Agenda packet — Fontana City Council, September 26, 2023 (part 3 of 3)

Principal of, premium, if any, and interest on the Bonds is payable by the Trustee to DTC. Disbursement of such payments to DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of DTC Participants. In the event that the book-entry only system is no longer used with respect to the Bonds, the Beneficial Owners will become the registered owners of the Bonds and will be paid principal and interest by the Trustee, all as described herein. See Appendix I — “INFORMATION CONCERNING THE DEPOSITORY TRUST COMPANY AND ITS BOO K-ENTRY SYSTEM” herein.

The Bonds are subject to optional redemption, mandatory redemption from Special Tax prepayments and mandatory sinking fund redemption as described herein. For a more complete description of the Bonds and the basic documentation pur suant to which they are being sold and delivered, see “THE BONDS” and Appendix F — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE” herein.

Appraisal Report
The District has obtained an appraisal of the Taxable Property (as defined herein) included in the District dated August 22, 2023, with a date of value as of July 17, 2023 (the “Appraisal”). The Appraisal was prepared for the District by Kitty Siino & Associates, Inc., Tustin, California (the “Appraiser”). Subject to the limitations set forth in the Appraisal, the Appraiser is of the opinion that, as of July 17, 2023 the minimum market value of the Taxable Property within the District was not less than $ 71,001,082 (the “Appraised Value”). See “THE COMMUNITY FACILITIES DISTRICT — Property Values” and “ THE COMMUNITY FACILITIES DISTRICT — Value-to-Lien Ratios.” A copy of the Appraisal is included as Appendix B to this Official Statement. It is a condition precedent to the issuance of the Bonds that the Appraiser deliver a certificate stating that nothing has come to the attention of the Appraiser subsequent to the date of the Appraisal that would lead the Appraiser to believe that the value of the Taxable Property (as defined in the Rate and Method) in the District is less than the minimum market value of such property reported in the Appraisal. However, the Appraiser has not performed any procedures since the date of value to obtain knowledge of such events or occurrences nor is it obligated to do so in the future.

Price Point Study
In connection with t he formation of the District, the City hired Empire Economics, Inc., Capistrano Beach, California (the “Price Point Consultant”) to prepare a price point study of the prices of the homes planned within the District, dated August 26, 2020 (the “Original Price Point Study”). The Special Tax rates set forth in the Rate and Method were based in part on the prices set forth in the Original Price Point Study. In connection with and in preparation for the issuance of the Bonds, the City hired the Price Point Con sultant to conduct an update to the Original Price Point Study within the District, dated July 17, 2023 (the “Updated Price Point Study”). Pursuant to Section C of the Rate and Method, prior to the issuance of Bonds, the City is required to amend the Assigned Special Tax (as defined in the Rate and Method) to the extent necessary to cause the total effective tax burden for residential property in the District to not exceed 1.95% of the minimum sales prices set forth in the Updated Price Point Study. A copy of the Updated Price Point Study is included as Appendix C to this Official Statement. Based on the conclusions of the Updated Price Point Study, the Facilities Special Taxes. the Services Special Taxes and all direct and overlapping property taxes, special assessments and other special taxes, the City does not expect to amend the Assigned Special Tax because effective tax rates are not projected to exceed 1.95% for any parcel. See “THE COMMUNITY FACILITIES DISTRICT — Direct and Overlapping Debt — Table 3” — Projected Total Effective Tax Rate for Individually Owned Residential Property.” See also “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Rate and Method of Apportionment.” 451

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Professionals Involved in the Offering
U.S. Bank Trust Company, National Association, Los Angeles, California, will act as Trustee under the Indenture and as the initial Dissemination Agent under the District Continuing Disclosure Agreement. Stifel, Nicolaus & Company, Incorporated is the Underwriter of the Bonds. The validity of the Bonds and certain other legal matters are subject to the approving opinion of Orrick Herrington & Sutcliffe LLP, Bond Counsel to the District. CSG Advisors Incorporated, San Francisco, California, is acting as Municipal Advisor for the City in connection with the Bonds. Kitty Siino & Associates, Inc., Tustin, California, is acting as the Appraiser to the District. DTA, Inc. is acting as the Special Tax Consultant to the District. Empire Economics, Inc. is acting as the Price Point Consultant to the District. Certain legal matters will be passed on for the City and the District by Best Best & Krieger LLP, Riverside, California, in its capacity as City Attorney, and Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Disclosure Counsel. Certain legal matters will be passed upon for the Underwriter by its counsel, Jones Hall, A Professional Law Corporation, San Francisco, California.

For information concerning respects in which certain of the above -mentioned professionals, advisors, counsel and agents may have a financial or other interest in the offering of the Bonds, see “FINANCIAL INTERESTS” herein.

Continuing Disclosure
The District will agree to provide, or cause to be provided, to the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access system available on the Internet at http://emma.msrb.org (“EMMA”) certain annual financial information and operating data. The District will further agree to provide notice of certain listed events. These covenants will be made in order to assist the Underwriter in complying with Securities and Exchange Commi ssion Rule 15c2-12(b)(5) (the “Rule”). See “CONTINUING DISCLOSURE” herein. Additionally, Tri Pointe has agreed to provide, or cause to be provided, to EMMA, on a semi-annual basis, certain information and to provide notice of certain listed events. See the form of District Continuing Disclosure Agreement attached as Appendix G hereto (the “District Continuing Disclosure Agreement”) for a description of the specific nature of the annual reports to be filed by the District and notices of listed events to be provided by the District. See the form of Developer Disclosure Certificate attached as Appendix H hereto (the “Developer Continuing Disclosure Certificate”) for a description of the specific nature of the semi-annual reports to be filed by Tri Pointe and notices of listed events to be provided by Tri Pointe. See “CONTINUING DISCLOSURE.”
Bond Owners’ Risks
Certain events could affect the ability of the District to pay the principal of and interest on the Bonds when due. See the section of this Official Statement entitled “SPECIAL RISK FACTORS” for a discussion of certain factors which should be considered, in addition to other matters set forth herein, in evaluating an investment in the Bonds.

Other Information
This Official Statement speaks only as of it s date, and the information contained herein is subject to change.

Brief descriptions of the Bonds and the Indenture are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. All referenc es herein to the Indenture, the Bonds and the constitution and laws of the State as well as the proceedings of the City Council, acting as the legislative body of the District, are qualified in their entirety by references to such documents, laws and proceedings, and with respect to the Bonds, by reference to the Indenture. 452

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Copies of the Indenture, the District Continuing Disclosure Agreement and other documents and information referred to herein are available for inspection and (upon request and payment to the City of a charge for copying, mailing and handling) for delivery from the City at 8353 Sierra Avenue, Fontana, California 92335, Attention: Jessica Brown.

ESTIMATED SOURCES AND USES OF FUNDS
The following table sets forth the expected sources and use s of Bond proceeds and certain other amounts.

Sources:

Principal Amount of the Bonds $
[Plus/Less] [Net[ Original Issue [Premium/Discount]
Less Underwriter’s Discount
Plus Funds on Hand
Total $
Uses:

Improvement Fund(1) $
Reserve Fund(2)
Costs of Issuance Fund
Total $

(1) Consists of $____________ to be deposited into the Construction Account and $__________ to be deposited into the Community Benefit Facilities Account.
(2) Equal to the initial Reserve Requirement.

THE BONDS
General Provisions
The Bonds will be issued in fully registered form without coupons in denominations of $5,000 and any integral multiple thereof (“Authorized Denominations”). The Bonds will be dated the date of issuance thereof.

The Bonds are scheduled to mature on September 1, in the years and in the principal amounts, and will bear interest at the rates per annum, shown on the inside front cover page of this Official Statement. Interest on the Bonds will be computed on the basis of a 360-day year consisting of twelve 30-day months and will be payable on March 1 and September 1 of each year, commencing March 1, 2024 (each an “Interest Payment Date”).

Interest on each Bond will be payable from the Interest Payment Date next preceding the date of authentication thereof unless (i) such Bond is authenticated on or before an Interest Payment Date and after the close of business on the fifteenth calendar day of the month preceding such Interest Payment Date, whether or not such day is a Business Day (the “Record Date”) in which event interest thereon will be payable from such Interest Payment Date, (ii) such Bond is authenticated on or before the first Record Date, in which event interest thereon will be payable from the Closing Date or (iii) interest on such Bond is in default as of the date of authentication thereof, in which event interest thereon will be payable from the date to which interest has been previously paid or duly provided for.

The interest on, and principal of and redemption premiums, if any, on the Bonds are payable in lawful money of the United States of America. Interest is payable by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Owners of the Bonds at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date (except that interest on any Bond which is not punctually paid or duly provided for on any Interest Payment Date will, if and to the extent that amounts subsequently become available therefor, be payable on a payment date established by the Trustee to the Person in whose name the ownership of such Bond is registered on the Registration Books at the close of business on a special record date to be established by the Trustee pursuant to the Indenture). Payment of principal of any Bond will be made only upon presentation and surrender thereof at maturity or upon earlier redemption at the Office of the Trustee.
453

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The Bonds will initially be issued in book-entry form, and DTC will act as securities depository. So long as the Bonds are held in book-entry form, principal of, premium, if any, and interest on the Bonds will be paid by the Trustee directly to DTC for distribution to the Beneficial Owners of the Bonds in accordance with procedures adopted by DTC. See Appendix I — “INFORMATION CONCERNING THE DEPOSITORY TRUST COMPANY AND ITS BOOK-ENTRY SYSTEM.”
The Bonds are not general obligations of the District but are special, limited obligations of the District payable solely from Net Special Tax Revenues and the other amounts held under the Indenture in the Special Tax Fund, the Bond Fund and the Reserve Fund. Neither the faith and credit nor the taxing power of the District (except to the limited extent set forth in the Indenture), the City, the State, or any political subdivision thereof, is pledged to the payment of the Bonds or Additional Bonds. See “SPECIAL RISK FACTORS — Bonds Are Limited Obligations.”
Redemption
Optional Redemption. The Bonds maturing on and after September 1, 20__ shall be subject to optional redemption, in whole, or in part in Authorized Denominations, on any date on or after September 1, 20__, from any source of available funds, at the following respective Redemption Prices (ex pressed as percentages of the principal amount of the Bonds to be redeemed), plus accrued interest thereon to the date of redemption:

Redemption Dates Redemption Price
September 1, 20__ through August 31, 20__ 103%
September 1, 20__ through August 31, 20__ 102
September 1, 20__ through August 31, 20__ 101
September 1, 20__ and thereafter 100

Mandatory Redemption from Special Tax Prepayments . The Bonds are subject to mandatory redemption, in whole, or in part in Authorized Denominations, on any Interest Payment Date, from and to the extent of Special Tax prepayments required to be applied thereto and any related proportional amounts in the Reserve Fund required to be applied thereto pursuant to the Indenture (see “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Reserve Fund” and “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Special Tax Fund”) at the following respective Redemption Prices (expressed as percentages of the principal amount of the Bonds to be redeemed), plus accrued interest thereon to the date of redemption:

Redemption Dates Redemption Price
Any Interest Payment Date through March 1, 20__ 103%
September 1, 20__ and March 1, 20__ 102
September 1, 20__ and March 1, 20__ 101
September 1, 20__ and thereafter 100

Mandatory Sinking Fund Redemption . The Bonds maturing September 1, 20__ shall be subject to mandatory sinking fund redemption, in part, on September 1 in each year, commencing September 1, 20__, at a Redemption Price equal to the principal amount of the B onds maturing September 1, 20__ to be redeemed, 454

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without premium, plus accrued interest thereon to the date of redemption, in the aggregate respective principal amounts in the respective years as follows:

Sinking Fund
Redemption Date
(September 1)
Principal Amount
to be
Redeemed

If some but not all of the Bonds maturing on September 1, 20__ are redeemed pursuant to the optional redemption provisions of the Indenture described above, the principal amount of the Bonds maturing on September 1, 20__ to be redeemed by mandatory sinking fund redemption as described above on any subsequent September 1 shall be reduced, by $5,000 or an integral multiple thereof, as designated by the District in a Written Certificate of the District submitted to the Trustee; provided, however, that the aggr egate amount of such reductions shall not exceed the aggregate amount of the Bonds maturing on September 1, 20__ so optionally redeemed. If some but not all of the Bonds maturing on September 1, 20__ are redeemed pursuant to the mandatory redemption from Special Tax prepayments provisions of the Indenture, the principal amount of the Bonds maturing on September 1, 20__ to be redeemed by mandatory sinking fund redemption as described above on any subsequent September 1 shall be reduced by the aggregate prin cipal amount of the Bonds maturing on September 1, 20__ so mandatorily redeemed from Special Tax prepayments, such reduction to be allocated among redemption dates as nearly as practicable on a pro rata basis in amounts of $5,000 or integral multiples thereof, as determined by the Trustee, notice of which determination shall be given by the Trustee to the District.

The Bonds maturing September 1, 20__ shall be subject to mandatory sinking fund redemption, in part, on September 1 in each year, commencing Sep tember 1, 20__, at a Redemption Price equal to the principal amount of the Bonds maturing September 1, 20__ to be redeemed, without premium, plus accrued interest thereon to the date of redemption, in the aggregate respective principal amounts in the respe ctive years as follows:

Sinking Fund
Redemption Date
(September 1)
Principal Amount
to be
Redeemed

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September 1, 20__ so mandatorily redeemed from Special Tax prepayments, such reduction to be allocated among redemption dates as nearly as practicable on a pro rata basis in amounts of $5,000 or integral multiples thereof, as determined by the Trustee, notice of which determination shall be given by the Trustee to the District.

Sinking Fund
Redemption Date
(September 1)
Principal Amount
to be
Redeemed

Selection of Bonds for Redemption. Whenever provision is made in the Indenture for the redemption of less than all of the Bonds and Additional Bonds, the Trustee will select the Bonds and Additional Bonds to be redeemed from all Bonds and Additional Bonds not previously called for redemption (a) with respect to any optional redemption of Bonds and Additional Bonds of a Series, among maturities of the Bonds and Additional Bonds of such Series as directed in a Written Request of the District (b) with respect to any mandatory redemption of Bonds or Additional Bonds from prepayments of the Special Tax, among maturities of all Series of Bonds and any Additional Bonds on a pro rata basis as nearly as practicable, and (c) with respect to any other redemption of Additional Bonds, among maturities as provided in the Supplemental Indenture pursuant to which such Additional Bonds are issued. The Trustee shall select for redemption the Bonds and any Additional Bonds of the same Series with the same maturity by lot in any manner that the Trustee, in its sole discretion, shall deem appropriate. For purposes of such selection, all Bonds shall be deemed to be comprised of the greatest number of separate denominations that would result in each such denomination being an Authorized Denomination and each such separate denomination shall be treated as a separate Bond that may be separately redeemed.

Notice of Redemption. If the Bonds are held in book-entry form, notice of redemption will be mailed to DTC and not to the Beneficial Owners of the Bonds under the DTC book-entry system. Neither the District nor the Trustee is responsible for giving notice of redemption to the Beneficial Owners. See Appendix I — 456

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“INFORMATION CONCERNING THE DEPOSITORY TRUST COMPANY AND ITS BOOK -ENTRY SYSTEM” herein.

The Indenture provides that the Trustee on behalf and at the expense of the District will give notice of any redemption by fir st class mail to the respective Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books and to the Original Purchaser, at least 30 but not more than 60 days prior to the date fixed for redemption. Such notice of redemption will state the date of the notice, the redemption date, the redemption place and the Redemption Price and shall designate the CUSIP numbers, if any, the Bond numbers and the maturity or maturities of the Bonds to be redeemed (except in the event of redemption of all of the Bonds of such maturity or maturities in whole). The notice of redemption will require that the Bonds to be redeemed be surrendered at the Office of the Trustee for redemption at the Redemption Price, and give noti ce that further interest on such Bonds will not accrue from and after the date fixed for redemption. Neither the failure to receive any notice so mailed, nor any defect in such notice, will affect the validity of the proceedings for the redemption of the Bonds or the cessation of accrual of interest thereon from and after the date fixed for redemption.

With respect to any notice of any optional redemption of Bonds, unless at the time such notice is given the Bonds to be redeemed shall be deemed to have bee n paid within the meaning of the Indenture, such notice will state that such redemption is conditional upon receipt by the Trustee, on or prior to the date fixed for such redemption, of moneys that, together with other available amounts held by the Trustee, are sufficient to pay the Redemption Price of, and accrued interest on, the Bonds to be redeemed, and that if such moneys shall not have been so received said notice shall be of no force and effect and the District will not be required to redeem such Bonds. In the event a notice of redemption of Bonds contains such a condition and such moneys are not so received, the redemption of Bonds as described in the conditional notice of redemption will not be made and the Trustee will, within a reasonable time after the date on which such redemption was to occur, give notice to the Persons and in the manner in which the notice of redemption was given, that such moneys were not so received and that there shall be no redemption of Bonds pursuant to such notice of redemption.

Effect of Notice of Redemption. If, on said date fixed for redemption, moneys for the Redemption Price of all the Bonds to be redeemed, together with interest to said date, is held by the Trustee so as to be available therefor on such date, and, if notice of redemption thereof will have been mailed as aforesaid and not canceled, then, from and after said date, interest on said Bonds will cease to accrue and become payable. All moneys held by or on behalf of the Trustee for the redemption of Bonds will be held in trust for the account of the Owners of the Bonds so to be redeemed without liability to such Owners for interest thereon. 457

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Debt Service Schedule
Year Ending
September 1 Principal(1) Interest Total
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
2054
TOTAL:

(1) Includes mandatory sinking fund redemption.

Source: The Underwriter.

SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
General
The Bonds are special, limited obligations of the District, and, except as otherwise provided in the Indenture, they are payable solely from Net Special Tax Revenues. The Indenture defines “Net Special Tax Revenues” to mean Special Tax Revenues less amoun ts required to pay Administrative Expenses. The term “Special Tax Revenues” is defined in the Indenture to mean the proceeds of the Special Tax received by or on behalf of the District, including any prepayments thereof, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Tax (which shall be limited to the amount of said lien and interest and penalties thereon). The Indenture defines the term “Special Tax” as the special tax described and defined in the Rate and Method as the “Special Tax” approved by the qualified electors of the District. “Administrative Expenses” is defined in the Indenture to mean costs directly related to 458

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the administration of the District, inclu ding, but not limited to: the costs of computing the Special Tax and preparing the annual Special Tax collection schedules and the costs of collecting the Special Tax, the costs of remitting the Special Tax to the Trustee, the fees and costs of the Truste e (including its legal counsel) in the discharge of the duties required of it under the Indenture, the costs incurred by the District in complying with the disclosure provisions of any continuing disclosure undertaking and the Indenture, including those related to public inquiries regarding the Special Tax and disclosures to Owners, the costs of the District related to an appeal of the Special Tax, any amounts required to be rebated to the federal government in order for the District to comply with the tax covenants in the Indenture, an allocable share of the salaries of the City staff providing services on behalf of the District directly related to the foregoing and a proportionate amount of City general administrative overhead related thereto, and the costs of foreclosure of any delinquent Special Tax.

Under the Rate and Method, parcels of Taxable Property, exclusive of Taxable Public Property and Taxable Property Owner Association Property, are classified as Developed Property if a building permit has been obtained for such parcel by May 1 of the fiscal year preceding the Special Tax levy. For the projected Fiscal Year 2024-25 Special Tax levy, based on the development status within the District as of July 17, 2023, 131 parcels of Taxable Property will be classified as Developed Property, assuming no additional building permits are obtained prior to May 1, 2024. See “PROPERTY OWNERSHIP AND THE DEVELOPMENT.” Under no circumstances may the amount of Special Tax levied by the District in any year exceed the maximum rates approved by the qualified electors within the District, as set forth in the Rate and Method. A copy of the Rate and Method is attached to this Official Statement as Appendix A.

In addition to the Net Special Tax Revenues, any other amounts held by the Trustee in the Special Tax Fund, the Bond Fund and the Reserve Fund are pledged pursuant to the Indenture to secure the payment of the principal of, premium, if any, and interest on the Bonds and any Additional Bonds in accordance with their respective terms, the Indenture and the Act. However, those amounts are pledged subject to the provisions of the Indenture permitting the application thereof for the purposes set forth in the Indenture. Amounts on deposit in the Improvement Fund, the Costs of Issuance Fund, the Redemption Fund, the Administrative Expense Fund and the Rebate Fund are not pledged to the payment of any of the Bonds or any Additional Bonds.

NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE DISTRICT (EXCEPT TO THE LIMITED EXTENT SET FORTH IN THE INDENTURE), THE CITY OR THE

STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE BONDS OR ADDITIONAL BONDS. EXCEPT FOR THE NET SPECIAL TAX

REVENUES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT O F THE BONDS OR ADDITIONAL BONDS. THE BONDS AND ANY ADDITIONAL BONDS ARE NOT GENERAL OR

SPECIAL OBLIGATIONS OF THE CITY BUT ARE SPECIAL, LIMITED OBLIGATIONS OF THE

DISTRICT PAYABLE SOLELY FROM NET SPECIAL TAX REVENUES AND THE OTHER ASSETS PLEDGED THEREFOR UNDER THE INDENTURE AS MORE FULLY DESCRIBED HEREIN.

Special Tax
Pursuant to the Act, the City Council adopted a resolution on June 9, 2020 stating its intention to establish the District and to levy a special tax within the District. In accordance with the provisions of the Act, the City Council established the District on December 8, 2020 for the purpose of, among other things, financing certain public infrastructure improvements necessary for the proposed development within the District. At a special election held on December 8, 2020, the then sole landowner of the property within the District, SC Victoria, authorized the District to incur indebtedness in an amount not to exceed $8,000,000 and approved the Rate and Method. The Rate and Method is set forth in Appendix A hereto.

Pursuant to Section C of the Rate and Method, prior to the issuance of the Bonds, if necessary, the City is required to amend the Assigned Special Tax (as defined in the Rate and Method) to the extent necessary to cause the Total Tax Burden (as defined in the Rate and Method) for one or more land use classes of residential property in the District to not exceed 1.95% of the Minimum Sale Prices (as defined in the Rate and Method) set 459

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forth in the Updated Price Point Study. A copy of the Updated Price Point Study is included as Appendix C to this Official Statement. Based on the conclusions of the Updated Price Point Study, the Facilities Special Taxes, the Services Special Taxes and all direct and overlapping property taxes, special assessments and other special taxes, the City does not expect to amend the Assigned Special Tax. See “— Rate and Method of Apportionment” below. See also “THE COMMUNITY FACILITIES DISTRICT — Direct and Overlapping Debt — Table 3 — Projected Total Effective Tax Rate for Individually Owned Residential Property.” Pursuant to the Indenture, the District has covenanted that it will fix and levy the Special Tax within the District in each Fiscal Year in accordance with the Rate and Method in an amount sufficie nt (subject to the limitations contained in the Rate and Method as to the maximum Special Tax that may be levied on each parcel) to yield Special Tax Revenues in the amount required for (i) the payment of principal of and interest on any Outstanding Bonds and any Additional Bonds becoming due and payable during the Corresponding Bond Year, (ii) any necessary replenishment of the Reserve Fund, and (iii) the payment of Administrative Expenses estimated to be paid from such Special Tax Revenues, taking into account the balances in the funds and accounts established under the Indenture. See Appendix F — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Certain Covenants Under the Indenture.” Notwithstanding this covenant, the amount of Special Tax actually collected each year may be less than the amount described for a variety of different reasons.

See “SPECIAL RISK FACTORS — Levy of the Special Tax.”
The Bonds have been structured so that, beginning in Fiscal Year 2024 -25, the Assigned Special Tax rates set forth in the Rate and Method that may be levied within the District, based on the expected buildout of the District, are at least 110% of debt service on the Bonds in each Bond Year net of estimated Administrative Expenses of $40,000 escalating 2% each fiscal year beginning July 1, 2025. The Special Tax levied in any fiscal year may not exceed the maximum rates authorized pursuant to the Rate and Method. See Appendix A ⎯ “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” There is no assurance that the Special Tax proceeds will, in all circumstances, be adequate to pay the principal of and interest on the Bonds when due.

Pursuant to the Act, the Special Tax levied in any Fiscal Year against any parcel of residential property in the District may not be increased as a consequence of delinquency or default by the owners of any other parcels within the District by more than 10% above the amount that would have been levied in that Fiscal Year had there never been any such delinquencies or defaults. See “SPECIAL RISK FACTORS ⎯ Levy of the Special Tax” and “SPECIAL RISK FACTORS ⎯ Exempt Properties.”
Rate and Method of Apportionment
General. The Rate and Method is to be applied by the District each year for the purpose of determining the amount of the Special Tax to be levied against each Assessor’s Parcel of Taxable Property within the District.

For purposes of the discussion of the Rate and Method only, terms with initial capital letters that are not otherwise defined in this Official Statement shall have the respective meanings assigned to them in the Rate and Method, a copy of which appears in Appendix A.

Under the terms of the Indenture, prior to August 1 of each year, the D istrict will ascertain from the County of San Bernardino Assessor the relevant parcels on which the Special Tax are to be levied, taking into account any parcel splits during the preceding and then current year. The District will levy the Special Tax by August 10 of each Fiscal Year that the Bonds are Outstanding, or otherwise such that the computation of the levy is complete before the final date on which the auditor (the “Auditor”) of the County of San Bernardino (the “County”) will accept the transmission of the Special Tax amounts for the parcels within the District for inclusion on the next real property tax roll. Upon the completion of the computation of the amounts of the levy, the District will prepare, or cause to be prepared, and shall transmit t o the Auditor, such data as the Auditor requires to include the levy of the Special Tax on the next real property tax roll.

The Special Tax levied in any Fiscal Year may not exceed the maximum rates authorized pursuant to the Rate and Method. See Appendix A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX” hereto. Although the Bonds have been structured so that, beginning in Fiscal Year 2023-24, the Assigned 460

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Special Tax rates set forth in the Rate and Method that may be levied based on expected build out of the District are at least 110% of debt service on the Bonds net of estimated Administrative Expenses of $40,000 escalating 2% each fiscal year beginning July 1, 2025, there is no assurance that the proceeds of the Special Tax will, in all circumstances, be adequate to pay the principal of and interest on the Bonds when due. See “SPECIAL RISK FACTORS — Levy of the Special Tax” herein.

Rate and Method of Apportionment of Special Tax . The District is legally authorized and has covenanted to cause the levy of the Special Taxes in an amount determined according to a methodology, i.e., the Rate and Method, which the City Council and the qualified elector within the District have approved. The Rate and Method apportions the total amount of the Facilities Sp ecial Tax and Services Special Tax to be collected among the Taxable Property in the District as more particularly described below. The Facilities Special Tax is referred to herein as the “Special Tax” or the “Special Taxes.” The Services Special Tax is not pledged to the repayment of the Bonds and is not available to pay debt service on the Bonds.

The following is a synopsis of the provisions of the Rate and Method, which should be read in conjunction with the complete text of the Rate and Method which i s attached as Appendix A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” The meaning of the defined terms used in this section are as set forth in Appendix A. This section provides only a summary of the Rate and Method, and is qualified by more complete and detailed information contained in the Rate and Method attached as Appendix A. As used in the Rate and Method, “Bonds” means the Bonds and any Additional Bonds. “Alley Load Product ” means all Residential Property for which residential dwelling uni ts have their garage entrance on one side of the unit, off of an alley or drive that runs behind such unit, with main house entrance from the opposite side of the unit.
“CFD Administrator” means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement for Facilities and the Special Tax Requirement for Services, providing for the levy and collection of the Special Taxes, and performing other duties as set forth in the Rate and Method of Apportionment of Special Tax.
“Cluster Product” means all Residential Property located within the District that is not an Alley Load Product.
“Developed Property” means, for each Fiscal Year, (i) with respect to the Facilities Special Tax, all Taxable Property, exclusive of Taxable Public Property and Taxable Property Owner Association Property, for which a building permit for new construction, other than the construction of a garage, parking lot, or parking structure, was issued after January 1, 2020 and on or before May 1 of the Fiscal Year preceding the Fiscal Year for which the Facilities Special Taxes are being levied, and (ii) with respect to the Services Special Tax, all Taxable Property, exclusive of Taxable Public Property and Taxable Property Owner Association Property, (a) for which the Final Residential Subdivision was recorded prior to the Fiscal Year for which the Services Special Taxes are being levied, or (b) for which a building permit has been issued with respect to Non-Residential Property on or before May 1 of the Fiscal Year preceding the Fiscal Year for which the Services Special Taxes are being levied.
“Facilities Special Tax” means the special tax to be levied in each Fiscal Year on each Assessor’s Parcel of Taxable Property within the District to fund the Special Tax Requirement for Facilities as set forth in the Rate and Method of Apportionment of Special Tax.
“Lower Income Households Welfare Exemption Property” means, for each Fiscal Year, an Assessor’s Parcel within the boundaries of the District that is entit led to a welfare exemption under subdivision (g) of Section 214 of the California Revenue and Taxation Code (or any successor statute), as indicated in the County’s assessment roll finalized as of the last preceding January 1. 461

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“Product Type” means Cluster Product or Alley Load Product, as defined in the Rate and Method. “Services Special Tax” means the special tax to be levied in each Fiscal Year on each Assessor’s Parcel of Developed Property within the District to fund the Special Tax Requirement for Serv ices as set forth in the Rate and Method of Apportionment of Special Tax. The Services Special Tax is not pledged to the repayment of the Bonds and is not available to pay debt service on the Bonds. “Special Tax Requirement for Facilities” means, for any Fiscal Year, that amount required, after taking into account available amounts held in the funds and accounts under the Indenture, for the following items:
(i) debt service on all Outstanding Bonds due in the calendar year commencing in such Fiscal Year; (ii) periodic costs with respect to the Bonds, including but not limited to, costs of credit enhancement and federal rebate payments due in the calendar year commencing in such Fiscal Year; (iii) pay all or a portion of Administrative Expenses; (iv) any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) without duplicating any amounts described in clause (iv) above, reasonably anticipated Facilities Special Tax delinquencies based on the delinquency rate for the Facilities Special Tax in the previous Fiscal Year, as said levy for delinquencies shall be limited by the Act; and (vi) pay directly for the acquisition or construction of Authorized Facilities, provided that the inclusion of such amount does not cause an increase in the Facilities Special Tax levy on Undeveloped Property.
“Taxable Property” means all of the Assessor’s Parcels within the boundaries of the District which are not exempt from the Special Tax pursuant to law or described below under the subhea ding “ — Exempt Property.” Each Fiscal Year, all Taxable Property within the District will be classified as Developed Property, Undeveloped Property, Taxable Property Owner Association Property, or Taxable Public Property, and will be subject to Special Ta xes in accordance with the Rate and Method described below under the subheading “Maximum Special Tax, Assigned Special Tax and Backup Special Tax.” “Taxable Property Owner Association Property ” means all Assessor’s Parcels of Property Owner Association Property that are not exempt from the Special Tax described below under the subheading “— Exempt Property ,” and further described in Section E of the Rate and Method attached hereto as Appendix A.
“Taxable Public Property” means all Assessor’s Parcels of Public Property that are not exempt from the Special Tax described below under the subheading “— Exempt Property,” and further described in Section E of the Rate and Method attached hereto as Appendix A.
“Undeveloped Property” means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Taxable Public Property or Taxable Property Owner Association Property.

