homes is not considered herein; rather, the value of permits and impact fees paid for lots with either construction underway or not yet begun is reflected int he valuation.

Value Type Definitions
The definitions of the value types applicable to this assignment are summarized below.

Market Value
The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

1. Buyer and seller are typically motivated;

2. Both parties are well informed or well advised, and acting in what they consider their own best interests;

3. A reasonable time is allowed for exposure in the open market;

4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and

5. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. 1 Assessed Value
The value of a property according to the tax rolls in ad valorem taxation; may be higher or lower than market value, or based on an assessment ratio that is a percentage of market value. 2 Property Rights Definitions
The property rights appraised which are applicable to this assignment are defined as follows. 1 Code of Federal Regulations, Title 12, Chapter I, Part 34.42[h]; also, Interagency Appraisal and Evaluation Guidelines, Federal Register, 75 FR 77449, December 10, 2010, page 77472 2 Appraisal Institute, The Dictionary of Real Estate Appraisal, 7th ed. (Chicago: Appraisal Institute, 2022) Item Number: 2.

Client and Intended User(s) 4
Skyborne (Village 3)
Fee Simple Estate
Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.3 Client and Intended User(s)
The client and intended user is the City of Desert Hot Springs. No party or parties beyond the clients and The Finance Team with this proposed issuance may use or rely on the information, opinions, and conclusions contained in this report; however, this appraisal report may be included in the offering document provided in connection with the issuance and sale of the Bonds.

Intended Use
The intended use of the appraisal is for bond underwriting purposes. The appraisal is not intended for any other use.

Applicable Requirements
This appraisal report conforms to the following requirements and regulations:
• Uniform Standards of Professional Appraisal Practice (USPAP); • Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute; • Applicable state appraisal regulations;
• Interagency Appraisal and Evaluation Guidelines issued December 10, 2010; • Appraisal Standards for Land Secured Financing published by the California Debt and Investment Advisory Commission (CDIAC) (2004).

Report Format
Standards Rule 2-2 (Content of a Real Property Appraisal Report) contained in the Uniform Standards of Professional Appraisal Practice (USPAP) requires each written real property appraisal report to be prepared as either an Appraisal Report or a Restricted Appraisal Report. This report is prepared as an Appraisal Report as defined by USPAP under Standards Rule 2-2(a), and incorporates practical explanation of the data, reasoning, and analysis used to develop the opinion of value.

Prior Services
USPAP requires appraisers to disclose to the client any other services they have provided in connection with the subject property in the prior three years, including valuation, consulting, property management, brokerage, or any other services. We have performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding the agreement to perform this assignment. 3 Appraisal Institute, The Dictionary of Real Estate Appraisal, 7th ed. (Chicago: Appraisal Institute, 2022) Item Number: 2.

Appraiser Competency 5
Skyborne (Village 3)
Appraiser Competency
No steps were necessary to meet the competency provisions established under USPAP. The assignment participants have appraised several properties similar to the subject in physical, locational, and economic characteristics, and are familiar with market conditions and trends; therefore, appraiser competency provisions are satisfied for this assignment. Appraiser qualifications and state credentials are included in the addenda of this report.

Item Number: 2.

Appraiser Competency 6
Skyborne (Village 3)
Scope of Work
Introduction
The appraisal development and reporting processes require gathering and analyzing information about the assignment elements necessary to properly identify the appraisal problem. The scope of work decision includes the research and analyses necessary to develop credible assignment results, given the intended use of the appraisal. Sufficient information includes disclosure of research and analyses performed and might also include disclosure of research and analyses not performed.

To determine the appropriate scope of work for the assignment, the intended use of the appraisal, the needs of the user, the complexity of the property, and other pertinent factors were considered. The concluded scope of work is described below.

Research and Analysis
The type and extent of the research and analysis conducted are detailed in individual sections of the report. Although effort has been made to confirm the arms-length nature of each sale with a party to the transaction, it is sometimes necessary to rely on secondary verification from sources deemed reliable.

Subject Property Data Sources
The legal and physical features of the subject property, including size of the site, flood plain data, seismic zone designation, property zoning, existing easements and encumbrances, access and exposure, and condition of the improvements (as applicable) were confirmed and analyzed.

Inspection
Details regarding the property inspection conducted as part of this appraisal assignment are summarized as follows:

Property Inspection
Party Inspection Type Inspection Date
Eric Segal, MAI On-site April 8, 2026
Noah Kauffman, MAI, R/W-AC None N/A
Kari Tatton None N/A
Valuation Methodology
Three approaches to value are typically considered when developing a market value opinion for real property. These are the cost approach, the sales comparison approach, and the income capitalization approach. Use of the approaches in this assignment is summarized as follows:

Item Number: 2.

Appraiser Competency 7
Skyborne (Village 3)
Approaches to ValueApproaches to Value
ApproachApproach Applicability to SubjectApplicability to Subject Use in AssignmentUse in Assignment Cost ApproachCost Approach Not ApplicableNot Applicable Not UtilizedNot Utilized Sales Comparison ApproachSales Comparison Approach ApplicableApplicable UtilizedUtilized Income Capitalization ApproachIncome Capitalization Approach Not ApplicableNot Applicable Not UtilizedNot Utilized Approaches to ValueApproaches to Value
ApproachApproach Applicability to SubjectApplicability to Subject Use in AssignmentUse in Assignment Cost ApproachCost Approach Not ApplicableNot Applicable Not UtilizedNot Utilized Sales Comparison ApproachSales Comparison Approach ApplicableApplicable UtilizedUtilized Income Capitalization ApproachIncome Capitalization Approach Not ApplicableNot Applicable Not UtilizedNot Utilized Approaches to ValueApproaches to Value
ApproachApproach Applicability to SubjectApplicability to Subject Use in AssignmentUse in Assignment Cost ApproachCost Approach Not ApplicableNot Applicable Not UtilizedNot Utilized Sales Comparison ApproachSales Comparison Approach ApplicableApplicable UtilizedUtilized Income Capitalization ApproachIncome Capitalization Approach Not ApplicableNot Applicable Not UtilizedNot Utilized Approaches to ValueApproaches to Value
ApproachApproach Applicability to SubjectApplicability to Subject Use in AssignmentUse in Assignment Cost ApproachCost Approach Not ApplicableNot Applicable Not UtilizedNot Utilized Sales Comparison ApproachSales Comparison Approach ApplicableApplicable UtilizedUtilized Income Capitalization ApproachIncome Capitalization Approach Not ApplicableNot Applicable Not UtilizedNot Utilized The valuation began by employing the sales comparison approach to estimate the not-less-than market value for the completed single-family homes, based on the smallest floor plan within each community.

Then, the extraction technique was utilized to estimate the market value of the 99 single-family residential lots and 62 lots with homes under construction. The subject consists of 286 residential improved lots and homes under construction. Given the amount of demand for homes at the subject, it is anticipated the remaining homes under construction and improved lots could absorb within 12 months and no discounting would be necessary. Therefore, as a check of reasonableness, we have arrayed a number of bulk lot sales in the subject’s market area.

As a condition of this assignment, the Assessed Values for certain Assessor's Parcels with completed and sold homes with a complete Assessed Value for both Land and Improvements is presented herein for illustration purposes only. As requested, these Assessor's Parcels are not appraised herein with a not-less-than market value; instead, the assigned County of Riverside Assessor's value will be relied upon for underwriting purposes.

This appraisal will utilize the term “improved lot” to denote a residential lot that has all off-sites and on-sites in place, and includes any impact fees due up until building permit. Building permits and fees due at building permit are excluded for finished lot. Terminology for this type of improved lot can vary by market area, and is sometimes referred to as a “loaded lot”.

The market value estimates for the various taxable land use components described above were then assigned to the various assessor’s parcels comprising the appraised properties in order to derive the cumulative, or aggregate, value of the CFD. Our analysis excluded a typical cost approach since the subject property represents land. However, costs associated with home construction were taken into consideration as part of the land residual analysis and determination of financial feasibility. Given the limited, if any, income producing potential of the land, an income approach was not utilized.

Item Number: 2.

Riverside County Area Analysis 8
Skyborne (Village 3)
Economic Analysis
Riverside County Area Analysis
Riverside County is located in Southern California’s Inland Empire region and represents one of the fastest-growing counties in the state. It is 7,209 square miles in size and has a population density of 352 persons per square mile. The area is characterized by a diverse economy driven by logistics, warehousing, manufacturing, healthcare, education, and tourism, with strong connections to neighboring Los Angeles, Orange, and San Diego counties. Riverside County benefits from its strategic location along major transportation corridors, including Interstates 10, 15, and 215, as well as proximity to regional rail lines and international airports. Community amenities include numerous parks, recreational areas, higher education institutions, and regional attractions such as the Coachella Valley, wine country, and resort destinations. Continued population growth, relatively affordable housing compared to coastal markets, and an expanding industrial base have contributed to increased demand across residential, commercial, and industrial real estate sectors.

Population
Riverside County has an estimated 2026 population of 2,540,505, which represents an average annual

0.8% increase over the 2020 census of 2,418,185. Riverside County added an average of 20,387 residents per year over the 2020-2026 period, and its annual growth rate contrasts with The California,which had little to no change in population over this time.

Looking forward, Riverside County's population is projected to increase at a 0.5% annual rate from 2026-2031, equivalent to the addition of an average of 11,986 residents per year. Riverside County's population growth differs from California, which is projected to have little or no change in population during this time.

Employment
Total employment in Riverside County was estimated at 842,613 jobs at year-end 2024. Between yearend 2014 and 2024, employment rose by 200,876 jobs, equivalent to a 31.3% increase over the entire period. There were gains in employment in nine out of the past ten years. Riverside County's rate of employment growth over the last decade surpassed that of California, which experienced an increase in employment of 13.4% or 2,156,518 jobs over this period.

Population Compound Ann. % Chng
2020 Census 2026 Estimate 2031 Projection 2020 - 2026 2026 - 2031 Riverside County 2,418,185 2,540,505 2,600,434 0.8% 0.5% California 39,538,223 39,435,158 39,455,567 0.0% 0.0%
Source: Claritas SPOTLIGHT
Population Trends
Item Number: 2.

Riverside County Area Analysis 9
Skyborne (Village 3)
A comparison of unemployment rates is another way of gauging an area’s economic health. Over the past decade, the Riverside County unemployment rate has been generally higher than that of California, with an average unemployment rate of 6.1% in comparison to a 5.8% rate for California.

Recent data shows that the Riverside County unemployment rate is 6.1% in comparison to a 5.6% rate for California, a negative sign for the Riverside County economy but one that must be tempered by the fact that Riverside County has outperformed California in the rate of job growth over the past two years.

Employment Sectors
The composition of the Riverside County job market is depicted in the following chart, along with that of California. Total employment for both areas is broken down by major employment sector, and the sectors are ranked from largest to smallest based on the percentage of Riverside County jobs in each category.

Employment Trends
Total Employment (Year End) Unemployment Rate (Ann. Avg.) Year
Riverside
County
%
Change California
%
Change
Riverside
County California
2014 641,737 16,089,814 8.3% 7.6%
2015 680,905 6.1% 16,606,038 3.2% 6.7% 6.2%
2016 706,809 3.8% 16,930,563 2.0% 6.2% 5.5%
2017 732,428 3.6% 17,263,084 2.0% 5.4% 4.8%
2018 753,119 2.8% 17,573,378 1.8% 4.5% 4.3%
2019 781,240 3.7% 17,857,719 1.6% 4.3% 4.1%
2020 740,727 -5.2% 16,401,290 -8.2% 10.2% 10.2%
2021 791,327 6.8% 17,641,250 7.6% 7.4% 7.3%
2022 809,945 2.4% 18,066,913 2.4% 4.3% 4.3%
2023 826,900 2.1% 18,146,497 0.4% 4.8% 4.7%
2024 842,613 1.9% 18,246,332 0.6% 5.3% 5.3%
Overall Change 2014-2024 200,876 31.3% 2,156,518 13.4%
Avg Unemp. Rate 2014-2024 6.1% 5.8%
Unemployment Rate - September 2025 6.1% 5.6%
Source: U.S. Bureau of Labor Statistics and Moody's Analytics. Employment figures are from the Quarterly Census of Employment and Wages (QCEW).

Unemployment rates are from the Current Population Survey (CPS). The figures are not seasonally adjusted.

Item Number: 2.

Riverside County Area Analysis 10
Skyborne (Village 3)
Riverside County has greater concentrations than California in the following employment sectors:

1. Trade; Transportation; and Utilities, representing 24.6% of the Riverside County payroll employment compared to 17.3% for California as a whole. This sector includes jobs in retail trade, wholesale trade, trucking, warehousing, and electric, gas, and water utilities.

2. Construction, representing 8.5% of the Riverside County payroll employment compared to 4.9% for California as a whole. This sector includes construction of buildings, roads, and utility systems.

Riverside County is underrepresented in the following sectors:

1. Professional and Business Services, representing 9.2% of the Riverside County payroll employment compared to 15.3% for California as a whole. This sector includes legal, accounting, and engineering firms, as well as management of holding companies.

Employment Sectors - 2024

24.6%

17.6%

15.0%

12.6%

9.2%

8.5%

5.2%

2.8%

2.5%

1.4%

0.7%

17.3%

17.8%

14.6%

11.0%

15.3%

4.9%

6.7%

3.1%

4.4%

1.9%

2.9%
0% 5% 10% 15% 20% 25% 30%
Trade; Transportation; and Utilities
Education and Health Services
Government
Leisure and Hospitality
Professional and Business Services
Construction
Manufacturing
Other Services
Financial Activities
Natural Resources & Mining
Information
Riverside County California
Source: U.S. Bureau of Labor Statistics and Moody's Analytics Item Number: 2.

Riverside County Area Analysis 11
Skyborne (Village 3)
Major Employers
Major employers in Riverside County are shown in the following table.

Gross Domestic Product
Gross Domestic Product (GDP) is a measure of economic activity based on the total value of goods and services produced in a defined geographic area, and annual changes in Gross Domestic Product (GDP) are a gauge of economic growth.

Economic growth, as measured by annual changes in GDP, has been somewhat lower in Riverside County than California overall during the past decade. Riverside County has grown at a 3.0% average annual rate while the State of California has grown at a 3.3% rate. Riverside County continues to underperform California. GDP for Riverside County rose by 1.4% in 2023 while California's GDP rose by

2.0%.

Riverside County has a per capita GDP of $39,496, which is 52% less than California's GDP of $82,877.

This means that Riverside County industries and employers are adding relatively less value to the economy than their counterparts in California.

Name Number of Employees
1 County of Riverside 25,345
2 Amazon 14,317
3 State of California 8,398
4 Wal-Mart 7,523
5 Riverside Unified School District 6,562
6 Moreno Valley Unified School District 6,306
7 Kaiser Permanente Riverside Medical Center 5,817
8 Stater Brothers Market 5,145
9 University of California, Riverside 5,137
10 Eisenhower Medical Center 4,971
Major Employers - Riverside County
Source: County of Riverside Annual Comprehensive Financial Report, Fiscal Year Ended June 30, 2025 Item Number: 2.

Riverside County Area Analysis 12
Skyborne (Village 3)
Household Income
Riverside County has a lower level of household income than California. Median household income for Riverside County is $99,433, which is 5.6% less than the corresponding figure for California.

The following chart shows the distribution of households across twelve income levels. Riverside County has a greater concentration of households in the middle income levels than California.

Specifically, 45% of Riverside County households are between the $50,000 - $150,000 levels in household income as compared to 41% of California households. A lesser concentration of households is apparent in the higher income levels, as 30% of Riverside County households are at the $150,000 or greater levels in household income versus 34% of California households.