Exempt Property. No Facilities Special Tax will be levied on up to 7.7 Acres of Public Property and/or Property Owner Association Property in the District. Tax -exempt status will be assigned by the CFD Administrator in chronological order in which property in the District becomes Public Property or Property Owner Association Property. However, should an Assessor’s Parcel no longer be classified as Public Property or Property Owner Association Property, it will, from that point forward, be subject to the Facilities Special Tax.

Notwithstanding the above, an Assessor’s Parcel in the District that is transferred to a public agency or property owner’s association prior to the issuance of the first series of bonds that causes the Acreage of Public Property and Property Owner Association Property to exceed the 7.7 Acreage limit that can be designated by the CFD Administrator under the Rate and Method will also be exempted from the Special Tax.

Public Property or Property Owner Association Property that is not exempt from the Facilities Special Tax as described above will be subject to the levy of the Facilities Special Tax and will be taxed Proportionately as part of the fourth step described under the heading “ Method of Apportionment of Special Tax ” below. The District will not levy a Services Special Tax on Undeveloped Property, Taxable Public Prope rty, Taxable 462

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Property Owner Association Property or Public Property and Property Owner Association Property described below under the subheading “— Exempt Property,” and further described in Section E of the Rate and Method attached hereto as Appendix A.

Under the Rate and Method, no Special Tax shall be levied on Lower Income Household Welfare Exemption Property; provided that if, in any Fiscal Year, applicable law does not require that an Assessor’s Parcel that is Lower Income Households Welfare Exemption Property be exempt from the Facilities Special Tax, then the Facilities Special Tax shall be levied on such Assessor’s Parcel in accordance with the Rate and Method as if such Assessor’s Parcel were not classified as Lower Income Households Welfare Exempt ion Property.

Senate Bill 1473, the “Local Government Omnibus Act of 2020,” amended Government Code Section 53340(c) to provide that in a community facilities district in which the levy of a special tax is authorized by an ordinance adopted on or after Ja nuary 1, 2020, a property receiving a welfare exemption under subdivision (g) of Section 214 of the California Revenue and Taxation Code shall be exempt from the special tax unless debt is outstanding and the property was subject to the special tax prior t o receiving the exemption, in which case the property shall remain subject to the special tax and the special tax shall be enforceable against the property.

Therefore, pursuant to the Rate and Method and California law, and given that no property is subje ct to the welfare exemption as of the date hereof, the Special Tax will be applicable to Lower Income Household Welfare Exemption Property so long as the Bonds are outstanding.

Maximum Special Tax, Assigned Special Tax and Backup Special Tax. The Maximum Special Tax, Assigned Special Tax and Backup Special Tax for the Facilities Special Tax provided for in the Rate and Method are as follows:

Facilities Special Tax.

Developed Property. The Maximum Facilities Special Tax for each Assessor’s Parcel classifie d as Developed Property will be the greater of (i) the amount derived by application of the Assigned Facilities Special Tax or (ii) the amount derived by application of the Backup Facilities Special Tax.

Assigned Facilities Special Tax. Residential Property will be assigned to either Land Use Class 1 or Land Use Class 2, as identified in Table 1 in Section C of the Rate and Method, based on the Product Type associated with such Assessor’s Parcel. Non -Residential Property will be assigned to Land Use Class 3. The Assigned Facilities Special Tax applicable to an Assessor’s Parcel classified as Residential Property was $2,348 per unit for units assigned to Land Use Class 1 as an Alley Load Product and $2,229 per unit for units assigned to Land Use Class 2 as a Cluster Product. The Assigned Facilities Special Tax applicable to an Assessor’s Parcel classified as Non-Residential Property is $31,660 per acre. Based on the Updated Price Point Study provided by the Price Point Consultant, the City does not expect the Assigned Facilities Special Tax rates set forth in Section C of the Rate and Method to be reduced, as the total effective tax burden applicable to each land use class of residential property to be constructed within the District will not exceed 1.95% of the minimum sale prices set forth in the Updated Price Point Study. A copy of the Updated Price Point Study is included as Appendix C to this Official Statement.

Backup Facilities Special Tax. The Backup Facilities Special Tax for an Assessor’s Parcel of Developed Property upon adoption of the Rate and Method equaled the lesser of (a) $37,240 per Acre, or (b) in connection with any reduction in the Assigned Facilities Special Tax as set forth in Section C.1 of the Rate and Method, the reduced amount pe r Acre calculated pursuant to Section C.1.a.(3) of the Rate and Method. Pursuant to the Updated Price Point Study provided by the Price Point Consultant, no reduction of the Assigned Facilities Special Tax will be required under the Rate and Method; accor dingly, no reduction of the Backup Facilities Special Tax will be required.

The Assigned Facilities Special Tax and Backup Facilities Special Tax are not subject to escalation. 463

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Multiple Land Use Classes. In some instances an Assessor’s Parcel of Developed Property may contain both Developed and Undeveloped Property. In such cases, the Acreage of the Assessor’s Parcel will be allocated between Developed Property and Undeveloped Property based on the portion of the Assessor’s Parcel for which building permits had been issued prior to May 1 of the prior Fiscal Year and the portion of the Assessor’s Parcel for which building permits had not been issued prior to May 1 of the prior Fiscal Year. Furthermore, Developed Property may contain more than one Land Use Class. In such cases, the Acreage that is considered Developed Property will be allocated between Residential Property and Non -Residential Property based on the amount of Acreage designated for each land use as determined by reference to the site plan app roved for such Assessor’s Parcel. The Maximum Facilities Special Tax that can be levied on such Assessor’s Parcel will be the sum of the Maximum Facilities Special Tax that can be levied on each type of property located on that Assessor’s Parcel.

The CFD Administrator’s allocation to each type of property will be final.

Undeveloped Property, Taxable Public Property and Taxable Property Owner Association Property .

The Maximum Facilities Special Tax for each Assessor’s Parcel of Undeveloped Property, Taxab le Public Property and Taxable Property Owner Association Property is $37,240 per Acre. The Maximum Facilities Special Tax rates for Undeveloped Property, Taxable Public Property and Taxable Property Owner Association Property are not subject to escalation.

Method of Apportionment of Special Tax . Commencing with Fiscal Year 2021 -22, and for each following Fiscal Year, the CFD Administrator will determine the Special Tax Requirement for Facilities and, subject to the Maximum Facilities Special Tax rates de scribed above, will provide for the levy the Facilities Special Tax as follows:

First: The Facilities Special Tax shall be levied on each Assessor’s Parcel of Developed Property in an amount equal to 100% of the applicable Assigned Facilities Special Tax; Second: If additional monies are needed to satisfy the Special Tax Requirement for Facilities after the first step has been completed, the Facilities Special Tax shall be levied Proportionately on each Assessor’s Parcel of Undeveloped Property at up to 1 00% of the Maximum Facilities Special Tax for Undeveloped Property;
Third: If additional monies are needed to satisfy the Special Tax Requirement for Facilities after the first two steps have been completed, then the levy of the Facilities Special Tax on each Assessor’s Parcel of Developed Property whose Maximum Facilities Special Tax is determined through the application of the Backup Facilities Special Tax shall be increased in equal percentages from the Assigned Facilities Special Tax up to the Maximum Facilities Special Tax for each such Assessor’s Parcel; Fourth: If additional monies are needed to satisfy the Special Tax Requirement for Facilities after the first three steps have been completed, then the Facilities Special Tax shall be levied Proportionately on each Assessor’s Parcel of Taxable Public Property and Taxable Property Owner Association Property at up to 100% of the Maximum Facilities Special Tax for Taxable Public Property and Taxable Property Owner Association Property, as needed to satisfy the Special Tax Requirement for Facilities.

Notwithstanding the above, the CFD Administrator will, in any Fiscal Year, calculate a levy Proportionately less than 100% of the Assigned Facilities Special Tax in step one above, when (i) the CFD Administrator is no longer required to provide for the levy of the Facilities Special Tax pursuant to steps two through four above in order to meet the Special Tax Requirement for Facilities; and (ii) all authorized Bonds for the District have already been issued or the City Council has covenanted that it will not issue any additional District bonds (except refunding bonds) to be supported by the Facilities Special Tax. The District has covenanted in the Indenture not to issue any Additional Bonds except to refund th e Bonds or outstanding Additional Bonds. See “— No Additional Bonds Except For Refunding Bonds” below. 464

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Further, notwithstanding the above, under no circumstances shall the Facilities Special Tax levied in any Fiscal Year against any Assessor’s Parcel of Residential Property for which an occupancy permit for private residential use has been issued (in accordance with Section 53321(d)(3) of the California Government Code), be increased as a consequence of delinquency or default by the owner of any other Asse ssor’s Parcel within the District by more than 10% above the amount that would have been levied in that Fiscal Year had there never been any such delinquencies or defaults. To the extent that the levy of the Facilities Special Tax on Residential Property is limited by the provision in the previous sentence, the levy of the Facilities Special Tax on each Assessor’s Parcel of Non-Residential Property shall continue in equal percentages up to 100% of the applicable Maximum Facilities Special Tax.

Prepayment o f Special Taxes . The Facilities Special Tax obligation for an Assessor’s Parcel of Developed Property or Undeveloped Property for which a building permit has been issued, may be prepaid in full, or in part, and only if there are no delinquent Special Taxe s with respect to such Assessor’s Parcel at the time of prepayment, provided that the terms set forth under Section H of the Rate and Method are satisfied. The Prepayment Amount is calculated based on the Bond Redemption Amount plus Redemption Premium plus the Future Facilities Amount plus the Defeasance Amount plus the Administrative Fees and Expenses, less a credit for the resulting reduction in the Reserve Requirement for the Bonds (if any) and less an allocable share of capitalized interest (if any), all as specified in Appendix A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX — Section H.”
Mandatory redemption of Bonds from Special Tax prepayments may result in the reduction in the otherwise expected yield on such Bonds if the Bonds were purchased at a price greater than par. See “SPECIAL RISK FACTORS — Potential Early Redemption of Bonds from Special Tax Prepayments.” Term of Special Taxes. Pursuant to the Rate and Method, the Facilities Special Tax levy is authorized to be levied for a period not to exceed forty-five years commencing with Fiscal Year 2021-22.

Estimated Debt Service Coverage . Based on the expected buildout of the District, Assigned Special Tax rates set forth in the Rate and Method are at least 110% of debt service on the Bonds in each Bond Year plus estimated Administrative Expenses. The District may levy up to the Maximum Special Tax rates on Taxable Property within the District. See “ — Rate and Method of Apportionment — Maximum Special Tax, Assigned Special Tax and Backup Special Tax” and “— Rate and Method of Apportionment — Exempt Property.” Pursuant to the Rate and Method, the status of Developed Property is based on building permits issued as of May 1 of the Fiscal Year preceding the Fiscal Year for which the Special Tax is levied. As of July 17, 2023, building permits had been issued for 131 anticipated residentia l parcels within the District; accordingly, assuming no additional building permits are obtained prior to May 1, 2024, 131 taxable parcels within the District will be classified as Developed Property for the Fiscal Year 2024 -25 Special Tax levy. See “PROPERTY OWNERSHIP AND THE DEVELOPMENT.”
Collection and Application of the Special Tax
The Special Tax is levied and collected by the Treasurer-Tax Collector of the County in the same manner and at the same time as ad valorem property taxes; provided, however, that the District may directly bill the Special Tax, may collect the Special Tax at a different time or in a different manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on delinquent Assessor’s Parcels as permitted by the Act.

The District has made certain covenants in the Indenture for the purpose of ensuring that the current maximum rates and method of collection of the Special Tax are not altered in a manner that would impair the District’s a bility to collect a sufficient amount of the Special Tax to pay debt service on the Bonds and Administrative Expenses when due. First, the District has covenanted that, to the extent it is legally permitted to do so, it will not initiate proceedings under the Act to modify the Rate and Method if such modification would 465

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adversely affect the security for the Bonds and any Additional Bonds and if an initiative is adopted that purports to modify the Rate and Method in a manner that would adversely affect the s ecurity for the Bonds and any Additional Bonds, the District shall, to the extent permitted by law, commence and pursue reasonable legal actions to prevent the modification of the Rate and Method in a manner that would adversely affect the security for the Bonds and any Additional Bonds. Second, the District has covenanted not to authorize owners of taxable parcels within the District to satisfy Special Tax obligations by the tender of Bonds and any Additional Bonds unless the District shall have first obtained a report of an Independent Consultant certifying that doing so would not result in the District having insufficient Special Tax Revenues to pay the principal of and interest on all Outstanding Bonds and any Additional Bonds when due.

Although the Special Tax constitutes a lien on Taxable Property within the District, it does not constitute a personal indebtedness of the owners of such property within the District. Moreover, other overlapping general obligation debt already exists on the property loca ted within the District and other future special tax and assessment liens and overlapping general obligation debt could come into existence in the future in certain situations without the consent or knowledge of the City or the landowners therein. See “SP ECIAL RISK FACTORS — Parity Taxes and Special Assessments” herein. There is no assurance that property owners will be financially able to pay the annual Special Tax or that they will pay such taxes even if financially able to do so, all as more fully described in the section of this Official Statement entitled “SPECIAL RISK FACTORS.” Under the terms of the Indenture, the Trustee shall establish and maintain a separate fund designated the “Special Tax Fund.” As soon as practicable after the receipt by the District of any Special Tax Revenues, but in any event no later than the date ten Business Days prior to the Interest Payment Date after such receipt, the District shall transfer such Special Tax Revenues to the Trustee for deposit in the Special Tax Fund; provided, however, that any portion of any such Special Tax Revenues that represents Special Tax prepayments that are to be applied to the payment of the redemption price of Bonds and any Additional Bonds in accordance with the provisions of the Indenture shall be identified to the Trustee as such by the District and shall be deposited in the Redemption Fund. See “— Special Tax Fund” below, “THE BONDS — Redemption — Mandatory Redemption from Special Tax Prepayments ” and Appendix F — “SUMMARY OF CERTAIN PR OVISIONS OF THE INDENTURE.”
Covenant for Superior Court Foreclosure
Pursuant to Section 53356.1 of the Act, the District has covenanted in the Indenture that it will determine or cause to be determined, no later than September 15 of each year, whether or not any owners of property within the District are delinquent in the payment of the Special Tax levied thereon and that, if such delinquencies exist, the District will order and cause to be commenced no later than November 1, and thereafter diligently prosecute, an action in the superior court to foreclose the lien of the Special Tax or installment thereof not paid when due.

Notwithstanding the foregoing, the District is not required under the Indenture to order the commencement of foreclosure proceedings if (a) the total Special Tax delinquency in the District for such Fiscal Year is less than 5% of the total amount of the Special Tax levied in such Fiscal Year, and (b) the amount then on deposit in the Reserve Fund is equal to the Reserve Requirement. Not withstanding the foregoing, if the District determines that any single parcel is delinquent in excess of $5,000 in the payment of the Special Tax, then the District will diligently institute, prosecute and pursue foreclosure proceedings against such parcel.

The mere commencement of foreclosure proceedings will not assure a prompt and favorable resolution of Special Tax delinquencies. The ability of the District to foreclose the lien of delinquent unpaid Special Tax may be limited. See “SPECIAL RISK FACTOR S — Bankruptcy and Legal Delays” and “SPECIAL RISK FACTORS — FDIC/Federal Government Interests in Properties.” Moreover, even if a judgment of foreclosure and order of sale is obtained, the District must cause a notice of levy to be issued. Under current law, the property owner has 120 days from the date of service of the notice of levy in which to redeem the subject property. If the property owner fails to redeem the property and it is sold, the property owner’s only remedy is an action to set aside the sale, which action must be brought within 90 days of the date of sale. If such an action results in the setting aside of the foreclosure sale, the judgment is revived, and the District would be entitled to receive interest 466

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on the revived judgment as if the sale had not been made. Under former law a property owner had a period of one year within which to redeem property to be sold, and the constitutionality of the legislation that eliminated the one year redemption period has not been tested.

There can be no assurance that, even if the subject property is sold, the proceeds from such sale will be sufficient to pay the delinquent installments of the Special Tax. The Act does not require the District or any other governmental agency to purchase or otherwise acquire any Assessor’s Parcel being sold if there is no other purchaser at such sale. The Act does require that property being sold pursuant to foreclosure under the Act must be sold for not less than the judgment amount (which must include reasonable at torneys’ fees, together with interest, penalties, and other authorized charges and costs) plus post judgment interest and authorized costs, unless a lower bid price is authorized by the Owners of not less than 75% by value of the Bonds and any Additional Bonds Outstanding.

Special Tax Fund
The Indenture provides that the Trustee will establish and maintain a separate fund designated the “Special Tax Fund.” The Indenture requires that the District transfer Special Tax Revenues (other than Special Tax prepayments) to the Trustee for deposit into the Special Tax Fund as soon as practicable after the District’s receipt thereof, but in any event no later than ten Business Days prior to the Interest Payment Date after such receipt. No later than the Business Day immediately preceding each Interest Payment Date, after having made any requested transfers to the Administrative Expense Fund, as requested by the District, to have sufficient amounts available therein to pay Administrative Expenses, the Trustee is requi red by the Indenture to make transfers from the Special Tax Fund to the Interest Account in the Bond Fund, the Principal Account in the Bond Fund and the Reserve Fund in the amounts and in the priority specified in the Indenture. See Appendix F — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE.”
As soon as practicable after the District’s receipt of Special Tax prepayments, but in any event no later than ten Business Days prior to the Interest Payment Date after such receipt, the District is required to tr ansfer any Special Tax prepayment to the Trustee and, in connection therewith, submit to the Trustee a Written Certificate identifying such amounts as Special Tax prepayment, identifying the portion of such Special Tax prepayments so transferred that is to be applied to the Redemption Price of the Bonds and any Additional Bonds and identifying the portion of such Special Tax prepayment that is to be applied to the payment of interest on the Bonds and any Additional Bonds to be so redeemed. The portion of such Special Tax prepayment that is to be applied to the Redemption Price will be deposited by the Trustee in the Redemption Fund and will be applied to the redemption of the Bonds and any Additional Bonds pursuant to the Indenture. The portion of such Special Tax prepayment that is to be applied to the payment of interest on the Bonds and any Additional Bonds to be so redeemed will be deposited by the Trustee in the Interest Account and will be applied to the payment of such interest.

Reserve Fund
The Inde nture provides that the Trustee will establish and maintain a special fund designated the “Reserve Fund.” On the Closing Date, the Trustee will deposit in the Reserve Fund the amount specified under the Indenture. See “ESTIMATED SOURCES AND USES OF FUNDS.” The Trustee is also required, not later than the Business Day immediately preceding each Interest Payment Date, to transfer from the Special Tax Fund (after the requisite transfers to the Administrative Expense Fund, the Interest Account and the Principal Account) the amount, if any, necessary to cause the amount on deposit in the Reserve Fund to be equal to the Reserve Requirement. The Indenture defines “Reserve Requirement” to mean, as of the date of any calculation, the least of (i) “10% of the proceeds of the issue,” within the meaning of Section 148 of the Code (excluding Bonds and any Additional Bonds refunded with the proceeds of subsequently issued Additional Bonds secured by the Special Tax on a parity with such Bonds and Additional Bonds), (ii ) Maximum Annual Debt Service and (iii) 125% of Average Annual Debt Service.
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Except as otherwise provided in the Indenture, all amounts deposited in the Reserve Fund are to be used and withdrawn by the Trustee solely for the purpose of (i) making transfers to the Interest Account in accordance with the Indenture in the event that, on the Business Day prior to an Interest Payment Date, amounts in the Interest Account are insufficient to pay the interest on the Bonds and any Additional Bonds due and payable on such Interest Payment Date, (ii) making transfers to the Principal Account in accordance with the Indenture in the event that, on the Business Day prior to a September 1 on which principal of the Bonds and any Additional Bonds is due and payable (including principal due and payable by reason of mandatory sinking fund redemption of the Bonds and any Additional Bonds), amounts in the Principal Account are insufficient to pay such principal, and (iii) redeeming Bonds and any Additional Bonds in accordance wi th the Indenture as described in the following paragraph.

Whenever Bonds or any Additional Bonds are to be optionally redeemed or redeemed from Special Tax prepayments, a proportionate share (determined as provided below) of the amount on deposit in the Re serve Fund will, on the date on which amounts to redeem such Bonds and any Additional Bonds are deposited in the Redemption Fund or otherwise deposited with the Trustee, be transferred by the Trustee from the Reserve Fund to the Redemption Fund or to such deposit held by the Trustee and will be applied to the redemption of said Bonds and any Additional Bonds; provided that, such amount will be so transferred only if and to the extent that the amount remaining on deposit in the Reserve Fund will be at least equal to the Reserve Requirement (excluding from the calculation thereof said Bonds and any Additional Bonds to be redeemed). Such proportionate share will be equal to the largest integral multiple of the minimum Authorized Denomination for said Bonds and any Additional Bonds that is not larger than the amount equal to the product of (i) the amount on deposit in the Reserve Fund on the date of such transfer, times (ii) a fraction, the numerator of which is the principal amount of Bonds and any Additional B onds to be so redeemed and the denominator of which is the principal amount of Bonds and any Additional Bonds to be Outstanding on the day prior to the date on which such Bonds and any Additional Bonds are to be so redeemed.

Whenever the balance in the Reserve Fund exceeds the amount required to redeem or pay Outstanding Bonds and any Additional Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Trustee will, upon receipt of a Written Request of the District, transfer the amount in the Reserve Fund to the Interest Account, Principal Account and/or Redemption Fund, as applicable, to be applied, on the next succeeding Interest Payment Date to the payment and redemption of all of the Outstanding Bonds and any Additional Bonds. If, as a result of the scheduled payment of principal of or interest on the Bonds and any Additional Bonds, the Reserve Requirement is reduced, the Trustee will transfer an amount equal to the amount of such reduction to the Interest Account.

Investment of Moneys
All moneys held by the Trustee in any of the funds or accounts established pursuant to the Indenture are required to be invested by the Trustee solely in Permitted Investments, as directed in writing by the District. As used in the Indenture, the phrase “Permitted Investments” includes a variety of investments, some of which may not be rated by a national rating service. See Appendix F — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Definitions.”
No Additional Bonds Except for Refunding Bonds
So long as any of the Bonds and any Additional Bonds remain Outstanding, the District will not issue any obligations payable from Net Special Tax Revenues senior to the Bonds. The District may issue Additional Bonds or obl igations payable on a parity with the Bonds and any Additional Bonds, if, among other things:
(i) upon the issuance of such Additional Bonds, no Event of Default will occur or be continuing under the Indenture; (ii) the proceeds of the Additional Bonds will be applied to refund the Bonds or any Additional Bonds previously issued under the Indenture, pay Costs of Issuance incurred in connection with the issuance of such Additional Bonds, and/or make any requisite deposit to the Reserve Fund; and (iii) the Annual Debt Service in each Bond Year, calculated for all Bonds and any Additional Bonds that will be Outstanding after the issuance 468

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of such Additional Bonds, will be less than or equal to Annual Debt Service in such Bond Year, calculated for all Bonds and any Additional Bonds that are Outstanding immediately prior to the issuance of such Additional Bonds.

The District may issue obligations payable from Net Special Tax Revenues on a basis subordinate to the Bonds and any Additional Bonds.

THE COMMUNITY FACILITIES DISTRICT
General Information Regarding the District
The District was organized by the City Council under the Act to provide for the financing of public improvements to meet the needs of new development related to the District. The qualified electors within the boundaries of the District, being the then owners of all property in the District, authorized the District to incur bonded indebtedness to finance certain public facilities to meet the needs of new development within the District and approved the Rate and Method for and authorized the levy of the Special Tax.

The District includes approximately 21.54 gross acres and is located in the northwestern portion of the City. The District is located at the southwest corner of Victoria Street and Kestrel Drive, just east of Interstate

15. The District is being developed into a gated community known as “Aurora Park” by Tri Pointe, and is expected to consist of a total of 193 residential units in two product lines known as “Sienna at Aurora Park” and “Goldenrod at Aurora Park.” Sienna is proposed for 82 single family detached residential units and Goldenrod is proposed for 111 single family detached residential units . The District is located in Tract Map No. 20229, recorded on June 17, 2021.

As of July 17, 2023, within the District, 72 residential units had been completed and conveyed to individual homeowners, Tri Pointe owned six completed model units (none of which were in escrow), 10 homes over 95% complete (nine of which were in escrow), 1 1 residential units under construction and less than 95% complete (10 of which were in escrow), and 16 finished lots and the Land Bank owned 78 finished lots (none of which were in escrow). As of September 1, 2023, within the District, 88 residential units had been completed and conveyed to individual homeowners, Tri Pointe owned six completed model units (none of which were in escrow), 10 homes over 95% complete all of which were in escrow), 11 residential units under construction and less than 95% complete (none of which were in escrow), and the Land Bank owned 78 finished lots (none of which were in escrow). Sales contracts are subject to cancelation and, therefore, homes currently in escrow may not result in closed escrows with the prospective homebuyers. Within the District, 131 building permits had been obtained as of July 17, 2023. Accordingly, assuming no additional building permits are obtained prior to May 1, 2024, 131 parcels will be classified as Developed Property for the Fiscal Year 2024-25 Special Tax levy. See “PROPERTY OWNERSHIP AND THE DEVELOPMENT.”
The District is zoned R-M (or Medium Density Residential) on the City’s General Plan Land Use Map.

The District also falls within the West Gate Specific Plan, which as most recently amended denotes the District as zoned R-2 Cluster (Residential 5.1-12.0 dwelling units per acre). Tract Map No. 20229, recorded June 17, 2021, subdivided the District into a single lot along with condominium maps which divide the property into 193 single family units, along with a community center and pool/spa, tot lot, gazebo area, outdoor exercise area, covered eating areas, setback areas and internal streets. The approved condominium maps results in a density of approximately 10.08 dwelling units per acre, which is within the approved designation.

Water service to the property within the District will be supplied by the Fontana Water Company and sewer service to the property within the District will be supplied by the Inland Empire Utilities Agen cy.

Electricity will be supplied by Southern California Edison Company, gas by the Southern California Gas Company and schools by the Etiwanda School District and the Chaffey Joint Union High School District.

Like all of Southern California, the land within the District is subject to seismic activity. The District is not located in a County Designated Fault Zone or an Earthquake Fault Zone Boundary. However, faults that 469

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have the potential to generate the strongest ground shaking in the Fontana area inclu de the Cucamonga (thrust fault), the San Jacinto (strike -slip fault), and the San Andreas (strike -slip) fault. The Cucamonga fault is an active fault that crosses the northern portion of the City, trending northwest along the foot of the San Gabriel Mountains. The Lytle Creek Branch of the San Jacinto Fault is an active fault that crosses the extreme northeast portion of the City in a southeastern direction. There are several other faults that border the Lytle Creek alluvial basin, including the Chino, San Andreas and San Jacinto faults.

In recent years, wildfires have caused extensive damage throughout the State. The last major wildfire in the vicinity of the City was the Grand Prix Fire in October 2003. There have been smaller fires, such as the 147-acre Sierra Fire that burned in November 2018 and the 277-acre Karen Fire in July 2020. While the District is not aware of any particular risk of wildfire within the District, there can be no assurances that wildfires won’t occur within the District. See “ SPECIAL RISK FACTORS — Geologic, Topographic and Climatic Conditions.”
The Federal Emergency Management Agency has determined that the District is located in a Zone “AE, X500” flood area (an area with a one percent chance of flood discharge contained in a structure), and flood insurance will not be required.

An aerial photo showing the taxable property within the District and a map showing the general location of the District and the surrounding area appears on the pages before page 1. More detailed inform ation about the property therein is contained in Appendix B — “APPRAISAL REPORT,” and information about the ownership of such property is set forth under the caption “PROPERTY OWNERSHIP AND THE DEVELOPMENT.” General information about the City is set forth in Appendix E. 470

24 4869-9049-0225v4/022777-0040
Assigned Special Tax and Development Summary
The following table sets forth the Assigned Special Tax that are projected to be levied on the property within the District at buildout of the development.

TABLE 1

CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100 (VICTORIA)

SPECIAL TAX AND DEVELOPMENT SUMMARY
Rate and Method Land Use Classes
Number of
Permitted
Units/Acres
as of
May 1,
2023(1)
Number of
Additional
Permitted
Units/Acres
as of
July 17,
2023(2)
Remaining
Number of
Units/Acres(3)
Assigned
Facilities
Special
Tax
Assigned
Facilities
Special
Taxes at
Build-Out
Developed Property
Residential Property (Alley Load Product) 58 6 18 $ 2,348 $ 192,536 Residential Property (Cluster Product) 57 10 44 2,229 247,419 Non-Residential Property 0.00 0.00 0.00 31,660 0
TOTAL 115 16 62 N/A $ 439,955

(1) Represents the classification of one hundred 115 parcels of Taxable Property as Developed Property for Fiscal Year 2023 - 2024, comprised of approximately 8.2 acres, based upon the building permits that had been obtained for such properties as of May 1, 2023.
(2) Represents the projected Developed Property classification of 16 parcels of Taxable Property, comprised of approximately

1.2 acres that will be classified as Undeveloped Property for Fiscal Year 2024-25, based upon the building permits that had been obtained for such properties between May 1, 2023 and July 17, 2023. (3) Represents the projected Developed Property classification of 62 parcels of Taxable Property, comprised of approximately

4.5 acres that had not obtained a building permit as of July 17, 2023. The actual classification of these parcels for purposes of the Fiscal Year 2024-25 Special Tax levy will depend on building permits issued as of May 1, 2024.

Source: DTA, Inc.

Direct and Overlapping Debt
The District is included within the boundaries of numerous overlapping local agencies providing governmental services. Some of these local agencies have outstanding bonds, and/or the authority to issue bonds, payable from taxes or assessments. The existing indebtedness payable from taxes and assessments that may be levied upon the property within the District is shown in Table 2 below. In addition to current debt, new community facilities districts and/or special assessment districts could be formed in the future encompassing all or a portion of the property within the District; and such districts or the agencies that formed them could issue more bonds and levy additional special taxes or assessments. 471

25 4869-9049-0225v4/022777-0040
TABLE 2

CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100 (VICTORIA)

DIRECT AND OVERLAPPING DEBT SUMMARY (TAXABLE PROPERTY)
Overlapping District
Percent of Levy on
Taxable Parcels
in the District(1)
Total Debt
Outstanding(2)
District Share
of Total Debt
Outstanding
Etiwanda Elementary School District G.O. Bonds 0.16953% $104,723,080 $ 177,540 Chaffey Joint Union School District G.O. Bonds 0.03532 501,825,610 177,250 Chaffey Community College District G.O. Bonds 0.01845 302,930,000 55,900 Metropolitan Water District Mid-Valley G.O. Bonds 0.00051 20,175,000 110 Estimated Share of Overlapping Debt Allocable to District $ 410,800 Plus: The Bonds 5,330,000
Estimated Share of Direct and Overlapping Debt Allocable to District $ 5,740,800

(1) Based on the District’s estimated share of the Fiscal Year 2022-23 levy for each applicable overlapping district. (2) Based on the estimated overlapping tax and assessment debt outstanding as of August 1, 2023. Excludes debt secured by any tax or assessment established and levie d on an individual Assessor’s Parcel pursuant to a contractual agreement or other voluntary consent by the owner thereof.

Source: DTA, Inc., San Bernardino County.

As shown in Table 3A, the projected total effective tax rate for Fiscal Year 2024 -25 for completed residential units conveyed to individual homeowners as of July 17, 2023 in Sienna at Aurora Park ranges from approximately 1.906% to approximately 1.852% of the concluded value as identified in the Appraisal. As shown in Table 3B, the projected total effective tax rate for Fiscal Year 2024-25 for completed single family detached residential units conveyed to individual homeowners as of July 17, 2023 in Golden rod at Aurora Park ranges from approximately 1.715% to approximately 1.779% of the concluded value as identified in the Appraisal.

Such estimates assume that the Rate and Method is not amended in accordance with Section C thereof. 472

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TABLE 3A

CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100 (VICTORIA)

PROJECTED TOTAL EFFECTIVE TAX RATES FOR

INDIVIDUALLY OWNED RESIDENTIAL PROPERTY

SIENNA AT AURORA PARK
Sienna at Aurora Park
(Alley Load) Plan Types
DESCRIPTION Plan 1 Plan 2 Plan 3
Number of Units Sold(1) 12 12 11
Unit Size 1,879 1,997 2,264
Base Market Value (1) $ 522,362 $ 559,160 $ 572,792 Less: Homeowner Exemption (7,000) (7,000) (7,000) Equals: Assumed Taxable Value(2) $ 515,362 $ 552,160 $ 565,792

AD VALOREM PROPERTY TAXES (2)(3)
Property Tax
Rate
Projected
Amount
Projected
Amount
Projected
Amount
Base Property Tax 1.0000% $ 5,154 $ 5,522 $ 5,658
Etiwanda Elementary School District G.O. Bonds 0.0323 166 178 183 Chaffey Joint Union High School G.O. Bonds 0.0294 152 162 166 Chaffey Community College District G.O. Bonds 0.0137 71 76 78 Metropolitan Water District G.O. Bonds 0.0035 18 19 20 Subtotal Ad Valorem Property Tax Rate/Taxes 1.0789% $ 5,561 $ 5,957 $ 6,105

PARCEL CHARGES, ASSESSMENTS AND SPECIAL
TAXES(4)
Projected
Amount
Projected
Amount
Projected
Amount
Metropolitan Water District Water Standby Charge $ 8 $ 8 $ 8 Fontana Vector Control Charge 6 6 6
Etiwanda Elementary School District CFD No. 10 1,604 1,604 1,858 Fontana CFD No. 100 (Victoria) Services Special Tax(5) 430 430 430 Fontana CFD No. 100 (Victoria) Facilities Special Tax(6) 2,348 2,348 2,348 Subtotal Parcel Charges, Assessments And Special Taxes $ 4,396 $ 4,396 $ 4,650

PROJECTED TOTAL PROPERTY TAXES $ 9,957 $ 10,353 $ 10,755

PROJECTED EFFECTIVE TAX RATE (% OF BASE

MARKET VALUE)

1.906% 1.852% 1.878%

(1) Number of units sold and base market value for units that have closed to individual homeowners based on the Appraisal. (2) Assumed Taxable Value and ad valorem taxes incorporate owner-occupied assessed value exemption of $7,000. (3) Based on the Fiscal Year 2022-23 ad valorem rates for the tax rate area(s) within the District. Rates subject to change in future years. (4) Based on the Fiscal Year 2022 -23 charges identified on the San Bernardino County issued property tax bills. Charges subject to change in future years.
(5) Based on the levy of the Assigned Services Special Tax. (6) Based on the levy of the Assigned Facilities Special Tax.

Source: DTA, Inc., Kitty Siino & Associates, Inc., City of Fontana, County of San Bernardino. 473

27 4869-9049-0225v4/022777-0040
TABLE 3B

CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100 (VICTORIA)

PROJECTED TOTAL EFFECTIVE TAX RATES FOR

INDIVIDUALLY OWNED RESIDENTIAL PROPERTY

GOLDENROD AT AURORA PARK
Goldenrod at Aurora Park
(Cluster) Plan Types
DESCRIPTION Plan 1 Plan 2 Plan 3
Number of Units Sold(1) 13 14 10
Unit Size 2,006 2,292 2,743
Base Market Value (1) $ 611,830 $ 653,220 $ 740,610 Less: Homeowner Exemption (7,000) (7,000) (7,000) Equals: Assumed Taxable Value(2) $ 604,830 $ 646,220 $ 733,610

AD VALOREM PROPERTY TAXES (2)(3)
Property Tax
Rate
Projected
Amount
Projected
Amount
Projected
Amount
Base Property Tax 1.0000% $ 6,048 $ 6,462 $ 7,336
Etiwanda Elementary School District G.O. Bonds 0.0323 195 209 237 Chaffey Joint Union High School G.O. Bonds 0.0294 178 190 216 Chaffey Community College District G.O. Bonds 0.0137 83 89 101 Metropolitan Water District G.O. Bonds 0.0035 21 23 26 Subtotal Ad Valorem Property Tax Rate/Taxes 1.0789% $ 6,525 $ 6,973 $ 7,916

PARCEL CHARGES, ASSESSMENTS AND SPECIAL
TAXES(4)
Projected
Amount
Projected
Amount
Projected
Amount
Metropolitan Water District Water Standby Charge $ 8 $ 8 $ 8 Fontana Vector Control Charge 6 6 6
Etiwanda Elementary School District CFD No. 10 1,689 1,858 2,111 Fontana CFD No. 100 (Victoria) Services Special Tax(5) 430 430 430 Fontana CFD No. 100 (Victoria) Facilities Special Tax(6) 2,229 2,229 2,229 Subtotal Parcel Charges, Assessments And Special Taxes $ 4,362 $ 4,531 $ 4,784

PROJECTED TOTAL PROPERTY TAXES $ 10,887 $ 11,504 $ 12,700

PROJECTED EFFECTIVE TAX RATE (% OF BASE

MARKET VALUE)

1.779% 1.761% 1.715%

Source: DTA, Inc., Kitty Siino & Associates, Inc., City of Fontana, County of San Bernardino.

Property Values
Appraisal. In order to provide information with respect to the value of the land within the District, the District engaged Kitty Siino & Associates, Inc. to prepare the Appraisal. The principal of the Appraiser, who was actively involved in the preparation of the Appraisal, has an “MAI” designation from the Appraisal Institute and has prepared numerous appraisals for the sale of land secured municipal bonds. The Appraiser was selected by the District and has no material relationships with the City, the District o r the owners of the land within the District other than the relationship represented by the engagement to prepare the Appraisal and other similar engagements for the City. The City instructed the Appraiser to prepare its analysis and report in conformity with City-approved guidelines and the Appraisal Standards for Land Secured Financings published in 1994 and revised in 2004 by the commission now known as California Debt and Investment Advisory Commission. A copy of the Appraisal is included as Appendix B to this Official Statement.

The purpose of the Appraisal was to estimate the minimum market value of the fee simple estate, subject to special tax and special assessment liens, of the property within the District in its current condition. As of July 474

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17, 2023, within the District, 72 residential units had been completed and conveyed to individual homeowners, Tri Pointe owned six completed model units (none of which were in escrow), 10 homes over 95% complete (nine of which were in escrow), 11 residential units under construction and less than 95% complete (10 of which were in escrow), and 10 finished lots and the Land Bank owned 78 finished lots (none of which were in escrow).

Subject to the contingencies, assumptions and limiting conditions set forth in the Appraisal, the Appraiser concluded that, as of July 17, 2023, the minimum market value of the Taxable Property within the District was not less than $ 71,001,082, consisting of $43,783,946 for the 72 completed units conveyed to individual homeowners, $6,937,338 for the 16 completed homes owned by Tri Pointe, $5,214,805 for the 27 finished lots and homes under construction owned by Tri Pointe and $15,064,993 for the 78 finished lots owned by the Land Bank. See Appendix B — “APPRAISAL REPORT.”
Reference is made to Appendix B for a complete list and full discussion of the applicable contingencies, assumptions and limiting conditions and the methodology employed by the Appraiser. In the event that any of the contingencies, assumptions and limiting conditions are not actually realized, the value of the property within the District may be less than the amount reported in the Appraisal. In any case, there can be no assurance that any portion of the property within the District would actually sell for the amount indicated by the Appraisal.

The Appraisal merely indicates the Appraiser’s opinion as to the minimum market value of the property referred to therein as of the date and under the conditions specified therein. The Appraiser’s opinion reflects conditions prevailing in the applicable market as of the date of value. The Appraiser’s opinion does not predict the future value of the subject property, and there can be no assurance that market conditions will not adversely change in the future.

The Appraiser has specifically consented to the inclusion of the Appraisal in this Official Statement.

Nevertheless, the Appraisal contains the following statement:

The acceptance of and/or use of this appraisal report by the client or any third party constitutes acceptance of the following conditions:

The liability of Kitty Siino &Associates, Inc. and the appraisers responsible for this report is limited to the client only and to the fee actually received by the appraisers. Further, there is no accountability, obligation or liability to any third -party. If the appraisal report is placed in the hands of anyone other than the client for whom this report was prepared, the client shall make such party and/or parties aware of all limiting conditions and assumptions of this assignment and related discussions. Any party who uses or relies upon any information in this report, without the preparer’s written consent, does so at his own risk.

If the client or any third party brings legal action against Kitty Siino &Associates, Inc. or the signer of the Appraisal and the appraisers prevail, the party initiating such legal action shall reimburse Kitty Siino &Associates, Inc. and/or the appraisers for any and all costs of any nature, including attorneys’ fees, incurred in their defense.

It is a condition precedent to the issuance of the Bonds that the Appraiser deliver to the District a certification to the effect that nothing has come to the attention of the Appraiser subsequent to the date of value of the Appraisal that would cause the Appraiser to believe that the value of property in the District is less than the minimum value reported in the Appraisal. However, the Appraiser has not performed any procedures since the date of value to obtain knowledge of such events or occurrences nor is it obligated to do so in the future.

Value-to-Lien Ratios
The value of the property within the District is significant because, in the event of a delinquency in the payment of the Special Tax, the District may foreclose only against delinquent parcel s. Likewise, the ratio of the value of a parcel to its “share” of the Bonds is important because it provides an indication of the extent of the relative burden imposed on each parcel by the applicable Special Tax. As indicated above, the minimum market value of the property within the District is not less than $ 71,001,082. The ratio of that value to the 475

29 4869-9049-0225v4/022777-0040
$5,330,000 total principal amount of the Bonds is approximately 13.32*-to-1. This ratio does not include other overlapping general obligation debt within the District. At this time there is no other overlapping land secured special tax or assessment debt within the District. See “ — Direct and Overlapping Debt.” Taking the $5,330,000* principal amount of the Bonds and other overlapp ing general obligation debt within the District into account, the ratio of the minimum market value to the total amount of direct and overlapping bonded debt for the District of $410,800 is approximately 12.37*-to-1. Table 4 sets forth the minimum market value-to-lien ratios of all the taxable property within the District by development status as of July 17, 2023 based on the projected Fiscal Year 2024-25 Special Tax levy.

Each of the aforesaid value -to-lien ratios is for the entire District, howeve r, the ratios of the value of individual lots within the District to their respective shares of the principal amount of the Bonds can be expected to vary substantially depending upon the selling price thereof. The following Table 5 sets forth the value-to-lien ratios within the District by land use class under the Rate and Method using the principal amount of the Bonds allocated based on the projected Fiscal Year 2024-25 Special Tax levy.

Additionally, the following Table 6 sets forth the stratification of value-to-liens of the parcels within the District, based on the appraised value of such parcels set forth in the Appraisal and such parcels’ respective shares of the principal amount of the Bonds (allocated to each parcel based upon its respective share of the total projected Fiscal Year 2024-25 Special Tax levy) and the ratio of the appraised value to its share of the Bonds.

Taxable property within the District will be classified as “Developed Property” for purposes of the Fiscal Year 2024-25 Special Tax levy if a building permit for such property is obtained by May 1, 2024. Based on the development status within the District as of July 17, 2023, building permits had been issued for 131 residential parcels of Taxable Property within the District and will thus be classified as Developed Property for purposes of the projected Fiscal Year 2024-25 Special Tax levy. Tri Pointe currently expects to obtain the remaining 62 building permits by December 2023.

 Preliminary, subject to change.
476

30 4869-9049-0225v4/022777-0040
TABLE 4

CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100 (VICTORIA)

ESTIMATED MINIMUM MARKET VALUE-TO-LIEN RATIOS BASED ON BONDS ONLY

ALLOCATED BY PROPERTY OWNER/DEVELOPMENT STATUS
(Projected Fiscal Year 2024-25 Special Tax Levy)
Property Owner/
Development Status(1)
Number
of Taxable
Parcels
Projected
Fiscal Year
2024-25
Facilities
Special Tax(2)*
Percent of
Projected
Fiscal Year
2024-25
Facilities
Special Tax*
Pro Rata
Share of
Bonds(3)*
Minimum
Market Value(1)
Estimated
Minimum Market
Value-to-Lien
Ratios(4)*
Tri Pointe Homes Holdings, Inc.

Model Homes 6 $ 13,731 3.42% $ 182,276 $ 2,842,821 15.60 95%+ Completed Homes 10 23,361 5.82 310,113 4,094,517 13.20 Homes Under Construction 11 25,114 6.26 333,383 2,124,550 6.37 Finished Lots (Developed Property) 16 36,378 9.06 482,910 3,090,255 6.40 Subtotal 43 $ 98,584 24.55% $ 1,308,682 $ 2,842,821 9.29

Rescal Victoria 193, LLC
Model Homes 0 $ 0 0.00% $ 0 $ 0 N/A
95%+ Completed Homes 0 0 0.00 0 0 N/A
Homes Under Construction 0 0 0.00 0 0 N/A
Finished Lots (Developed Property) 16 36,378 9.06 482,910 3,090,255 6.40 Finished Lots (Undeveloped Property)(5) 62 101,898 25.38 1,352,674 11,974,738 8.85 Subtotal 78 $ 136,276 34.44% $ 1,835,584 $ 15,064,993 8.21

Individual Homeowners 72 $ 164,653 41.01% $ 2,185,734 $ 43,783,946 20.03 TOTAL 193 $ 401,513 100.00% $ 5,330,000 $ 71,001,082 13.32

* Preliminary, subject to change.
(1) Based on the Appraisal with a date of value as of July 17, 2023. (2) Based on the levy to fund Administrative Expenses and debt service on the Bonds, the building permits obtained as of July 17, 2023, and assumes no further development. (3) There are currently no overlapping assessment districts and/or other community facilities districts encumbering the District with outstanding debt (excluding debt secured by any tax or assessment established and levied on an individual Assessor’s Parcel pursuant to a contractual agreement or other voluntary consent by the owner thereof). The Bonds are allocated based on a proportionate share of the projected Fiscal Year 2024-25 Facilities Special Tax. (4) Calculated by dividing the Minimum Market Value column by the Pro Rata Share of Bonds column. (5) Under the Rate and Method, parcels of Taxable Property are classified as Developed Property if a building permit has been obtained for such parcel by May 1 of the fiscal year preceding the Special Tax levy. Accordingly, of the 94 parcels identified in the Appra isal as finished lots, thirty -two (32) of such parcels have obtained a building permit as of July 17, 2023 and will be classified as Developed Property for Fiscal Year 2024-45 and 62 of such parcels have not obtained a building permit as of July 17, 2023, and assuming no further development, will be classified as Undeveloped Property for Fiscal Year 2024-45.
477

31 4869-9049-0225v4/022777-0040
Source: DTA, Inc.

TABLE 5

CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100 (VICTORIA)

ESTIMATED MINIMUM MARKET VALUE-TO-LIEN RATIOS BASED ON BONDS ONLY

ALLOCATED BY LAND USE CLASSES
(Projected Fiscal Year 2024-25 Special Tax Levy)
Rate and Method Land Use Classes
Number of
Permitted
Units/
Acres as of
July 17,
2023(1)
Fiscal Year
2024-25
Assigned /
Maximum
Facilities
Special Tax(2)*
Projected
Fiscal Year
2024-25
Facilities
Special Tax(3)*
Pro Rata
Share of
Bonds(4)*
Minimum
Market
Value(5)
Estimated
Minimum
Market
Value-to-
Lien
Ratios(6)*
Developed Property
Residential Property (Alley Load Product) 64 $ 150,272 $ 150,272 $ 1,994,829 $ 27,420,510 13.75 Residential Property (Cluster Product) 67 149,343 149,343 1,982,497 31,605,834 15.94 Non-Residential Property 0.0 0 0 0 0 N/A
Subtotal 131 $ 299,615 $ 299,615 $ 3,977,326 $ 59,026,344 14.84

Undeveloped Property 4.5 $ 168,653 $ 101,898 $ 1,352,674 $ 11,974,738 8.85 TOTAL N/A $ 468,268 $ 401,513 $ 5,330,000 $ 71,001,082 13.32

* Preliminary, subject to change.
(1) Based on the building permits obtained as of July 17, 2023, and assumes no further development. Under the Rate and Method, parcels of Taxable Property are classified as Developed Property if a building permit has been obtained for such parcel by May 1 of the fiscal year preceding the Special Tax levy. (2) Based on the Assigned Facilities Special Tax revenues generated by residential dwelling units for which building permits had been obtained as of July 17, 2023, and the Maximum Facilities Special Tax revenues generated by 62 parcels of Taxable Property on approximately 4.5 acres of Undeveloped Property for which building permits had not been obtained as of July 17, 2023, and assumes no further development. (3) Based on the levy to fund Administrative Expenses and debt service on the Bonds, the building permits obtained as of July 17, 2023, and assumes no further development. (4) There are currently no overlapping assessment districts and/or other community facilities districts encumbering the District with outstanding debt (excluding debt secure d by any tax or assessment established and levied on an individual Assessor’s Parcel pursuant to a contractual agreement or other voluntary consent by the owner thereof). The Bonds are allocated based on a proportionate share of the projected Fiscal Year 2024-25 Facilities Special Tax. (5) Based on the Appraisal with a date of value as of July 17, 2023. (6) Calculated by dividing the Minimum Market Value column by the Pro Rata Share of Bonds column.

Source: DTA, Inc.
478

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TABLE 6

CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100 (VICTORIA)

ESTIMATED MINIMUM MARKET VALUE-TO-LIEN STRATIFICATION

BASED ON BONDS ONLY
(Projected Fiscal Year 2024-25 Special Tax Levy)
Estimated
Minimum Market
Value-to-Lien Ratio
Category
Number
of
Parcels
Subject to
Facilities
Special
Tax
Projected
Fiscal Year
2024-25
Facilities
Special Tax(1)
Percent of
Projected
Fiscal Year
2024-25
Facilities
Special Tax
Pro Rata
Share of
Bonds(2)
Minimum
Market
Value(3)
Estimated
Minimum
Market
Value-to-Lien
Ratios(4)
20:00:1 and above 37 $ 82,473 20.54% $ 1,094,812 $ 24,504,970 22.38 17:00:1 to 19.99:1 26 60,691 15.12 805,660 14,614,712 18.14

14.00:1 to 16.99:1 15 35,101 8.74 465,958 7,627,869 16.37

11.00:1 to 13.99:1 16 31,802 7.92 311,692 3,973,733 12.75

8.00:1 to 10.99:1 56 93,576 23.31 993,879 9,270,765 9.33

5.00:1 to 7.99:1 43 97,870 24.37 1,657,999 11,009,033 6.64 Less than 5:00:1(5) 0 0 0.00 0 0 NA
TOTAL 193 $ 401,513 100.00% $ 5,330,000 $ 71,001,082 13.32

(1) Based on the levy to fund Administrative Expenses and debt service on the Bonds, the building permits obtained as of July 17, 2023, and assumes no further development.
(2) There are currently no overlapping assessment districts and/or other community facilities districts encumbering the District with outstanding debt (excluding debt secured by any tax or assessment established and levied on an individual Assessor’s Parcel pursuant to a contractual agreement or other voluntary consent by the owner thereof). The Bonds are allocated based on a proportionate share of the projected Fiscal Year 2024-25 Facilities Special Tax. (3) Based on the Appraisal with a date of value as of July 17, 2023. (4) Calculated by dividing the Minimum Market Value column by the Pro Rata Share of Bonds column. (5) No parcel has a value-to-lien of less than 5:00:1.

Source: DTA, Inc.

Delinquency History
Fiscal Year 2022-23 was the first year in which Special Taxes were levied in the District. For Fiscal Year 2022-23, Facilities Special Taxes totaling $198,542 were levied on 87 parcels classified as Developed Property with respect to the Facilities Special Tax. For Fiscal Year 2022 -23, Services Special Taxes totaling $82,990 were levied on 193 parcels classified as Developed Property with respect to the Services Special Tax. As of August 15, 2023, one parcel was delinquent in payment of Facilities Special Taxes in the amount of $1,174 for a delinquency rate of 0.59%, and delinquent in payment of Services Special Taxes in the amount of $215 for a delinquency rate of 0.26%.

PROPERTY OWNERSHIP AND THE DEVELOPMENT
Representatives of Tri Pointe have provided the information in this section regarding Tri Pointe and its development in the District. Representatives of the Land Bank have also provided information in this section regarding the Land Bank and the Option Agreement. Neither the Underwriter nor the City has independently confirmed or verified the information in this section of the Official Statement nor does any such party make any representation as to accuracy or adequacy of this information. Further, there may be material adverse changes in this information after the date of this Official Statement.

The information in this section of the Official Statement regarding ownership of certain taxable property in the District has been included because it is considered relevant to an informed evaluation of the Bonds. The inclusion in this Official Statement of information related to Tri Pointe and the Land Bank should not be 479

33 4869-9049-0225v4/022777-0040
construed to suggest that the Bonds, or the Special Tax that will be used to pay the Bonds, are recourse obligations of Tri Pointe, the Land Bank, or any other property owner in the District. A property owner may sell or otherwise dispose of land within the District or a development or any interest therein at any time.

No assurance can be given that the proposed development within the District will occur as described below. As the proposed land development progresses and parcels are sold, it is expected that the ownership of the land within the District will become more diversi fied. No assurance can be given that development of the land within the District will occur in a timely manner or in the configuration or intensity described herein, or that any landowner described herein will obtain or retain ownership of any of the land within the District.

The Bonds and the Special Tax are not personal obligations of Tri Pointe, the Land Bank, or any other current or subsequent property owners and, in the event that Tri Pointe, the Land Bank, or any other current or subsequent property owner defaults in the payment of the Special Tax, the City may proceed with judicial foreclosure but has no direct recourse to the assets of Tri Pointe, the Land Bank , or any other current or subsequent property owner. As a result, other than as provided in the Official Statement, no financial statements or information is, or will be, provided about Tri Pointe, the Land Bank , or any other current or subsequent property owner. The Bonds are secured solely by the Net Special Tax Revenues and other amounts p ledged under the Indenture. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” and “SPECIAL RISK FACTORS.”
General Description of the Development
The District is located in Tract Map No. 20229, recorded on June 17, 2021. Tri Pointe Homes Holdings, Inc., a Delaware corporation (previously defined herein as “Tri Pointe” or the “Developer”) is acquiring the property within the District from Rescal Victoria 193, LLC (dba Resmark), a Delaware limited liability company (previously defined herein as the “Land Bank”) in phased takedowns pursuant to an Option Agreement. The Land Bank acquired all of the property within the District on December 23, 2020 and Tri Pointe began taking down property for development on June 7, 2021. Pursuant to the Option Agreement, Tr i Pointe was provided an exclusive option, but is not obligated, to acquire the property within the District over several takedowns pursuant to an agreed takedown schedule. In the event that Tri Pointe does not exercise its option to purchase the property, the Land Bank, being an investor only and not a homebuilder, would likely attempt to sell such property to another merchant builder. As of July 17, 2023, the date of value of the Appraisal, Tri Pointe had taken down 115 of the planned 193 residential lots in the District. Tri Pointe is scheduled to take down all of the remaining property to be developed as 78 residential units in the District by October 2024. There is no guarantee that Tri Pointe will acquire the remaining lots as planned See the caption “—Development Plan” below for more information regarding the Option Agreement, including the complete takedown schedule.

As of July 17, 2023, within the District, 72 residential units had been completed and conveyed to individual homeowners, Tri Pointe owned six completed model units (none of which were in escrow), 10 homes over 95% complete (nine of which were in escrow), 11 residential units under construction and less than 95% complete (10 of which were in escrow), and 16 finished lots and the Land Bank owned 78 finished lots (none of which were in escrow). As of September 1, 2023, within the District, 88 residential units had been completed and conveyed to individual homeowners, Tri Pointe owned six completed model units (none of which were in escrow), 10 homes over 95% complete all of which were in escrow), 11 residential units under construction and less than 95% complete (none of which were in escrow), and the Land Bank owned 78 finished lots (none of which were in escrow) .. Sales contracts are s ubject to cancelation and, therefore, homes currently in escrow may not result in closed escrows with the prospective homebuyers. As of July 17, 2023, building permits had been obtained for 131 of the 193 single family residential units planned to be constructed within the District. As of September 1, 2023, Tri Pointe had not obtained any additional building permits and Tri Pointe currently expects to obtain the remaining 62 building permits by December 2023. While the information set forth in this Official Statement reflects Tri Pointe’s current development expectations, no assurance can be given that final home construction and conveyance to individual home buyers will be carried out as described in this Official Statement.
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Tri Pointe
As previously defined in this Official Statement as the “Developer” or “Tri Pointe” is Tri Pointe Homes Holdings, Inc. (formerly known as TRI Pointe Homes, Inc.) , a Delaware corporation, which is an indirect, wholly-owned subsidiary of Tri Pointe Homes, Inc., a Delawar e corporation (“Tri Pointe Homes”), a publicly traded company whose common stock is listed on the New York Stock Exchange under the ticker symbol “TPH”.

Tri Pointe Homes is engaged in the design, construction and sale of innovative single -family attached and detached homes in 15 markets across ten states and the District of Columbia. Effective January 15, 2021, Tri Pointe Homes changed its corporate name from “TRI Pointe Group, Inc.” to “Tri Pointe Homes, Inc.” and consolidated its six regional homebuilding brands into one unified name—Tri Pointe Homes.

Tri Pointe Homes is subject to the informational requirements of the Exchange Act and, in accordance therewith, files reports, proxy statements, and other information, including financial statements, wit h the SEC.

Such filings, set forth, among other things, certain data relative to the consolidated results of operations and financial position of Tri Pointe Homes and its consolidated subsidiaries, including Tri Pointe, as of such dates (e.g., see Tri Pointe Homes’ Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on February 21, 2023, and Tri Pointe Homes’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, as filed with the SEC on July 27, 2023).

The SEC maintains an Internet web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC, including Tri Pointe Homes. The address of such Internet web site is www.sec.gov. All documents filed by Tri Pointe Homes pursuant to the requirements of the Exchange Act after the date of this Official Statement will be available for inspection in such manner as the SEC prescribes. Copies of Tri Pointe Homes’ most recent Annual Report on Form 10-K and each of its other quarterly and current reports, including any amendments, are available in the “investors” portion of its website at www.Tri Pointehomes.com.