Gross Domestic Product
Year
($,000s)
Riverside County % Change
($,000s)
California % Change
2013 73,802,348 – 2,340,335,300 –
2014 76,101,228 3.1% 2,428,675,700 3.8%
2015 79,908,186 5.0% 2,545,979,500 4.8%
2016 81,899,120 2.5% 2,623,711,700 3.1%
2017 84,070,198 2.7% 2,740,550,300 4.5%
2018 87,407,109 4.0% 2,850,970,300 4.0%
2019 90,816,468 3.9% 2,969,609,000 4.2%
2020 89,428,650 -1.5% 2,933,320,200 -1.2%
2021 95,104,339 6.3% 3,154,188,600 7.5%
2022 97,560,909 2.6% 3,184,007,800 0.9%
2023 98,880,553 1.4% 3,248,656,600 2.0%
Compound % Chg (2013-2023) 3.0% 3.3%
GDP Per Capita 2023 $39,496 $82,877
Source: U.S. Bureau of Economic Analysis (BEA) and Moody's Analytics; data released December 2024.

The release of state and local GDP data has a longer lag time than national data. The data represents inflation-adjusted "real" GDP stated in 2017 dollars.

Median
Riverside County $99,433
California $105,377
Comparison of Riverside County to California - 5.6%
Source: Claritas SPOTLIGHT
Median Household Income - 2026
Item Number: 2.

Riverside County Area Analysis 13
Skyborne (Village 3)
Education Levels
Residents of Riverside County have a lower level of educational attainment than those of California.

An estimated 26% of Riverside County residents are college graduates with four-year degrees, versus 37% of California residents.

Household Income Distribution - 2026

7.0%

4.8%

4.9%

7.7%

12.2%

11.2%

9.8%

8.2%

11.1%

6.8%

8.5%

7.8%

6.3%

4.8%

5.2%

8.4%

13.0%

12.5%

10.9%

9.1%

11.9%

6.9%

7.0%

4.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0%
Less than $15,000
$15,000 - $24,999
$25,000 - $34,999
$35,000 - $49,999
$50,000 - $74,999
$75,000 - $99,999
$100,000 - $124,999
$125,000 - $149,999
$150,000 - $199,999
$200,000 - $249,999
$250,000 - $499,999
$500,000 and more
Riverside County California
Source: Claritas SPOTLIGHT
Education Levels - 2026
Source: Claritas SPOTLIGHT
0%
20%
40%
60%
80%
100%
Riverside County California
26%
37%
Percent College Graduate
Item Number: 2.

Riverside County Area Analysis 14
Skyborne (Village 3)
Transportation
Access to and through Riverside County is provided by several major routes, including the 10, 15 and 215 Freeways, as well as State Routes 60, 62, 74, 79, 86, 91, 111 and 243. The 10 Freeway is the primary east-west connector while the 15 and 215 Freeways are the primary north-south routes. The 91 Freeway provides travel from the Inland Empire to Los Angeles County and Orange County, via the 55 Freeway.

The 10 Freeway is a major east-west route in Southern California, connecting the Pacific coast (Santa Monica) with the Arizona state line before traveling further east through the southern states and terminating in Jacksonville, Florida. The 10 Freeway links the coast of California, from the City of Santa Monica, Los Angeles and San Bernardino Counties, with Riverside County and the desert cities of the Coachella Valley.

As a primary north-south connector, the 15 Freeway connects the counties of San Bernardino, Riverside and San Diego. The route extends north through Nevada, Arizona, Utah, Idaho and Montana to the Canadian border. The 15 Freeway is a major thoroughfare for traffic between San Diego and the Inland Empire, as well as between Southern California and Las Vegas, Nevada. The 215 Freeway comprises approximately 55 miles of interstate highway in the Inland Empire, generally traveling parallel with the 15 Freeway. The southern terminus of the 215 is at the junction of the 15 Freeway in Murrieta in south Riverside County and travels through Perris before briefly merging with the 60 Freeway in Moreno Valley and continuing north from the 60 Freeway interchange to San Bernardino County and reconnecting with the 15 Freeway at Cajon. This interstate provides an alternative to the 15 Freeway for travel within Riverside and San Bernardino Counties.

Public transportation is provided by various agencies. Riverside Transit Agency serves the western third of Riverside County, SunLine Transit Agency serves Palm Springs and the Coachella Valley area, Palo Verde Valley Transit Agency serves Blythe near the Arizona border, Pass Transit serves the San Gorgonio Pass communities, and Corona Cruiser serves the community of Corona. In addition, Riverside County is also served by Greyhound buses and Amtrak passenger trains.

The county’s main airport is the Palm Springs International Airport. This two-runway airport is located about two miles east of downtown Palm Springs and is highly seasonal, with most flights operating during the winter.

Recreation & Culture
Riverside County offers innumerable recreational and cultural opportunities, including many public parks, schools, golf courses, museums and performing arts venues. Popular attractions include the Botanical Gardens at the University of California, Riverside; the historic Mission Inn in downtown Riverside; March Field Air Museum, an aviation museum near Moreno Valley and Riverside, adjacent to the March Air Reserve Base; Temecula Valley, a tourist destination in the southern part of the county with numerous wineries, wine tasting rooms, bed and breakfast inns and wedding venues; and Castle Park, an amusement park. Annual events in the county include the Festival of Lights in Riverside, known for its display of nearly three million Christmas lights; Ghost Walk Riverside; Temecula Valley Balloon and Wine Festival; and Harvest Wine Celebration.

Item Number: 2.

Riverside County Area Analysis 15
Skyborne (Village 3)
Riverside County is home to multiple higher education institutions including, but not limited to, the University of California Riverside, California Baptist University, California Southern Law School, California State University San Bernardino and Mt. San Jacinto College.

Conclusion
Riverside County is expected to experience continued growth supported by its strategic location, expanding industrial base, and relative affordability compared to coastal markets. The county’s diverse economy, population growth, and access to major transportation corridors will sustain demand across residential, commercial, and industrial real estate sectors. While ongoing development activity is expected, geographic, infrastructure, and regulatory constraints will likely limit large-scale expansion, supporting long-term market stability.

Item Number: 2.

Riverside County Area Analysis 16
Skyborne (Village 3)
Area Map
Item Number: 2.

Surrounding Area Analysis 17
Skyborne (Village 3)
Surrounding Area Analysis
Location
The subject is located in the city of Desert Hot Springs, in the central part of Riverside County. It is the westernmost city of the Coachella Valley, which also includes Cathedral City, Coachella, Indian Wells, Indio, La Quinta, Palm Desert, Palm Springs and Rancho Mirage. Desert Hot Springs lies to the north of Interstate 10, while the other cities/communities lie to the south.

Access and Linkages
The subject neighborhood benefits from very good freeway access. Interstate 10 is a major interstate highway spanning across the nation, from Santa Monica, California on the west coast to Jacksonville, Florida on the east coast. In the subject’s neighborhood, Interstate 10 provides access to the neighboring San Bernardino County to the northwest and into Los Angeles County further west. To the east, it travels through Riverside County into the state of Arizona.

The subject is also proximate to State Route 62, which intersects Interstate 10 to the south of the city limits. State Route 62 travels north through the city and then east across the Little San Bernardino Mountains, along the northern boundary of the Joshua Tree National Park and into the state of Arizona.

Just south of Desert Hot Springs and south of Interstate 10 is State Highway 111, the primary route through the Coachella Valley. It begins at Interstate 10 in the community of White Water, just east of Cabazon and extends southeast through Palm Springs, Rancho Mirage, Palm Desert, La Quinta, and Indio. It continues through the Imperial Valley and along the eastern portion of the Salton Sea, terminating south at the Mexico border. Secondary highways also south of Interstate 10 include Highway 74 which provides access to other cities and communities in Riverside County to the west, and Highway 86, providing southbound access extending near the border of Mexico.

Area thoroughfares include N. Indian Canyon Drive, which extends to the north and south of Interstate 10; Palm Drive, a north-south arterial stretching from Interstate 10 through the Desert Hot Springs downtown district; and Dillon Road, Two Bunch Palms Trail, Hacienda Avenue, Pierson Blvd, and Mission Lakes Blvd, which travel in an east-west direction.

Public transportation in the neighborhood is provided by SunLine Transit Agency. Three routes, Routes 14, 15 and 21, service the Desert Hot Springs area, with connections available to other destinations throughout the Coachella Valley, as well as to a Commuter Link route, which offers service throughout Southern California.

The nearest airport for commercial air travel is Palm Springs International Airport, located approximately fourteen miles to the south. Five additional international airports are located within an approximate two-hour drive of the subject’s neighborhood. In addition, there are five Amtrak stations within 30 miles of the city center.

Item Number: 2.

Surrounding Area Analysis 18
Skyborne (Village 3)
Demographics
A demographic profile of the surrounding area, including population, households, and income data, is presented in the following table.

Surrounding Area Demographics
2026 Estimates 1-Mile Radius 3-Mile Radius 5-Mile Radius 92240 (Desert
Hot Springs, CA)
Riverside County,
CA
Population 2020 999 7,844 34,595 41,545 2,418,185
Population 2026 1,007 8,224 36,451 43,646 2,540,505
Population 2031 1,004 8,446 37,575 44,908 2,600,434
Compound % Change 2020-2026 0.1% 0.8% 0.9% 0.8% 0.8%
Compound % Change 2026-2031 -0.1% 0.5% 0.6% 0.6% 0.5%
Households 2020 294 2,853 11,382 13,529 763,283
Households 2026 312 3,026 11,951 14,153 803,472
Households 2031 316 3,126 12,319 14,557 824,597
Compound % Change 2020-2026 1.0% 1.0% 0.8% 0.8% 0.9%
Compound % Change 2026-2031 0.3% 0.7% 0.6% 0.6% 0.5%
Median Household Income 2026 $70,358 $68,175 $56,013 $56,373 $99,433 Average Household Size 3.1 2.7 3.0 3.1 3.1
College Graduate % 23% 24% 16% 16% 26%
Owner Occupied % 54% 70% 53% 55% 67%
Renter Occupied % 46% 30% 47% 45% 33%
Median Owner Occupied Housing Value $389,536 $393,445 $360,383 $356,876 $611,431 Median Year Structure Built 1996 1992 1991 1990 1991
Average Travel Time to Work in Minutes 31 33 31 31 36
Source: Claritas SPOTLIGHT
As shown above, the current population within a 3-mile radius of the subject is 8,224, and the average household size is 2.7. Population in the area has grown since the 2020 census, and this trend is projected to continue over the next five years. Compared to the subject’s 92240 zip code overall, the population within a 3-mile radius is projected to grow at a similar rate.

Median household income is $68,175, which is lower than the household income for the 92240 zip code. Median owner-occupied home values are considerably lower within a 3-mile radius than those of the 92240 zip code.

Land Use
Desert Hot Springs was named for the naturally-occurring hot mineral waters discovered here. The city is situated between the San Bernardino Mountains and the San Jacinto Mountains. The Mission Creek fault line, a branch of the San Andreas Fault, runs between the two mountain ranges and separates two underground aquifers into hot water to the northeast and cold water to the southwest. The hot water springs contain a variety of minerals at varying degrees of heat and are accessible at numerous hotels, resorts and spas throughout the city. The cold water aquifer provides fresh water to the city.

The city of Desert Hot Springs has a mix of land uses. A large part of the city within the western and central portions, remains unimproved, while the majority of improvement lies in the eastern part of the city. Land uses here are devoted primarily to low and medium density single family residential, and Item Number: 2.

Surrounding Area Analysis 19
Skyborne (Village 3)
commercial uses along the main thoroughfares. Resorts and spas that offer hot springs are also located in this portion of the city.

Most commercial uses are concentrated within the region north of Two Bunch Palms Trail and south of Mission Lakes Boulevard. Some of the larger concentrations of commercial uses include the area near Two Bunch Palms Trail and Palm Drive, improved with a Vons-anchored center, Walgreens, several restaurants and cafes, and a US Post Office; the intersection of Palm Drive and Hacienda Drive is improved with the Hacienda Palms Shopping Center, anchored by Stater Bros grocery, and offering various neighborhood retail and dining services; most municipal offices and services are found along Pierson Blvd at West Drive; and a large concentration of hot springs resorts and spas are found near Miracle Hill and Mountain View Roads in the far eastern part of the city.

The subject is located on the northwest end of Desert Hot Springs, northwest of the majority of the development in the neighborhood. Immediately adjacent uses to the subject include vacant land.

There are various cultural and recreational opportunities in the city. Cabot’s Pueblo Museum is the adobe-style structure built by Cabot Yerxa, one of the earliest homestead settlers in Desert Hot Springs, over a period of 20 years, which is now a designated historical site and museum. The city became popular as a tourist destination in the 1940s and 50s when small spa and boutique hotels were plentiful and the city was known as the spa capital of the world. Currently, there are roughly 30 natural mineral springs lodgings and spas in Desert Hot Springs.

The cannabis industry has also become a significant source of revenue in the local economy. The city was among the first to provide structure for the legal operation of cannabis. During the 2018-2019 fiscal year, the cannabis industry provided $3.2 million, the second highest revenue stream in the city.

In addition, cannatourism, which involves traveling somewhere to consume or participate in cannabisrelated activities, has been introduced in the city’s cannabis strategic plan, with reports that city officials have begun drafting proposals to allow cannabis sales and use at hotels and entertainment venues.

The Coachella Valley is known for its numerous country/golf clubs, with over 100 private and semiprivate courses throughout the area. Desert Dunes Golf Club and Hidden Springs Golf Course are the nearest, located to the south of the city limits. Big Morongo Canyon Preserve and Joshua Tree National Park are located to the north and east of Desert Hot Springs, offering hiking, camping, and wildlife preserve.

Along the north side of Interstate 10 are industrial areas, improved primarily with windmill farms and related uses. These windmill farms are located in the San Gorgonio pass, a gap created by the San Andreas fault between the San Bernardino and San Jacinto mountains. The windmills, combined with growing use of solar power, provide ample renewable energy for the city, as well as for the Southern California energy grid.

Desert Hot Springs is served by the Palm Springs Unified School District, with five elementary schools, two middle schools, one high school and one alternative school located in Desert Hot Springs. There are several vocational schools, community colleges and four-year universities within approximately 10-20 miles of the subject, including California State University San Bernardino – Palm Desert Campus; Item Number: 2.

Surrounding Area Analysis 20
Skyborne (Village 3)
University of California Riverside, Loma Linda University – Dental Hygiene; various campuses of the College of the Desert; Mayfield College; SBB College, Brandman University and National University.

The nearest hospitals are Desert Regional Medical Center, approximately 14 miles south in Palm Springs; Eisenhower Medical Center Hospital located 20 miles southeast of the subject in Rancho Mirage, and JFK Memorial Hospital, located approximately 29 miles southeast in Indio.

Outlook and Conclusions
The subject property is located in a developing neighborhood on the western periphery of the city characterized by single-family residential development with supporting community uses located to the east in the established areas of Desert Hot Springs. The area is considered to be a middle-income neighborhood with adequate support facilities. The overall condition and quality of the neighborhood is rated as average to good. The composition of residential elements and commercial related support facilities generally provides stable conditions for the neighborhood.

Item Number: 2.

Surrounding Area Analysis 21
Skyborne (Village 3)
Surrounding Area Map
Item Number: 2.

Residential Market Analysis 22
Skyborne (Village 3)
Residential Market Analysis
Given prevailing land use patterns and the subject’s zoning, a likely use of the property is for residential development. In the following paragraphs, we examine supply and demand indicators for residential development in the subject’s area.

Submarket Overview
The subject is located in the city of Desert Hot Springs. The subject is adjacent to mature home construction and is considered to have good transportation linkages. Based on existing surrounding homes and new projects under development, the subject characteristics best support a project designed for a combination of entry-level and/or first-time move-up home buyers.