The foregoing website addresses and references to filings with the SEC a re given for reference and convenience only, and the information on such websites and on file with the SEC does not form a part of this Official Statement and is not incorporated by reference herein. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on such websites. Tri Pointe Homes and Tri Pointe are not obligated to advance funds for construction or development or to pay ad valorem property taxes or the Special Taxes and investors should not rely on the information and financial statements contained on such websites in evaluating whether to buy, hold or sell the Bonds. The information contained on such websites may be incomplete or inaccurate and has not been reviewed by the City or the Underwriter.

The Land Bank
Rescal Victoria 193, LLC (dba Resmark), a Delaware limited liability company (previously defined herein as the “Land Bank”), is ultimately controlled by Resmark Equity Partners LLC (“Resmark”). Resmark was founded in 1995 and is a real estate investment manager focused on the residential sector. Resmark finances, acquires, develops and manages real estate investments in California, the Western United States, Texas, the Southeastern United States, the D.C./mid -Atlantic region and se lect additional major metropolitan markets.

Since its formation, Resmark has invested in over 90,000 single -family and multi -family units and lots and invested in over 295 single -family and multi -family investments. Resmark’s principal office is located in Virginia.

Development Plan
General. Tri Pointe plans to construct a total of 193 residential units in the District in a community known as Aurora Park. Aurora Park is a gated community consisting of two product lines known as “Sienna at Aurora Park,” which is planned to be comprised of 82 single family detached alley -load residential units, and “Goldenrod at Aurora Park,” which is planned for 111 cluster detached condominiums. For each of the Sienna 481

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and Goldenrod products, Aurora Park features two sto ry floorplans with three exterior architectural styles:

Traditional, Spanish and Farmhouse. Home exteriors feature dual glazed low -E windows, insulated roll -up sectional garage doors, rain gutters, and 8 -foot entry doors with black hardware and Smart Wi -Fi deadbolt.

Aurora Park homes include tankless water heaters, 220V outlet in garage for electric car chargers, Eero Wi -Fi systems, Merv 13 air filters, and smart home system including Amazon voice control for automation of smart deadbolt, Ring doorbell, and Smart programmable Wi -Fi thermostat. Kitchens include granite countertops and white thermofoil flat panel cabinets, stainless steel double basin sinks, and GE stainless steel appliances.

The following table describes the development and ownership status as of July 17, 2023 by floor plan within the development.

TABLE 7

AURORA PARK

DEVELOPMENT AND OWNERSHIP STATUS
(AS OF JULY 17, 2023)
Floor Plan
Total Units
Planned Home Size
Closings
as of July
17, 2023
Completed
Homes/
Models
Homes
Under
Constructio
n
Finished
Lots(1)
Homes in
Escrow
Base Home
Prices(2)
Sienna
1 29 1,879 12 4 5 $613,000
2 27 1,997 12 4 4 $636,000
3 26 2,264 11 4 5 $682,000
Total 82 35 12 5 30 14

Goldenrod
1 37 2,006 13 1 $660,000
2 38 2,292 14 1 $679,000
3 36 2,743 10 2 $749,000
Total 111 37 4 6 64 5

Total 193 72 16 11 94 19

(1) As of July 17, 2023, 16 finished lots were owned by Tri Pointe and 78 finished lots were owned by the Land Bank. (2) Base sales prices are subject to change and exclude any lot premiums, options, upgrades, incentives, and any selling concessi ons, mortgage rate buydowns or price reductions currently being offered. Tri Pointe is offering varying concessions , including rate buy downs, on a case- by-case basis. As of July 17, 2023, the date of value of the Appraisal, the net closing cost and rate buy down concessions for the 72 residential units conveyed to individual homeowners and the 19 residential units in escrow within the District ranged from $0 to $38,500, and averaged $13,341.60 per residential unit.

Source: Tri Pointe.

Sienna at Aurora Park . The Sienna residential units are alley loaded detached condominiums that include three floorplans ranging from 1,879 to 2,264 square feet. Each of the floorplans feature two stories with three to four bedrooms and two to three -car garages. As of July 17, 2023, the base sales prices for the Sienna units ranged from $613,000 to $682,000. Base sales prices are subject to change and exclude any lot premiums, options, upgrades, incentives, and any selling concessions, mortgage rate buydowns or price reductions currently being offered. Tri Pointe is offering varying concessions, including rate buy downs, on a case-by-case basis.

As of July 17, 2023, within Sienna, 35 completed units had been conveyed to individual homeowners, Tri Pointe owned three completed model units (none of which were in escrow), nine completed residential units (all of which were in escrow), and five residential units under construction (all of which were in escrow) and six finished lots (none of which were in escrow) and the Land Bank owned 24 finished lots (none of which were in escrow). Between July 17, 2023 and September 1, 2023, an additional nine residential units had been completed and conveyed to individual homeowners, for a total of 44 residential units owned by individual homeowners as of September 1, 2023. Sales of residential units within Sienna began in June 2022 and Tri Pointe expects that construction will be complete within Sienna by July 2025. 482

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Goldenrod at Aurora Park. The Goldenrod residential units are detached condominiums arranged in motor courts, and include three floorplans ranging from 2,006 to 2,743 square feet. Each of the floorplans feature two stories with three to five bedrooms and two to three-car garages. As of July 17, 2023, the base sales prices for the Sienna units ranged from $660,000 to $749,000. Base sales prices are subject to change and exclude any lot premiums, options, upgrades, incentives, and any selling concessions, mortgage rate buydowns o r price reductions currently being offered. Tri Pointe is offering varying concessions, including rate buy downs, on a case-by-case basis.

As of July 17, 2023, within Goldenrod, 37 completed units had been conveyed to individual homeowners, Tri Pointe own ed three completed model units (none of which were in escrow), one completed residential unit (which is being used as a sales gallery), six residential units under construction (five of which were in escrow) and ten finished lots (none of which were in escrow) and the Land Bank owned 54 finished lots (none of which were in escrow). Between July 17, 2023 and September 1, 2023, an additional seven residential units had been completed and conveyed to individual homeowners, for a total of 44 residential units owned by individual homeowners as of September 1, 2023. Sales of residential units within Goldenrod began in June 2022 and Tri Pointe expects that construction will be complete within Goldenrod by July 2025.

Option Agreement. On December 4, 2020, Tri Pointe entered into a Purchase and Sale Agreement and Escrow Instructions (the “Original PSA”) to acquire the property in the District intended to be subdivided into 193 lots (the “Property”) from SC Victoria, LLC, a California limited liability company (previously defined as “SC Victoria” or the “Original Owner”). On December 23, 2020, concurrent with the execution of the Option Agreement (described below), Tri Pointe nominated the Land Bank as the buyer under the Original PSA and the Land Bank acquired all of the Property from SC Victoria pursuant to the Original PSA.

On December 23, 2020, the Land Bank and Tri Pointe entered into an Option Agreement regarding the Property, as amended (herein, the “Option Agreement”), whereby Tri Pointe has the option but not the obligation to purchase finished lots in the District from the Land Bank pursuant to a takedown schedule. To Tri Pointe’s actual knowledge, it is not in default under the Option Agreement.

As of September 1 , 2023, Tri Point e has acquired 115 of the 193 lots from the Land Bank. The remaining 78 lots are expected to be acquired by Tri Pointe on a monthly basis in blocks of 0 -18 lots through October 2024, although Tri Pointe may acquire more lots than scheduled and at earlier times so long as the cumulative number lots are acquired by the applicable takedown date. The failure to acquire the cumulative number of lots by the date required will result in the payment of a premium in addition to the purchase price.

There is no gu aranty that Tri Pointe will acquire the remaining 78 lots from the Land Bank as planned. The following is the takedown option schedule:
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TABLE 8

CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100 (VICTORIA)

TAKEDOWN SCHEDULE
Goldenrod Sienna
Phase # of Units Phase # of Units Date
M 3 M 3 6/7/2021*
1/SC 7 1 9 10/5/2021*
2 9 -- -- 11/5/2021*
-- -- 2 8 12/3/2021*
3 6 3 9 2/4/2022*
4 10 -- 3/5/2022*
-- 0 4 9 4/5/2022*
5 6 -- 5/5/2022*
6 6 5 9 6/3/2022*
-- 6 5 4/5/2023*
7 10 -- 7/10/2023*
-- 0 7 6 7/10/2023*
8 10 8 6 9/6/23*
-- 0 9 6 11/5/23
9 10 10 8 1/1/24
10 10 11 4 4/5/24
11 10 -- -- 6/5/24
12 6 -- -- 8/5/24
13 8 -- -- 10/5/24
TOTAL: 111 82

* Represents that actual takedown date.

Source: Tri Pointe.

In addition to and concurrent with the Option Agreement, Tri Pointe and Land Bank entered into a Construction Agreement regarding the Property (the “Construction Agreement”), whereby the Land Bank engaged Tri Pointe as contractor (the “Contractor) to, among other things, construct improvements on and for the benefit of the property in the District necessary to bring the lots into finished lot condition and reimburse the Contractor for such development costs up to a guaranteed maximum aggregate contract amount.

Under the terms of the Option Agreement, the Land Bank agreed to provide Tri Pointe the exclusive right and option to purchase all 193 lots comprising the Property in consideration for (a) an initial option payment, which payment has been made to the L and Bank; (b) the covenants of Tri Pointe to timely pay the option payments under the Option Agreement on a monthly basis in arrears; and (c) upon exercise of the option, the payment of the purchase price for each set of lots acquired.

In addition, pursuant to the Option Agreement and with some limitations, the Land Bank has granted Tri Pointe a license to enter upon the property to construct homes before it acquires the lots from the Land Bank.

To date, Tri Pointe has obtained building permits for and commenced construction of homes on lots owned by the Land Bank and Tri Pointe ’s plan is to continue to obtain building permits for and commence home 484

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construction on some or all of the remaining lots prior to acquiring them from the Land Bank. As of September 1, 2023, Tri Pointe had obtained building permits for 16 lots owned by the Land Bank as of such date.

The option under the Option Agreement expires on the earlier of (i) the last date permitted for the final takedown specified on the takedown schedule (October 2024) and the expiration of any applicable cure period, or (ii) the date Tri Pointe has acquired all of the Lots in accordance with the Option Agreement. The failure to timely acquire lots could result in the termination of the option and Tri Pointe will no longer have a right to purchase any of the remaining units under the Option Agreement. The Option Agreement does provide Tri Pointe a one-time option to acquire all of the lots at once. In the event that Tri Pointe does not exercise its option, the Land Bank being an investor only and not a homebuilder, would likely attempt to sell such lots to another merchant builder.

Under the Construction Agreement, the Contractor has agreed to use commercially reasonable efforts to construct all of the on -site and off -site improvements and obtain the requisite governmental permits and approvals necessary to create finished lots on the Property pursuant to a construction schedule and the Land Bank has agreed to reimburse the Contractor for such development costs up to a guaranteed maximum aggregate contract amount. As of September 1 , 2023, other than bond exoneration work and final paving, which is to be completed at build out of the Property, all of the work required by the Construction Agreement is substa ntially complete.

During the term of the Option Agreement and the Construction Agreement, Tri Pointe is obligated to pay all property taxes and carry-costs related to the Property owned by the Land Bank.

No assurance can be given that Tri Pointe will acquire the property within the District from The Land Bank or that home construction and sales will be carried out on the schedule and according to the plans described herein, or that the home construction and sale plans or base prices set forth above will not change after the date of this Official Statement. Additionally, homes under contract to be sold may not result in closed escrows as sales contracts are subject to cancellation. See “SPECIAL RISK FACTORS — Failure to Develop Properties.” Moreover, rising interest rates may affect prospective buyers’ willingness or ability to close escrow or enter into future sales contracts. See “SPECIAL RISK FACTORS — Increasing Mortgage Interest Rates.” Increasing Mortgage Interest Rates . Most of the purchasers of Tri Pointe’s homes finance their acquisitions with mortgage financing. As such, rising interest rates, decreased availability of mortgage financing or of certain mortgage programs, higher down payment requirements or increased monthly mortgage costs could have a negative impact on the estimated absorption rates of Tri Pointe’s planned for-sale homes in the District.

Further, a combination of higher mortgage rates, delays in construction stemming from delays in the supply chain, homebuyers’ inability to sell their existing homes and adverse changes in local, regional or national economic conditions, among other factors, could contribute to an increase in Tri Pointe’s rate of home order cancellations. An increase in the level of such cancellations could similarly have a negative impact on the estimated absorption rates of Tri Pointe’s planned for-sale homes in the District.

See the caption “SPECIAL RISK FACTORS – Impact of Economic Conditions on the Development in the District” for certain risks associated with the outbreak of the COVID-19 Pandemic.

Required Infrastructure. All backbone infrastructure required to build-out all 193 residential units has been completed.

Entitlement Status. Other than certain permits required in the normal course of home construction, all discretionary entitlements required to complete the development and sales of homes in the District have been received. All environmental approvals have been secured in order to complete the development in the District.

Conditions of Approval . None of the remaining infrastructure improvements are required to be completed as a condition of receiving building or occupancy permits. 485

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Except as described in this Official Statement and except for those consents, permits, authorizations, certifications and approvals of governmental entities required in the ordinary course of development, Tri Pointe has no actual knowledge of any impediment to construction or obtaining land use entitlements which could be reasonably expected to have a material adverse effect on its ability to complete the planned development of its property within the District as described in the Official Statement.

Financing Plan
To date, Tri Pointe has financed its land acquisition and various site development and home construction costs related to its property in the District through internally generated funds (which may include home s ales revenues and funding from its parent company Tri Pointe Homes), as well as payments for improvements from The Land Bank pursuant to the Option Agreement. As of September 1, 2023, Tri Pointe had expended approximately $54,320,980 on land acquisition, land development, homebuilding, marketing and sales costs. As of such date, Tri Pointe expected to incur approximately $ 879,587 on remaining land acquisition and development costs and approximately $22,633,300 on remaining homebuilding, marketing, and sales costs for its property in the District.

Tri Pointe expects to use internally generated (which may include home sales revenues and funding from its parent company Tri Pointe Homes) to complete its land acquisition and development in the District. Tri Pointe believes that it will have sufficient funds available to complete its planned land acquisition and development in the District in accordance with the development schedule described in this Official Statement.

Notwithstanding the belief of Tri Pointe that it will have sufficient funds to complete its planned land acquisition and development in the District, no assurance can be given that sources of financing available to Tri Pointe will be sufficient to complete the land acquisition, development and home construction as currently anticipated. While Tri Pointe has made such internal financing available in the past, there can be no assurance whatsoever of its willingness or ability to do so in the future. Neither Tri Pointe nor any of its affiliates has any legal obligation of any kind to make any such funds available or to obtain loans. Other than pointing out the willingness of Tri Pointe to provide internal financing in the past, Tri Pointe has not represented in any way that it will do so in the future. If and to the extent that internal financing and home sales revenues are inadequate to pay the costs to complete Tri Pointe’ planned land acquisition and development in the District and other financing by Tri Pointe is not put into place, there could be a shortfall in the funds required to complete the proposed land acquisition and development by Tri Pointe and portions of the project may not be developed.

SPECIAL RISK FACTORS
The principal source of payment of debt service on the Bonds will be payments of the Special Tax made with respect to the Taxable Property. As discussed under “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Special Tax,” the Special Tax is to be levied annually against all such Taxable Property either at the maximum rate authorized by the Rate and Method or at such lower rates as are determined by the District Administrator to raise sufficient funds to comply with the agreements, conditions, covenants and terms contained in the Indenture, and in accordance with the Act. The Special Tax is to be collected on the tax roll of the District at the same time and in the same manner as general ad valorem real property taxes are collected. The Special Tax cannot be levied at a tax rate higher than the maximum tax rate even if the maximum tax rate will not produce sufficient Net Special Tax Revenues to pay the principal and interest then payable with respect to the Bonds. See discussions below under “— Levy of the Special Tax” and “— Collection of the Special Tax.” Payment of the Special Tax levied on a parcel is secured by a continuing lien against such parcel. In the event an installment of the Special Tax included in the tax bill for a parcel of Taxable Property is not paid when due, the District has covenanted to institute foreclosure proceedings in court to cause the parcel to be sold in order to attempt to recover the delinquent amount from the sale proceeds. Foreclosure and sale may not always result in the recovery of the full amount of delinquent installments of the Special Tax. See “— 486

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Collection of the Special Tax.” The sufficiency of the foreclosure sale proceeds to cover the delinquent amount depends in part upon the market for and the value of the parcel at the time of the sale. Sufficiency of the foreclosure sale proceeds to cover a delinquency may also depend upon the value of prior or parity liens and similar claims. Further, other governmental claims, such as hazardous substance claims, may affect the realizable value even though such claims may not rise to the status of liens. See “— Hazardous Substances.” Timely foreclosure and sale proceedings with respect to a parcel of Taxable Property may be forestalled or delayed by a stay in the event the owner of the parcel becomes the subject of bankruptcy proceedings. Not only may foreclosure and sale proceedings be forestalled or delayed, but the sale of a parcel may also be similarly affected by a bankruptcy stay. Further, should the stay not be lifted, payment of the Special Tax may be subordinated to bankruptcy law priorities. See “— Bankruptcy and Legal Delays.” Although bankruptcy proceedings may forestall or delay a foreclosure and sale or a tax sale of a delinquent parcel of Taxable Property, the Special Tax is secured by a lien which, assuming proper procedures are followed, may be enforced against the parcel. There may not be any recourse against a bankrupt property owner since the owner is not personally obligated to pay the Special Tax. Further, if proper disclosure of the authorization of the Spe cial Tax is not made to the owner, the willingness or ability of an owner to pay the Special Tax may be adversely affected. See “— Payment of the Special Tax is Not a Personal Obligation of the Owners.”
The District is not obligated to advance funds to pay such debt service except from moneys on deposit in the Reserve Fund. See “— Bonds Are Limited Obligations.” Even if debt service is timely paid, interest on the Bonds may have to be included in the gross income of the owner of the Bonds by reason of som e circumstance occurring subsequent to issuance of the Bonds, thereby reducing the after-tax yield. See “— Loss of Tax Exemption.” Risks of Real Estate Secured Investments Generally – Declines in Value Purchasers of the Bonds will be subject to the risks generally incident to an investment secured by real estate, including, without limitation, (i) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of the District, the supply of or demand for com petitive properties in such area, and the market value of property in the event of sale or foreclosure; (ii) changes in real estate tax rates and other operating expenses, governmental rules and fiscal policies; and (iii) natural disasters (including, without limitation, earthquakes, wildfires and floods), which may result in uninsured losses. See the caption “— Increasing Mortgage Interest Rates” below.

No assurance can be given that the individual property owners within the District will pay the Special Tax in the future or that they will be able to pay the Special Tax on a timely basis. See the caption “— Bankruptcy and Legal Delays” for a discussion of certain limitations on the District’s ability to pursue judicial proceedings with respect to delinquent parcels within the District.

Levy of the Special Tax
The principal source of money with which to pay debt service on the Bonds is the proceeds derived from the annual levy and collection of the Special Tax applicable to the Taxable Property in the District. The amount of the Special Tax that can be levied is limited to the maximum tax rates authorized pursuant to the Rate and Method. Additionally, pursuant to Section 53321(d) of the Government Code, the Special Tax levied against any Assessor’s parcel for which an occupancy permit for private residential use has been issued shall not be increased as a consequence of delinquency or default by the owner of any other Assessor’s parcel within the District by more than ten percent above the amoun t that would have been levied in that fiscal year had there never been any such delinquencies or defaults. As a result, it is possible that the District may not be able to increase the tax levy to the Assigned Special Tax on residential parcels in all years. The levies cannot be made 487

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at higher rates even if the failure to do so would result in insufficient Net Special Tax Revenues to pay the principal of and interest on the Bonds as the same become due and payable.

The levy of the Special Tax will rarely, if ever, result in a uniform relationship between the value of a particular parcel and the amount of the levy of the Special Tax against such parcel. Thus, there will rarely, if ever, be a uniform relationship between the value of a parcel and its propor tionate share of the debt service on the Bonds. The Special Tax levied in any particular Fiscal Year on a parcel is based upon the revenue needs of the District and the application of the Rate and Method. The application of the Rate and Method will, in t urn, be dependent upon certain development factors with respect to each parcel by comparison with similar development factors with respect to the other parcels in the District. Thus, in addition to annual variations in the revenue needs of the District that must be met from the Special Tax, the following are some of the factors which might cause the levy of the Special Tax on any particular parcel to vary from the Special Tax that might otherwise be expected:

Reduction in the number of parcels of Taxable Property, for reasons such as acquisition of such parcels by a governmental entity and failure of the governmental entity to pay the Special Tax based upon a claim of exemption or, in the case of the federal government or an agency thereof, immunity from ta xation, thereby resulting in an increased tax burden on the remaining parcels of Taxable Property; and Failure of the owners of certain parcels of Taxable Property to pay the applicable Special Tax and delays in the collection of or inability to collect such Special Tax by tax sale or foreclosure and sale of the delinquent parcels, thereby resulting in an increased tax burden on the remaining parcels of Taxable Property.

Collection of the Special Tax
The timely payment of the principal of and interest on the Bonds is ultimately dependent upon the timely payment of all of the Special Tax. Any money on deposit in the Reserve Fund can be used to make such payment in the event of delinquencies, but the replenishment of the Reserve Fund will be dependent on the recovery of such delinquencies. The Indenture provides that the Special Tax is to be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable (or in such other manner as the City Counc il shall determine, including direct billing of the affected property owners) and, except as provided in the special covenant for foreclosure described under the caption “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Covenant for Superior Court Foreclosure” and in the Act, is to be subject to the same proportionate penalties and the same procedure, sale and lien priority in case of delinquency as is provided for ad valorem taxes on real property.

Pursuant to the Act, in the event of any delinquency in the payment of the Special Tax, the District may order the institution of a superior court action to foreclose the lien therefor within specified time limits. In such an action, the real property subject to the unpaid amount may be sold at judicial foreclosure sale. Such judicial foreclosure action is not mandatory. However, the District has covenanted for the benefit of the owners of the Bonds that it will institute foreclosure proceedings as authorized by the Act in order to enforce the lien of the delinquent installments of the Special Tax under certain circumstances. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Covenant for Superior Court Foreclosure.” In the event that foreclosure proceedings are commenced, such foreclosure proceedings could be stayed by the commencement of bankruptcy proceedings by or against the owner of the property being foreclosed. In the event that sales or foreclosures of property are necessary, there could be a delay in payments to Owners of the Bonds pending such sale s or the prosecution of foreclosure proceedings and receipt by the District of the proceeds of sale if the Reserve Fund is depleted.

The District may be unable to make full or timely payment of debt service on the Bonds if property owners in the District fail to pay installments of the Special Tax when due, if the Reserve Fund is depleted, or if the District is unable to sell foreclosed parcels for amounts sufficient to cover the delinquent installments of the Special Tax.
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Failure to Develop Properties
Development of property within the District may be subject to unexpected delays, disruptions and changes which may affect the willingness and ability of Tri Pointe, or any other property owner to pay the Special Tax prior to delinquency. Land development is s ubject to comprehensive federal, State and local regulations.

Approval is required from various agencies in connection with the layout and design of developments, the nature and extent of improvements, construction activity, land use, zoning, school and health requirements, as well as numerous other matters. There is always the possibility that such approvals will not be obtained or, if obtained, will not be obtained on a timely basis. Failure to obtain any such agency approval or satisfy such governmental requirements would adversely affect planned land development. Development of land in the District is also subject to the availability of water. Finally, development of land is subject to economic considerations.

As of July 17, 2023, within the Distric t, 72 residential units had been completed and conveyed to individual homeowners, Tri Pointe owned six completed model units (none of which were in escrow), 10 homes over 95% complete (nine of which were in escrow), 11 residential units under construction and less than 95% complete (10 of which were in escrow), and 10 finished lots and The Land Bank owned 78 finished lots (none of which were in escrow). As of September 1, 2023, within the District, 88 residential units had been completed and conveyed to individual homeowners, Tri Pointe owned six completed model units (none of which were in escrow), 10 homes over 95% complete all of which were in escrow), 11 residential units under construction and less than 95% complete (none of which were in escrow), and the Land Bank owned 78 finished lots (none of which were in escrow). Sales contracts are subject to cancelation and, therefore, homes currently in escrow may not result in closed escrows with the prospective homebuyers. Within the District, 131 building permits had been obtained as of July 17, 2023. Accordingly, assuming no additional building permits are obtained prior to May 1, 2024, 131 parcels will be classified as Developed Property for the projected Fiscal Year 2024-25 Special Tax levy. . See “THE COMMUNITY FACILITIES DISTRICT” and “PROPERTY OWNERSHIP AND THE DEVELOPMENT.” However, no assurance can be given that the remaining proposed residential development will be partially or fully completed; and for purposes of evaluating the investment qualit y of the Bonds, prospective purchasers should consider the possibility that such parcels will remain vacant and unimproved.

Undeveloped or partially developed land is inherently less valuable than developed land and provides less security to the Bond Owners should it be necessary for the District to foreclose on the property due to the nonpayment of the Special Tax. The failure to complete development in the District as planned, or substantial delays in the completion of the development may reduce the value of the property within the District and increase the length of time during which the Special Tax will be payable from undeveloped property, and may affect the willingness and ability of the owners of property within the District to pay the Special Tax prior to delinquency.

There can be no assurance that land development operations within the District will not be adversely affected by a future deterioration of the real estate market and economic conditions or future local, State and federal governmental po licies relating to real estate development, an increase in mortgage interest rates, the income tax treatment of real property ownership, or the national economy. A slowdown of the development process and the absorption rate could adversely affect land values and reduce the ability or desire of the property owners to pay the annual Special Tax. In that event, there could be a default in the payment of principal of, and interest on, the Bonds when due.

Bond Owners should assume that any event that significantly impacts the ability to develop land in the District would cause the property values within the District to decrease substantially from those estimated by the Appraiser and could affect the willingness and ability of the owners of land within the District to pay the Special Tax prior to delinquency.

Concentration of Property Ownership
Based on the development and ownership status as of July 17, 2023, Tri Pointe and The Land Bank are expected to be responsible for approximately 24.55% and 34.44%, respect ively, of the projected Fiscal Year 489

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2024-25 Special Tax levied within the District. Tri Pointe reports that since such date, additional development and certain sales contracts for residential units have closed escrow to individual homeowners. Based on th e development and ownership status as of September 1, 2023, Tri Pointe and The Land Bank are expected to be responsible for approximately 15.40% and 34.44%, respectively, of the projected Fiscal Year 2024 -25 Special Tax levied within the District.

As described under “PROPERTY OWNERSHIP AND THE DEVELOPMENT,” Tri Pointe has entered into an Option Agreement with Remark to acquire lots within the District in phased takedowns. As of September 1, 2023, The Land Bank owned 78 lots within the District. During the term of the Option Agreement, Tri Pointe is contractually obligated to pay the Special Tax levied on the property subject to such agreement. However, in the event the Option Agreement is terminated prior to Tri Pointe having acquired all of the l ots thereunder, the Special Tax would continue to be levied on the property in the District owned by The Land Bank. No assurances can be made of the willingness and the ability of the Land Bank, or its affiliates, to pay such Special Tax.

While the District includes 72 completed residential units owned by individual homeowners as of July 17, 2023, the inability or refusal of Tri Pointe or Remark to pay the Special Tax applicable to its property when due could result in the depletion of the Reserve Fund pri or to reimbursement thereof from sale or foreclosure proceedings, and/or insufficient money with which to pay the principal of and interest on the Bonds as the same became due. Additionally, pursuant to the Act, the Special Tax levied in any fiscal year a gainst any parcel of residential property in the District may not be increased as a consequence of delinquency or default by the owners of any other parcels within the District by more than 10% above the amount that would have been levied in that fiscal year had there never been any such delinquencies or default. As a result, while the Maximum Special Tax pursuant to the Rate and Method may be higher, the Maximum Special Tax on parcels of residential parcels cannot be greater than 110% of the projected actual Special Tax levy on such parcels.

Exempt Properties
Certain properties are exempt from the Special Tax in accordance with the Rate and Method. In addition, the Act provides that properties or entities of the state, federal or local government are exem pt from the Special Tax; provided, however, that property in the District acquired by a public entity through a negotiated transaction or by gift or devise, which is not otherwise exempt from the Special Tax, will continue to be subject to the Special Tax. In addition, the Act provides that if property subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property is to be treated as if it were a special assessment. The constitutionality and operation of these provisions of the Act have not been tested.

In particular, insofar as the Act requires payment of the Special Tax by a federal entity acquiring property in the District, it may be unconstitutional. If for any reason property in the District becomes exempt from taxation by reason of ownership by a nontaxable entity such as the federal government or another public agency, subject to the limitation of the maximum authorized rates, the Special Tax will be r eallocated to the remaining Taxable Properties in the District. This would result in the owners of such property paying a greater amount of the Special Tax and could have an adverse impact upon the timely payment of the Special Tax.

Moreover, if a substantial portion of property in the District becomes exempt from the Special Tax because of public ownership, or otherwise, the Maximum Annual Special Tax which could be levied upon the remaining acreage might not be sufficient to pay principal of and interest on the Bonds when due and a default would occur with respect to the payment of such principal and interest.

Constitutional Limitations on Taxation and Appropriations Articles XIIIA and XIIIB of the California Constitution. On June 6, 1978, California voters approved an amendment to the California Constitution, commonly known as Proposition 13 (the Jarvis/Gann Initiative), which added Article XIIIA to the California Constitution. The effect of Article XIIIA is to significantly limit 490

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the imposition of new ad valorem taxes, special taxes, transaction taxes, and sales taxes. On November 7, 1978, California voters approved Proposition 8, which made certain clarifications to Article XIIIA.

Article XIIIA of the California Constitution limits the amount of ad valorem taxes on real property to 1% of “full cash value” as determined by the county assessor. Article XIIIA defines “full cash value” to mean “the county assessor’s valuation of real property as shown on the 1975 -76 tax bill under ‘full cash value’ or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” The “full cash value” is subject to annual adjustment to reflect increases, not to exceed 2% per year, or decreases in the consumer price index or comparable local data, or to reflect reductions in property value caused by damage, destruction or other factors.

Article XIIIA exempts from the 1% tax limitation any taxes to repay indebtedness approved by the voters prior to July 1, 1978, and allows local governments to raise their property tax rates above the constitutionally mandated 1% ceiling for the purpose of paying off certain new general obligation debt issued for the acquisition or improvement of real property and approved by two-thirds of the votes cast by the qualified electorate. Article XIIIA requires a vote of two-thirds of the qualified electorate to impose special taxes on real property, while otherwise generally precluding the imposition of any additional ad valorem taxes, special taxes, transaction taxes, and sales taxes. In addition, Article XIIIA requires the approval of two-thirds of all members of the California Legislature to change any State laws resulting in increased tax revenues.

Enactment of Article XIIIA has reduced the amount of general property tax revenues received by the City. This reduction in such revenues makes it less likely that the City or the District will have surplus funds, other than the Reserve Fund for the Bonds, with wh ich to advance funds to make any payments or to cure any deficiency in the Interest Account or Principal Account of the Special Tax Fund, should the City or the District, as applicable, in the exercise of its discretion, choose to do so. If there are addi tional delinquencies after exhaustion of funds in the Reserve Fund for the Bonds, none of the City or the District has any obligation to transfer into the Interest Account or Principal Account of the Special Tax Fund the amount of any such delinquencies out of any surplus moneys of the City.

On July 2, 1979, the Fifth District Court of Appeal rendered a 3 -0 decision in the case of County of Fresno v. Malmstrom (94 Cal.App.3d 974), that determined that special assessments are not subject to the limitations o f Article XIIIA (Proposition 13). The Court held the one percent tax limitation imposed by California Constitution Article XIIIA on ad valorem taxes does not apply to special assessments levied pursuant to the Improvement Act of 1911 (Streets and Highways Code, Section 5000 et seq., the relevant portions of which are incorporated in the 1915 Act) and the 1913 Act. The Court further held that because special assessments pursuant to such acts are not within the definition of “special taxes” in Article XIIIA, the Constitution does not require the levy of assessments and the issuance of bonds to be approved by a two-thirds vote of the qualified electors in an assessment district. On September 12, 1979, the California Supreme Court refused to hear an appeal of the lower court’s decision.

At the November 6, 1979, general election, Proposition 4 (the Gann Initiative) was approved by the voters of California. Such proposition added Article XIIIB to the California Constitution.

Article XIIIB of the California Constitution limits the annual appropriations of the State and of any city, county, school district, authority, or other political subdivision of the State to the level of appropriations of the particular governmental entity for the prior fiscal year, as adjusted for changes in the cost of living, population and services rendered by the governmental entity. The “base year” for establishing such appropriation limit is the fiscal year 1978-79 and the limit is to be adjusted annually to reflect changes in population, consumer prices and certain increases in the cost of services provided by these public agencies.

Appropriations subject to Article XIIIB generally include the proceeds of taxes levied by the State or other entity of local government, exclusive of certain State subventions, refunds of taxes, benefit payments from retirement, unemployment insurance, and disability insurance funds. “Proceeds of taxes” include, but are not 491

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limited to, all tax revenues and the proceeds to an entity of government from (i) regulatory licenses, user charges, and user fees (but only to the extent such proceeds exceed the cost of providing the service or regulation), and (ii) the investment of tax revenues. Article XIIIB includes a requirement that if an entity’s revenues in any year exceed the amounts permitted to be spent, the excess would have to be allocated to fund schools or be returned by revising tax rates or fee schedules over the subsequent two years.

On December 17, 1980, the Third District Court of Appeal rendered a 3-0 decision in the case County of Placer v. Corin (113 Cal. App. 3d 443) that determined that special assessments are not subject to the limitation of Article XIIIB (Proposition 4). The Court held that the definition of “proceeds of taxes” imposed by California Constitution Article XIIIB does not apply to special assessments and improvement bonds issued pursuant to the 1915 Act and the 1913 Act. The decision of the Court was not appealed.

The enactment of Article XIIIA of the California Co nstitution (Proposition 13) and subsequent legislative enactments effectively repeal the otherwise mandatory duty on the part of the City, under the 1915 Act, to levy and collect a special tax (in an amount necessary to meet delinquencies, but not to exceed ten cents on each $100 of assessable property within the City in any one year) if other funds are not available to cover delinquencies.

In early 1990, the U.S. Supreme Court struck down as a violation of equal protection certain property tax assessment p ractices in West Virginia, which had resulted in vastly different assessments of similar properties. Since Article XIIIA provides that property may only be assessed up to 2%, per year, except upon change of ownership or new construction, recent purchasers may pay substantially higher property taxes than long-time owners of comparable property in a community. The Supreme Court in the West Virginia case expressly declined to comment in any way on the constitutionality of Article XIIIA.

Based on this decisio n, however, property owners in California brought three suits challenging the acquisition value assessment provisions of Article XIIIA. Two cases involve residential property and one case involves commercial property. In all three cases, State trial and appellate courts have upheld the constitutionality of Article XIIIA’s assessment rules and concluded that the West Virginia case did not apply to California’s laws.

On June 3, 1991, the U.S. Supreme Court agreed to hear the appeal in the challenge relatin g to commercial property, but the plaintiff subsequently decided to drop the case.

On October 7, 1991, the U.S. Supreme Court granted the plaintiff’s petition for a writ of certiorari and agreed to hear the Nordlinger v. Lynch case. On June 18, 1992, the U.S. Supreme Court affirmed the Nordlinger decision (112 U.S. 2326) of the California Court of Appeal, Second Appellate District, which previously held that Article XIIIA does not violate the U.S. Constitution.

The City cannot predict whether any other pending or future challenges to the State’s present system of property tax assessment will be successful, when the ultimate resolution of any challenge will occur, or the ultimate effect any decision regarding the State’s present system of property t ax assessment will have on the City’s revenues or on the State’s financial obligations to local governments.

Articles XIIIC and XIIID of the California Constitution . Proposition 218, a state ballot initiative known as the “Right to Vote on Taxes Act,” was approved by California voters on November 6, 1996.

Proposition 218 added Articles XIIIC and XIIID to the State Constitution, and, with the exception of certain provisions, Articles XIIIC and XIIID became effective on November 6, 1996.

Among other things, Proposition 218 imposed certain voting requirements and other limitations on the imposition of new or increased taxes, assessments, and property-related fees and charges. Under Proposition 218 (i) all taxes imposed by local governments are deemed to be e ither general taxes, or special taxes, (ii) no local government may impose, extend, or increase any general tax unless and until such tax is submitted to the electorate and approved by a majority vote, and (iii) no local government may impose, extend, or increase any special tax unless and until such tax is submitted to the electorate and approved by a two -thirds vote. Special 492

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purpose districts, including community facilities districts and assessment districts, have no power to levy general taxes. The City believes that the issuance of the Bonds does not require the conduct of further proceedings under the Refunding Act, the 1915 Act, the 1913 Act, the Mello -Roos Act, or Proposition 218, as applicable, other than as described herein.

Proposition 218 provides that the initiative power shall “not be prohibited or otherwise limited in matters reducing or repealing any local tax, assessment, fee or charge...” Thus, Proposition 218 removes limitations on the initiative power in matters of, among other things, the Special Tax. Consequently, it is conceivable that the voters of the City or the District could, by future initiative, repeal, reduce, or prohibit the future imposition or increase of any Special Tax, subject to overriding federal constitutional princip les relating to impairment of contracts.

Although the provisions of Article XIIIC have not been interpreted by the courts, the City believes that the initiative power cannot be used to reduce or repeal the unpaid Special Tax that are pledged as security fo r payment of the Bonds or to otherwise interfere with the mandatory, statutory duty of the City and the County Auditor with respect to the unpaid Special Tax that are pledged as security for payment of the Bonds.

The Appellate District, Division One, issued its opinion in 2014 in City of San Diego v. Melvin Shapiro, et al. (228 Cal. App. 4th 756) (the “San Diego Decision”). The case involved a Convention Center Facilities District (the “CCFD”) established by the City of San Diego. The CCFD is a financing district much like a community facilities district established under the provisions of the Act. The CCFD is comprised of all of the real property in the entire City of San Diego. However, the special tax to be levied within the CCFD was to be levied only on hotel properties located within the CCFD.

The election authorizing the special tax was limited to owners of hotel properties and lessees of real property owned by a governmental entity on which a hotel is located. Thus, the election was not a register ed voter election. Such approach to determining who would constitute the qualified electors of the CCFD was modeled after Section 53326(c) of the Act, which generally provides that, if a special tax will not be apportioned in any tax year on residential property, the legislative body may provide that the vote shall be by the landowners of the proposed district whose property would be subject to the special tax. The Court held that the CCFD special tax election was invalid under the California Constitution because Article XIIIA, Section 4 thereof and Article XIIIC, Section 2 thereof require that the electors in such an election be the registered voters within the district.

The facts of the San Diego Decision show that there were hundreds of thousands of reg istered voters within the CCFD (viz., all of the registered voters in the City of San Diego). There were no registered voters in the District at the time of formation. In the San Diego Decision, the Court expressly stated that it was not addressing the validity of landowner voting to impose special taxes pursuant to the Act in situations where there are fewer than 12 registered voters. Thus, by its terms, the Court’s holding does not apply to the Special Tax elections in the District. Moreover, Section 53341 of the Act provides that any “action or proceeding to attack, review, set aside, void or annul the levy of a special tax…shall be commenced within 30 days after the special tax is approved by the voters.” Similarly, Section 53359 of the Act provides that any action to determine the validity of bonds issued pursuant to the Act be brought within 30 days of the voters approving the issuance of such bonds. Voters in the District approved the Special Tax and the issuance of bonds on December 8, 2020.

Based on Sections 53341 and 53359 of the Act and analysis of existing laws, regulations, rulings and court decisions, the City believes the Special Tax is being levied in accordance with the Rate and Method and the Act.

The interpretation and application of Proposition 218 will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination.
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Maximum Special Tax
Within the limits of t he Special Tax, the District may adjust the Special Tax levied on all property in the District to provide an amount required to pay interest on and principal of the Bonds, and the amount, if any, necessary to cure delinquencies and replenish the Reserve Fund to an amount equal to the Reserve Requirement for the respective Bonds and to pay Administrative Expenses. However, the amount of the Special Tax that may be levied against any property in the District is subject to the Maximum Special Tax applicable t o it. There is no assurance that the Maximum Special Tax on the property in the District will be sufficient to pay the amounts required to be paid by the Indenture at all times. Additionally, pursuant to the Act, the Special Tax levied in any fiscal year against any parcel of residential property in the District may not be increased as a consequence of delinquency or default by the owners of any other parcels within the District by more than 10% above the amount that would have been levied in that fiscal year had there never been any such delinquencies or defaults. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Special Tax.” Payment of the Special Tax is Not a Personal Obligation of the Owners An owner of a parcel of Taxable Property is not personal ly obligated to pay the Special Tax. Rather, the Special Tax is an obligation only against the parcel of Taxable Property. If the value of a parcel is not sufficient, taking into account other obligations also payable thereby, to fully secure the Special Tax, the District has no recourse against the owner.

Disclosures to Future Purchasers
The District has recorded a notice of the Special Tax Lien in the Office of the County Recorder. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such Special Tax obligation in the purchase of a parcel of land, a home or a commercial or industrial facility in the District or the lending of money thereon. The Act requires the subdivider (or its agent or representative) of a subdivision to notify a prospective purchaser or long-term lessor of any lot, parcel, or unit subject to a Mello–Roos special tax of the existence and maximum amount of such special tax using a statutorily prescribed form. California Civil Code Section 1102.6b requires that in the case of transfers other than those covered by the above requirement, the seller must at least make a good faith effort to notify the prospective purchaser of the special tax lien in a format prescribed by statute. Failure by an owner of the property to comply with the above requirements, or failure by a purchaser or lessor to consider or understand the nature and existence of the S pecial Tax, could adversely affect the willingness and ability of the purchaser or lessor to pay the Special Tax when due.

Parity Taxes and Special Assessments
The ability or willingness of a property owner in the District to pay the Special Tax could be a ffected by the existence of other taxes and assessments imposed upon the property. The Special Tax and any penalties thereon will constitute a lien against the lots and parcels of land on which they will be annually imposed until they are paid. Such lien is on a parity with all special tax and special assessments levied by other agencies and is co-equal to and independent of the lien for general property taxes, other special taxes, and certain special assessments regardless of when they are imposed upon the same property. The Special Tax has priority over all existing and future private liens imposed on the property. In addition, other public agencies whose boundaries overlap those of the District could, with or in some circumstances without the consent of the owners of the land in the District, impose additional taxes or assessment liens on the property in the District in order to finance public improvements to be located inside or outside of the District.

The District has no control over the ability of other entities and districts to issue indebtedness secured by special tax or assessments payable from all or a portion of the property in the District. In addition, the City is not prohibited itself from establishing assessment districts, community facili ties districts or other districts which might impose assessments or taxes against property in the District. In the event any additional 494

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improvements are financed pursuant to the establishment of an assessment district, community facilities district or other district, any taxes or assessments levied to finance such improvements will have a lien on a parity with the lien of the Special Tax. The imposition of additional liens on a parity with the Special Tax could reduce the ability or willingness of the property owners to pay the Special Tax and increase the possibility that foreclosure proceeds will not be adequate to pay delinquent Special Tax or the principal of and interest on the Bonds when due.

Depletion of Reserve Fund
The Reserve Fund is to be maintained at an amount equal to the Reserve Requirement. Money in said fund may be used to pay debt service on the Bonds in the event the proceeds of the levy and collection of the Special Tax against property in the District are insufficient. If funds in the Reserve Fund are used to pay debt service on the Bonds, the funds can be replenished from the proceeds of the levy and collection of the Special Tax that are in excess of the amount required to pay all amounts to be paid pursuant to the Indenture. However, no replenishment from the proceeds of a levy of the Special Tax can occur as long as the proceeds that are collected from the levy of the Special Tax at the maximum tax rates, together with other available funds, remain insufficient to pay all such amounts. Thus, it is possible that the Reserve Fund will be depleted by its use to pay such amounts and will not be replenished by the levy of the Special Tax. There is no assurance that the amount in the Reserve Fund will, at any particular time, be sufficient to pay all such amounts or that any amounts of the Reserve Requirement used for debt service on the Bonds will be fully replenished from the proceeds of the levy and collection of the Special Tax.

Bankruptcy and Legal Delays
The payment of the Special Tax and the ability of the District to foreclose the lien of a delinquent unpaid tax, as discussed in “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS,” may be limited by bankruptcy, insolvency or other laws generally affecting creditors’ rights or by the laws of the State of California relating to judicial foreclosure. In addition, the prosecution of a foreclosure action could be delayed due to crowded local court calendars or delays in the legal process. The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel’s approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases.

Although bankruptcy proceedings would not cause the obligation to pay the Special Tax to become extinguished, the bankruptcy of a property owner could result in a delay in prosecuting superior court foreclosure proceedings because federal bankruptcy laws may provide for an automatic stay of foreclosure and sale of tax sale proceedings. Any such delays could increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds and the possibility of delinquent tax installments not being paid in full. Moreover, if the value of the subject property is less than the lien of the Special Tax, such exces s could be treated as an unsecured claim by the bankruptcy court. Further, should remedies be exercised under the federal bankruptcy laws against Taxable Property, payment of the Special Tax may be subordinated to bankruptcy law priorities.

Thus, certain claims may have priority over the Special Tax in a bankruptcy proceeding even though they would not outside of a bankruptcy proceeding.

FDIC/Federal Government Interests In Properties
The ability of the District to collect interest and penalties specified by the Act and to foreclose the lien of delinquent Special Tax may be limited in certain respects with regard to parcels in which the Federal Deposit Insurance Corporation (the “FDIC”), or other federal government entities such as Fannie Mae or Freddie Ma c, has or obtains an interest.
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In the case of the FDIC, in the event that any financial institution making a loan which is secured by parcels is taken over by the FDIC and the applicable Special Tax is not paid, the remedies available to the District may be constrained. The FDIC’s policy statement regarding the payment of state and local real property taxes (the “Policy Statement”) provides that taxes other than ad valorem taxes which are secured by a valid lien in effect before the FDIC acquired an intere st in a property will be paid unless the FDIC determines that abandonment of its interests is appropriate. The Policy Statement provides that the FDIC generally will not pay installments of non-ad valorem taxes which are levied after the time the FDIC acquires its fee interest, nor will the FDIC recognize the validity of any lien to secure payment except in certain cases where the Resolution Trust Corporation had an interest in property on or prior to December 31, 1995. Moreover, the Policy Statement provides that, with respect to parcels on which the FDIC holds a mortgage lien, the FDIC will not permit its lien to be foreclosed out by a taxing authority without its specific consent, nor will the FDIC pay or recognize liens for any penalties, fines or similar claims imposed for the non-payment of taxes.

The FDIC has taken a position similar to that expressed in the Policy Statement in legal proceedings brought against Orange County, California, in United States Bankruptcy Court and in Federal District Court .

The Bankruptcy Court issued a ruling in favor of the FDIC on certain of such claims. Orange County appealed that ruling, and the FDIC cross -appealed. On August 28, 2001, the Ninth Circuit Court of Appeals issued a ruling favorable to the FDIC except with respect to the payment of pre-receivership liens based upon delinquent property tax.

The District is unable to predict what effect the application of the Policy Statement would have in the event of a delinquency with respect to parcels in which the FDIC has or obtains an interest, although prohibiting the lien of the FDIC to be foreclosed out at a judicial foreclosure sale would prevent or delay the foreclosure sale.

In the case of Fannie Mae and Freddie Mac, in the event a parcel of Taxable Property is owned by a federal government entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, or in the event a private deed of trust secured by a parcel of Taxable Property is owned by a federal government entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, the ability to foreclose on the parcel or to collect delinquent Special Tax may be limited. Federal courts have held that, based on the supremacy clause of the United States Constitution, in the absence of Congressional intent to the contrary, a state or local agency cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal government interest. This means that, unless Congress has otherwise provided, if a federal government entity owns a parcel of Taxable Property but does not pay taxes and assessments levied on the parcel (including the Special Tax), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments.

Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and the District wishes to foreclose on the parcel as a result of delinquent Special Tax, the property cannot be sold at a foreclosur e sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on a parity with the Special Tax and preserve the federal government’s mortgage interest.

The District’s remedies may also be limited in the case of delinquent Special Tax with respect to parcels in which other federal agencies (such as the Internal Revenue Service and the Drug Enforcement Administration) have or obtain an interest.

Geologic, Topographic and Climatic Conditions
The District, like all California com munities, may be subject to unpredictable seismic activity, fires, flood, or other natural disasters. Southern California is a seismically active area. Seismic activity represents a potential risk for damage to buildings, roads, bridges and property with in the District. In addition, land susceptible to seismic activity may be subject to liquefaction during the occurrence of such event. 496

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Like all of Southern California, the land within the District is subject to seismic activity. The District is not located in a County Designated Fault Zone or an Earthquake Fault Zone Boundary. However, faults that have the potential to generate the strongest ground shaking in the Fontana area include the Cucamonga (thrust fault), the San Jacinto (strike -slip fault), and the San Andreas (strike -slip) fault. The Cucamonga fault is an active fault that crosses the northern portion of the City, trending northwest along the foot of the San Gabriel Mountains. The Lytle Creek Branch of the San Jacinto Fault is an active fault that crosses the extreme northeast portion of the City in a southeastern direction. There are several other faults that border the Lytle Creek alluvial basin, including the Chino, San Andreas and San Jacinto faults.

The Federal Emergency Management Agency has determined that the District is located in a Zone “AE, X500” flood area (an area with a one percent chance of flood discharge contained in a structure), and flood insurance will not be required.

In recent years, wildfires have caused extensive damage throughout the State. In some instances, entire neighborhoods have been destroyed. Several of the fires that occurred in recent years damaged or destroyed property in areas that were not previously considered to be at risk from such events. The last major wildfire in the vicinity of the City was the Grand Prix Fire in October 2003. There have been smaller fires, such as the 147- acre Sierra Fire that burned in November 2018 and the 277-acre Karen Fire in July 2020. The property within the District is located in an area which the Department of Forestry and Fire Protection of the State of California has designated as a very high fire hazard severity zone. Some commentators believe that climate change will lead to even more frequent and more damaging wildfires in the future. Property damage du e to wildfire could result in a significant decrease in the market value of property in the District and in the ability or willingness of property owners to pay the Special Tax.

In the event of a severe earthquake, fire, flood or other natural disaster, there may be significant damage to both property and infrastructure in the District. As a result, a substantial portion of the property owners may be unable or unwilling to pay the Special Tax when due. In addition, the value of land in the District could be diminished in the aftermath of one or more of such events, reducing the resulting proceeds of foreclosure sales in the event of delinquencies in the payment of the Special Tax.

Hazardous Substances
While governmental taxes, assessments, and charges are a common claim against the value of a parcel of Taxable Property, other less common claims may be relevant. One example is a claim with regard to a hazardous substance.

In general, the owners and operators of a parcel of Taxable Property may be required by law to remedy conditions of the parcel relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of property whether or not the owner (or operator) has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the Taxable Property be affected by a hazardous substance is to reduce the marketability and value of the parcel by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller. Further, such liabilities may arise not simply from the existence of a hazardous sub stance but from the method of handling it. All of these possibilities could significantly affect the value of the property that is realizable upon a delinquency and foreclosure.

While the District is not aware that the owner (or operator) of any of Taxable Property has such a current liability with respect to any of the Taxable Property, it is possible that such liabilities do currently exist and that the District is not aware of them. Tri Pointe has also represented to the District that it is not aware o f any 497

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substances currently classified as hazardous by the federal government or the State located on its property within the District.

Further, it is possible that liabilities may arise in the future with respect to any of the Taxable Property resulting from the existence, currently, on the parcel of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilitie s could significantly affect the value of a parcel of Taxable Property that is realizable upon a delinquency.

No Acceleration Provision
The Indenture does not contain a provision allowing for the acceleration of the Bonds in the event of a payment default or other default under the terms of the Bonds or the Indenture.

Bonds Are Limited Obligations
Neither the faith and credit nor the taxing power of the District (except to the limited extent set forth in the Indenture), the City, the State or any political subdivision thereof is pledged to the payment of the Bonds or any Additional Bonds. The Bonds are limited obligations of the District; and, except as provided in the Indenture, they are payable solely from Net Special Tax Revenues and the other assets pledged therefore under the Indenture. Net Special Tax Revenues could be insufficient to pay debt service on the Bonds as a result of delinquencies in the payment of the Special Tax or the insufficiency of proceeds derived from the sale of land within the District following a delinquency in the payment of the applicable Special Tax. The District has no obligation to pay debt service on the Bonds in the event of insufficient Net Special Tax Revenues, except to the extent that money is available for such purpose in the Reserve Fund. The District’s only obligation with respect to delinquent Special Tax is to pursue judicial foreclosure proceedings under the circumstances described in the Indenture. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Covenant for Superior Court Foreclosure.”
Loss of Tax Exemption
As discussed under “TAX MATTERS,” interest on the Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date of issuance, as a result of acts or omissions of the District subsequent to the issuance of the Bonds in violation of the District’s covenants with respect to the Bonds.

Should interest become includable in gross income, the Bonds are not subject to redemption by reason thereof and will remain o utstanding until maturity or unless earlier redeemed pursuant to optional or mandatory redemption or redemption upon prepayment of the Special Tax.

Potential Early Redemption of Bonds from Special Tax Prepayments Property owners within the District are permitted to prepay their Special Tax at any time. Such payments will result in a mandatory redemption of Bonds from Special Tax prepayments on the Interest Payment Date for which timely notice may be given under th e Indenture following the receipt of such Special Tax prepayment. The resulting redemption of Bonds purchased at a price greater than par could reduce the otherwise expected yield on such Bonds. See “THE BONDS — Redemption — Mandatory Redemption from Special Tax Prepayments.”
Cybersecurity
The City, like many other public and private entities, relies on a large and complex technology environment to conduct its operations. As a recipient and provider of personal, private, or sensitive information, 498

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the City is subject to multiple cyber threats including, but not limited to, hacking, viruses, malware and other attacks on computer and other sensitive digital networks and systems. Entities or individuals may attempt to gain unauthorized access to the City’s digital systems for the purposes of misappropriating assets or information or causing operational disruption and damage. To date, the City has not experienced an attack on its computer operating systems which resulted in a breach of its cybersecurity syste ms that are in place. However, no assurances can be given that the City’s efforts to manage cyber threats and attacks will be successful or that any such attack will not materially impact the operations or finances of the City.

In May 2021, a public facin g web server of the City that was responsible for building permit and inspection scheduling was compromised. The system contained vendor and database account credentials that were promptly changed. An investigation revealed that the credentials had not been used since the compromise and that changing the credentials prevented any further unauthorized access. All traces of the compromise were removed. Mitigation measures, including a web application firewall and Secure Sockets Layer (SSL) decryption, were put into place to prevent future compromises and additional prevention measures have been implemented.

No data was lost and no damage to any systems, financial or otherwise, occurred. There were no costs associated with remediation.

Impact of Economic Conditions on the Development in the District Certain events and factors which negatively affect the regional, State and national economies could have an adverse effect on the pace at which Tri Pointe is able to complete and sell homes and demand by and th e ability of individuals to purchase homes within the District. Such events and factors could include rising inflation and interest rates, persistent supply chain issues, further impacts of the COVID-19 pandemic and global market instability caused by the war in Ukraine. Any adverse impact of the foregoing and other economic factors on the projects in the District and the real estate market in general cannot be predicted.

Amid an unexpected run on deposits, the Federal Deposit Insurance Corporation (the “ FDIC”) announced on March 10, 2023 that it had been appointed as receiver for Silicon Valley Bank (“SVB”), a large California bank and the 16th largest bank in the United States, and was liquidating SVB as a going concern.

Additionally, on March 12, 2023, the FDIC announced that it had been appointed as receiver for Signature Bank, another large regional bank. However, the United States Treasury Department, the Federal Reserve and the FDIC issued a joint statement that all deposits at both institutions would be honored, regardless of dollar amount.

On March 26, 2023, First Citizens BancShares announced that it would acquire SVB. On May 1, 2023, the FDIC announced that it had been appointed as receiver for First Republic Bank and reached a purchase and assumption agreement with JPMorgan Chase Bank, National Association, to assume all of the deposits and substantially all of the assets of First Republic Bank. Due to the failures of SVB, Signature Bank, and First Republic Bank, there has been uncertainty and concern in the financial markets that there may be additional bank liquidity issues.

Tri Pointe expects to use internally generated funds (which may include home sales proceeds and funding from its parent company, Tri Pointe Homes) to complete its development in the District. However, the uncertainty in the financial markets may affect homebuyers’ willingness or ability to obtain financing for the purchase of new homes within the District, which, in turn, could impact Tri Pointe’s ability or determination to complete its development in the District in the budget and timeframe described herein. See “PROPERTY OWNERSHIP AND THE DEVELOPMENT.”
Increasing Mortgage Interest Rates
30-year fixed mortgage interest rates have increased substantially within the pas t year. Increases in mortgage interest rates could have a negative impact on the estimated absorption rates of the planned for -sale residential units in the District described herein. With respect to entry -level households, increased mortgage interest rates may adversely impact the affordability of homes and may increase mortgage payment levels for owning a lower-priced home relative to renting a residence, thereby making purchasing less attractive. With 499

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respect to move-up households, higher mortgage interest rates may impact the desire of current homeowners to move from their present home due to the fact that their present home likely has a relatively low mortgage interest rate. In addition, the new home would likely have a higher interest rate on a new mortgage loan as well as higher purchase price and property taxes. Such considerations may decrease the desire for move -up households to purchase a new home.

CONTINUING DISCLOSURE
Community Facilities District
Pursuant to a Continuing Disclosure Agreement (the “District Continuing Disclosure Agreement”) with U.S. Bank Trust Company, National Association, in its capacity as Trustee and in its capacity as dissemination agent, the District has agreed to provide, or cause to be provided, to the Electronic Mun icipal Market Access System of the Municipal Securities Rulemaking Board, which can be found on the Internet at www.emma.msrb.org (“EMMA”), on an annual basis certain financial information and operating data concerning the District. The District has further agreed to provide notice to EMMA of certain listed events. The District’s covenants have been made in order to assist the Underwriter in complying with the Rule.

The District has not previously entered into any undertaking with respect to the Rule. Ho wever, the City, as well as the Fontana Public Financing Authority (the “Authority”), the Fontana Public Facilities Financing Authority (the “Facilities Authority”), the Successor Agency to the Fontana Redevelopment Agency (the “Successor Agency”) and various community facilities districts within the City (each, a “CFD”), all of which are entities with the City Council as the legislative body, have entered into numerous continuing disclosure undertakings.

Except as described below, within the last five years, the City and its related entities have complied in all material respects with its undertakings under the Rule: (i) the Authority with respect to two bond issues and 12 CFDs with respect to each such CFD’s bond issue(s) filed the City’s Fiscal Year 2019 -20 audited financial statements late and failed to file unaudited financial statements on or before the deadlines therefore; (ii) twelve CFDs with respect to each such CFDs’ bond issue(s) and the Facilities Authority with respect to its bond issues filed unaudited financial statements for Fiscal Year 2020 -21 but did so after the deadline for meeting those continuing disclosure obligations; the audited financial statement was subsequently filed to EMMA when it became available; (iii) the Successor Agency with respect to its bonds filed unaudited financial statements for Fiscal Year 2020-21 prior to the deadline therefore and posted audited financial statements when such document became available; (iv) the Successor Agency with respect to its bonds filed its Fiscal Year 2022 audited financial statements late and failed to file unaudited financial statements on or before the deadline therefore ; (v) w ith respect to Fiscal Year 2021-22, 14 CFDs and the Facilities Authority filed unaudited financial statements prior to such CFDs’ and the Facilities Authority’s deadline to file but in the case of the Facilities Authority, such filing excluded certain required information typically included in audited financial statements; the Fiscal Year 2021- 22 audited financial statements were subsequently posted to EMMA when they became available .; (vi) a CFD failed to file one annual report for one issue of bonds for which the official statement re lating to such bonds contained all of the information required to be contained in such report; (vii) the District is aware that not all of the required information was included with respect to a number of annual report filings by the City, the Authority, the Successor Agency and several CFDs, including required tabular information ; and (viii) t he City, the Authority, the Successor Agency and certain CFDs failed to timely file certain notices of ratings changes.