Single-Family Building Permits
Single-family building permits for the city of Desert Hot Springs as well as Riverside County totals are shown in the following table. When we compare the trend in permitting, population and price, there can be a relationship. More supply of homes could eventually mean lower prices, whereas conversely a lower number of permits pulled could eventually mean higher prices. Further, the number of permits pulled shows builder confidence in the current market when compared to other years.

Single-Family Building Permits
Year
City of Desert Hot
Springs % Change County of Riverside % Change
2016 29 -- 5,136 --
2017 37 27.59% 5,827 13.45%
2018 41 10.81% 7,327 25.74%
2019 30 -26.83% 6,267 -14.47%
2020 77 156.67% 8,344 33.14%
2021 180 133.77% 7,428 -10.98%
2022 143 -20.56% 8,211 10.54%
2023 100 -30.07% 8,349 1.68%
2024 104 4.00% 7,548 -9.59%
2025 199 91.35% 6,003 -20.47%
Source: SOCDS Building Permits Monthly Request
The bulk of the single-family building permits within Riverside County are in unincorporated areas of the county, as well as the cities of Menifee and Beaumont.

Active New Home Projects Pricing and Absorption
The city of Desert Hot Springs is located within the Desert Riverside submarket of the Inland Empire.

The Ryness Report provides a comparison of sales activity between various regions and markets, including year-to-date totals from the same week of the previous year. Their surveys and reports include sales, buyer traffic, and financing rates on activity in major residential developments throughout California, Arizona, and Nevada. The report for the Inland Empire for the week ending April 5, 2026, is included as follows.

Item Number: 2.

Residential Market Analysis 23
Skyborne (Village 3)
Item Number: 2.

Residential Market Analysis 24
Skyborne (Village 3)
The Ryness Report has identified 26 active projects in the Desert Riverside submarket, with 4 of those within the city of Desert Hot Springs (two of which represent the subject property). The following tables include active projects in the Desert Riverside submarket.

Projects considered most similar to the subject are further detailed in the following table.

Item Number: 2.

Residential Market Analysis 25
Skyborne (Village 3)
Active Projects
Project Name Community Developer Average Price
Avg. Home
Size (SF)
Average
Price/SF
Units
Planned Units Sold
Avg.

Sales/Week
Avg.

Sales/Month
Rancho Descanso Desert Hot Springs Lennar $469,756 2,017 $232.96 76 58 0.99 3.96 Syborne Ara Desert Hot Springs Lennar $431,259 2,215 $194.70 142 67 1.04 4.16 Skyborne Nova Desert Hot Springs Lennar $395,297 1,472 $268.60 144 64 0.99 3.96 Eagle Point Desert Hot Springs Monte Vista $477,490 1,909 $250.13 16 6 0.27 1.08 Pyramid Ranch Coachella Pulte $579,323 2,396 $241.82 203 81 0.89 3.56 Dolfina Indio DR Horton $629,516 2,284 $275.57 173 108 1.31 5.24 Gallery at Indian Palms Indio Gallery Homes $560,276 1,920 $291.81 73 37 0.29 1.16 Espana Avila Indio Lennar $495,657 1,472 $336.80 112 40 1.13 4.52 Espana Palenica Indio Lennar $537,323 1,971 $272.61 100 30 0.85 3.40 Espana Terrassa Indio Lennar $606,323 2,394 $253.30 97 30 0.85 3.40 Minimum $395,297 1,472 $194.70 1.08
Maximum $629,516 2,396 $336.80 5.24
Average $518,222 2,005 $261.83 3.44
Source: Ryness Reports and Developer's Websites.

Overall, projects in the area are averaging 0.86 sales per week (3.44 sales per month) with an average home size of 2,005 square feet and an average home price of $518,222. However, it is noted the subject’s two projects are exceeding this pace of sales with an absorption rate of 4.16 (Ara) and 3.96 (Nova) sales per month and price points at the lower end of the range of $431,259 and $395,297.

Resale Pricing
The following table shows historical resale data for more recently built homes (2015 and newer) in the city of Desert Hot Springs. We restricted our search to lot sizes with less than 10,000 square feet. The resale market is analyzed as a further gauge of buyer demand for housing. Often home buyers are considering housing purchase options that cover both the new home market, as well as the resale market.

Item Number: 2.

Residential Market Analysis 26
Skyborne (Village 3)
Resales
Address Sale Date
Living Area
(SF) Sale Price
Last List
Price
Sales
Price/SF Sale/List Year Built
Days on
Market
Lot Size
(SF)
11850 E Crescent St 4/3/2026 1,792 $390,000 $400,000 $218 97.50% 2022 85 6,098 11588 Sky Pointe Dr 3/5/2026 2,088 $450,000 $459,000 $216 98.04% 2021 215 8,276 68055 Calle Cerrito 2/20/2026 1,815 $494,000 $499,000 $272 99.00% 2024 100 8,712 13701 El Cajon 1/10/2026 1,356 $400,000 $389,900 $295 102.59% 2021 16 9,583 11689 S Crescent St 12/20/2025 1,946 $435,000 $439,950 $224 98.87% 2021 56 6,970 66544 Thunderbird Ln 12/19/2025 2,058 $449,000 $449,000 $218 100.00% 2024 202 4,933 16295 Avenida Atezada 12/18/2025 1,567 $496,000 $500,000 $317 99.20% 2022 115 7,405 13996 Avenida La Vista 12/4/2025 1,918 $555,000 $559,000 $289 99.28% 2015 26 9,148 66631 Thunderbird Ln 12/1/2025 2,058 $459,900 $439,900 $223 104.55% 2024 162 5,663 65238 Rolling Hills Dr 12/1/2025 1,922 $465,000 $465,000 $242 100.00% 2020 65 9,148 9690 Puesta Del Sol Pl 11/17/2025 2,155 $524,000 $529,000 $243 99.05% 2021 171 9,148 66191 Mission Lakes Blvd 11/13/2025 1,400 $480,000 $489,900 $343 97.98% 2024 125 7,841 9282 Silver Star Ave 11/11/2025 2,120 $489,000 $489,000 $231 100.00% 2017 161 8,276 66681 Thunderbird Ln 10/17/2025 1,857 $444,900 $429,900 $240 103.49% 2024 92 5,663 11647 S Crescent Street 9/24/2025 1,792 $447,000 $447,000 $249 100.00% 2023 84 5,662 13633 El Rio Ln 9/22/2025 1,549 $390,000 $350,000 $252 111.43% 2017 34 8,276 66361 S Agua Dulce Dr 9/18/2025 2,023 $527,500 $534,900 $261 98.62% 2022 85 7,405 66309 N Agua Dulce Dr 9/15/2025 2,067 $540,000 $549,900 $261 98.20% 2022 58 7,405 68645 Ridge Crest Way 9/11/2025 1,876 $523,140 $495,000 $279 105.68% 2024 76 9,428 9705 Puesta Del Sol Pl 9/9/2025 2,125 $685,000 $679,900 $322 100.75% 2020 129 9,148 11624 Sky Pointe Dr 9/4/2025 1,542 $420,000 $415,000 $272 101.20% 2022 19 7,405 66661 Thunderbird Lane Ln 9/3/2025 1,857 $443,000 $443,000 $239 100.00% 2024 57 5,663 62742 N Crescent St 9/2/2025 1,542 $402,000 $409,000 $261 98.29% 2021 40 6,098 13828 Scenic Crest Cir 9/2/2025 1,876 $545,000 $549,000 $291 99.27% 2024 32 9,750 66641 Thunderbird Ln 8/30/2025 1,857 $453,900 $453,900 $244 100.00% 2024 4 6,200 64111 Apache Mountain St 8/1/2025 1,907 $375,000 $375,000 $197 100.00% 2016 343 6,534 9353 Palm Dr 8/1/2025 1,980 $528,000 $549,000 $267 96.17% 2024 172 7,405 Total Sales 27 1,854 $474,494 $473,672 $258 100.34% 2022 101 7,528 (avg.) (avg.) (avg.) (avg.) (avg.) (avg.) (avg.) (avg.) Source: Local Multiple Listing Service (MLS)
Ability to Pay
The Developer is constructing seven floor plans ranging in size from 1,229 to 2,583 square feet within two product lines. In this section, we will examine the ability to pay among prospective buyers for a representative price point of $400,000 , based on the indicators from the subject communities and competing projects. First, we will estimate the required annual household income based on typical mortgage parameters in the subject’s market area. Specifically, we will employ a loan-to-value ratio of 80% (down payment of 20%), mortgage interest rate of 6.00%, 360 monthly payments, and a 40% ratio for the housing costs as a percent of monthly income (inclusive of principal, interest, all taxes and insurance). Property tax payments are accounted for in the analysis as well as homeowner’s insurance and homeowner’s association. The following table shows the estimate of the annual household income that would be required to afford homes priced at the representative price point.

Item Number: 2.

Residential Market Analysis 27
Skyborne (Village 3)
Income Required
Home Price $400,000
Loan % of Price (Loan to Value) 80%
Loan Amount $320,000
Interest Rate 6.00%
Mortgage Payment $1,919
Property Taxes $456 Based on 1.160210% and direct charges of $831 City of Desert Hot Springs CFD No. 2025-1 $255
Homeowner's Association Fee $228
Property Insurance $83
Total Monthly Obligation $2,941
Mortgage Payment % of Income 40%
Monthly Income $7,352
Annual Income $88,227
We have obtained income data from Claritas Spotlight by Environics Analytics, for a 10-mile radius surrounding the subject property, which is considered representative of typical buyers for the subject property. In the following table we show the income brackets within the noted area, along with estimates of the percentage of households able to afford homes priced at the representative price point within each income bracket.

Household Ability: $400,000 Home
Household Income Households
Percent of
Households
Percent Able to
Pay Households
Households
Able to Pay
< $15,000 13,022 29.6% 0.0% 0 0.0%
$15,000 - $24,999 3,567 8.1% 0.0% 0 0.0%
$25,000 - $34,999 2,945 6.7% 0.0% 0 0.0%
$35,000 - $49,999 2,674 6.1% 0.0% 0 0.0%
$50,000 - $74,999 3,621 8.2% 0.0% 0 0.0%
$75,000 - $99,999 4,558 10.3% 47.1% 2,146 4.9%
$100,000 - $124,999 3,676 8.3% 100.0% 3,676 8.3%
$125,000 - $149,999 2,855 6.5% 100.0% 2,855 6.5%
$150,000 - $199,999 2,270 5.2% 100.0% 2,270 5.2%
$200,000 - $249,999 2,387 5.4% 100.0% 2,387 5.4%
$250,000 - $499,999 1,312 3.0% 100.0% 1,312 3.0%
$500,000+ 1,172 2.7% 100.0% 1,172 2.7%
44,059 100.0% 15,818 35.9%
Conclusions
Demand for homes in the subject’s market area is considered to be steady at the current time as indicated by the overall trend of building permit activity, new home sales prices and activity in recent quarters as well as the absorption rate within new home projects in the subject’s area.

Item Number: 2.

Land Description and Analysis 28
Skyborne (Village 3)
Property Analysis
Land Description and Analysis
Land Description
Source of Land Area Engineering Report
Primary Street Frontage Rainbow
Shape Irregular
Corner No
Topography Generally level and at street grade
Drainage No problems reported or observed
Environmental Hazards None reported or observed
Ground Stability No problems reported or observed
Flood Area Panel Number 06065C0880G
Date August 28, 2008
Zone X (Shaded)
Description Within 500-year floodplain
Insurance Required? No
Zoning; Other Regulations
Zoning Jurisdiction City of Desert Hot Springs
Zoning Designation R-L/SP
Description Residential Low Density (0-5 du/ac)/ Specific Plan (Skyborne) Legally Conforming? Appears to be legally conforming
Zoning Change Likely? No
Permitted Uses Single-family dwellings
Minimum Lot Area 5,500 SF
Minimum Street Frontage (Feet) 35'
Minimum Lot Width (Feet) 50'
Minimum Lot Depth (Feet) 105'
Maximum Building Height 28'
Maximum Floor Area Ratio 0.55
Other Land Use Regulations None reported or observed
Utilities
Service Provider
Water Mission Springs Water District (MSWD)
Sewer Mission Springs Water District (MSWD)
Electricity Southern California Edison (SCE)
Natural Gas Southern California Gas Company
Local Phone Verizon
Item Number: 2.

Land Description and Analysis 29
Skyborne (Village 3)
We are not experts in the interpretation of zoning ordinances. An appropriately qualified land use attorney should be engaged if a determination of compliance with zoning is required.

Entitlements
A summary of the current legal (entitlements) and physical status of the developed land is shown in the following table.

Entitlements
Description
No. of
Homes/Lots
Completed Single-Family Homes within Complete Assessed Improvement Value 120 Partially Completed Single-Family Homes (Under Construction) 62 Finished Single-Family Lots 99
Total 281
The balance of City of Desert Hot Springs CFD No. 2025-1 (IA 1), 5 single-family residential homes, are reflected on the County of Riverside Assessor's Tax Roll with a complete assessment for both land and improvements and are not a part of this Appraisal Report.

Offsite Improvements
At the time of inspection, intract work appeared to be complete.

Seismic Hazards
All properties in California are subject to some degree of seismic risk. The Alquist-Priolo Earthquake Fault Zoning Act was enacted by the State of California in 1972 to regulate development near active earthquake faults. The Act required the State Geologist to delineate “Earthquake Fault Zones” (formerly known as “Special Studies Zones”) along known active faults in California. Cities and counties affected by the identified zones must limit certain development projects within the zones unless geologic investigations demonstrate that the sites are not threatened by surface displacement from future faulting.

According to information from the California Department of Conservation and the California Geological Survey, the subject is not located within an Alquist-Priolo Special Studies Zone. The subject is not located in a liquefaction zone.

Fire Hazard Risk
The subject property is in Local Responsibility Area (LRA), meaning the financial responsibility of preventing and suppressing wildfires is primarily the responsibility of a Local agency (city of Desert Hot Springs). Fire and Resource Assessment Program of CAL FIRE has classified the subject’s area as a Moderate Fire Hazard Severity Zone (FHSZ).

Item Number: 2.

Land Description and Analysis 30
Skyborne (Village 3)
Environmental Hazards
An environmental assessment report was not provided for review, and during our inspection, we did not observe any obvious signs of contamination on or near the subject. However, environmental issues are beyond our scope of expertise. It is assumed that the property is not adversely affected by environmental hazards.

Easements, Encroachments and Restrictions
We were not provided a current title report to review. We are not aware of any easements, encroachments, or restrictions that would adversely affect value. Our valuation assumes no adverse impacts from easements, encroachments, or restrictions, and further assumes that the subject has clear and marketable title.

Permits and Fees
Remaining City DIF and MSWD Fees were reported to total $2,560,000, which will be accounted for in our concluded value of the subject’s 99 finished lots.

Site Development Costs
Remaining development costs of $2,200,000 for landscaping and renewal & replacement (R&R) costs associated with streets, concrete, etc. were reported by the developer.

Subject
Item Number: 2.

Land Description and Analysis 31
Skyborne (Village 3)
Conclusion of Site Analysis
Overall, the physical characteristics of the site and the availability of utilities result in functional utility suitable for a variety of uses including those permitted by zoning. Uses permitted by zoning include single-family dwellings. We are not aware of any other particular restrictions on development.

Item Number: 2.

Land Description and Analysis 32
Skyborne (Village 3)
Boundary Map
Item Number: 2.

Land Description and Analysis 33
Skyborne (Village 3)
Site Plan
Ara Lots
Nova Lots
Item Number: 2.