The City has since made filings on behalf of itself and its related entities to correct material omissions with respect to the filings that were required to have been made within the past five years and has adopted written procedures to ensure future compliance with the City’s disclosure undertakings and those of its related entities.

Except as disclosed in this Official Statement, within the last five years, the City, the Successor Agency and the Authority have not failed to timely comply with their respective prior continuing disclosure obligations 500

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under the Rule in all material respects. The full text of the form of the District Continuing Disclosure Agreement is set forth in Appendix G.

The Developer
General. Although the Underwriter has concluded that Tri Pointe is not an obligated person under Rule 15c2-12, pursuant to the Developer Continuing Disclosure Certificate, Tri Pointe has agreed to provide, or cause to be provided, to EMMA, on a semi-annual basis certain information concerning Tri Pointe and the property it owns or has under option with The Land Bank within the District. Tri Pointe has further agreed to provide notice to EMMA of certain listed events, including certain events relating to The Land Bank that are known to Tri Pointe. Tri Pointe’s obligation to provide semi-annual reports and notices of certain listed events will terminate upon the earlier to occur of certain events, including at such time as Tri Pointe owns or has under option no more than [38] of the residential lots in the District subject to the Special Tax levy. A default under the Developer Continuing Disclosure Certificate will not, in itself, constitute an Event of Default under the Indenture, and the sole remedy under the Developer Continuing Disclosure Certificate in the event of any failure of Tri Pointe or the dissemination agent, as applicable, to comply with the Developer Continuing Disclosure Certificate will be an action to compel performance. See APPENDIX H — “FORM OF DEVELOPER CONTINUING DISCLOSURE CERTIFICATE” for a description of the specific nature of the semi-annual reports to be filed by Tri Pointe and notices of listed events to be provided by Tri Pointe.

Neither the District nor the City has considered, or reached any conclusion as to, whether or not Tri Pointe is an obligated person under Rule 15c2 -12 and takes no responsibility for any such conc lusion.

Additionally, neither the District nor the City has participated in the preparation, negotiation or implementation of the Developer Continuing Disclosure Certificate or in discussions regarding the form or content thereof. The District and the Ci ty take no responsibility for such form or content or for the adequacy of the Developer Continuing Disclosure Certificate for its intended purpose.

None of the District, the City or the Trustee is a party to the Developer Continuing Disclosure Certificate, and none of the District, the City or the Trustee has any obligation or responsibility to monitor, nor any right or obligation to enforce, compliance by Tri Pointe with its undertaking pursuant to the Developer Continuing Disclosure Certificate, and none of the District, the City or the Trustee will be so monitoring or enforcing such compliance.

Tri Pointe Continuing Disclosure Compliance. To the actual knowledge of Tri Pointe, Tri Pointe has not failed to comply in any material respect with its previous undertakings by it to provide periodic continuing disclosure reports or notices of listed events with respect to community facilities district or assessment district bond issues in southern California within the past five years.

TAX MATTERS
In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the District (“Bond Counsel”), based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”) and is exempt from State of California personal income taxes. Bond Counsel is of the further opinion that interest on the Bonds is not a specific preference item for purposes of the federal individual alternative minimum tax. Bond Counsel observes that, for tax years beginning after December 31, 2022, interest on the Bonds included in adjusted financial statement income of certain corporations is not excluded from the federal corporate alternative minimum tax. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Bonds. A complete copy of the proposed form of opinion of Bond Counsel is set forth in APPENDIX D hereto. 501

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To the extent the issue price of any maturity of the Bonds is less than the amount to be paid at maturity of such Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Bonds), the difference constitutes “original issue discount,” the accrual of which, to the extent properly allocable to each Beneficial Owner thereof, is treated as interest on the Bonds which is excluded from gross income for federal income tax purposes and exempt from State of California personal income taxes. For this purpose, the issue price of a particular maturity of the Bonds is the first price at which a substantial amount of such maturity of the Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the Bonds accrues daily over the term to maturity of such Bonds on the basis of a constant interest rate compounded semiannually (with straight -line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Bonds. Beneficial Owners of the Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of Beneficial Owners who do not purchase such Bonds in the original offering to the public at the first price at which a substantial amount of such Bonds is sold to the public.

Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) (“Premium Bonds”) will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a Beneficial Owner’s basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such Beneficial Owner.

Beneficial Owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances.

The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the B onds. The District has made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants.

Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Bond Counsel’s attention after the date of issuance of the Bonds may adversely affect the value of, or the tax status of interest on, the Bonds.

Accordingly, the opinion of Bond Counsel is not intended to, and may not, be relied upon in connection with any such actions, events or matters.

Although Bond Counsel is of the opinion that interest on the Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of amounts treated as interest on, the Bonds may otherwise affect a Beneficial Owner’s federal, state or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the Beneficial Owner or the Beneficial Owner’s other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences.

Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, in whole or in part, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Beneficial Owners from realizing the full current ben efit of the tax status of such interest. The introduction or enactment of any such legislative proposals or clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Bonds. Prospec tive purchasers of the Bonds should consult their own tax advisors regarding the potential impact of any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion. 502

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The opinion of Bond Cou nsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel’s judgment as to the proper treatment of the Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service (“IRS”) or the courts.

Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the District, or about the effect of future changes in the Code, the applicable regulations, the interpr etation thereof or the enforcement thereof by the IRS. The District has covenanted, however, to comply with the requirements of the Code.

Bond Counsel’s engagement with respect to the Bonds ends with the issuance of the Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the District or the Beneficial Owners regarding the tax-exempt status of the Bonds in the event of an audit examination by the IRS. Under current procedures, Beneficial Owners would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax -exempt bonds is difficult, obtaining an independent review of IRS positions with which the District legitimately disa grees, may not be practicable. Any action of the IRS, including but not limited to selection of the Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the Bonds, and may cause the District or the Beneficial Owners to incur significant expense.

Payments on the Bonds generally will be subject to U.S. information reporting and possibly to “backup withholding.” Under Section 3406 of the Code and a pplicable U.S. Treasury Regulations issued thereunder, a non-corporate Beneficial Owner of Bonds may be subject to backup withholding with respect to “reportable payments,” which include interest paid on the Bonds and the gross proceeds of a sale, exchange , redemption, retirement or other disposition of the Bonds. The payor will be required to deduct and withhold the prescribed amounts if (i) the payee fails to furnish a U.S. taxpayer identification number (“TIN”) to the payor in the manner required, (ii) the IRS notifies the payor that the TIN furnished by the payee is incorrect, (iii) there has been a “notified payee underreporting” described in Section 3406(c) of the Code or (iv) the payee fails to certify under penalty of perjury that the payee is not subject to withholding under Section 3406(a)(1)(C) of the Code. Amounts withheld under the backup withholding rules may be refunded or credited against a Beneficial Owner’s federal income tax liability, if any, provided that the required information is tim ely furnished to the IRS. Certain Beneficial Owners (including among others, corporations and certain tax-exempt organizations) are not subject to backup withholding. The failure to comply with the backup withholding rules may result in the imposition of penalties by the IRS.

ABSENCE OF LITIGATION
In connection with the issuance of the Bonds, the City Attorney of the City will deliver a certificate to the effect that, to the best of the City Attorney’s knowledge , after due inquiry and investigation, there is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body, pending or threatened, or any unfavorable decision, ruling or finding, against or affecting the City or the District, which would adversely i mpact the ability of the City or the District to complete the transactions described in, or contemplated by, the Indenture or this Official Statement, restrain or enjoin the collection of the Special Tax, or in any way contest or affect the validity of the Bonds, the Indenture, the Special Tax, or the transactions described herein.

ABSENCE OF RATINGS
The District has not made, and does not contemplate making, application to any rating organization for a rating on the Bonds.

CERTAIN LEGAL MATTERS
Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the District, will render an opinion with respect to the validity and enforceability of the Indenture and as to the validity of the Bonds. A copy of the form of such 503

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approving opinion is attached hereto as Appendix D. Bond Counsel has not undertaken any responsibility for the accuracy, completeness or fairness of the Official Statement or other offering materials relating to the Bonds and expresses no opinion relating thereto. Certain legal matters will be passed upon for the City by the City Attorney and by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Disclosure Counsel. Certain legal matters will be passed upon for the Underwriter by its counsel, Jones Hall, A Professional Law Corporation, San Francisco, California.

Although it is serving as Bond Counsel to the District in connection with the issuance and sale of the Bonds, Bond Counsel represents the Underwriter in connection with other financings and matters unrelat ed to the Bonds. Disclosure Counsel and the City Attorney also represent the Underwriter in connection with other financings and matters unrelated to the Bonds.

UNDERWRITING
The Bonds are being purchased by Stifel, Nicolaus & Company, Incorporated (the “Underwriter”). The Underwriter has agreed to purchase the Bonds at a price of $___________ ($_________ principal amount, [plus/less] [net] original issue [premium/discount] of $__________ and less an Underwriter’s discount of $_________). The Bond Purchase Agreement relating to the Bonds provides that the Underwriter will purchase all of the Bonds if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in the Bond Purchase Agreement, the approval of certain legal matters by counsel and certain other conditions. The Underwriter’s compensation is contingent upon the successful issuance of the Bonds.

Under certain circumstances, the Underwriter may offer and sell Bonds to certain dealers and others at prices lower than the offering prices stated on the inside front cover page hereof. The offering prices may be changed from time to time by the Underwriter.

FINANCIAL INTERESTS
The fees being paid to the Municipal Advisor, Bond Counsel, Disclosure Counse l, Underwriter, and Underwriter’s Counsel are contingent upon the issuance and delivery of the Bonds.

MUNICIPAL ADVISOR
The District has retained CSG Advisors Incorporated, San Francisco, California, as municipal advisor (the “Municipal Advisor”) for the sale of the Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement.

CSG Advisors Incorporated is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities.

ADDITIONAL INFORMATION
The purpose of this Official Statement is to supply information to prospective buyers of the Bonds.

Quotations and summaries and explanations of the Bonds and documents contained in this Official Statement do not purport to be complete, and reference is made to such documents for full and complete s tatements and their provisions.
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The execution and delivery of this Official Statement by the City Manager of the City has been duly authorized by the City Council of the City of Fontana acting in its capacity as the legislative body of the District.

CITY OF FONTANA COMMUNITY FACILITIES
DISTRICT NO. 100 (VICTORIA)
By:

City Manager
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APPENDIX A

RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
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RATE AND METHOD OF APPORTIONMENT FOR
CITY OF FONTANA COMMUNITY FACILITIES DISTRICT NO. 100
(VICTORIA)
A Special Tax a s hereinafter defined shall be levied on all Assessor’s Parcels of Taxable Property in City of Fontana Community Facilities District No. 100 (Victoria) (“CFD No. 100”) and collected each Fiscal Year, in an amount determined by the City Council of the City of Fontana, through the application of the Rate and Method of Apportionment as described below. All of the real property in CFD No. 100, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided.

A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
“Acre” or “Acreage” means the land area expressed in acres of an Assessor’s Parcel as shown on an Assessor’s Parcel Map, or if the land area is not shown on an Assessor’s Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, or other recorded County map or the land area calculated to the reasonable satisfaction of the CFD Administrator using the boundaries set forth on such map or plan. The square footage of an Assessor’s Parcel is equal to the Acreage of such parcel multiplied by 43,560. “Act” means the Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2 of Title 5 (commencing with Section 53311) of the California Government Code. “Administrative Expenses” means the following actual or reasonably estimated costs directly related to the administration of CFD No. 100, including but not limited to: the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by t he City or designee thereof or both); the costs of collecting the Special Taxes (whether by the County or otherwise); the costs of remitting the Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 100 or any designee thereof of complying with arbitrage rebate requirements with respect to the Special Tax and CFD No. 100 Bonds; the costs to the City, CFD No. 100 or any designee th ereof of complying with disclosure requirements of the City, CFD No. 100 or obligated persons associated with applicable federal and state securities laws and the Act; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, CFD No. 100, or any designee thereof related to the reduction of the Assigned Facilities Special Tax and Backup Facilities Special Tax in accordance with Section C.1 herein; the costs of the City, CFD No. 100 or any designee thereof related to an appeal of the Special Tax; and the City’s annual administration fees and third party expenses related to CFD No. 100 Bonds. Administrative Expenses shall also include amounts estimated or advance d by the City or CFD No. 100 for any other administrative purposes of CFD No. 100, including attorney’s fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes.
“Alley Load Product” means all Residential Property for which residential dwelling units have their garage entrance on one side of the unit, off of an alley or drive that runs behind such unit, with main house entrance from the opposite side of the unit.
“Assessor” means the Assessor of the County.
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“Assessor’s Parcel” means a lot or parcel to which an Assessor’s parcel number is assigned as determined from an Assessor’s Parcel Map or the applicable assessment roll. “Assessor’s Parcel Map” means an official map of the Assessor designating parcels by Assessor’s Parcel number.
“Assigned Facilities Special Tax” means the Facilities Special Tax for each Land Use Class of Developed Property, as determined in accordance with Section C.1.a.(2) below. “Assigned Services Special Tax” means the Services Special Tax, determined in accordance with Section C.2.b herein, that can be levied in any Fiscal Year on any Assessor’s Parcel of Developed Property. “Authorized Facilities” means those facilities eligible to be funded by CFD No. 100. “Authorized Services” means those services eligible to be funded by CFD No. 100 in accordance with the Act, including, but not limited to, fire protection and suppression services, maintenance and lighting of parks, parkways, streets, roads and open space, flood and storm protection services and maintenance and operation of any real property or other tangible property with an estimated useful life of five or more years that is owned by the City.
“Backup Facilities Special Tax” means the Facilities Special Tax applicable to each Assessor’s Parcel of Developed Property, as determined in accordance with Section C.1.a.(3) below. “Buildout” means, for CFD No. 100, that all expected building permits for residential dwelling units and/or non-residential development to be constructed within CFD No. 100 have been issued, as determined by the CFD Administrator.
“CFD Administrator” means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement for Facilities and the Special Tax Requirement for Services, providing for the levy and collection of the Special Taxes, and performing other duties as set forth herein. “CFD No. 100” means City of Fontana Community Facilities District No. 100 (Victoria). “CFD No. 100 Bonds” means any bonds or other debt (as defined in Section 53317(d) of the Act), whether in one or more series, issued by CFD No. 100 and secured by the Facilities Special Tax levy on property within the boundaries of CFD No. 100 under the Act.
“City” means the City of Fontana, California.
“Cluster Product” means all Residential Property located within CFD No. 100 that is not an Alley Load Product.
“Contractual Impositions ” means (a) a voluntary contractual assessment established and levied on an Assessor’s Parcel pursuant to Chapter 29 of Part 3 of Division 7 of the California Streets and Highways Code (commencing with Section 5898.10 et seq.), as amended from time to time, (b) a special tax established and levied on an Assessor’s Parcel pu rsuant to Section 53328.1 of the California Government Code and related provisions of the Act, as amended from time to time, and (c) any other fee, charge, tax or assessment established and levied on an individual Assessor’s Parcel pursuant to a contractual agreement or other voluntary consent by the owner thereof.
“Council” means the City Council of the City acting as the legislative body of CFD No. 100. “County” means the County of San Bernardino.
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“Developed Property” means, for each Fiscal Year, (i) with respect to the Facilities Special Tax, all Taxable Property, exclusive of Taxable Public Property and Taxable Property Owner Association Property, for which a building permit for new construction, other than the construction of a garage, parking lot, or p arking structure, was issued after January 1, 2020 and on or before May 1 of the Fiscal Year preceding the Fiscal Year for which the Facilities Special Taxes are being levied, and (ii) with respect to the Services Special Tax, all Taxable Property, exclusive of Taxable Public Property and Taxable Property Owner Association Property, (a) for which the Final Residential Subdivision was recorded prior to the Fiscal Year for which the Services Special Taxes are being levied, or (b) for which a building permit has been issued with respect to Non-Residential Property on or before May 1 of the Fiscal Year preceding the Fiscal Year for which the Services Special Taxes are being levied. “Facilities Special Tax” means the special tax to be levied in each Fiscal Year o n each Assessor’s Parcel of Taxable Property within CFD No. 100 to fund the Special Tax Requirement for Facilities, as set forth in Section C.1 herein.
“Final Residential Subdivision” means a Final Subdivision that creates individual lots for which buildin g permits may be issued for residential dwelling units without further subdivision of such property. “Final Subdivision” means (i) a subdivision of property by recordation of a final map, parcel map, or lot line adjustment approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) that creates individual lots or parcels for which building permits may be issued, or (ii) for condominiums, a final map approved by the City and a condominium plan recorded pursuant to California Civil Code Section 4285 that creates an individual lot(s) for which a building permit(s) may be issued without further subdivision. The term “Final Subdivision” shall not include any Assessor’s Parcel Map or subdivision map or portion there of that does not create individual lots for which a building permit may be issued, including Assessor’s Parcels that are designated as remainder parcels. Notwithstanding the above, a condominium plan for which one or more building permits have been issued , but no individual lots have been created for such building permits, shall be considered a Final Subdivision, and the portion of the condominium plan for which building permits have been issued shall be defined as Developed Property “Fiscal Year” means the period starting July 1 and ending on the following June 30. “Indenture” means the indenture, fiscal agent agreement, trust agreement, resolution or other instrument pursuant to which CFD No. 100 Bonds are issued, as modified, amended and/or supplemented from time to time. “Land Use Class” means any of the classes listed in Table 1, Table 2, or Table 3 herein. “Lower Income Households Welfare Exemption Property” means, for each Fiscal Year, an Assessor’s Parcel within the boundaries of CFD No. 100 that is entitled to a welfare exemption under subdivision (g) of Section 214 of the California Revenue and Taxation Code (or any successor statute), as indicated in the County’s assessment roll finalized as of the last preceding January 1. “Maximum Facilities Special Tax” means the maximum Facilities Special Tax, determined in accordance with Section C.1 herein, that can be levied in any Fiscal Year on any Assessor’s Parcel of Taxable Property. “Maximum Services Special Tax” means the maximum Services Special Tax, determined in accordance with Section C.2 herein, that can be levied in any Fiscal Year on any Assessor’s Parcel of Developed Property. “Minimum Sale Price” means the minimum price at which parcels of a given Land Use Class have sold or are expected to be sold in a normal marketing environment and shall not include prices for such parcels that are sold at a discount to expected sales prices for the purpose of stimulating the initial sales activity with respect to such Land Use Class.
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“Non-Residential Property” means all Assessor’s Parcels of Developed Property for which a building permit(s) has been issued by the City permitting the construction of one or more non-residential structures or facilities. “Outstanding Bonds” means all CFD No. 100 Bonds which are outstanding under the Indenture. “Price Point Consultant” means any consultant or firm of such consultants selected by CFD No. 100 that (a) has substantial experience in performing price point studies for residential dwelling units within community facilities districts or otherwise estimating or confirming pricing for residential dwelling units in community facilities districts, (b) has recognized expertise in analyzing economic and real estate data that relates to the pricing of residential dwelling units in community facilities districts, (c) is in fact independent and not under the control of CFD No. 100 or the City, (d) does not have any substantial interest, direct or indirect, with or in (i) CFD No. 100, (ii) the City, (iii) any owner of real property in CFD No. 100, or (iv) any real property in CFD No. 100, and (e) is not connected with CFD No. 100 or the City as an officer or employee thereof, but who may be regularly retained to make reports to CFD No. 100 or the City. “Price Point Study” means a price point study or a letter updating a previous price point study prepared by the Price Point Consultant pursuant to Section C herein.
“Product Type” means Cluster Product or Alley Load Product, as defined in this Section A. “Property Owner Association Property” means, for each Fiscal Year, (i) any property within the boundaries of CFD No. 100 for which the owner of record, as determined from the County’s assessment roll for the Fiscal Year in which the Special Tax is b eing levied, is a property owner’s association, including any master or sub - association, or (ii) any property located in a Final Subdivision that was recorded as of the January 1 preceding the Fiscal Year in which the Special Tax is being levied and which, as determined from such Final Subdivision, is or will be open space, a common area recreation facility, or a private street. Notwithstanding the foregoing, any property previously classified as Developed Property and subsequently owned in fee or by easem ent, or dedicated to, a property owner association, including any master or sub -association, shall remain classified as Developed Property.
“Proportionately” means that the ratio of the actual Facilities Special Tax levy to the Assigned Facilities Special Tax is equal for all Assessor’s Parcels of Developed Property, and that the ratio of the actual Services Special Tax levy to the Assigned Services Special Tax is equal for all Assessor’s Parcels of Developed Property. For Undeveloped Property, “Proportionately” means that the ratio of the actual Facilities Special Tax levy per Acre to the Maximum Facilities Special Tax per Acre is equal for all Assessor’s Parcels of Undeveloped Property.

The term “Proportionately” shall similarly be applied to other categ ories of Taxable Property as listed in Section D herein.
“Public Property” means, for each Fiscal Year, any property within the boundaries of CFD No. 100 that is (i) owned by, irrevocably offered or dedicated to the federal government, the State, the County, the City, or any local government or other public agency, provided, however, that any property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified according to its use; or (ii) encumbered by a public utility easement making impractical its use for any purpose other than that set forth in the easement.
“Rate and Method of Apportionment” means this Rate and Method of Apportionment for CFD No. 100. “Residential Property” means all Assessor’s Parcels of Developed Property for which a building permit(s) has been issued by the City permitting the construction thereon of one or more residential dwelling units. “Services Special Tax” means the special tax to be levied in each Fiscal Year on each Assessor’s Parcel of Developed Property within CFD No. 100 to fund the Special Tax Requirement for Services, as set forth in Section C.2 herein.
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“Special Tax” means the Facilities Special Tax and/or Services Special Tax, as applicable. “Special Tax Requirement for Facilities” means, for any Fiscal Year, that amount required, after taking into account available amounts held in the funds and accounts under the Indenture, for the following items: (i) debt service on all Outstanding Bonds due in the calendar year commencing in such Fiscal Year; (ii) periodic costs with respect to the CFD No. 100 Bonds, including but not limited to, costs of credit enhancement and federal rebate payments due in the calendar year commencing in such Fiscal Year; (iii) pay all or a portion of Administrative Expenses; (iv) any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) without duplicating any amounts described in clause (iv), above, reasonably anticipated Facilities Special Tax delinquencies based on the delinquency rate for the Facilities Special Tax in the previous Fiscal Year, as said levy for delinquencies shall be limited by the Act; and (vi) pay directly for the acquisition or construction of Authorized Facilities, provided that the inclusion of such amount does not increase the Facilities Special Tax levy beyond the first step in Section D.1 herein. “Special Tax Requirement for Services” means that amount required in any Fiscal Year for CFD No. 100 to (i) pay directly for the Authorized Services; (ii) pay Administrative Expenses not funded through the Special Tax Requirement for Facilities as determined by the CFD Administrator; (iii) pay for reasonably anticipated Services Special Tax delinquencies based on the delinquency rate for the Services Special Tax levy in the previous Fiscal Year; less (iv) a credit for funds available to reduce the annual Services Special Tax levy, as determined by the CFD Administrator, so long as the amount required is not less than zero. “State” means the State of California.
“Taxable Property” means all of the Assessor’s Parcels within the boundaries of CFD No. 100 which are not exempt from the Special Tax pursuant to applicable law or Section E herein. “Taxable Property Owner Association Property” means all Assessor’s Parcels of Property Owner Association Property that are not exempt pursuant to Section E herein. “Taxable Public Property” means all Assessor’s Parcels of Public Property tha t are not exempt pursuant to Section E herein.
“Total Tax Burden” means, for a parcel of residential property within a Land Use Class, for the Fiscal Year in which Total Tax Burden is being calculated, the sum of (a) the Assigned Facilities Special Tax for such Fiscal Year, plus (b) the Assigned Services Special Tax for such Fiscal Year, plus (c) the ad valorem property taxes, special assessments, special taxes for any overlapping community facilities districts, and any other governmental fees, charges (other than fees or charges for services such as sewer and trash), taxes and assessments (which, for purposes of clarity, do not include Contractual Impositions) collected by the County on ad valorem tax bills and that the CFD Administrator estimates would be levied or imposed on such residential property in such Fiscal Year if the residential dwelling unit thereon or therein had been completed and sold, and was subject to such fees, charges, taxes and assessments in such Fiscal Year. “Trustee” means the trustee or fiscal agent under the Indenture. “Undeveloped Property” means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Taxable Public Property or Taxable Property Owner Association Property.

Please refer to additional definitions in Section H herein relating to the Prepayment of Facilities Special Tax.

B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, commencing with Fiscal Year 2021-2022, all Taxable Property within CFD No. 100 shall be classified as Developed Property, Undeveloped Property, Taxable Public Property or Taxable Property Owner 510

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Association Property, and shall be subject to Special Taxes in accordance with this Rate and Method of Apportionment determined pursuant to Sections C and D herein.

C. MAXIMUM SPECIAL TAX RATE

1. Facilities Special Tax
At least 30 days prior to the issuance of the first series of CFD No. 100 Bonds, the Assigned Facilities Special Tax on Developed Property (set forth in Table 1) shall be analyzed in accordance with and subject to the conditions set forth in this Section C. At such time, the CFD Administrator shall request the Price Point Consultant to prepare a Price Point Study setting forth the Minimum Sale Price of residential property within each Land Use Class. If based upon such Price Point Study the CFD Administrator calculates that the Total Tax Burden applicable to one or more Land Use Classes of residential property constructed or to be constructed within CFD No. 100 shall exceed 1.95% of the Minimum Sale Price of such residential property constructed or to be constructed within CFD No. 100, the CFD Administrator shall reduce the Assigned Facilities Special Tax to the extent necessary to cause the Total Tax Burden that shall apply to residential property within such Land Use Class(es) to not exceed 1.95% of the Minimum Sale Price of such residential property. Each Assigned Facilities Special Tax reduction for a Land Use Class shall be calculated separately, and it shall not be required that such reduction be proportionate among Land Use Classes. In connection with any reduction in the Assigned Facilities Special Tax, the CFD Administrator shall also reduce the Backup Facilities Special Tax in accordance with Section C.1.a.(3) herein. Upon determining the reductions, if any, in the Assigned Facilities Special Tax and Backup Facilities Special Tax required pursuant to this Section C, the CFD Administrator shall complete the Certificate to Amend Facilities Special Tax substantially in the form attached hereto as Exhibit A (the “Certificate to Amend”) and shall execute such completed Certificate to Amend and shall deliver such Certificate to Amend to CFD No. 100. Upon receipt thereof, if in satisfactory form, CFD No. 100 shall execute such Certificate to Amend. The reduced Assigned Facilities Special Tax and Backup Facilities Special Tax specified in such Certificate to Amend shall become effective upon the execution of such Certificate to Amend by CFD No. 100. The Assigned Facilities Special Tax and Backup Facilities Special Tax reductions permitted pursuant to this Section C shall be reflected in an amended notice of Special Tax lien which CFD No. 100 shall cause to be recorded with the San Bernardino County Recorder as soon as practicable after execution of the Certificate to Amend by CFD No. 100. If based upon such Price Point Study the CFD Administrator calculates that the Total Tax Burden applicable to each Land Use Class of residential property constructed or to be constructed within CFD No. 100 does not exceed 1.95% of the M inimum Sale Price of each such Land Use Class of residential property constructed or to be constructed within CFD No. 100, then there shall be no reduction in the Assigned Facilities Special Tax, nor shall there be a reduction in the Backup Facilities Special Tax. a. Developed Property
(1). Maximum Facilities Special Tax
The Maximum Facilities Special Tax for each Assessor’s Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Facilities Special Tax or (ii) the amount derived by application of the Backup Facilities Special Tax. (2). Assigned Facilities Special Tax
Residential Property shall be assigned to either Land Use Class 1 or Land Use Class 2, as identified in Table 1 below, based on the Product Type associated with such Assessor’s Parcel. Non -Residential Property shall be assigned to Land Use Class 3. The Assigned Facilities Special Tax that shall be levied in any Fiscal Year for each Land Use Class is shown below in Table 1. 511

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Table 1
Assigned Facilities Special Tax for Developed Property
City of Fontana CFD No. 100 (Victoria)

Land
Use
Class Description Product Type
Assigned
Facilities
Special Tax
1 Residential Property Alley Load Product $2,348 per unit 2 Residential Property Cluster Product $2,229 per unit
3 Non-Residential Property NA $31,660 per Acre

(3). Backup Facilities Special Tax
The Backup Facilities Special Tax for an Assessor’s Parcel of Developed Property shall equal the lesser of (a) $37,240 per Acre, or (b) in connection with any reduction in the Assigned Facilities Special Tax as set forth in Section C.1 herein, the amount per Acre calculated pursuant to the formula below:

BFST = AFST  ATP
These terms have the following meaning:

BFST = the reduced Backup Facilities Special Tax
AFST = The total estimated Assigned Facilities Special Tax levy for CFD No. 100 based on the reduced Assigned Facilities Special Taxes for Developed Property permitted pursuant to Section C.1 herein which could be levied on all expected development assuming Buildout of CFD No. 100.

ATP = The sum of the Acreage of all Taxable Property within a Final Subd ivision (assuming Buildout) within CFD No. 100 (after excluding Public Property and Property Owner Association Property as set forth in Section E.1 herein) multiplied by 90%.