Land Description and Analysis 34
Skyborne (Village 3)
Parcel Maps
Item Number: 2.

Land Description and Analysis 35
Skyborne (Village 3)
Aerial
Item Number: 2.

Proposed Improvements Description 36
Skyborne (Village 3)
Proposed Improvements Description
Overview
The subject property is being developed by Lennar and details of the two product lines are presented in the following table.

Floor Plan Summary
Project Name
Living
Area (SF) Bedroom Bathroom Stories Garage
Typical Lot
Size (SF) Builder's Base Price
Nova
Residence 1 1,229 3 2.0 One 2-Car 5,500 $384,349
Residence 2 1,494 3 2.0 One 2-Car 5,500 $392,523
Residence 3 1,692 4 2.0 One 2-Car 5,500 $409,018
Ara
Residence 1 1,784 3 2.0 One 2-Car 5,500 $418,090
Residence 2 2,084 4 2.0 One 2-Car 5,500 $420,490
Residence 3 2,409 4 3.0 Two 2-Car 5,500 $449,190
Residence 4 2,583 4 3.0 Two 2-Car 5,500 $437,267
The interior finish profile is considered to be of a typical quality for the area, which is generally average to good overall quality.

The subject property has a Homeowner’s Association (HOA) that will be responsible for maintaining the community swimming pool, dog park, and tot lot. The Developer reports that dues are $228 per home per month, to be paid by the future homeowners. The subject’s floor plans are shown on the following pages.

Item Number: 2.

Proposed Improvements Description 37
Skyborne (Village 3)
Floor Plans
Nova at Skyborne
Residence One – 1,229 SF
Item Number: 2.

Proposed Improvements Description 38
Skyborne (Village 3)
Residence Two – 1,494 SF
Item Number: 2.

Proposed Improvements Description 39
Skyborne (Village 3)
Residence Three – 1,692 SF
Item Number: 2.

Proposed Improvements Description 40
Skyborne (Village 3)
Ara at Skyborne
Residence One – 1,784 SF
Item Number: 2.

Proposed Improvements Description 41
Skyborne (Village 3)
Residence Two – 2,084 SF
Item Number: 2.

Proposed Improvements Description 42
Skyborne (Village 3)
Residence Three – 2,409
Item Number: 2.

Proposed Improvements Description 43
Skyborne (Village 3)
Residence Four – 2,583 SF
Item Number: 2.

Proposed Improvements Description 44
Skyborne (Village 3)
Item Number: 2.

Proposed Improvements Description 45
Skyborne (Village 3)
Item Number: 2.

Proposed Improvements Description 46
Skyborne (Village 3)
Item Number: 2.

Proposed Improvements Description 47
Skyborne (Village 3)
Item Number: 2.

Proposed Improvements Description 48
Skyborne (Village 3)
Item Number: 2.

Proposed Improvements Description 49
Skyborne (Village 3)
Item Number: 2.

Real Estate Taxes 50
Skyborne (Village 3)
Real Estate Taxes
The property tax system in California was amended in 1978 by Article XIII to the State Constitution, commonly referred to as Proposition 13. It provides for a limitation on property taxes and for a procedure to establish the current taxable value of real property by reference to a base year value, which is then modified annually to reflect inflation (if any). Annual increases cannot exceed 2% per year.

The base year was set at 1975-76 or any year thereafter in which the property is substantially improved or changes ownership. When either of these two conditions occurs, the property is to be reappraised at market value, which becomes the new base year assessed value. Proposition 13 also limits the maximum tax rate to 1% of the value of the property, exclusive of bonds and direct charges.

Bonded indebtedness approved prior to 1978, and any bonds subsequently approved by a two-thirds vote of the district in which the property is located, can be added to the 1% tax rate.

Ad Valorem Taxes
The existing ad valorem taxes are of nominal consequence in this appraisal, primarily due to the fact these taxes will be adjusted substantially as the remaining property improvements are completed and in consideration of the definition of market value employed in this appraisal, which assumes a sale of the appraised properties. According to the Riverside County Treasurer-Tax Collector’s Office, the subject has a tax rate of 1.160210% for tax year 2025/26, based on assessed value. In addition, the appraised properties are subject to direct charges. Based on a survey of surrounding residential properties, it is estimated the subject would have direct charges of approximately $831 per lot.

Special Assessments
All of the appraised properties are encumbered by the Special Tax Lien of City of Desert Hot Springs CFD No. 2025-1 (IA 1) that also increases 2% per year. With respect to special taxes, we have relied upon information provided by the special tax consultant, for the annual special tax levy on the appraised properties, which are shown as follows for tax year 2025/26:

Special Tax Table (Fiscal Year 2025-2026)
Land Use Category Square Footage Category
Single-Family Property Less than 1,450 SF $2,140 per unit Single-Family Property 1,450 - 1,599 SF $2,255 per unit Single-Family Property 1,600 - 1,749 SF $2,370 per unit Single-Family Property 1,750 - 1,899 SF $2,485 per unit Single-Family Property 1,900 - 2,049 SF $2,600 per unit Single-Family Property 2,050 - 2,199 SF $2,715 per unit Single-Family Property 2,200 - 2,349 SF $2,830 per unit Single-Family Property 2,350 - 2,499 SF $2,945 per unit Single-Family Property Greater than or equal to 2,499 SF $3,060 per unit Source: Rate and Method of Apportionment of Special Taxes Assigned Special Tax
Item Number: 2.

Highest and Best Use 51
Skyborne (Village 3)
Highest and Best Use
Process
Before a property can be valued, an opinion of highest and best use must be developed for the subject site, both as if vacant, and as improved or proposed. By definition, the highest and best use must be:
• Legally permissible under the zoning regulations and other restrictions that apply to the site. • Physically possible.
• Financially feasible.
• Maximally productive, i.e., capable of producing the highest value from among the permissible, possible, and financially feasible uses.

Highest and Best Use As If Vacant
Legally Permissible
The site is zoned R-L/SP, Residential Low Density (0-5 du/ac)/ Specific Plan (Skyborne). Permitted uses include single-family dwellings. To our knowledge, there are no legal restrictions such as easements or deed restrictions that would effectively limit the use of the property. The subject property has a recorded final map with 289 individual APNs. The subject's present entitlements are the result of significant planning and review, and any rezone or land use different than currently approved is unlikely. Given prevailing land use patterns in the area, only single-family residential use is given further consideration in determining highest and best use of the site, as though vacant.

Physically Possible
The physical characteristics of a site that affect its possible use include, but are not limited to, location, street frontage, visibility, access, size, shape, topography, availability of utilities, offsite improvements, easements and soil and subsoil conditions. The legally permissible test has resulted in single-family residential development; at this point the physical characteristics are examined to see if they are suited for the legally permissible use.

Based on our physical inspection of the subject property, we know of no reason why the property would not support development. All utilities are available to the perimeter of the site. The property is not located within an adverse earthquake, flood, or fire zone. Further, the subject is proximate to new development and development appears possible. Surrounding land uses are compatible and/or similar. Development on adjacent properties provides support that soils are adequate for development. Based on the physical characteristics of the subject property, residential development is considered physically possible and most appropriate
Financially Feasible
Financial feasibility depends on supply and demand influences. With respect to financial feasibility of single-family residential development, in recent months merchant builders have acquired unimproved lots for near term construction, and there are multiple active projects in the area that demonstrate demand for new homes. Finished lots are transferring for prices that exceed the sum of unimproved lots and site development costs, which reflects completion of site development is financially feasible.

Item Number: 2.

Highest and Best Use 52
Skyborne (Village 3)
Maximally Productive
Legal, physical, and market conditions have been analyzed to evaluate the highest and best use of the appraised properties as vacant. The analysis is presented to evaluate the type of use(s) that will generate the greatest level of future benefits possible to the property. Based on the factors previously discussed, the maximally productive use of the appraised properties, and their highest and best use as vacant is for near-term single-family residential development.

As Improved (Proposed)
As with the highest and best use as though vacant, the four tests of highest and best use must also be applied to the subject property considering the in-place improvements. Consideration must be given to the continued as-is use of the subject, as well as alternative uses for the subject. The potential alternative uses consist of demolition, expansion, conversion or renovation.

In the case of undeveloped land under development, consideration must be given to whether it makes sense to demolish existing improvements (either on-site or off-site improvements) for replacement with another use. The time and expense to demolish existing improvements, re-grade, reroute utilities or re-map must be weighed against alternative uses. If the existing or proposed improvements are not performing well, then it may produce a higher return to demolish existing improvements, if any, and re-grade the site for development of an alternative use.

Based on the current condition, the improvements completed contribute to the overall property value. The value of the subject property as improved exceeds its value as vacant less demolition. The highest and best use of the subject property as improved is for continuing construction of homes, as dictated by demand.

Most Probable Buyer
In conjunction with the definition of market value, this appraisal assumes a hypothetical sale of the subject properties to a probable buyer/user, as of the date of value. The subject is considered to have good appeal for production homes. The most probable buyer would be a developer/homebuilder for the finished lots and homes under construction. The most probable buyer for the completed homes would be an individual homeowner.

Item Number: 2.

Valuation Methodology 53
Skyborne (Village 3)
Valuation
Valuation Methodology
Appraisers usually consider three approaches to estimating the market value of real property. These are the cost approach, sales comparison approach and the income capitalization approach.

The cost approach assumes that the informed purchaser would pay no more than the cost of producing a substitute property with the same utility. This approach is particularly applicable when the improvements being appraised are relatively new and represent the highest and best use of the land or when the property has unique or specialized improvements for which there is little or no sales data from comparable properties.

The sales comparison approach assumes that an informed purchaser would pay no more for a property than the cost of acquiring another existing property with the same utility. This approach is especially appropriate when an active market provides sufficient reliable data. The sales comparison approach is less reliable in an inactive market or when estimating the value of properties for which no directly comparable sales data is available. The sales comparison approach is often relied upon for owner-user properties.

The income capitalization approach reflects the market’s perception of a relationship between a property’s potential income and its market value. This approach converts the anticipated net income from ownership of a property into a value indication through capitalization. The primary methods are direct capitalization and discounted cash flow analysis, with one or both methods applied, as appropriate. This approach is widely used in appraising income-producing properties.

Additional analyses often undertaken in the valuation of subdivisions include extraction, land residual analysis, and the subdivision development method.

Reconciliation of the various indications into a conclusion of value is based on an evaluation of the quantity and quality of available data in each approach and the applicability of each approach to the property type.

The methodology employed in this assignment is summarized as follows:

Approaches to ValueApproaches to Value
ApproachApproach Applicability to SubjectApplicability to Subject Use in AssignmentUse in Assignment Cost ApproachCost Approach Not ApplicableNot Applicable Not UtilizedNot Utilized Sales Comparison ApproachSales Comparison Approach ApplicableApplicable UtilizedUtilized Income Capitalization ApproachIncome Capitalization Approach Not ApplicableNot Applicable Not UtilizedNot Utilized Approaches to ValueApproaches to Value
ApproachApproach Applicability to SubjectApplicability to Subject Use in AssignmentUse in Assignment Cost ApproachCost Approach Not ApplicableNot Applicable Not UtilizedNot Utilized Sales Comparison ApproachSales Comparison Approach ApplicableApplicable UtilizedUtilized Income Capitalization ApproachIncome Capitalization Approach Not ApplicableNot Applicable Not UtilizedNot Utilized Approaches to ValueApproaches to Value
ApproachApproach Applicability to SubjectApplicability to Subject Use in AssignmentUse in Assignment Cost ApproachCost Approach Not ApplicableNot Applicable Not UtilizedNot Utilized Sales Comparison ApproachSales Comparison Approach ApplicableApplicable UtilizedUtilized Income Capitalization ApproachIncome Capitalization Approach Not ApplicableNot Applicable Not UtilizedNot Utilized Approaches to ValueApproaches to Value
ApproachApproach Applicability to SubjectApplicability to Subject Use in AssignmentUse in Assignment Cost ApproachCost Approach Not ApplicableNot Applicable Not UtilizedNot Utilized Sales Comparison ApproachSales Comparison Approach ApplicableApplicable UtilizedUtilized Income Capitalization ApproachIncome Capitalization Approach Not ApplicableNot Applicable Not UtilizedNot Utilized Item Number: 2.

Market Valuation – Floor Plans 54
Skyborne (Village 3)
Market Valuation – Floor Plans
The market value of the subject’s smallest floor plans within each product line with a completed home, Nova and Ara, are estimated in this section.

The objective of the analysis is to estimate the base price, net of incentives, upgrades and lot premiums. Incentives can take the form of direct price reductions or non-price incentives such as upgrades, interest rate buydowns, or non-recurring closing costs. Further, for the homes with various options of the number of bedrooms or bathrooms, consistent with the “not-less-than” valuation, we will utilize the lesser of the two options. The sales comparison approach to value is employed in order to provide an opinion of market value for the smallest floor plan offered in the communities.

This approach is based on the economic principle of substitution. According to The Appraisal of Real Estate, 15th Edition (Chicago: Appraisal Institute, 2020), “The principle of substitution holds that the value of property tends to be set by the cost of acquiring a substitute or alternative property of similar utility and desirability within a reasonable amount of time.” The sales comparison approach is applicable when there are sufficient recent, reliable transactions to indicate value patterns or trends in the market.

The proper application of this approach requires obtaining recent sales data for comparison with the appraised properties. In order to assemble the comparable sales, we searched public records and other data sources for leads, then confirmed the raw data obtained with parties directly related to the transactions (primarily brokers, buyers and sellers). Further, we searched the Multiple Listing Service (MLS) for resales of comparable properties. The comparables utilized in the following analysis are from sales within the subject’s active communities, sales from surrounding communities, and the MLS.

The smallest floor plans within the two active product lines shown in the following table.

Smallest Floor Plan Summary
Floor Plan
Living
Area (SF) Bedroom Bathroom Stories Garage
Typical Lot
Size (SF)
Developer's Base
Price
Nova 1,229 3 2.0 One 2-Car 5,500 $384,349
Ara 1,784 3 2.0 One 2-Car 5,500 $418,090
Item Number: 2.

Market Valuation – Floor Plans 55
Skyborne (Village 3)
The comparable sales are summarized in the following table.

Comparable Home Sale Summary
No. Address City/Community
Contract
Date Sale Price
Close of
Escrow
Living Area
(SF) Bedroom Bathroom Garage Year Built
Lot Size
(SF)
1 11395 N Star Ln Desert Hot Springs 12/6/2025 $436,500 2/18/2026 1,784 3 2 2-Car 2025 6,098 2 62687 Rainbow Ln Desert Hot Springs 1/30/2026 $425,000 2/27/2026 1,692 4 2.0 2-Car 2025 5,663 3 62683 Rainbow Ln Desert Hot Springs 11/22/2025 $374,500 1/21/2026 1,229 3 2.0 2-Car 2025 6,534 4 66274 Hacienda Ave Desert Hot Springs 2/17/2026 $399,000 3/27/2026 1,370 3 2.0 2-Car 2025 6,534 5 65103 Avenida De Nuves Desert Hot Springs 3/7/2026 $443,000 4/7/2026 1,747 4 2.0 2-Car 2026 7,200 6 15722 Via Quedo Desert Hot Springs 1/26/2026 $405,000 3/4/2026 1,356 3 2.0 2-Car 2026 7,405 7 16347 Avenida Atezada Desert Hot Springs 10/28/2025 $471,500 1/9/2026 1,702 4 2.0 2-Car 2025 7,841 Item Number: 2.

Market Valuation – Floor Plans 56
Skyborne (Village 3)
Discussion of Adjustments
The sales are compared to the subject and adjusted to account for material differences that affect value. Adjustments are considered for the following factors, in the sequence shown below.

Adjustment Factor Accounts For Comments
Special Taxes Bond debt has a direct impact on
the amount for which the end
product will sell. In an effort to
account for the impact of bond
indebtedness on the sales price, we
establish a present value amount
for the difference in the bond
encumbrance between the subject
and comparables based on the
annual assessment, and the
estimated average holding period of
a single‐family home, which is
estimated at 12 years.

The subject and some of the
comparables have a bond
encumbrance and are adjusted
accordingly.

Upgrades and
Incentives
The objective of the analysis is to
estimate the base value per floor
plan, net of incentives. Incentives
can take the form of direct price
reductions or non-price incentives
such as upgrades or non-recurring
closing costs.

Incentives and upgrades included in
the sales have been considered and
adjusted for in this analysis.

Real Property Rights Fee simple, leased fee, leasehold, partial interest, etc.

All the comparables represent fee
simple estate transactions.

Therefore, adjustments for property
rights are not necessary.

Financing Terms Seller financing, or assumption of
existing financing, at non-market
terms.

The comparable sales were cash to
the seller transactions and do not
require adjustments.

Conditions of Sale Extraordinary motivation of buyer
or seller, assemblage, forced sale.

The comparables did not involve
any non-market or atypical
conditions of sale. Adjustments for
this factor do not apply.

Market Conditions
(Date of Sale, Phase
Adjustment)
The market conditions vary over
time, but the date of this appraisal
is for a specific point in time. In a
dynamic economy – one that is
undergoing changes in the value of
the dollar, interest rates and
economic growth or decline – extra
As demonstrated in the previous
market analysis section, new home
pricing on a dollar per square foot
basis has been fluctuating over the
past twelve months in the subject’s
market area, as well as within the
region overall. Home pricing over
Item Number: 2.

Market Valuation – Floor Plans 57
Skyborne (Village 3)
Adjustment Factor Accounts For Comments
attention needs to be paid to assess
changing market conditions.

Significant monthly changes in price
levels can occur in several areas of a
neighborhood, while prices in other
areas remain relatively stable.

Although the adjustment for market
conditions is often referred to as a
time adjustment, time is not the
cause of the adjustment.
the past 6-12 months has remained
somewhat stable; as such, no
adjustments for market conditions
were required.

Location Location is a very important factor
to consider when making
comparisons. The comparables
need not be in the same
neighborhood but should be in
neighborhoods that offer the same
advantage and have, in general, the
same overall desirability to the
most probable buyer or user.

All of the comparables are located
in Desert Hot Springs and no
adjustments are required.

Community Appeal Community characteristics that may
influence sale prices include a gated
amenity or the condition of
surrounding development.

However, Comparables 4, 6, and 7
represent new construction within
in-fill areas surrounded by older
development; as such, an upward
adjustment is applied to these sales.

The remaining comparables have
similar community appeal and do
not require adjustments.

Lot Size The lot size adjustment pertains to
the differences between the
subject’s average lot size and
comparables with either larger or
smaller lots. It does not include any
lot premium adjustments, which are
adjusted for separately. The
amount of the adjustment used in
the comparison of the base lot sizes
comes from a survey of premiums
paid for larger lots.

Considering the average lot size
adjustment factors indicated by the
comparable sales utilized in this
analysis, lot size adjustment factor
of $7.00 /SF is considered
reasonable for the subject’s
residential lots. This figure is
supported by observations of sales
in the subject’s market area.

Lot Premiums/
Discounts
Properties sometimes achieve
premiums for corner or cul-de-sac
positioning, or proximity to open
space or views. Adjustments for lot
Appropriate adjustments are
applied based upon lot placement
Item Number: 2.

Market Valuation – Floor Plans 58
Skyborne (Village 3)
Adjustment Factor Accounts For Comments
position premiums would be in
addition to lot size adjustments
previously considered.
and configuration within their
respective projects.

Design and Appeal Design and appeal of a floor plan is
consumer specific. One exterior
may appeal to one buyer, while
another appeals to a different
buyer. These types of features for
new homes with similar functional
utility are not typically noted in the
base sales prices.

All of the comparables are similar to
the subject in regard to design and
appeal.

Quality of
Construction
Construction quality can differ from
slightly to substantially between
projects and is noted in the exterior
and interior materials and design
features of a standard unit. In terms
of quality of construction, the
subject represents good
construction quality.

Most of the comparable sales
feature similar construction quality
and do not require adjustments.

However, slight adjustments are
made to those comparables with
superior or inferior quality finishes.

Age/Condition When comparing resale to resale,
the market generally reflects a
difference of 1% per year of
difference in effective age.

All of the comparable sales
represent new construction; thus,
no adjustments are required.

Functional Utility Ability to adequately provide for its intended purpose.

The appraised properties and
comparables represent traditional
detached single-family residential
construction on similar lot size
categories as the subject.

Adjustments for this factor do not
apply.

Room Count For similar size units the differences
between room count is a buyer
preference. One buyer might prefer
two bedrooms and a den versus a
three-bedroom unit. Extra rooms
typically result in additional building
area and are accounted for in the
size adjustment. Therefore, no
adjustments are made for number
of total rooms or bedrooms.

Because bathrooms are a functional
item for each floor plan and add
substantial cost due to the number
of plumbing fixtures, an adjustment
is made for the difference in the
number of fixtures between the
subject and the comparable sales.

The adjustment is based on an
amount of $7,500 per fixture (or
half-bath) and is supported by cost
estimates for an average quality
home in the Residential Cost
Item Number: 2.

Market Valuation – Floor Plans 59
Skyborne (Village 3)
Adjustment Factor Accounts For Comments
Handbook, published by the
Marshall and Swift Corporation.

Considering the fact that plumbing
upgrades for existing bathrooms
generally range from $5,000 to over
$25,000 for the various fixtures, the
$7,500 per fixture, or half-bath, is
supported. Consequently, a factor
of $15,000 per full bath is also
applied in our analysis.

Unit Size/Living Area Units similar (in the same
development), except for size, were
compared to derive the applicable
adjustment for unit size. Those used
for comparison purposes, are units
within similar projects. Units within
the same project were used since
they have a high degree of similarity
in quality, workmanship, design and
appeal. Other items such as a single
level or two-story designs, number
of bathrooms and number of garage
spaces were generally similar in
these comparisons, in order to
avoid other influences in price per
square foot. Where differences
exist, they are minor and do not
impact the overall range or average
concluded.

The typical range indicated by the
paired units in this analysis
generally demonstrated a value
range from approximately $50 to
upwards of $100 per square foot.

Considering the information cited
above, a factor of $65.00 per square
foot is concluded to be appropriate
and reasonable for the difference in
living area between the subject and
the comparables, given the quality
of the product.

Number of Stories For similar size units, the
differences between the number of
stories is typically a buyer
preference. One buyer might prefer
a single-story versus a two-story
unit.

In current market conditions, single
story floor plans typically demand a
slight premium; as such, an
adjustment of 1% is applied for
story differences, if applicable.

Parking/Garage Number of garage spaces The subject and all comparable floor plans offer two-car garages. Thus,
no adjustments is required for this
element of comparison.

Landscaping Included landscaping The subject and all of the Item Number: 2.

Market Valuation – Floor Plans 60
Skyborne (Village 3)
Adjustment Factor Accounts For Comments
comparables include only front yard
landscaping.

Solar Energy System California Title 24 (2022 Standards) requires solar photovoltaic (PV)
systems on almost all new
construction including single-family
homes. As such, homeowners are
required to either lease or purchase
(generally at their cost) a solar
energy system at the time of sale.

A factor of $15,000 is utilized in our
analysis. Solor is not included in the
price of the subject homes;
however, Comparables 4 and 6
include an owned solar system and
are adjusted downward.

Adjustment Grids
The following pages include grids reflecting the aforementioned adjustments.

Item Number: 2.

Market Valuation – Floor Plans 61
Skyborne (Village 3)
Nova
Project Information Subject Property
Project Name Skyborne Nova In-fill In-fill
Plan Nova Residence 1
Address/Lot Number 62683 Rainbow Ln 66274 Hacienda Ave 15722 Via Quedo City/Area Desert Hot Springs Desert Hot Springs Desert Hot Springs Desert Hot Springs Price N/Ap $374,500 $399,000 $405,000
Price Per SF N/Ap $304.72 $291.24 $298.67
Special Taxes (7-year hold at 4.5%) $12,610 $12,610 $0 $0 Adjustment $0 -$12,610 -$12,610
Adjusted Price (Including Bonds) $374,500 $386,390 $392,390 Total Consideration per SF $304.72 $282.04 $289.37
Data Source Project sales agent MLS MLS
Incentives N/Ap Yes ($34,278) No $0 No $0
Upgrades Base Yes ($9,220) No $0 No $0
Effective Base Sales Price $331,002 $386,390 $392,390
Adjustments: Factor Description +/(-) Description +/(-) Description +/(-) Property Rights Fee Simple Similar Similar Similar
Financing Terms Cash Equivalent Similar Similar Similar Conditions of Sale Market Market Market Market
Market Conditions
Contract Date 4/1/2026 11/22/2025 2/17/2026 1/26/2026
Project Location Desert Hot Springs Desert Hot Springs Desert Hot Springs Desert Hot Springs Community Appeal Average Similar Sl. Inferior $7,728 Sl. Inferior $7,848 Lot Size $7.00 5,500 6,534 6,534 ($7,238) 7,405 ($13,335) Lot Premium N/Ap Yes ($4,139) Similar Similar
Design and Appeal Average Similar Similar Similar
Quality of Construction Good Similar Sl. Superior ($23,183) Sl. Superior ($23,543) Age (Total/Effective) New Similar Similar Similar
Condition Good/New Similar Similar Similar
Functional Utility Average Similar Similar Similar
Room Count
Bedrooms 3 3 3 3
Baths $15,000 2.0 2.0 $0 2.0 $0 2.0 $0
Living Area (SF) $65.00 1,229 1,229 $0 1,370 ($9,165) 1,356 ($8,255) Number of Stories One One One One
Heating/Cooling Central/Forced Similar Similar Similar
Garage $15,000 2-Car 2-Car 2-Car 2-Car
Landscaping Front Similar Similar Similar
Other None Similar Owned ($15,000) Owned ($15,000)
Gross Adjustments $4,139 $62,314 $67,981
Net Adjustments ($4,139) ($46,859) ($52,286)
Adjusted Retail Value $326,863 $339,531 $340,104
Concluded Retail Value $335,000
Indicated Value Per SF $272.58
Comparable 3 Comparable 4 Comparable 6
Adjustments were necessary to account for differences between these homes and the subject’s floor plan. The sales provide a range of indicators of $326,863 to $340,104. We have concluded an estimate of value of $335,000, which appears reasonable.

Item Number: 2.

Market Valuation – Floor Plans 62
Skyborne (Village 3)
Ara
Project Information Subject Property
Project Name Skyborne Ara Nova Rancho Descanso In-fill
Plan Ara Residence 1 Residence 3
Address/Lot Number 11395 N Star Ln 62687 Rainbow Ln 65103 Avenida De Nuves 16347 Avenida Atezada City/Area Desert Hot Springs Desert Hot Springs Desert Hot Springs Desert Hot Springs Desert Hot Springs Price N/Ap $436,500 $425,000 $443,000 $471,500
Price Per SF N/Ap $244.67 $251.18 $253.58 $277.03
Special Taxes (7-year hold at 4.5%) $14,643 $14,643 $13,966 $0 $0 Adjustment $0 -$678 -$14,643 -$14,643
Adjusted Price (Including Bonds) $436,500 $424,322 $428,357 $456,857 Total Consideration per SF $244.67 $250.78 $245.20 $268.42 Data Source Project sales agent Project sales agent MLS MLS Incentives N/Ap No $0 Yes ($10,000) No ($7,753) No $0
Upgrades Base No $0 Yes ($16,416) Yes $0 No $0
Effective Base Sales Price $436,500 $397,906 $420,604 $456,857 Adjustments: Factor Description +/(-) Description +/(-) Description +/(-) Description +/(-) Property Rights Fee Simple Similar Similar Similar Similar Financing Terms Cash Equivalent Similar Similar Similar Similar Conditions of Sale Market Market Market Market Market
Market Conditions
Contract Date 4/1/2026 12/6/2025 1/30/2026 3/7/2026 10/28/2025 Project Location Desert Hot Springs Desert Hot Springs Desert Hot Springs Desert Hot Springs Desert Hot Springs Community Appeal Average Similar Similar Similar Sl. Inferior $4,569 Lot Size $7.00 5,500 6,098 ($4,186) 5,663 7,200 ($11,900) 7,841 ($16,387) Lot Premium N/Ap Yes ($1,050) Yes ($2,927) Similar Similar Design and Appeal Average Similar Similar Similar Similar Quality of Construction Good Similar Similar Sl. Superior ($8,412) Sl. Superior ($27,411) Age (Total/Effective) New Similar Similar Similar Similar Condition Good/New Similar Similar Similar Similar
Functional Utility Average Similar Similar Similar Similar Room Count
Bedrooms 3 3 4 4 4
Baths $15,000 2.0 2.0 $0 2.0 $0 2.0 $0 2.0 $0
Living Area (SF) $65.00 1,784 1,784 $0 1,692 $5,980 1,747 $2,405 1,702 $5,330 Number of Stories One One One One One
Heating/Cooling Central/Forced Similar Similar Similar Similar Garage $15,000 2-Car 2-Car 2-Car 2-Car 2-Car
Landscaping Front Similar Similar Similar Similar
Other None Similar Similar Similar Similar
Gross Adjustments $5,236 $8,907 $22,717 $53,697
Net Adjustments ($5,236) $3,053 ($17,907) ($33,900)
Adjusted Retail Value $431,264 $400,959 $402,697 $422,957 Concluded Retail Value $418,000
Indicated Value Per SF $234.30
Comparable 1 Comparable 2 Comparable 5 Comparable 7
Adjustments were necessary to account for differences between these homes and the subject’s floor plan. The sales provide a range of indicators of $400,959 to $431,264. A conclusion in line with their current base pricing of $418,000 is concluded.

Item Number: 2.

Market Valuation – Floor Plans 63
Skyborne (Village 3)
Conclusion of Home Values
Based on the analysis herein, the market value conclusions for the homes are summarized in the following table.

Floor Plan Value Conclusions
Floor Plan Community
Living
Area (SF) Bedroom Bathroom Stories Garage
Typical Lot
Size (SF)
Concluded Base
Retail Value
Nova Skyborne 1,229 3 2.0 One 2-Car 5,500 $335,000
Ara Skyborne 1,784 3 2.0 One 2-Car 5,500 $418,000
Item Number: 2.

Residential Lot Valuation 64
Skyborne (Village 3)
Residential Lot Valuation
We will utilize the extraction analysis to estimate the market value of the subject’s finished.

Remaining development costs applicable to the subject property are accounted for in the Market Value by Ownership section.

Extraction Analysis
We utilize an extraction (residual) analysis that takes into account home prices, direct and indirect construction costs, accrued depreciation and developer’s incentive in order to arrive at an estimate of finished lot value. The elements of the extraction technique are discussed below.

Revenue
The subject has a typical lot size of 5,500 square feet. Based on the Residential Market section of this report and considering current asking prices, we estimate a typical average-sized home on the subject would contain approximately 1,900 square feet and would have a corresponding base price of $400,000 . This estimate will be utilized in the extraction analysis.

Expense Projections
As part of an ongoing effort to assemble market information, the table below reflects survey responses and developer budget information for numerous single-family residential subdivisions throughout the Southern California region.