Furthermore, all Assessors’ Parcels within CFD No. 100 shall be relieved simultan eously and permanently from the obligation to pay and disclose the Backup Facilities Special Tax if the CFD Administrator calculates that (i) the annual debt service required for the Outstanding Bonds, when compared to the Assigned Facilities Special Tax t hat shall be levied against all Assessors’ Parcels of Developed Property in CFD No. 100 results in 110% debt service coverage (i.e., the Assigned Facilities Special Tax that shall be levied against all Developed Property in CFD No. 100 in each remaining Fiscal Year based on the then existing development is at least equal to the sum of (a) 1.10 times the debt service necessary to support the remaining Outstanding Bonds in each corresponding Fiscal Year, and (b) Administrative Expenses), and (ii) all authorized CFD No. 100 Bonds have already been issued or the Council has covenanted that it shall not issue any additional CFD No. 100 Bonds (except refunding bonds) to be supported by the Facilities Special Tax in CFD No. 100. (4). Multiple Land Uses
In some inst ances an Assessor’s Parcel may contain both Developed Property and Undeveloped Property. In such cases, the Acreage of the Assessor’s Parcel shall be allocated between Developed Property and Undeveloped Property based on the portion of the Assessor’s Parc el for which building 512

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permits had been issued prior to May 1 of the prior Fiscal Year and the portion of the Assessor’s Parcel for which building permits had not been issued prior to May 1 of the prior Fiscal Year.

Furthermore, Developed Property may conta in more than one Land Use Class. In such cases, the Acreage that is considered Developed Property shall be allocated between Residential Property and Non-Residential Property based on the amount of Acreage designated for each land use as determined by reference to the site plan approved for such Assessor’s Parcel. The Maximum Facilities Special Tax that can be levied on such Assessor’s Parcel shall be the sum of the Maximum Facilities Special Tax that can be levied on each type of property located on that Assessor’s Parcel.

The CFD Administrator’s allocation to each type of property shall be final. b. Undeveloped Property, Taxable Public Property, and Taxable Property Owner Association Property
The Maximum Facilities Special Tax for each Assessor’s Parcel of Undeveloped Property, Taxable Public Property, and Taxable Property Owner Association Property shall be $37,240 per Acre and shall not be subject to escalation and shall therefore remain the same in every Fiscal Year.

2. Services Special Tax
For purposes of the Services Special Tax, an Assessor’s Parcel(s) of Developed Property within a Final Residential Subdivision shall be assigned to Land Use Class 1 as identified in Table 2 and Table 3 below. Non- Residential Property shall be assigned to Land Use Class 2. Furthermore, the Services Special Tax levied against each Assessor’s Parcel within a Final Residential Subdivision shall be based on the number of residential dwelling units for which building permits have been issued or are expec ted to be issued for such Assessor’s Parcel, as determined by the CFD Administrator based on such Final Residential Subdivision of other available documents.
a. Maximum Services Special Tax
The Fiscal Year 2020 -2021 Maximum Services Special Tax for each La nd Use Class of Developed Property is shown below in Table 2.

Table 2
Maximum Services Special Tax for Developed Property
City of Fontana CFD No. 100 (Victoria)
Fiscal Year 2020-2021
Land
Use
Class Description
Maximum
Services
Special Tax
1 Final Residential Subdivision $600 per unit
2 Non-Residential Property $8,340 per Acre

b. Assigned Services Special Tax
The Fiscal Year 2020 -2021 Assigned Services Special Tax for each Land Use Class of Developed Property is shown below in Table 3.
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Table 3
Assigned Services Special Tax for Developed Property
City of Fontana CFD No. 100 (Victoria)
Fiscal Year 2020-2021
Land
Use
Class Description
Assigned
Services
Special Tax
1 Final Residential Subdivision $430 per unit
2 Non-Residential Property $5,980 per Acre

c. Increase in the Maximum Services Special Tax
On each July 1, commencing on July 1, 2021, the Maximum Services Special Tax shall be increased by an amount equal to two percent (2%) of the amount in effect for the previous Fiscal Year. d. Increase in the Assigned Services Special Tax
The Assigned Services Special Tax above shall be applicable for Fiscal Year 2020 -2021, and shall increase thereafter, commencing on July 1, 2021, and on each July 1 thereafter in an amount estimated to fund the Special Tax Requirement for Services for the Fiscal Year commencing on such July 1.

However, in no case shall the Assigned Services Special Tax for an Assessor’s Parcel of Developed Property exceed the applicable Maximum Services Special Tax for such Assessor’s Parcel of Developed Property in any Fiscal Year.
e. Multiple Land Uses
In some instances an Assessor’s Parcel of Developed Property may contain more than one Land Use Class. In such cases, the Acreage of Developed Property shall be allocated between Residential Property and Non -Residential Property based on the amount of Acreage designated for each land use as determined by reference to the site plan approved for such Assessor’s Parcel. The Maximum Services Special Tax that can be levied on such Assessor’s Parcel shall be the sum of the Maximum Services Special Tax that can be levied on each type of property located on that Assessor’s Parcel. The CFD Administrator’s allocation to each type of property shall be final.

D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX

1. Facilities Special Tax
Commencing with Fiscal Year 2021 -2022, and for each following Fiscal Year, the CFD Administrator shall determine the Special Tax Requirement for Facilities and shall provide for the levy of the Facilities Special Tax each Fiscal Year as follows:

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Third: If additional monies are needed to satisfy the Special Tax Requirement for Facilities after the first two steps have been completed, then the levy of the Facilities Special Tax on each Assessor ’s Parcel of Developed Property whose Maximum Facilities Special Tax is determined through the application of the Backup Facilities Special Tax shall be increased in equal percentages from the Assigned Facilities Special Tax up to the Maximum Facilities Special Tax for each such Assessor’s Parcel; Fourth: If additional monies are needed to satisfy the Special Tax Requirement for Facilities after the first three steps have been completed, then the Facilities Special Tax shall be levied Proportionately on ea ch Assessor’s Parcel of Taxable Public Property and Taxable Property Owner Association Property at up to 100% of the Maximum Facilities Special Tax for Taxable Public Property and Taxable Property Owner Association Property, as needed to satisfy the Special Tax Requirement for Facilities.

Notwithstanding the above, the CFD Administrator shall, in any Fiscal Year, calculate a levy Proportionately less than 100% of the Assigned Facilities Special Tax in step one (above), when (i) the CFD Administrator is no longer required to provide for the levy of the Facilities Special Tax pursuant to steps two through four above in order to meet the Special Tax Requirement for Facilities; and (ii) all authorized CFD No. 100 Bonds have already been issued or the Council has covenanted that it shall not issue any additional CFD No. 100 Bonds (except refunding bonds) to be supported by the Facilities Special Tax.

Further notwithstanding the above, under no circumstances shall the Facilities Special Tax levied in any Fiscal Year against any Assessor’s Parcel of Residential Property for which an occupancy permit for private residential use has been issued (in accordance with Section 53321(d)(3) of the California Government Code), be increased as a consequence of delinquency or default by the owner of any other Assessor’s Parcel within CFD No. 100 by more than ten percent above the amount that would have been levied in that Fiscal Year had there never been any such delinquencies or defaults. To the extent that the levy of the Facilities Special Tax on Residential Property is limited by the provision in the previous sentence, the levy of the Facilities Special Tax on each Assessor’s Parcel of Non-Residential Property shall continue in equal percentages up to 100% of the applicable Maximum Facilities Special Tax.

2. Services Special Tax
Commencing with Fiscal Year 2021 -2022 and for each following Fiscal Year, the CFD Administrator shall determine the Special Tax Requirement for Services and shall provide for the levy of the Services Special Tax until the total Services Special Tax levy equals the Special Tax Requirement for Services. The Services Special Tax shall be levied each Fiscal Year as follows:

First: The Services Special Tax shall be levied Proportionate ly each Fiscal Year on each Assessor’s Parcel of Developed Property at up to 100% of the applicable Assigned Services Special Tax as needed to satisfy the Special Tax Requirement for Services;
Second: If additional monies are needed to satisfy the Special Tax Requirement for Services after the first step has been completed, then the levy of the Services Special Tax on each Assessor’s Parcel of Developed Property shall be increased in equal percentages from the Assigned Services Special Tax up to the Maximu m Services Special Tax for each such Assessor’s Parcel.

E. EXEMPTIONS

1. Facilities Special Tax
No Facilities Special Tax shall be levied on up to 7.7 Acres of Public Property and/or Property Owner Association Property in CFD No. 100. Tax-exempt status shall be assigned by the CFD Administrator in the chronological order in which property in CFD No. 100 becomes Public Property or Property Owner Association 515

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Property. However, should an Assessor’s Parcel no longer be classified as Public Property or Propert y Owner Association Property, it shall, from that point forward, be subject to the Facilities Special Tax.

Notwithstanding the above, an Assessor’s Parcel in CFD No. 100 that is transferred to a public agency or property owner’s association prior to the is suance of the first series of CFD No. 100 Bonds that causes the Acreage of Public Property and Property Owner Association Property to exceed the 7.7 Acreage limit that can be designated by the CFD Administrator under this Section E.1 shall also be exempted from paying the Special Tax.

Public Property or Property Owner Association Property that is not exempt from the Facilities Special Tax under this Section E.1 shall be subject to the levy of the Facilities Special Tax and shall be taxed Proportionately as part of the fourth step in Section D herein, at up to 100% of the applicable Maximum Facilities Special Tax for Taxable Public Property and Property Owner Association Property.

In addition, no Facilities Special Tax shall be levied on Lower Income Households Welfare Exemption Property, provided that if, in any Fiscal Year, applicable law does not require that an Assessor’s Parcel that is Lower Income Households Welfare Exemption Property be exempt from the Facilities Special Tax, then the Facilities Special Tax shall be levied on such Assessor’s Parcel in accordance with this Rate and Method of Apportionment as if such Assessor’s Parcel were not classified as Lower Income Households Welfare Exemption Property.

2. Services Special Tax
No Services Special Tax shall be levied on Undeveloped Property, Taxable Public Property, Taxable Property Owner Association Property, Public Property, or Property Owner Association Property.

In addition, no Services Special Tax shall be levied on Lower Income Households Welfare Exemption Property, provided that if, in any Fiscal Year, applicable law does not require that an Assessor’s Parcel that is Lower Income Households Welfare Exemption Property be exempt from the Services Special Tax, then the Services Special Tax shall be levied on such Assessor’s Parcel in accordance with this Rate and Method of Apportionment as if such Assessor’s Parcel were not classified as Lower Income Households Welfare Exemption Property.

F. MANNER OF COLLECTION
The Special Tax shall be collected in t he same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 100 may directly bill the Special Tax, and/or may collect Special Taxes at a different time or in a different manner if necessary to meet financial o bligations, and, to the extent of the Facilities Special Tax, may covenant to foreclose and may actually foreclose on delinquent Assessor’s Parcels.

G. APPEALS AND INTERPRETATIONS
Any landowner or resident who feels that the amount of the Special Tax levie d on his/her Assessor’s Parcel is in error may submit a written appeal to the CFD Administrator, provided that the appellant is current in his/her payment of Special Taxes. During the pendency of an appeal, all Special Taxes previously levied must be paid on or before the payment date established when the levy was made. The CFD Administrator shall review the appeal, meet with the appellant if the CFD Administrator deems necessary, and advise the appellant of its determination. If the CFD Administrator agrees with the appellant, a cash refund shall not be made (except for the last year of levy), but the amount of the Special Tax levied shall be appropriately modified through an adjustment to the Special Tax levy in the following Fiscal Year. If the CFD Ad ministrator disagrees with the appellant and the appellant is dissatisfied with the determination, the appellant then has 30 days in which to appeal to the Council by filing a written notice of appeal with the City Clerk, provided that the appellant is current in his/her payment of Special Taxes. This second appeal must specify the reasons for its disagreement with the CFD Administrator’s determination.
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The CFD Administrator shall interpret this Rate and Method of Apportionment for purposes of clarifying a ny ambiguity and make determinations relative to the annual administration of the Special Tax and any landowner or resident appeals. Any decision of the CFD Administrator shall be subject to appeal to the Council whose decision shall be final and binding as to all persons.

H. PREPAYMENT OF FACILITIES SPECIAL TAX
Under this Rate and Method of Apportionment, an Assessor’s Parcel within CFD No. 100 is permitted to prepay the Facilities Special Tax. The obligation of the Assessor’s Parcel to pay the Facilities Special Tax may be fully or partially prepaid and permanently satisfied as described herein, provided that a prepayment may be made only for Assessor’s Parcels of Developed Property, or for an Assessor’s Parcel of Undeveloped Property for which a building permit has been issued after January 1, 2020, and only if there are no delinquent Special Taxes with respect to such Assessor’s Parcel at the time of prepayment. An owner of an Assessor’s Parcel intending to prepay the Facilities Special Tax obligation shall provide the CFD Administrator with written notice of intent to prepay. Within 30 days of receipt of such written notice, the CFD Administrator shall notify such owner of the prepayment amount for such Assessor’s Parcel. The CFD Administrator may ch arge such owner a reasonable fee for providing this service. If there are Outstanding Bonds, prepayment must be made not less than 30 days prior to a date that notice of redemption of CFD No. 100 Bonds from the proceeds of such prepayment may be given by the Trustee pursuant to the Indenture that is specified in the report of the Facilities Special Tax Prepayment Amount (defined below).

The following additional definitions apply to this Section H:
“CFD Public Facilities Costs” means either $5,605,000 in 2020 dollars, which shall increase by the Construction Inflation Index on July 1, 2021, and on each July 1 thereafter, or such lower number as (i) shall be determined by the CFD Administrator as sufficient to provide funding for the Authorized Facilities under the authorized bonding program for CFD No. 100, or (ii) shall be determined by the Council concurrently with a covenant that it shall not issue any more CFD No. 100 Bonds (except refunding bonds) to be supported by the Facilities Special Tax levy under this Rate and Method of Apportionment. “Construction Inflation Index” means the annual percentage change in the Engineering News Record Building Cost Index for the City of Los Angeles, measured as of the month of December in the calendar year which ends in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the CFD Administrator that is reasonably comparable to the Engineering News Record Building Cost Index for the City of Los Angeles. “Future Facilities Costs” means the CFD Public Facilities Costs minus (i) costs of Authorized Facilities previously paid from the Improvement Fund, (ii) moneys currently on deposit in the Improvement Fund available to pay costs of Authorized Facilities, and (iii) the amount the CFD Administrator reasonably expects to derive from the reinvestment of these funds.
“Improvement Fund” means a fund or account specifically identified in the Indenture (or prior to the issuance of the first series of CFD No. 100 Bonds a fund or account held by the City) to hold funds which are currently available for expenditure to acquire or construct Authorized Facilities. “Previously Issued Bonds” means, for any Fiscal Year, a ll Outstanding Bonds that are outstanding under the Indenture after the first interest and/or principal payment date following the current Fiscal Year. 517

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1. Prepayment in Full
The Facilities Special Tax Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below):

Bond Redemption Amount
plus Redemption Premium
plus Future Facilities Amount
plus Defeasance Amount
plus Administrative Fees and Expenses
less Reserve Fund Credit
less Capitalized Interest Credit
Total: equals Facilities Special Tax Prepayment Amount
As of the proposed date of prepayment, the Facilities Special Tax Prepayment Amount shall be calculated according to the following paragraphs:

1. Confirm that no Special Tax delinquencies apply to such Assessor’s Parcel.

2. For Assessor’s Parcels of Developed Property, compute the Assigned Facilities Special Tax and Backup Facilities Special Tax for the Assessor’s Parcel to be prepaid. For Assessor’s Parcels of Undeveloped Property for w hich a building permit has been issued after January 1, 2020, compute the Assigned Facilities Special Tax and Backup Facilities Special Tax for that Assessor’s Parcel as though it was already designated as Developed Property, based upon the building permit which has already been issued for such Assessor’s Parcel.

3. (a) Divide the Assigned Facilities Special Tax computed pursuant to paragraph 2 by the total estimated Assigned Facilities Special Tax levy for CFD No. 100 based on the Assigned Facilities Special Taxes for Developed Property which could be levied on all expected development assuming Buildout of CFD No. 100, excluding any Assessor’s Parcels which have been prepaid, and (b) Divide the Backup Facilities Special Tax computed pursuant to paragraph 2 by the total estimated Backup Facilities Special Taxes at Buildout for the entire CFD No. 100, excluding any Assessor’s Parcels which have been prepaid.

4. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the Previously Issued Bonds to compute the amount of Previously Issued Bonds to be redeemed (the “Bond Redemption Amount”).

5. Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable redemption premium (e.g., the redemption price minus 100%), if any , on the Previously Issued Bonds to be redeemed (the “Redemption Premium”).

6. Compute the current Future Facilities Costs.

7. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the amount determined pursuant to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the “Future Facilities Amount”).

8. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the redemption date for the Previously Issued Bonds specified in the report of the Facilities Special Tax Prepayment Amount. 518

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9. Determine the Facilities Special Tax levied on the Assessor’s Parcel in the current Fiscal Year which has not yet been paid.

10. Compute the minimum amount the CFD Administrator reasonably expects to derive from the reinvestment of the Facilities Special Tax Prepayment Amount, less any interest earnings attributed to the Future Facilities Amount, and less any interest earnings attributed to the Administrative Fees and Expenses (defined below) from the date of prepayment until the redemption date for the Previously Issued Bonds to be redeemed with the prepayment.

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

12. The administrative fees and expenses of CFD No. 100 are as calculated by the CFD Administrator and include the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming CFD No. 100 Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the “Administrative Fees and Expenses”).

13. The reserve fund credit (the “Reserve Fund Credit”) shall equal the lesser of: (a) the expected reduction in the reserve requirement (as defined in the Indenture), if any, associated with the redemption of Previously Issued Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirement (as defined in the Indenture) in effect after the redemption of Previously Issued Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be les s than zero. No Reserve Fund Credit shall be granted if the amount then on deposit in the reserve fund for the Previously Issued Bonds is below 100% of the reserve requirement (as defined in the Indenture).

14. If any capitalized interest for the Previous ly Issued Bonds will not have been expended as of the date immediately following the first interest and/or principal payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the larger quotient computed pu rsuant to paragraph 3(a) or 3(b) by the expected balance in the capitalized interest fund or account under the Indenture after such first interest and/or principal payment date (the “Capitalized Interest Credit”).

15. The Facilities Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 4, 5, 7, 11 and 12, less the amounts computed pursuant to paragraphs 13 and 14 (the “Facilities Special Tax Prepayment Amount”).

2. Prepayment in Part
The amount of the prepayment shall be calculated as in Section H.1; except that a partial prepayment shall be calculated according to the following formula:

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

PP = the partial prepayment.

PE = the Facilities Special Tax Prepayment Amount calculated according to Section H.1.

F = the percentage, expressed as a decimal, by which the owner of the Assessor’s Parcel is partially prepaying the Facilities Special Tax.

A = the Administrative Fees and Expenses calculated according to Section H.1. 519

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3. General Provisions Applicable to the Prepayment of Facilities Special Tax (a). Use of the Facilities Special Tax Prepayment Amount The Facilities Special Tax Prepayment Amount, less the Administrative Fees and Expenses calculated according to Section H.1 which shall be retained by CFD No. 100, and less the Future Facilities Amount calculated according to Section H.1 which shall be deposited into the Improvement Fund, shall be deposited into specific funds established under the Indenture, to ful ly or partially redeem as many Outstanding Bonds as possible, and, if amounts are less than $5,000, to make debt service payments on the Outstanding Bonds.
(b). Full Prepayment of Facilities Special Tax
Upon confirmation of the payment of the current Fiscal Year’s entire Facilities Special Tax obligation, the CFD Administrator shall remove the current Fiscal Year’s Facilities Special Tax levy for such Assessor’s Parcel from the County tax rolls. With respect to any Assessor’s Parcel that is prepaid in accordance with Section H.1, the CFD Administrator shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of the Facilities Special Tax and the release of the Facilities Special Tax lien on such Assessor’s Parcel, a nd the obligation of such Assessor’s Parcel to pay the Facilities Special Tax shall cease.
(c). Partial Prepayment of Facilities Special Tax
With respect to any Assessor’s Parcel that is partially prepaid, the CFD Administrator shall (i) distribute or cause to be distributed the funds remitted to it according to Section H.3.(a) and (ii) indicate in the records of CFD No. 100 that there has been a partial prepayment of the Facilities Special Tax and that a portion of the Facilities Special Tax with respect t o such Assessor’s parcel, equal to the outstanding percentage (1.00 – F) of the remaining Maximum Facilities Special Tax, shall continue to be levied on such Assessor’s Parcel pursuant to Section D herein.
(d). Debt Service Coverage
Notwithstanding the foregoing, no prepayment of the Facilities Special Tax shall be allowed unless the amount of Facilities Special Tax that may be levied on Taxable Property (assuming Buildout) within CFD No. 100 in each future Fiscal Year (after excludin g Public Property and Property Owner Association Property as set forth in Section E.1 herein), after the proposed prepayment, is at least equal to the sum of (i) 1.10 times the debt service necessary to support the remaining Outstanding Bonds in each corresponding Fiscal Year, and (ii) Administrative Expenses.

I. TERM OF SPECIAL TAX
The Facilities Special Tax shall be levied for a period not to exceed forty -five years commencing with Fiscal Year 2021-2022. The Services Special Tax shall be levied in perpet uity to fund the Special Tax Requirement for Services.
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EXHIBIT A

CERTIFICATE TO AMEND FACILITIES SPECIAL TAX
CFD NO. 100 CERTIFICATE

1. Pursuant to Section C.1 of the Rate and Method of Apportionment (the “Rate and Method”) for City of Fontana Community Facilities District No. 100 (Victoria) (“CFD No. 100”), the Assigned Facilities Special Tax and the Backup Facilities Special Tax for Developed Property within CFD No. 100 has been reduced as described herein.
(a) The information in Table 1 of the Rate and Method relating to the Assigned Facilities Special Tax for Developed Property within CFD No. 100 shall be modified as follows:

Land
Use
Class Description Product Type
Assigned
Facilities
Special Tax
1 Residential Property Alley Load Product $[____] per unit 2 Residential Property Cluster Product $[____] per unit 3 Non-Residential Property NA $[____] per Acre

(b) The Backup Facilities Special Tax for Developed Property, as stated in Section C.1.a.(3) of the Rate and Method, shall be reduced from $37,240 per Acre to $[_____] per Acre:

2. The Assigned Facilities Special Tax and the Backup Facilities Special Tax for Developed Property may only be reduced prior to the first issuance of CFD No. 100 Bonds.

3. Upon execution of the certificate by CFD No. 100, CFD No. 100 shall cause an amended notice of Special Tax lien for CFD No. 100 to be recorded reflecting the reductions set forth herein.

All capitalized terms used herein shall have the meanings set forth in the Rate and Method.

By:

CFD Administrator
Date:

By execution hereof, the undersigned acknowledge, on behalf of CFD No. 100, receipt of this certificate and modification of the Rate and Method as set forth in this certificate.

CITY OF FONTANA COMMUNITY FACILITIES DISTRICT No. 100 (VICTORIA) By:

Date:

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APPENDIX B

APPRAISAL REPORT

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APPENDIX C

UPDATED PRICE POINT STUDY

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APPENDIX D

FORM OF OPINION OF BOND COUNSEL

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APPENDIX E

GENERAL INFORMATION CONCERNING

THE CITY OF FONTANA
This appendix sets forth general information about the City of Fontana (“Fontana”) including information with respect to its finances. The following information concerning Fontana, the County of San Bernardino (the “County”) and the State of California (the “State”) are included only for general background purposes. The Bonds are not o bligations of the City, County or State or any political subdivision thereof and neither the faith and credit nor the taxing power of the City, County or the State, or any political subdivision thereof, is pledged to the payment of the Bonds or any Additional Bonds General
The City of Fontana encompasses approximately 42.4 square miles of land and has an estimated population in 2023 of approximately 213,851. The City is located 50 miles east of Los Angeles, and approximately 10 miles west of the cities of Riverside and San Bernardino. Founded in 1913, Fontana is the second largest city in San Bernardino County, and the 20th largest in the State. The Riverside-San Bernardino area is often referred to as Southern California’s “Inland Empire.” As one of the cities in the Inland Empire, Fontana is part of a region whose population base exceeds 4.4 million people.

The earliest recorded landowner in the Fontana area was Don Antonio Maria Lugo, who received a land grant in 1813. A second grant, in 1842, secured the land known as Rancho de San Bernardino for his sons. The Lugo sons sold a portion of their land, which included part of what is now Fontana, to a group of Mormon settlers in 1851. The Mormon settlers eventually returned to Salt Lake City, and the Se mi-Tropical Land & Water Company gained control of the Rancho. Active development of the area, however, did not begin until the early 1900’s when the Fontana Development Company acquired the acreage and began a community called Rosena - a name that was changed to Fontana in 1913.

Fontana quickly became a diversified agricultural area, with citrus, grain, grapes, poultry, and swine being the leading agricultural commodities. The community faced a transition beginning in 1942 when the Fontana area was selected as the site for a steel mill. Fontana incorporated in 1952 and the area became Southern California’s leading producer of steel and steel related products.

The steel industry dominated the City’s economy from the time the mill was built until the mid-1980’s.

In the late 1970’s, however, Kaiser Steel began to cut down on production and manpower, and the steel mill closed in 1984. The mill site, located outside of City limits, is in the process of being developed into an integrated community of transportation-related industrial, commercial and business park uses to take advantage of the site’s excellent highway and rail access. The plate steel and rolling mill plant was acquired by California Steel Industries, which continues to produce steel products. In addition, railroad and trucking operations and a number of industrial facilities and warehousing/distribution centers are located in Fontana because of its convenient geographical location and excellent transportation network.

Auto Club Speedway (formerly California Speedway) is a two-mile (3 km), low-banked, D-shaped oval superspeedway in unincorporated San Bernardino County which has hosted NASCAR racing annually since 1997. The track was also used for open wheel racing events until 2005. The racetrack is located near the former locations of Ontario Motor Speedway and Riverside International Raceway. The track is currently owned and operated by International Speedway Corporation and is the only track owned by ISC to have naming rights sold.

The speedway is served by the nearby Interstate 10 and Interstate 15 freeways as well as a Metrolink station located behind the backstretch.
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City Government
The City was incorporated as a general law city in 1952 and is governed by a Mayor and four council members elected by geographical district to serve four -year terms. The City operates under the Council - Manager form of government. Effective July 1, 200 8, the Fontana City Council established the Fontana Fire Protection District, which is governed by the same members who comprise the City Council, and which provides fire and related services to the City and certain adjacent unincorporated areas by means of contract with the San Bernardino County Fire Department. The City Council appoints the City Manager who is responsible for the day-to-day administration of City business and the coordination of all departments of the City.

The City of Fontana provides police protection, street sweeping, park maintenance, building inspection, library, sewer, storm drain and sanitation services. Numerous hospitals and health care facilities are located near Fontana.

Population
Fontana has been one of the most rapidly grow ing cities in Southern California. The adopted 1990 General Plan calls for a careful balance of residential, commercial and industrial development to ensure a quality urban environment with a broad range of employment and housing opportunities.

The population in Fontana increased approximately 5.98% from 2014 to 2023. The population growth in the City, County and State is shown on the following chart.

POPULATION ESTIMATES
City of Fontana, County of San Bernardino and State of California 2014-2023
Year(1) City of Fontana
County of San
Bernardino State of California
2014 201,790 2,094,951 38,556,731
2015 203,790 2,112,187 38,865,532
2016 205,180 2,122,579 39,103,587
2017 208,003 2,139,520 39,352,398
2018 209,113 2,150,017 39,519,535
2019 211,123 2,165,876 39,605,361
2020 211,519 2,175,424 39,648,938
2021 210,167 2,179,007 39,286,510
2022 212,616 2,180,777 39,078,674
2023 213,851 2,182,056 38,940,231

(1) January 1 estimate.

Source: State of California, Department of Finance.

Transportation
The City of Fontana is strategically located in the hub of surface, rail and air transportation facilities.

Union Pacific and Burlington Northern/Santa Fe rail lines provide rail service to Fontana. Switch yards and multi-modal terminals are located nearby.

Major interstate freeways and state highways provide direct access to the City, making shipping and transportation to and from seaports, North American Free Trade Agreement ports of entry, and the rest of the nation highly dependable. I nterstate 10 traverses the southern section of the City, Interstate 15 borders the western portion of the City, and Interstate 210, which is the extension of Route 30, opened in November 2002, 526

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links the San Bernardino Valley with the San Fernando Valley an d traverses the northern portion of the City.

State freeways 57, 60 and 91 are minutes from Fontana.

The LA/Ontario International Airport is a medium -hub, full-service airport, which offers more than 70 daily flights to cities in the U.S., Mexico and Taiwan and is served by nine commercial carriers. The airport is owned and operated by Ontario International Airport Authority, a joint powers agency, and is served by AeroMexico, Alaska Airlines, American Airlines, Delta Air Lines, Southwest Airlines, United Airlines/United Express, US Airways and Volaris. Various airlines provide freight services at Ontario International Airport.

With approximately 570,000 square feet and 26 passenger gates within two terminals, Ontario International Airport is the Western States Regional Terminal for United Parcel Service. In 2022 approximately

5.7 million passengers used the airport and cargo shipments increased 9% from the pre -pandemic 2019. Over the first six months of 2022, total passenger volume was nearly 3 million, 12.4% greater than the first half of 2022. The passenger count included 2.8 million domestic travelers and 176,000 international passengers, increases of 9.5% and 94.4%, respectively. Ontario also ranks among the fastest recovering airports in the U.S. after the severe disruption in global air travel during the early months of the pandemic Transit services are provided by Metrolink commuter rail service to Los Angeles with connections to the numerous surrounding cities provided by Omnitrans bus service, Dial-a-Ride, Yellow Cab Company and Bell Cab Company.

Education
Five school districts serve students in the City of Fontana. There are thirty public elementary schools, seven middle schools, five high schools, three alternative high schools, seven private elementary/middle schools, one School of Language Development and one adult school. Local colleges and universities include Universal Technical Institute of California Inc., Chaffey College, San Bernardino Valley College, California State University-San Bernardino, Riverside Community College, Westech College and the University of California - Riverside.
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Employment
The following table summarizes the labor force, employment and unemployment figures for the years 2017 through 2022 for the City, the County, the State and the United States.