Subdivision Budgets
Developer Classification
Budget
Date
No. of
Units Quality
Avg. Home
Size (SF)
Typical Lot
Size
G & A % of
Revenue
Mkt & Sales % of
Revenue
Direct
Costs/SF
Indirect
Costs/SF
Indirect % of
Direct Costs
Site
Costs/Lot
Permits &
Fees/Unit
Cost per ModelProfit % of
Revenue
Local 2026 32 Average 2,815 8,550 9.9% 5.0% $97.08 N/Av N/Av $149,466 $30,500 N/Av 17.63% Regional 2025 173 Average 2,409 5,520 3.8% 1.0% $105.85 $6.23 5.9% $91,849 $76,201 N/Av N/Av National 2025 141 Average 2,638 5,664 2.0% 2.0% $85.06 N/Av N/Av N/Av $110,800 N/Av 12.10% Regional 2025 237 Average 1,615 N/Av 3.0% N/Av $95.06 N/Av N/Av $156,118 $52,733 N/Av 25.50% National 2025 55 Average 3,131 6,300 N/Av N/Av $89.90 N/Av N/Av $72,436 $82,900 N/Av N/Av National 2025 177 Average 1,992 4,763 N/Av N/Av $78.50 $9.69 12.3% $146,377 $71,100 N/Av N/Av National 2024 862 Average 2,056 5,280 N/Av N/Av $99.56 N/Av N/Av $161,203 $60,400 N/Av N/Av National 2024 276 Average 1,820 3,000 2.7% 2.7% $93.38 N/Av N/Av N/Av $48,101 N/Av 19.20% National 2024 184 Average 2,098 2,746 4.5% 4.5% $92.00 $11.44 12.43% $98,293 $28,400 N/Av 19.00% National 2024 85 Average 2,147 4,800 N/Av 4.5% $95.47 $9.78 10.24% N/Av $96,000 N/Av N/Av National 2024 89 Average 2,135 7,200 N/Av N/Av $88.55 N/Av N/Av $76,390 $66,100 N/Av N/Av National 2024 129 Average 2,707 6,200 N/Av N/Av $83.18 N/Av N/Av $139,940 $54,600 $37,814 N/Av Local 2023 53 Average 2,900 6,750 3.5% 3.0% $85.53 $16.67 19.49% $125,482 $64,861 N/Av 12.0% National 2023 85 Average 1,844 3,000 N/Av N/Av $96.00 N/Av N/Av $65,855 $48,588 N/Av N/Av National 2023 202 Average 2,342 7,250 N/Av N/Av $72.06 $11.06 15.35% $76,242 $73,000 N/Av N/Av National 2023 276 Average 2,220 7,200 N/Av N/Av $74.96 $11.09 14.79% $83,185 $32,800 $80,339 N/Av National 2023 177 Average 2,112 7,200 N/Av N/Av $77.91 $9.73 12.49% $110,669 $61,700 N/Av N/Av National 2023 573 Average 2,327 5,232 N/Av N/Av $99.86 N/Av 2.50% $126,003 $98,422 N/Av 20.00% National 2022 150 Average 2,092 5,500 N/Av N/Av $92.11 N/Av N/Av $72,875 $51,700 N/Av 20.5% National 2022 96 Average 2,346 7,350 N/Av N/Av $79.46 N/Av N/Av $124,544 $68,647 $164,265 N/Av National 2022 387 Average 1,771 5,000 6.0% 3.0% $105.39 N/Av N/Av N/Av $43,000 N/Av 28.0% National 2022 187 Average 2,420 6,698 N/Av N/Av $95.00 N/Av N/Av $255,045 $77,870 N/Av N/Av Regional 2021 72 Good 2,551 3,800 N/Av 7.4% $88.00 N/Av N/Av $112,128 $63,610 N/Av 9.5% Regional 2021 99 Average 2,187 8,005 4.4% 5.7% $72.68 $6.35 9% $89,461 $35,931 $54,000 9.6% Regional 2020 10 Average 3,127 7,500 N/Av N/Av $96.00 $8.64 9% N/Av $20,405 N/Av N/Av Regional 2020 233 Good 2,300 7,500 3.0% 4.2% $91.00 N/Av 11% $100,000 $40,600 N/Av 10.0% Regional 2020 81 Average 1,974 5,775 N/Av 2.5% $80.00 $16.00 20% $83,788 $81,336 N/Av N/Av Local 2020 51 Average 2,106 6,955 3.3% 4.0% $91.50 $10.07 11% $122,885 $66,000 $38,500 20.0% National 2020 14 Average 2,165 3,500 N/Av 3.2% $95.00 $11.02 12% N/Av $68,214 N/Av N/Av Local 2020 27 Average 1,834 9,148 N/Av N/Av $80.00 N/Av 16% N/Av $24,627 N/Av N/Av National 2020 70 Average 1,948 7,817 N/Av N/Av $87.02 N/Av 12% N/Av $38,080 N/Av N/Av Regional 2020 30 Average 2,672 5,000 9.8% 6.3% $88.79 N/Av 10% $91,600 $62,730 N/Av 12.2% Regional 2020 145 Average 1,834 5,500 N/Av N/Av $60.00 N/Av N/Av N/Av $62,500 N/Av 8.0% National 2020 148 Average 2,253 7,000 N/Av N/Av $57.21 N/Av N/Av $39,000 $40,000 N/Av N/Av Regional 2020 46 Average 2,289 6,600 N/Av N/Av $66.49 N/Av N/Av N/Av $31,200 N/Av N/Av Item Number: 2.

Extraction Analysis 65
Skyborne (Village 3)
Information from the survey above will contribute to the estimate of development expenses classified as follows.

General and Administrative
These expenses consist of management fees, liability and fire insurance, inspection fees, appraisal fees, legal and accounting fees and copying or publication costs. This expense category typically ranges from 2.5% to 4.0%, depending on length of project and if all of the categories are included in a builder’s budget. We have used 3.0% for general and administrative expenses.

Marketing and Sale
These expenses typically consist of advertising and promotion, closing costs, sales operations, and sales commissions. The expenses are expressed as a percentage of the gross sales revenue. The range of marketing and sales expenses typically found in projects within the subject’s market area is 5.0% to

6.5%. A figure of 6.0%, or 3.0% for marketing and 3.0% for sales, is estimated in the marketing and sales expense category.

Direct and Indirect Construction Costs
Construction costs are generally classified into direct and indirect costs. Direct costs reflect the cost of labor and materials to build the project. Direct costs generally are lower per square foot for larger floor plans, all else being equal, due to economies of scale. Indirect items are the carrying costs and fees incurred in developing the project and during the construction cycle. Construction quality and market-segment are significant factors that affect direct construction costs. In addition, national/public builders, which are able to achieve lower costs due to the larger scale in which orders are placed, routinely achieve lower direct costs.

Based on the cost comparables, and considering the product line under development, a direct cost estimate of $75.00 per square foot is applied to the 1,900 square foot home.

Regarding indirect costs, the following list itemizes some of the typical components that generally comprise indirect costs:
• Architectural and engineering fees for plans, plan checks, surveys and environmental studies • Appraisal, consulting, accounting and legal fees
• The cost of carrying the investment in land and contract payments during construction. If the property is financed, the points, fees or service charges and interest on construction loans are considered
• All-risk insurance
• The cost of carrying the investment in the property after construction is complete, but before sell-out is achieved
• Developer fee earned by the project coordinator
• Interest reserve
Item Number: 2.

Extraction Analysis 66
Skyborne (Village 3)
Conversations with homebuilders indicate the indirect costs generally range anywhere from 10% to 30% of the direct costs (excluding marketing, sales, general and administrative expenses, taxes, which are accounted for separately). The indirect costs in the static residual (extraction) analysis must capture the additional cost factors segregated in the discounted cash flow, such as property taxes, special taxes and the effects of time value of money; thus, in this analysis, indirect costs of 20.0% is considered reasonable for the subject.

Permits and Fees
Building permits are estimated at $3,000 per lot.

Accrued Depreciation
For new construction on the subject, an allocation for depreciation (physical, functional, or economic) is not applicable.

Developer’s Incentive
According to industry sources, developer’s incentive (profit) historically has ranged anywhere from 5% to 25%, with a predominate range of 5% to 15%. This is consistent with our survey presented earlier in this section, which ranged from 8.0% to 28.0%. Profit is based on the perceived risk associated with the development. Low profit expectations are typical for projects focused on more affordable product with faster sales rates. Higher profit expectations are common in projects with more risk such as developments where sales rates are slower, project size produces an extended holding period or the product type is considered weak or untested.

Elements affecting profit include location, supply/demand, anticipated risk, construction time frame and project type. Another element considered in profit expectations is for the development stage of a project. First phases typically generate a lower profit margin due to cautious or conservative pricing, as new subdivisions in competitive areas must become established to generate a fair market share.

Additionally, up front development costs on first phases can produce lower profit margins.

Positive attributes of the subject property include:
• Approved entitlements and completed site development. • Recent price increases and steady yearly absorption
There are generally few “negative” attributes associated with the subject property, other than the potential for deterioration in market conditions in the residential sector that would result from a change in macroeconomic factors (e.g., unemployment rates, interest rates, etc.). The prior table at the beginning of the Expense Projections discussion includes survey results for profit expectations of active home builders in the region.

Based on the preceding discussion and developer surveys, as well as the product lines offered, we have concluded an estimate of 8% for developer’s incentive.

Item Number: 2.

Extraction Analysis 67
Skyborne (Village 3)
Conclusion
Our estimate of finished lot value for the subject’s lots via the extraction analysis is presented as follows:

Extraction
Revenue
Average Floor Plan Size 1,900 SF
Typical Home Price $400,000
Expense Projections
G & A Cost @ 3.0% of Retail Value $12,000
Marketing/Sales @ 6.0% of Retail Value $24,000
Average Direct Costs @ $75.00 /SF $142,500
Indirect Cost @ 20.0% of Direct Cost $28,500
Building Permit $3,000 /Lot $3,000
Developer's Incentive 8% of Home Price $32,000
$242,000
Residual Lot Value: $158,000
Rounded: $158,000
Item Number: 2.

Extraction Analysis 68
Skyborne (Village 3)
As a check of reasonableness, we have arrayed a number of recent bulk lot transactions in the subject’s market area.

Summary of Comparable Land Sales
No. Name/Address
Sale Date;
Status
Sale Price; Bond
Consideration/Lot
Typical Lot
Size Number of Lots $/Lot Lot Finishing Costs
Price per
Finished Lot
1 Rancho Descanso Sep-24 $9,753,434 7,200 76 $128,335 $45,743 $174,078 65352 Rancho Descanso Closed $0
Desert Hot Springs
Riverside County
2 Refuge Apr-24 $13,500,000 3,760 332 $40,663 $134,337 $175,000 Gerald Ford Dr. & Explorer Dr. Closed $0
Palm Desert
Riverside County
3 Coco Palms TD#1 Feb-24 $1,893,822 6,000 67 $28,266 $151,144 $179,410 SEC Jackson Street & Avenue 49 Closed $2,424
Indio
Riverside County
4 Renata at Domani Jun-22 $3,586,500 4,500 132 $27,170 $87,830 $115,000 39906 Felicita Pky. Closed $2,424
Palm Desert
Riverside County
5 Bellissima May-22 $2,382,500 6,000 111 $21,464 $98,536 $120,000 53-039 Modena Ter. Closed $0
Coachella
Riverside County
Subject 5,500 286
Skyborne (Village 3)
Desert Hot Springs, CA
Comments: Lennar purchased 76 single-family detailed lots (typical lot size 7,200 SF) in September 2024 for $9,753,434. The project is located near the intersection of Palm Drive and Camino Campesino in Desert Hot Springs. Lennar plans on constructing four floor plans ranging from 1,747 to 2,258 SF with base pricing starting at $485,000.

Comments: Situated south of Gerald Ford Drive, Refuge is a masterplan community proposed for a maximum of 700 attached and detached additive housing units. This property comprises the first phase of the project, encompassing Planning Areas 3 and 4 (332 total lots), which was acquired by Pulte Homes and will be known as Del Webb Explore. Reportedly, finishing costs totaled $134,337 per lot. Typical lot size is 3,760 SF.

Comments: This property has a recorded final map for 67 single-family detached lots, which were unimproved at the time of sale. Reportedly, site development costs totaled $151,144 per lot. Typical lot size is 6,000 SF.

Comments: Sale of 132 lots to Pulte, who is developing a 55+ age-restricted community known as Renata at Domani. The typical lot size is 4,500 SF and homes range in size from 1,579 to 1,865 SF with prices starting at $428,990. The lots were final mapped at the time of sale and finishing costs are estimated at $87,830 per lot.

Comments: Sale of 111 tentatively mapped lots to Pulte, who is developing a project known as Bellissima. Floor plans range from 1,959 to 2,824 SF with sale prices between $471,990 and $541,990. The typical lot size is 6,000 SF. Finishing costs are estimated at $98,536 per lot.

Item Number: 2.

Extraction Analysis 69
Skyborne (Village 3)
Comparable Land Sales Map
Item Number: 2.

Extraction Analysis 70
Skyborne (Village 3)
The comparables reflect a range of sale prices of $115,000 to $175,000 per finished lot. The wide disparity in the unadjusted range is largely attributable to location, as well as differences in permits and fees, and site costs. The preceding analysis indicates a finished lot value of $158,000 for the subject lots, which is supported by the range of sales and considered reasonable.

The preceding improved lot values will be assigned to each improved lot with a partially completed home within City of Desert Hot Springs CFD No. 2025-1 (IA 1). Remaining permits & fees will be deducted from the remaining finished lots within the CFD without development impact fees paid (reported at approximately $27,646 per lot). Additionally, there are remaining site development costs reported at $2,200,000. These costs will be allocated and deducted from the holdings of the homebuilder (landbank) with a completed lot and home under construction, which totals 161 lots. We take into account total remaining site development costs, as well as a profit factor of 5% of costs. The profit factor is applied to provide an incentive for a prospective buyer to oversee the remaining site development of the subject property. The 5% profit, based on the remaining costs, is estimated at $110,000 (5% x $2,200,000). Therefore, the total remaining site development costs inclusive of profit is estimated at $2,310,000 or $14,348 per lot ($2,310,000 / 161 lots). The remaining costs are not allocated to completed homes.

Item Number: 2.

Market Value by Ownership 71
Skyborne (Village 3)
Market Value by Ownership
The appraised properties represent 286 lots/homes comprising City of Desert Hot Springs CFD No. 2025-1 (IA 1). In this section, the previously concluded market values will be allocated to each ownership group comprising the appraised properties in order to provide a market value of the appraised properties by ownership.

The appraised properties consist of 99 improved residential lots, 62 homes under construction, and 120 completed homes. A market value for the smallest floor plan in each community developed within the District is assigned to the 120 completed homes held by individual homeowners and the merchant builder.

In light of the fact the merchant builder has a number of lot(s) that could sell in bulk to one buyer within 12 months, no additional discounting is necessary beyond the market value, in bulk, of the various single-family residential lot categories previously estimated.

Based on the previous analyses, the estimates of market value, by ownership, subject to the impact of the Lien of the Special Tax securing the City of Desert Hot Springs CFD No. 2025-1 (IA 1), bonds, as of the date of value, April 1, 2026, are presented in the following table.

Market Value by Ownership
Lots/Homes
Lot/Home
Value
Remaining Site
Development Costs
Permits and
Fees
Value per
Component Market Value (Rd.)
Individual Homeowners
Completed Homes
Ara 55 $418,000 -- $0 $418,000 $22,990,000 (Not-Less-Than) Nova 59 $335,000 -- $0 $335,000 $19,765,000 (Not-Less-Than) Total - Individual Homeowners 114 $42,755,000
Lennar Homes
Completed Homes
Ara 2 $418,000 -- $0 $418,000 $836,000 (Not-Less-Than)
Nova 4 $335,000 -- $0 $335,000 $1,340,000 (Not-Less-Than) Total - Lennar Homes 6 $2,176,000
AG EHC II CA 2
Finished Lots 99 $158,000 ($14,348) ($27,646) $116,000 $11,484,000 Homes Under Construction 62 $158,000 ($14,348) -- $144,000 $8,928,000 Total - AG EHC II CA 2 161 $20,412,000
Aggregate Market Value, subject to a hypothetical condition 281 $65,343,000 Based on the preceding valuation analysis, it is our opinion the aggregate value of the fee simple interest in the City of Desert Hot Springs Community Facilities District No. 2025-1 (Improvement Area No. 1), subject to the extraordinary assumptions and hypothetical conditions noted, and in accordance with the definitions, certifications, general assumptions and limiting conditions, is as follows:

Item Number: 2.

Market Value by Ownership 72
Skyborne (Village 3)
Value ConclusionsValue Conclusions
Appraisal PremiseAppraisal Premise
No. of No. of
ParcelsParcels Value ConclusionValue Conclusion
Aggregate Value of Appraised PropertiesAggregate Value of Appraised Properties 281281 $65,343,000$65,343,000 Aggregate Value of Existing Homes based on Assessed ValueAggregate Value of Existing Homes based on Assessed Value 55 $2,108,122$2,108,122 Total Aggregate Value of Appraised and Assessed Properties in the DistrictTotal Aggregate Value of Appraised and Assessed Properties in the District 286286 $67,451,122$67,451,122 Extraordinary Assumptions and Hypothetical ConditionsExtraordinary Assumptions and Hypothetical ConditionsExtraor NoneNoneNoneNone

1.1.The value derived herein is based on the hypothetical condition that proceeds financed by the CFD No. 2025-1 1.1. The value derived he Revenue Bonds are available to reimburse the Developer for certain public improvements already completed.Revenue Bonds are av The use of any extraordinary assumption or hypothetical condition may have affected the assignment results.The use of any extraordin The value conclusions are based on the following hypothetical conditions. A hypothetical condition is a condition, The value conclusi directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the directly related to a speci effective date of the assignment results, but is used for the purpose of analysis.effective date of the assignment results, but is used for The value conclusions are subject to the following extraordinary assumptions. An extraordinary assumption is an The value conclusio assignment-specific assumption as of the effective date regarding uncertain information used in an analysis which, assignment-specif if found to be false, could alter the appraiser’s opinions or conclusions.if found to be false, could alter the appraiser’s opinions or co Exposure Time
Exposure time is the length of time the subject property would have been exposed for sale in the market had it sold on the effective valuation date at the concluded market value. Exposure time is always presumed to precede the effective date of the appraisal. Based on our review of recent sales transactions for similar properties and our analysis of supply and demand in the local land market, it is our opinion that the probable exposure time for the subject at the concluded market value / values stated previously is 12 months. As it relates to the completed home component of the subject, current market conditions indicate that 30-to-60-day exposure period is reasonable.

Marketing Time
Marketing time is an estimate of the amount of time it might take to sell a property at the concluded market value immediately following the effective date of value. As we foresee no significant changes in market conditions in the near term, it is our opinion that a reasonable marketing period for the subject in bulk is likely to be the same as the exposure time. Accordingly, we estimate the subject’s marketing period at 12 months.

Item Number: 2.

Certification 73
Skyborne (Village 3)
Certification
We certify that, to the best of our knowledge and belief:

1. The statements of fact contained in this report are true and correct.

2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are our personal, impartial, and unbiased professional analyses, opinions, and conclusions.

3. We have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved.

4. We have performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding the agreement to perform this assignment.

5. We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.

6. Our engagement in this assignment was not contingent upon developing or reporting predetermined results.

7. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.

8. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice as well as applicable state appraisal regulations.

9. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.

10. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

11. Eric Segal, MAI, made a personal inspection of the property that is the subject of this report.

Noah Kauffman, MAI, R/W-AC, and Kari Tatton have not personally inspected the subject.

12. No one provided significant real property appraisal assistance to the person(s) signing this certification.

13. We have experience in appraising properties similar to the subject and are in compliance with the Competency Rule of USPAP.

14. As of the date of this report, Eric Segal, MAI, and Noah Kauffman, MAI, R/W-AC, completed the continuing education program for Designated Members of the Appraisal Institute.

Item Number: 2.

Certification 74
Skyborne (Village 3)
Eric Segal, MAI
Certified General Real Estate Appraiser
California Certificate # AG026558
Noah Kauffman, MAI, R/W-AC
Certified General Real Estate Appraiser
California Certificate # 3004618
Kari Tatton
Certified General Real Estate Appraiser
California Certificate # 3002218
Item Number: 2.

Assumptions and Limiting Conditions 75
Skyborne (Village 3)
Assumptions and Limiting Conditions
This appraisal and any other work product related to this engagement are limited by the following standard assumptions, except as otherwise noted in the report:

1. The title is marketable and free and clear of all liens, encumbrances, encroachments, easements and restrictions. The property is under responsible ownership and competent management and is available for its highest and best use.

2. There are no existing judgments or pending or threatened litigation that could affect the value of the property.

3. There are no hidden or undisclosed conditions of the land or of the improvements that would render the property more or less valuable. Furthermore, there is no asbestos in the property.

4. The revenue stamps placed on any deed referenced herein to indicate the sale price are in correct relation to the actual dollar amount of the transaction.

5. The property is in compliance with all applicable building, environmental, zoning, and other federal, state and local laws, regulations and codes.

6. The information furnished by others is believed to be reliable, but no warranty is given for its accuracy.

This appraisal and any other work product related to this engagement are subject to the following limiting conditions, except as otherwise noted in the report:

1. An appraisal is inherently subjective and represents our opinion as to the value of the property appraised.

2. The conclusions stated in our appraisal apply only as of the effective date of the appraisal, and no representation is made as to the effect of subsequent events.

3. No changes in any federal, state or local laws, regulations or codes (including, without limitation, the Internal Revenue Code) are anticipated.

4. No environmental impact studies were either requested or made in conjunction with this appraisal, and we reserve the right to revise or rescind any of the value opinions based upon any subsequent environmental impact studies. If any environmental impact statement is required by law, the appraisal assumes that such statement will be favorable and will be approved by the appropriate regulatory bodies.

5. Unless otherwise agreed to in writing, we are not required to give testimony, respond to any subpoena or attend any court, governmental or other hearing with reference to the property without compensation relative to such additional employment.

6. We have made no survey of the property and assume no responsibility in connection with such matters. Any sketch or survey of the property included in this report is for illustrative purposes only and should not be considered to be scaled accurately for size. The appraisal Item Number: 2.

Assumptions and Limiting Conditions 76
Skyborne (Village 3)
covers the property as described in this report, and the areas and dimensions set forth are assumed to be correct.

7. No opinion is expressed as to the value of subsurface oil, gas or mineral rights, if any, and we have assumed that the property is not subject to surface entry for the exploration or removal of such materials, unless otherwise noted in our appraisal.

8. We accept no responsibility for considerations requiring expertise in other fields. Such considerations include, but are not limited to, legal descriptions and other legal matters such as legal title, geologic considerations such as soils and seismic stability; and civil, mechanical, electrical, structural and other engineering and environmental matters. Such considerations may also include determinations of compliance with zoning and other federal, state, and local laws, regulations and codes.

9. The distribution of the total valuation in the report between land and improvements applies only under the reported highest and best use of the property. The allocations of value for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. The appraisal report shall be considered only in its entirety. No part of the appraisal report shall be utilized separately or out of context.

10. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraisers, or any reference to the Appraisal Institute) shall be disseminated through advertising media, public relations media, news media or any other means of communication (including without limitation prospectuses, private offering memoranda and other offering material provided to prospective investors) without the prior written consent of the persons signing the report.

11. Information, estimates and opinions contained in the report and obtained from third-party sources are assumed to be reliable and have not been independently verified.

12. Any income and expense estimates contained in the appraisal report are used only for the purpose of estimating value and do not constitute predictions of future operating results.

13. If the property is subject to one or more leases, any estimate of residual value contained in the appraisal may be particularly affected by significant changes in the condition of the economy, of the real estate industry, or of the appraised property at the time these leases expire or otherwise terminate.

14. Unless otherwise stated in the report, no consideration has been given to personal property located on the premises or to the cost of moving or relocating such personal property; only the real property has been considered.

15. The current purchasing power of the dollar is the basis for the values stated in the appraisal; we have assumed that no extreme fluctuations in economic cycles will occur.

16. The values found herein are subject to these and to any other assumptions or conditions set forth in the body of this report but which may have been omitted from this list of Assumptions and Limiting Conditions.

17. The analyses contained in the report necessarily incorporate numerous estimates and assumptions regarding property performance, general and local business and economic Item Number: 2.

Assumptions and Limiting Conditions 77
Skyborne (Village 3)
conditions, the absence of material changes in the competitive environment and other matters. Some estimates or assumptions, however, inevitably will not materialize, and unanticipated events and circumstances may occur; therefore, actual results achieved during the period covered by our analysis will vary from our estimates, and the variations may be material.

18. The Americans with Disabilities Act (ADA) became effective January 26, 1992. We have not made a specific survey or analysis of the property to determine whether the physical aspects of the improvements meet the ADA accessibility guidelines. We claim no expertise in ADA issues, and render no opinion regarding compliance of the subject with ADA regulations.

Inasmuch as compliance matches each owner’s financial ability with the cost to cure the nonconforming physical characteristics of a property, a specific study of both the owner’s financial ability and the cost to cure any deficiencies would be needed for the Department of Justice to determine compliance.

19. The appraisal report is prepared for the exclusive benefit of the Client, its subsidiaries and/or affiliates. It may not be used or relied upon by any other party. All parties who use or rely upon any information in the report without our written consent do so at their own risk.

20. No studies have been provided to us indicating the presence or absence of hazardous materials on the subject property or in the improvements, and our valuation is predicated upon the assumption that the subject property is free and clear of any environment hazards including, without limitation, hazardous wastes, toxic substances and mold. No representations or warranties are made regarding the environmental condition of the subject property. Integra Realty Resources – Los Angeles, Integra Realty Resources, Inc., Integra Strategic Ventures, Inc. and/or any of their respective officers, owners, managers, directors, agents, subcontractors or employees (the “Integra Parties”), shall not be responsible for any such environmental conditions that do exist or for any engineering or testing that might be required to discover whether such conditions exist. Because we are not experts in the field of environmental conditions, the appraisal report cannot be considered as an environmental assessment of the subject property.

21. The persons signing the report may have reviewed available flood maps and may have noted in the appraisal report whether the subject property is located in an identified Special Flood Hazard Area. We are not qualified to detect such areas and therefore do not guarantee such determinations. The presence of flood plain areas and/or wetlands may affect the value of the property, and the value conclusion is predicated on the assumption that wetlands are nonexistent or minimal.

22. Integra Realty Resources – Los Angeles is not a building or environmental inspector. Integra Los Angeles does not guarantee that the subject property is free of defects or environmental problems. Mold may be present in the subject property and a professional inspection is recommended.

23. The appraisal report and value conclusions for an appraisal assume the satisfactory completion of construction, repairs or alterations in a workmanlike manner.

24. It is expressly acknowledged that in any action which may be brought against any of the Integra Parties, arising out of, relating to, or in any way pertaining to this engagement, the Item Number: 2.

Assumptions and Limiting Conditions 78
Skyborne (Village 3)
appraisal reports, and/or any other related work product, the Integra Parties shall not be responsible or liable for any incidental or consequential damages or losses, unless the appraisal was fraudulent or prepared with intentional misconduct. It is further acknowledged that the collective liability of the Integra Parties in any such action shall not exceed the fees paid for the preparation of the appraisal report unless the appraisal was fraudulent or prepared with intentional misconduct. Finally, it is acknowledged that the fees charged herein are in reliance upon the foregoing limitations of liability.

25. Integra Realty Resources – Los Angeles, an independently owned and operated company, has prepared the appraisal for the specific intended use stated elsewhere in the report. The use of the appraisal report by anyone other than the Client is prohibited except as otherwise provided. Accordingly, the appraisal report is addressed to and shall be solely for the Client’s use and benefit unless we provide our prior written consent. We expressly reserve the unrestricted right to withhold our consent to your disclosure of the appraisal report or any other work product related to the engagement (or any part thereof including, without limitation, conclusions of value and our identity), to any third parties. Stated again for clarification, unless our prior written consent is obtained, no third party may rely on the appraisal report (even if their reliance was foreseeable).

26. The conclusions of this report are estimates based on known current trends and reasonably foreseeable future occurrences. These estimates are based partly on property information, data obtained in public records, interviews, existing trends, buyer-seller decision criteria in the current market, and research conducted by third parties, and such data are not always completely reliable. The Integra Parties are not responsible for these and other future occurrences that could not have reasonably been foreseen on the effective date of this assignment. Furthermore, it is inevitable that some assumptions will not materialize and that unanticipated events may occur that will likely affect actual performance. While we are of the opinion that our findings are reasonable based on current market conditions, we do not represent that these estimates will actually be achieved, as they are subject to considerable risk and uncertainty. Moreover, we assume competent and effective management and marketing for the duration of the projected holding period of this property.

27. All prospective value opinions presented in this report are estimates and forecasts which are prospective in nature and are subject to considerable risk and uncertainty. In addition to the contingencies noted in the preceding paragraph, several events may occur that could substantially alter the outcome of our estimates such as, but not limited to changes in the economy, interest rates, and capitalization rates, behavior of consumers, investors and lenders, fire and other physical destruction, changes in title or conveyances of easements and deed restrictions, etc. It is assumed that conditions reasonably foreseeable at the present time are consistent or similar with the future.

28. The appraisal is also subject to the following:

Item Number: 2.

Assumptions and Limiting Conditions 79
Skyborne (Village 3)
Extraordinary Assumptions and Hypothetical ConditionsExtraordinary Assumptions and Hypothetical ConditionsExtraor NoneNoneNoneNone

1.1.The value derived herein is based on the hypothetical condition that proceeds financed by the CFD No. 2025-1 1.1. The value derived he Revenue Bonds are available to reimburse the Developer for certain public improvements already completed.Revenue Bonds are av The use of any extraordinary assumption or hypothetical condition may have affected the assignment results.The use of any extraordin The value conclusions are based on the following hypothetical conditions. A hypothetical condition is a condition, The value conclusi directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the directly related to a speci effective date of the assignment results, but is used for the purpose of analysis.effective date of the assignment results, but is used for The value conclusions are subject to the following extraordinary assumptions. An extraordinary assumption is an The value conclusio assignment-specific assumption as of the effective date regarding uncertain information used in an analysis which, assignment-specif if found to be false, could alter the appraiser’s opinions or conclusions.if found to be false, could alter the appraiser’s opinions or co Item Number: 2.

Addenda
Skyborne (Village 3)
Addendum A
Appraiser Qualifications
Item Number: 2.

Integra Realty Resources - Los
Angeles (219)
irr.com
T 916.435.3883
F 916.435.4774
12100 Wilshire Blvd
Suite 800
Los Angeles, CA 90025
Eric Segal, MAI
Experience
Mr. Segal is a Certified General real estate appraiser and holds the Appraisal Institute's MAI designation. In 1998, Mr. Segal began his career in real estate as a research analyst/appraiser trainee for Richard Seevers and Associates. By 1999, he began writing narrative appraisal reports covering a variety of commercial properties, with an emphasis on residential master planned communities and subdivisions. Today, Mr. Segal is a partner in the firm and is involved in appraisal assignments covering a wide variety of properties including office, retail, industrial, multifamily housing, master planned communities, and specializes in the appraisal of Mello Roos Community Facilities Districts and Assessment Districts for land secured municipal financings, as well as multifamily developments under the U.S. Department of Housing and Urban Development’s Multifamily Accelerated Processing (MAP) Guide. He has developed the experience and background necessary to deal with complex assignments covering an array of property types, with a particular focus on urban redevelopment in the cities of San Francisco, Oakland, Monterey, Alameda and San Mateo. He has developed the experience and background necessary to deal with complex assignments covering an array of property types. Eric is currently Senior Managing Director of the Integra Los Angeles office, and Managing Director of the Integra Orange County, Integra-San Francisco and Integra-Sacramento offices.

Professional Activities & Affiliations
MAI Designation, Appraisal Institute Appraisal Institute, January 2016 Licenses
California, Certified General Real Estate Appraiser, AG026558, Expires February 2027 Nevada, Certified General, A.0207666-CG, Expires January 2027 Arizona, Certified General, CGA - 1006422, Expires January 2026 Washington, Certified General, 20100611, Expires June 2025 Education
Academic:

Bachelor of Science in Business Administration (Concentrations in Finance and Real Estate & Land Use Affairs), California State University, Sacramento Appraisal and Real Estate Courses:

Uniform Appraisal Standards for Federal Land Acquisitions (Yellow Book) Uniform Standards of Professional Appraisal Practice
Appraisal Principles
Basic Income Capitalization
Highest & Best Use and Market Analysis
Advanced Income Capitalization
Report Writing and Valuation Analysis
Self Storage Economics and Appraisal Seminar
Appraisal Litigation Practice and Courtroom Management
Hotel Valuations: New Techniques for today’s Uncertain Times Computer Enhanced Cash Flow Modeling
Advanced Sales Comparison & Cost Approaches
[email protected] - 916.435.3883 x228
Item Number: 2.

Integra Realty Resources - Los
Angeles (219)
irr.com
T 916.435.3883
F 916.435.4774
12100 Wilshire Blvd
Suite 800
Los Angeles, CA 90025
Eric Segal, MAI
Education (Cont'd)
Advanced Applications
Subdivision Valuation
Appraisal of Self-Storage Facilities
Appraisal of Fast Food Facilities
Appraisal of Limited Service Hotels
How Tenants Create or Destroy Value: Leasehold Valuation and its Impact on Value Appraisal of Manufactured Homes Featuring Next Generation Manufactured Homes Appraisal and Real Estate Courses (cont’d):

Business Practices and Ethics
IRS Valuation Update
[email protected] - 916.435.3883 x228
Item Number: 2.

Item Number: 2.

Integra Realty
Resources - Sacramento
irr.com
T 916.435.3883
F 916.435.4774
516 Gibson Drive
Suite 290
Roseville, CA 95678
Noah Kauffman, MAI, R/W-AC
Experience
Mr. Kauffman is a Certified General real estate appraiser with Integra Realty Resources, a real estate appraisal firm that engages in a wide variety of real estate valuation and consultation assignments. Mr. Kauffman joined IRR’s Sacramento office in 2014, following roles with financial firms including Bridgewater Associates and Trust Company of the West. Having lived in both Northern and Southern California, he brings statewide market knowledge and focuses on subdivision development appraisals for land-secured financing including Community Facilities Districts (CFDs) and Assessment Districts (ADs).

He also manages the company’s Right-of-Way / public acquisition appraisal services across multiple California offices. Mr. Kauffman has developed the experience and background necessary to deal with complex assignments covering an array of property types. Noah Kauffman holds the Appraisal Institute's MAI designation and the Right of Way – Appraisal Certification (R/W-AC) from the International Right of Way Association.

Licenses
California, Certified General Real Estate Appraiser, 3004618, Expires June 2027 Education
Academic:

Bachelor of Science in Agricultural Management and Rangeland Resources, University of California, Davis
Appraisal and Real Estate Courses:

Advanced Concepts & Case Studies
Advanced Income Capitalization
Advanced Market Analysis & Highest and Best Use
Subdivision Valuation
Quantitative Analysis
Laws and Regulations for California Appraisers
Problems in the Valuation of Partial Acquisitions
Reviewing Appraisals in Eminent Domain
The Uniform Act Executive Summary
The Valuation of Partial Acquisitions
Uniform Appraisal Standards for Federal Land Acquisitions: Practical Applications Ethics and the Right of Way Profession
Farm and Rural Resources Appraisal
Basic Appraisal Principles
Basic Appraisal Procedures
Business Practices and Ethics
General Appraiser Sales Comparables Approach
General Appraiser Site Valuation and Cost Approach
General Appraiser Market Analysis and Highest and Best Use General Appraiser Report Writing and Case Studies
General Appraiser Income Capitalization Approach Part I & II Residential Sales Comparables and Income Approach
Residential Site Valuation and Cost Approach
Residential Market Analysis and Highest and Best Use
Residential Report Writing and Case Studies
[email protected] - 916.773.3258
Item Number: 2.

Item Number: 2.

Integra Realty Resources -
Sacramento
irr.com
T 916.435.3883
F 916.435.4774
516 Gibson Drive
Suite 290
Roseville, CA 95678
Kari Tatton
Experience
Ms. Tatton is a Certified General real estate appraiser. After completing her bachelor’s degree at California State University, Sacramento, Ms. Tatton began her career in real estate in March 2011, and has been writing narrative appraisal reports for a variety of commercial properties including office, retail, industrial, multifamily housing, land and special-purpose properties including self-storage facilities, religious facilities, schools and auto dealerships. She specializes in the appraisal of residential master planned communities and subdivisions, as well as Mello-Roos and Assessment Districts for land-secured municipal financings.

Licenses
California, California Certified General Real Estate Appraiser, 3002218, Expires June 2028 Education
Academic:

Bachelor of Arts in Interior Design (Concentration in Interior Architecture) California State University, Sacramento
Appraisal and Real Estate Courses:

Basic Appraisal Principles
Basic Appraisal Procedures
Site Valuation & Cost Approach
General Market Analysis & Highest and Best Use
Sales Comparison Approach
Income Capitalization Approach Part I
Income Capitalization Approach Part II
General Appraiser Report Writing and Case Studies
Appraisal of Fast Food Facilities
Appraising Small Apartment Properties
Appraisal of Land Subject to Ground Leases
Appraising Automobile Dealerships
[email protected] - 916.435.3883 x229
Item Number: 2.

Item Number: 2.

About IRR
Integra Realty Resources, Inc. (IRR) provides world-class commercial real estate valuation, counseling, and advisory services. Routinely ranked among leading property valuation and consulting firms, we are now the largest independent firm in our industry in the United States, with local offices coast to coast and in the Caribbean.

IRR offices are led by MAI-designated Senior Managing Directors, industry leaders who have over 25 years, on average, of commercial real estate experience in their local markets. This experience, coupled with our understanding of how national trends affect the local markets, empowers our clients with the unique knowledge, access, and historical perspective they need to make the most informed decisions.

Many of the nation's top financial institutions, developers, corporations, law firms, and government agencies rely on our professional real estate opinions to best understand the value, use, and feasibility of real estate in their market.

Local Expertise...Nationally!
irr.com
Item Number: 2.

Addenda
Skyborne (Village 3)
Addendum B
Definitions
Item Number: 2.

Addenda
Skyborne (Village 3)
Definitions
The source of the following definitions is the Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015), unless otherwise noted.

As Is Market Value
The estimate of the market value of real property in its current physical condition, use, and zoning as of the appraisal date.

Disposition Value
The most probable price that a specified interest in property should bring under the following conditions:

1. Consummation of a sale within a specified time, which is shorter than the typical exposure time for such a property in that market.

2. The property is subjected to market conditions prevailing as of the date of valuation.

3. Both the buyer and seller are acting prudently and knowledgeably.

4. The seller is under compulsion to sell.

5. The buyer is typically motivated.

6. Both parties are acting in what they consider to be their best interests.

7. An adequate marketing effort will be made during the exposure time.

8. Payment will be made in cash in U.S. dollars (or the local currency) or in terms of financial arrangements comparable thereto.

9. The price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

This definition can also be modified to provide for valuation with specified financing terms.

Effective Date

1. The date on which the appraisal or review opinion applies.

2. In a lease document, the date upon which the lease goes into effect.

Entitlement
In the context of ownership, use, or development of real estate, governmental approval for annexation, zoning, utility extensions, number of lots, total floor area, construction permits, and occupancy or use permits.

Entrepreneurial Profit

1. A market-derived figure that represents the amount an entrepreneur receives for his or her contribution to a project and risk; the difference between the total cost of a property (cost of Item Number: 2.

Addenda
Skyborne (Village 3)
development) and its market value (property value after completion), which represents the entrepreneur’s compensation for the risk and expertise associated with development. An entrepreneur is motivated by the prospect of future value enhancement (i.e., the entrepreneurial incentive). An entrepreneur who successfully creates value through new development, expansion, renovation, or an innovative change of use is rewarded by entrepreneurial profit. Entrepreneurs may also fail and suffer losses.

2. In economics, the actual return on successful management practices, often identified with coordination, the fourth factor of production following land, labor, and capital; also called entrepreneurial return or entrepreneurial reward.

Exposure Time

1. The time a property remains on the market.

2. The estimated length of time that the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective opinion based on an analysis of past events assuming a competitive and open market.

Fee Simple Estate
Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.

Floor Area Ratio (FAR)
The relationship between the above-ground floor area of a building, as described by the zoning or building code, and the area of the plot on which it stands; in planning and zoning, often expressed as a decimal, e.g., a ratio of 2.0 indicates that the permissible floor area of a building is twice the total land area.

Highest and Best Use

1. The reasonably probable use of property that results in the highest value. The four criteria that the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity.

2. The use of an asset that maximizes its potential and that is possible, legally permissible, and financially feasible. The highest and best use may be for continuation of an asset’s existing use or for some alternative use. This is determined by the use that a market participant would have in mind for the asset when formulating the price that it would be willing to bid. (ISV)

3. [The] highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future. (Uniform Appraisal Standards for Federal Land Acquisitions)
Item Number: 2.

Addenda
Skyborne (Village 3)
Investment Value

1. The value of a property to a particular investor or class of investors based on the investor’s specific requirements. Investment value may be different from market value because it depends on a set of investment criteria that are not necessarily typical of the market.

2. The value of an asset to the owner or a prospective owner for individual investment or operational objectives.

Lease
A contract in which rights to use and occupy land, space, or structures are transferred by the owner to another for a specified period of time in return for a specified rent.

Leased Fee Interest
The ownership interest held by the lessor, which includes the right to receive the contract rent specified in the lease plus the reversionary right when the lease expires.

Leasehold Interest
The right held by the lessee to use and occupy real estate for a stated term and under the conditions specified in the lease.

Liquidation Value
The most probable price that a specified interest in real property should bring under the following conditions:

1. Consummation of a sale within a short time period.

2. The property is subjected to market conditions prevailing as of the date of valuation.

3. Both the buyer and seller are acting prudently and knowledgeably.

4. The seller is under extreme compulsion to sell.

5. The buyer is typically motivated.

6. Both parties are acting in what they consider to be their best interests.

7. A normal marketing effort is not possible due to the brief exposure time.

8. Payment will be made in cash in U.S. dollars (or the local currency) or in terms of financial arrangements comparable thereto.

9. The price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

This definition can also be modified to provide for valuation with specified financing terms.

Marketing Time
An opinion of the amount of time it might take to sell a real or personal property interest at the concluded market value level during the period immediately after the effective date of an appraisal.

Marketing time differs from exposure time, which is always presumed to precede the effective date of an appraisal.

Item Number: 2.

Addenda
Skyborne (Village 3)
Market Value
The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:
• buyer and seller are typically motivated;
• both parties are well informed or well advised, and acting in what they consider their own best interests;
• a reasonable time is allowed for exposure in the open market; • payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
• the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. (Source: Code of Federal Regulations, Title 12, Chapter I, Part 34.42[g]; also Interagency Appraisal and Evaluation Guidelines, Federal Register, 75 FR 77449, December 10, 2010, page 77472) Prospective Opinion of Value
A value opinion effective as of a specified future date. The term does not define a type of value.

Instead, it identifies a value opinion as being effective at some specific future date. An opinion of value as of a prospective date is frequently sought in connection with projects that are proposed, under construction, or under conversion to a new use, or those that have not yet achieved sellout or a stabilized level of long-term occupancy.

Item Number: 2.

Addenda
Skyborne (Village 3)
Addendum C
Comparable Data
Item Number: 2.

Addenda
Skyborne (Village 3)
Land Sales
Item Number: 2.

Land Sale Profile Sale No. 1
Location & Property Identification
Property Name: Rancho Descanso
Sub-Property Type: Residential, Finished SFR Lots
Address: 65352 Rancho Descanso
City/State/Zip: Desert Hot Springs, CA 92240
County: Riverside
Market Orientation: Suburban
IRR Event ID: 3362886
Sale Information
Sale Price: $9,753,434
Effective Sale Price: $9,753,434
Sale Date: 09/01/2024
Sale Status: Closed
$/Acre(Gross): $9,753,434
$/Land SF(Gross): $223.91
$/Building SF: $1,354.64
$/Unit (Potential): $128,335 /Improved Lot
Grantor/Seller: GHA Rancho Descanso, LLC
Grantee/Buyer: Lennar
Assets Sold: Real estate only
Property Rights: Fee Simple
Financing: Cash to seller
Conditions of Sale: Arm's-length
Sale Analysis
Expenditures After Purchase: $45,743
Expenditures Description: Finishing costs per lot
Improvement and Site Data
Acres(Gross): 1.00
Land-SF(Gross): 43,560
Potential Building SF: 7,200
No. of Units (Potential): 76
Source of Land Info.: Other
Comments
Lennar purchased 76 single-family detailed lots (typical lot size 7,200 SF) in September 2024 for $9,753,434. The project is located near the intersection of Palm Drive and Camino
Campesino in Desert Hot Springs. Lennar plans on
constructing four floor plans ranging from 1,747 to 2,258 SF with base pricing starting at $485,000.

Rancho Descanso
Item Number: 2.

Land Sale Profile Sale No. 2
Location & Property Identification
Property Name: Refuge
Sub-Property Type: Residential, Single Family
Development Land
Address: Gerald Ford Dr. & Explorer Dr.

City/State/Zip: Palm Desert, CA 92211
County: Riverside
Market Orientation: Suburban
IRR Event ID: 3362917
Sale Information
Sale Price: $13,500,000
Effective Sale Price: $13,500,000
Sale Date: 04/01/2024
Sale Status: Closed
$/Acre(Gross): $145,037
$/Land SF(Gross): $3.33
$/Building SF: $3,590.43
$/Unit (Potential): $40,663 /Approved Lot
Grantor/Seller: Refuge Palm Desert, LLC
Grantee/Buyer: PulteGroup
Assets Sold: Real estate only
Property Rights: Fee Simple
Financing: Cash to seller
Conditions of Sale: Arm's-length
Sale Analysis
Expenditures After Purchase: $134,337
Expenditures Description: Finishing costs per lot
Improvement and Site Data
Acres(Gross): 93.08
Land-SF(Gross): 4,054,565
Potential Building SF: 3,760
No. of Units (Potential): 332
Source of Land Info.: Other
Comments
Situated south of Gerald Ford Drive, Refuge is a masterplan community proposed for a maximum of 700 attached and
detached additive housing units. This property comprises the first phase of the project, encompassing Planning Areas 3 and 4 (332 total lots), which was acquired by Pulte Homes and will be known as Del Webb Explore. Reportedly, finishing costs totaled $134,337 per lot. Typical lot size is 3,760 SF.

Refuge
Item Number: 2.