CIVILIAN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT RATE
City of Fontana, San Bernardino County, State of California and United States 2017 through 2022(1)
Year and Area Labor Force Employment(2) Unemployment(3) Unemployment
Rate (%)
2017
City of Fontana 96,800 92,200 4,600 4.8%
San Bernardino County 942,000 895,300 46,800 5.0
State of California 19,185,400 18,258,100 927,300 4.8
United States 160,320,000 153,337,000 6,982,000 4.4

2018
City of Fontana 98,400 94,600 3,800 3.9%
San Bernardino County 955,100 915,800 39,200 4.1
State of California 19,289,500 18,469,900 819,600 4.2
United States 162,075,000 155,761,000 6,314,000 3.9

2019
City of Fontana 99,600 96,000 3,600 3.6%
San Bernardino County 967,100 929,800 37,400 3.9
State of California 19,413,200 18,617,900 795,300 4.1
United States 163,539,000 157,538,000 6,001,000 3.7

2020
City of Fontana 100,700 91,300 9,400 9.4%
San Bernardino County 974,700 880,900 93,800 9.6
State of California 18,971,600 17,047,600 1,924,000 10.1 United States 160,742,000 147,795,000 12,947,000 8.1

2021
City of Fontana 102,500 95,200 7,300 7.1%
San Bernardino County 992,200 918,600 73,600 7.4
State of California 18,9734200 17,586,300 1,387,100 7.3 United States 161,204,000 152,581,000 8,623,000 5.3

2022
City of Fontana 104,100 100,200 3,900 3.8%
San Bernardino County 1,008,500 967,200 41,300 4.1
State of California 19,252,000 18,440,900 811,100 4.2
United States 164,287,000 158,291,000 5,996,000 3.6

Note: Data is not seasonally adjusted.
(1) Annual averages, unless otherwise specified.
(2) Includes persons involved in labor-management trade disputes. (3) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures in this table.

Source: U.S. Department of Labor – Bureau of Labor Statistics, California Employment Development Department. March 2022 Benchmark.
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Listed below are the major employers in the City.

CITY OF FONTANA - MAJOR EMPLOYERS – 2021
Employer Number of Employees
Kaiser Permanente 7,642
Fontana Unified School District 6,665
Amazon.com Services LLC 3,145
Target Stores T 553 1,788
Kaiser Foundations Hospitals 1,783
St Bernardine Medical CEnter 1,775
Walmart #6060 DC Drop Yard 1,034
City of Fontana (includes part-time employees) 992
Walmart D C #6060 973
Saia Motor Freight Line LLC 402

Source: City of Fontana Fiscal Year Ending June 30, 2022 Annual Comprehensive Financial Report.

Listed below are the major employers in the County.

PRINCIPAL EMPLOYERS
San Bernardino County
Fiscal Year 2021-22
Rank Name of Business
Approximate No. of
San Bernardino
County
Employees(1) Type of Business
1 County of San Bernardino 5,000-9,999 Public Administration 2 Amazon 5,000-9,999 Electronic Commerce
3 Loma Linda University Medical Center 5,000-9,999 Medical Center 4 Stater Brothers 1,000-5,000 Grocery Store
5 Burlington Distribution Corp. 1,000-5,000 Retail
6 Environmental Systems Research 1,000-5,000 Software
7 FedEx Ground 1,000-5,000 Package Delivery
8 Inland Empire Health Plan 1,000-5,000 Insurance
9 San Antonio Community Hospital 1,000-5,000 Medical Center 10 San Manuel Resort & Casino 1,000-5,000 Casino

(1) Due to confidentiality of reporting number of employees, ranges have been provided.

Source: San Bernardino County Annual Comprehensive Financial Report for the year ending June 30, 2022. 529

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Industries
Residents of the City find employment throughout the Riverside-San Bernardino-Ontario Labor Market Area. This labor market area, as defined for reporting purposes by the California Employment Development Department, has boundaries coterminous with those of Riverside and San Bernardino Counties. The following table sets forth certain employment data for the Riverside - San Bernardino-Ontario Metropolitan Statistical Area and the County for the period from 2018 through 2022.

RIVERSIDE-SAN BERNARDINO-ONTARIO METROPOLITAN STATISTICAL AREA

INDUSTRY EMPLOYMENT & LABOR FORCE - BY ANNUAL AVERAGE
2018 2019 2020 2021 2022
Civilian Labor Force 2,045,200 2,075,200 2,095,800 2,125,300 2,160,600 Civilian Employment 1,957,500 1,991,200 1,888,900 1,968,700 2,071,200 Civilian Unemployment 87,700 84,000 206,900 156,600 89,400 Civilian Unemployment Rate 4.3% 4.0% 9.9% 7.4% 4.1%

Total Farm 1,521,100 1,568,100 1,509,900 1,588,800 1,674,200 Total Nonfarm 14,500 15,400 14,100 13,700 13,900
Total Private 1,506,600 1,552,700 1,495,800 1,575,100 1,660,300 Goods Producing 1,249,400 1,291,500 1,247,800 1,333,100 1,410,900 Mining & Logging 206,800 209,700 202,200 207,700 216,400 Construction 1,200 1,200 1,300 1,400 1,600
Manufacturing 105,200 107,200 104,900 110,100 115,200
Service Providing 100,400 101,300 96,000 96,100 99,600
Trade, Transportation & Utilities 1,299,800 1,343,100 1,293,700 1,367,400 1,443,900 Wholesale Trade 379,400 395,100 406,900 443,200 464,500 Retail Trade 66,100 67,700 65,600 67,400 69,700
Transportation, Warehousing & Utilities 181,200 180,700 168,800 177,000 180,600 Information 132,100 146,600 172,500 198,800 214,200
Financial Activities 11,400 11,500 9,600 9,700 10,200
Professional & Business Services 44,600 45,000 44,100 45,200 46,800 Educational & Health Services 151,400 157,900 154,800 169,400 179,100 Leisure & Hospitality 239,500 250,300 248,800 254,300 266,400 Other Services 170,600 175,900 141,300 160,200 179,600
Government 45,800 46,200 40,200 43,600 47,900
Total, All Industries 257,200 261,200 248,000 242,000 249,400

Note: Does not include proprietors, self-employed, unpaid volunteers or family workers, domestic workers in households and persons involved in labor -management trade disputes. Employment reported by place of work. Items may not add to total due to independent rounding. The “Total, All Industries” data is not directly comparable to the employment data found in this Appendix E.

Source: State of California, Employment Development Department, March 2022 Benchmark. 530

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Tax Levy and Tax Collection
Below is a chart which indicates the tax levy and collection records for the City for fiscal years 2013 through 2022.

Fiscal Year
Percent of Levy
Collected to Date
Total Tax Collections
to Tax Levy to Date
2013 98.37% $ 95,130,535
2014 101.55 100,966,890
2015 106.51 115,888,404
2016 101.77 116,422,050
2017 104.24 125,264,871
2018 106.48 135,757,922
2019 107.57 154,079,402
2020 103.19 160,025,650
2021 103.78 172,050,509
2022 106.23 188,891,255

Note: The amounts presented include City property taxes and the Former Redevelopment Agency of the City of Fontana (the “Redevelopment Agency”) tax increment. This schedule also includes amounts collected by the City and Redevelopment Agency that were passed-through to other agencies.

Source: City of Fontana Fiscal Year Ending June 30, 2022 Annual Comprehensive Financial Report.

Largest Taxpayers
The principal property taxpayers in the City for 2022 are as follows:

Taxpayer
2022 Assessed
Valuation
% of Total
Assessed
Valuation
Duke Realty LP $ 190,372,678 0.79%
GLC Fontana LLC 168,685,357 0.70
San Gabriel Valley Water Company 144,589,954 0.60
Vintage Park East LLC 135,437,610 0.56
Target Corporation 129,474,525 0.54
Northwestern Mutual Life Insurance Co 110,338,280 0.46
Fairfield Potomac Club LLC 109,687,838 0.46
10824 Production Owner LLC 105,633,138 0.44
Citrus Avenue LLC 99,271,641 0.41
DCT Jurupa Ranch LLC 99,192,276 0.41
TOTAL: $ 1,292,683,297 5.38%

Source: City of Fontana Fiscal Year Ending June 30, 2022 Annual Comprehensive Financial Report. 531

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Taxable Sales
The table below presents taxable sales for the years 2018 through 2022 for the City.

TAXABLE SALES
City of Fontana
2018 through 2022
(Dollars in Thousands)
Year
Retail and Food
Permits
Retail and Food
Taxable
Transactions Total Permits
Total Outlets
Taxable
Transactions
2018 3,944 $2,650,007 5,597 $3,596,721
2019 4,101 2,688,599 5,870 3,713,487
2020 4,467 2,768,279 6,543 3,637,153
2021 3,997 3,393,088 5,969 4,374,359
2022 4,209 3,538,573 6,197 4,783,415

Source: Taxable Sales in California, California Department of Tax and Fee Administration.

The table below presents taxable sales for the years 2018 through 2022 for the County.

TAXABLE SALES
San Bernardino County
2018 through 2022
(Dollars in Thousands)
Year
Retail and Food
Permits
Retail and Food
Taxable
Transactions Total Permits
Total Outlets
Taxable
Transactions
2018 39,837 26,905,784 61,838 40,554,024
2019 40,964 27,585,905 64,771 41,768,748
2020 44,330 28,745,277 71,145 43,265,512
2021 40,801 38,345,912 66,585 55,378,097
2022 41,690 40,003,128 68,480 59,745,218

Source: Taxable Sales in California, California Department of Tax and Fee Administration.

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Personal Income
The following tables show the personal income and per capita personal income for the City, County, State of California and United States from 2015 through 2022.

PERSONAL INCOME(1)
City of Fontana, County of San Bernardino, State of California, and United States 2015-2022
Year
City of
Fontana
County of
San Bernardino California United States
2015 $3,963,623 $74,773,589 $2,125,430,300 $15,681,233,000 2016 4,013,591 77,868,801 2,218,457,800 16,092,713,000
2017 4,159,001 80,514,585 2,318,280,900 16,837,337,000
2018 4,444,518 83,915,091 2,431,773,900 17,687,054,000
2019 4,775,796 89,559,909 2,567,425,600 18,575,467,000
2020 5,061,439 99,313,293 2,790,523,500 19,812,171,000
2021 108,623,799 3,006,183,900 21,288,709,000
2022 n/a 3,018,471,100 21,804,787,500

Note: Dollars in Thousands.

Source: U.S. Department of Commerce, Bureau of Economic Analysis and City of Fontana Annual Comprehensive Financial Report for the year ending June 30, 2021.

PER CAPITA PERSONAL INCOME(1)(2)
City of Fontana, County of San Bernardino, State of California, and United States 2015-2022
Year
City of
Fontana
County of
San Bernardino California United States
2015 $19,400 $35,423 $54,546 $48,875
2016 19,122 36,618 56,560 49,613
2017 19,545 37,537 58,804 51,550
2018 20,965 38,849 61,508 53,786
2019 22,519 41,253 64,919 56,250
2020 23,763 45,499 70,643 59,763
2021 49,493 76,800 64,117
2022 n/a 77,339 65,423

(1) Per capita personal income is the total personal income divided by the total mid-year population estimates of the U.S. Bureau of the Census. All dollar estimates are in current dollars (not adjusted for inflation).

Source: City of Fontana Comprehensive Annual Financial Report for the year ending June 30, 2022 , Bureau of Econ omic Analysis for County, State and U.S.

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Construction Trends
Below is a table indicating residential and non-residential building permits valuations for the City.

CITY OF FONTANA

BUILDING PERMIT VALUATION
(in thousands of dollars)
Type 2018 2019 2020 2021 2022
Valuation ($000’s)
Residential: $ 145,610 $ 241,481 $ 311,547 $ 216,978 $ 211,710 Non-Residential: 197,379 290,767 149,761 126,814 363,353 Total Valuation: $ 342,989 $ 532,248 $ 461,308 $ 343,792 $ 575,063

New Housing Units:

Single Family 413 642 848 670 509
Multi Family 85 202 234 382 562
Total Units: 498 844 1,082 1,052 1,071

Note: Totals may not add to sums because of independent rounding.

Source: Construction Industry Research Board.

Recreation
The City of Fontana maintains over 40 parks, tot lots, sports facilities and other facilities in the community. The City of Fontana operates eight centers throughout the community. The Center Stage Theatre was originally built in 1937 as a sin gle screen movie theatre and was remodeled in 2008 and re -opened as the premiere performing arts venue in the City of Fontana.

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APPENDIX F

SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE

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APPENDIX G

FORM OF DISTRICT CONTINUING DISCLOSURE AGREEMENT

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APPENDIX H

FORM OF DEVELOPER CONTINUING DISCLOSURE CERTIFICATE

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APPENDIX I

INFORMATION CONCERNING THE DEPOSITORY TRUST COMPANY

AND ITS BOOK-ENTRY SYSTEM
The information in this section concerning DTC and DTC’s book-entry only system has been obtained from sources that the District believes to be reliable, but the District takes no responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, premium, if any, accreted value and interest on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC to the District which the District believes to be reliable, but the District and the Underwriter do not and cannot make any independent representations concerning these matters and do not take responsibility for the accuracy or completeness thereof. Neither the DTC, Direct Participants, Indirect Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters but should instead confirm the same with DTC or the DTC Participants, as the case may be.

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

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal R eserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.6 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post tr ade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of “AA+.” The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be record ed on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive Bonds representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
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To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as prepayments, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial O wners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being prepaid, DTC’s practic e is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in a ccordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whos e accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the District or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Trustee, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such p ayments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

A Bond Owner shall give notice to elect to have its Bonds purchased or tendered, through its Participant, to the Trustee, and shall effect delivery of such Bon ds by causing the Direct Participant to transfer the Participant’s interest in the Bonds, on DTC’s records, to the Trustee. The requirement for physical delivery of Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfi ed when the ownership rights in the Bonds are transferred by Direct Participants on DTC’s records and followed by a book- entry credit of tendered Bonds to the Trustee’s DTC account.

DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the District or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, physical certificates are required to be printed and delivered.

The District may decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities depository). In that event, Bonds will be printed and delivered to DTC. 539

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THE TRUSTEE, AS LONG AS A BOOK -ENTRY ONLY SYSTEM IS USED FOR THE BONDS, WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO OWNERS ONLY TO DTC. ANY

FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC PARTICIPANT TO NOTIFY

ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT

THE VALIDITY OF SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMPTION OF

THE BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE.
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APPRAISAL REPORT

CITY OF FONTANA
COMMUNITY FACILITIES DISTRICT NO. 100
(Victoria)

City of Fontana, San Bernardino County, California
(Appraisers’ File No. 2023-1283)

Prepared For
City of Fontana
8353 Sierra Avenue
Fontana, California 92335

Prepared By
Kitty Siino & Associates, Inc.
115 East Second Street, Suite 100
Tustin, California 92780

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KITTY SIINO & ASSOCIATES, INC.

REAL ESTATE APPRAISERS & CONSULTANTS

August 22, 2023

Jessica Brown, Chief Financial Officer
City of Fontana
8353 Sierra Avenue
Fontana, CA 92335

Reference: Appraisal Report
City of Fontana Community Facilities District No. 100 (Victoria) Aurora Park by TriPointe Homes
Southwest Corner of Victoria Street and Kestrel Drive,
East of Interstate 15, Fontana, California

Dear Ms. Brown:

At the request and authorization of the City of Fontana, we have completed an Appraisal Report for The City of Fontana Community Facilities District No. 100 (Victoria) (“Fontana CFD No. 100”) which consists of a gated residential community known as Aurora Park , in the City of Fontana .

Aurora Park includes a total of 193 residential units split between two product lines , Sienna at Aurora Park (“Sienna”) and Goldenrod at Aurora Park (“Goldenrod”). Sienna is proposed for 82 detached alley load units and Goldenrod is proposed for 111 detached cluster units; all homes are detached condominiums. TriPointe Homes Holdings, Inc. ("TriPointe") has an agreement with Rescal Victoria 193, LLC (dba “Resmark”), in which Resmark purchased the subject lands, and TriPointe has been purchasing “takedowns” of phases in a land banking agreement. Resmark and TriPointe also have an executed Construction agreement and take down schedule detailing the partnership. TriPointe is developing and marketing the property and the majority of these takedowns have occurred. Aurora Park offers two-story floorplans ranging in size from 1,879 to 2,264 square feet for Sienna (ally load product), and 2,006 to 2,743 square feet for Goldenrod (cluster product). Out of the 193 proposed units within Aurora Park, 72 have closed to individual homeowners to date with an additional 19 in escrow which are due to close upon completion. The TriPointe-owned property ranges from completed model homes to houses under construction while the Resmark owned property is all physically finished lots/pads.

The valuation method s used in this report are the Sales Comparison Approach, a Discounted Cash Flow Analysis and a Mass Appraisal Technique as defined within this report. The fee simple estate of the subject property has been valued, subject to the Fontana CFD No. 100 special tax lien. This report is written with the hypothetical condition that the subject propert y is enhanced by the improvements and/or fee credits to be funded by the Special Tax Bonds of Fontana CFD No. 100. As a result of our investigation, the concluded minimum market value for the subject property is shown below.

Aurora Park:

Resmark Ownership (78 pads) $ 15,064,993
TriPointe Ownership (27 lots/pads & 16 houses) $ 12,152,143 Individual Owners (72 houses) $ 43,783,946
Total Aggregate Value CFD No. 100 $ 71,001,082

The values are stated subject to the Assumptions and Limiting Conditions of this report, the Appraiser’s Certification and as of July 17, 2023.

115 East Second Street, Suite 100, Tustin, California 92780 (714) 544-9978 - Phone, (714) 544-9985 – Fax, E-Mail: [email protected] 542
Jessica Brown
City of Fontana
August 22, 2023
Page Two

Some supporting documentation concerning the data, reasoning and analyses may be retained in the appraiser’s files. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. This Appraisal Report is intended to comply with both the Uniform Standards of Professional Appraisal Practice (“USPAP” January 2020) and with the Appraisal Standards of the California Debt and Investment Advisory Commission (“CDIAC”). The appraiser is not responsible for unauthorized use of this report.

This letter of transmittal is part of the attached report, which sets forth the data and analyses upon which our opinion of value is, in part, predicated.

Respectfully submitted,

KITTY SIINO & ASSOCIATES, INC.

Kitty S. Siino, MAI
California State Certified General
Real Estate Appraiser (AG004793)

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TABLE OF CONTENTS

Assumptions and Limiting Conditions............................................................................... i Hypothetical Condition .................................................................................................... iii Extraordinary Assumption ............................................................................................... iii Aerial Photo of Fontana CFD No. 100 (Aurora Park) ...................................................... iv Purpose of the Appraisal ................................................................................................ 1 The Subject Property ...................................................................................................... 1 Intended Use of the Report ............................................................................................. 3 Definitions ...................................................................................................................... 3 Property Rights Appraised ............................................................................................. 5 Effective Date of Value ................................................................................................... 5 Date of Report ................................................................................................................ 6 Scope of Appraisal ........................................................................................................ 6 Regional Area Map.......................................................................................................... 8 County of San Bernardino Area Description ................................................................... 9 City of Fontana Area Map & Description ....................................................................... 17 Immediate Surroundings ............................................................................................... 23 Community Facilities District No. 100 ........................................................................... 26 Subject Property Description ......................................................................................... 29 Inland Empire Housing Market ...................................................................................... 38 Highest and Best Use Analysis ..................................................................................... 49 Valuation Analysis and Conclusions ............................................................................. 54 Appraisal Report Summary ........................................................................................... 74 Appraiser’s Certification ............................................................................................... 75

ADDENDA
Fontana CFD No. 100 Boundary Map
Tract Map No. 20229 and Condominium Maps
Discounted Cash Flow Analysis
Finished Lot Land Sales Map and Summary Chart
Improved Residential Sales Map and Summary Chart
Appraiser’s Qualifications
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ASSUMPTIONS AND LIMITING CONDITIONS

1. This report might not include full discussions of the data, reasoning and analyses that were used in the appraisal process to develop the appraiser’s opinion of value. Some supporting documentation concerning the data, reasoning and analyses may be retained in the appraiser’s files. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. The appraiser is not responsible for unauthorized use of this report.

2. No responsibility is assumed for legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated in this report.

3. It is assumed that the subject property is subject to the special tax lien of Fontana CFD No. 100.

4. Responsible ownership and competent property management are assumed unless otherwise stated in this report.

5. The information furnished by others is believed to be reliable; however, no warranty is given for its accuracy.

6. All engineering is assumed to be correct. Any plot plans and illustrative material used in this report are included only to assist the reader in visualizing the property and may not be to scale.

7. It is assumed that there are no hidden or unapparent conditions of either property, subsoil or structures that would render them more or less valuable. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required to discover them.

8. It is assumed that there is full compliance with all applicable federal, state and local environmental regulations and laws unless otherwise stated in this report.

9. It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless nonconformity has been stated, defined and considered in this appraisal report.

10. It is assumed that all required licenses, certificates of occupancy or other legislative or administrative authority from any local, state or national governmental or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report are based.

11. Any sketch or photograph included in this report may show approximate dimensions and is included only to assist the reader in visualizing the properties. Maps , photographs and exhibits found in this report are provided for reader reference purposes only. No guarantee regarding accuracy is expressed or implied unless 545
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otherwise stated in this report. No survey has been made for the purpose of this report.

12. It is assumed that the utilization of the land and improvements (if any) are within the boundaries or property lines of the property described and that there is no encroachment or trespass unless otherwise stated in this report.

13. The appraiser is not qualified to detect hazardous waste and/or toxic materials. Any comment by the appraiser that might suggest the possibility of the presence of such substances should not be taken as confirmation of the presence of hazardous waste and/or toxic materials. Such determination would require investigation by a qualified expert relating to asbestos, urea- formaldehyde foam insulation or other potentially hazardous materials that may affect the value of the property. The appraiser’s value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value unless otherwise stated in this report. No responsibility is assumed for any environmental conditions or for any expertise or engineering knowledge required to discover them. The appraiser’s descriptions and resulting comments are the result of the routine observations made during the appraisal process.

14. Proposed improvements, if any, are assumed to be completed in a good workmanlike manner in accordance with the submitted plans and specifications.

15. The distribution, if any, of the total valuation in this report between land and improvements applies only under the stated program of utilization. The separate allocations for land and buildings , if any, must not be used in conjunction with any other appraisal and are invalid if so used.

16. The Americans with Disabilities Act (“ADA”) became effective on January 26, 1992 and have been updated several times since then. The appraiser has made no specific compliance survey and analysis of the property to determine whether they conform to the various detailed requirements of the ADA, nor is the appraiser a qualified expert regarding the requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the ADA. If so, this fact could have a negative effect upon the value of the property.

Since the appraiser has no direct evidence relating to this issue, a possible noncompliance with requirements of the ADA in estimating the value has not been considered.

17. It is assumed there are no environmental concerns that would slow or thwart development of the subject properties and that the soils are adequate to support the highest and best use conclusions.

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18. Possession of this report, or a copy thereof, does not carry with it the right of publication. It may not be used for any purpose by any person other than the party to whom it is addressed without the written consent of the appraiser, and in any event, only with proper qualification and only in its entirety. Permission is given for this appraisal to be published as a part of the Official Statement or similar document for the Fontana CFD No. 100 special tax bonds

19. It is assumed that there are no conditions of approval or hindrances which could slow or thwart the obtaining of occupancy permits on the 193 subject residential units. This is the case per TriPointe.

HYPOTHETICAL CONDITION

1. It is assumed that all improvements and benefits to the subject properties, which are to be funded by the City of Fontana CFD No. 100 Special Tax Bond Proceeds are completed and in place.

EXTRAORDINARY ASSUMPTION

1. It is assumed that the sales information and remaining development costs as reported by the builder and summarized in the report are correct. Regarding sales, we have reviewed samples of closed sales against public record when available.

Differences occur between the builder’s sales information and public record. It is the appraiser’s understanding that the differences equate to the closing cost concessions which are given by the builder on a case- by-case basis. Regarding costs; while we have reviewed the remaining land development costs and fees and they appear reasonable; we are not experts in the field of construction estimation and are relying on the costs received in the valuation analysis.

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PURPOSE OF THE APPRAISAL

The purpose of this appraisal report is to estimate the value of the fee simple interest of the subject property, subject to the lien of the Fontana CFD No. 100 Special Tax Bonds.

THE SUBJECT PROPERTY

The subject property consists of 193 proposed single-family detached homes being developed into a gated community known as Aurora Park in the City of Fontana (“City”).

Aurora Park is located at the southwest corner of Victoria Street and Kestrel Drive, just east of Interstate 15 (“I-15”). Aurora Park is being built and sold by TriPointe Homes, and features two product lines: Sienna which includes 82 detached alley load units sized 1,879 to 2,264 square feet, and Goldenrod which includes 111 detached cluster units sized from 2,006 to 2,743 square feet. The subject community is encompassed by Tract Map 20229 and subsequent condominium maps , which subdivide the property into 82 pads for alley-loaded detached condominiums, and 111 pads for cluster detached condominiums. TriPointe has an agreement with Resmark, who owned the property, with TriPointe acquiring certain lots/pads as needed for development. Of the total 19 3 lots/pads, TriPointe has taken down 115 of the lots/pads and has sold and closed on 72 of the completed houses to individuals. The remaining lots vary in status from completed models, to under homes construction to finished lots. The description, ownership and condition of the lands are detailed in the chart on the following page.

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Description No.

Lots Owner Product / Condition / Status
Sienna at Aurora Park (Ally Load Small Lot Detached) Lot 1 of Tract 20229: Modules A, AA, C, E.

G. I. K, M, O, Q, S and U
Units 58-61 and 185-189 of
Module G; Units 157-162 and
170-172 of Module A; Units
163-166 and 173-176 of Module
C; Units 167-169 and 177-178
and 190-193 of Module E
35 Individuals Completed Homes
Units 108-110 of Module AA 3 TriPointe Model Homes (0 in Escrow) Units 55-57 and 179-184 of
Module I 9 TriPointe Over 95% Complete (9 in Escrow)
Units 86-90 of Module K 5 TriPointe Under Construction (5 in Escrow) Units 91-93 and 121-123 of
Module M 6 TriPointe Finished Lots (0 in Escrow)
Units 94-97 and 119-120 of
Module O; Units 98-101 and
117-118 of Module Q; Units
102-105 and 113-116 of Module
S; Units 106-107 and 111-112
of Module U
24 Resmark
(Land Bank) Finished Lots (0 in Escrow)
Sienna Subtotal: 82
Goldenrod at Aurora Park (Cluster Small Lot Detached) Lot 1 of Tract 20229: Modules B, BB, D, F, H, J, L, N, P, R, T, V, W and X
Units 1-6 of Module J; Units 43-
48 and 62-65 of Module H;
Units 49-54 of Module F; Units
142-147 of Module B; Units
148-156 of Module D
37 Individuals Completed Homes
Units 139-141 of Module BB1 3 TriPointe Model Homes (0 in Escrow) Unit 136 of BB1 1 TriPointe Over 95% Complete (used as Sales Gallery)
Units 7-12 of Module L 6 TriPointe Under Construction (5 in Escrow) Units 13-18 and 82-85 of Module
N 10 TriPointe Finished Lots (0 in Escrow)
Units 19-24 and 78-81 of Module
P; Units 25-30 and 74-77 of
Module R; Units 31-36 and 70-
73 of Module T; Units 37-42 and
66-69 of Module V; Units 124-
129 of Module W; Units 130-
135 of Module X; Units 137-138
of Module BB1
54 Resmark
(Land Bank) Finished Lots (0 in Escrow)
Goldenrod Subtotal: 111
TOTAL CFD No. 100 193

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INTENDED USE OF THE REPORT

It is the appraiser’s understanding that the client, the City of Fontana, will utilize this report in disclosure documents related to the sale of the Fontana CFD No. 100 Special Tax Bonds. This report may be included in the Official Statement or similar document to be distributed in connection with the marketing and offering of the bonds. It is the appraiser’s understanding that there are no other intended uses of this report.

DEFINITIONS

Market Value
The term “Market Value” as used in this report is defined as:

"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, 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 each acting in what he or she considers his or her own best interest;

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 Inherent in the Market Value definition is exposure time or the time the subject property would have been exposed on the open market prior to the appraisal in order to sell at the concluded values. In the case at hand and considering current market conditions , the exposure time for each individually owned property or the entire TriPointe or Resmark owned properties, each in a bulk sale, is less than one year.

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Finished Lot/Pad
The term “Finished Lot/Pad” is defined as:
“A parcel which has legal entitlements created by a recorded subdivision or condominium map, whose physical characteristics are a fine graded level pad per lot /pad with infrastructure contiguous to each individual lot /pad, asphalt paved roads and the necessary utilities. This term assumes the payment of all applicable development fees with the exception of building permit and plan check fees.”

Minimum Market Value
The term “Minimum Market Value” as used in this report is defined as:

“The base market value of a new home. That is, most buyers purchase some upgrades, options and/or lot premiums when purchasing a new home.

The sales price for the new home typically includes the base price for the plan, plus any upgrades, options or lot premiums, less concessions, if any, which were given or paid for by the builder. The concluded minimum market value is for the base value of the plan only, not taking into consideration any upgrades, options or premiums.”

Mass Appraisal Technique
The term “Mass Appraisal” as used in this report is defined as:
“The process of valuing a universe of properties as of a given date using standard methodology employing common data and allowing for statistical testing”
2 In the case at hand, the statistical testing included reviewing all original builder sales and reviewing the Multiple Listing Service (“MLS”) for any resales and/or current listings of each plan type. In addition, we have determined the actual range of sales prices for each plan type which will be utilized in the valuation process . The search of the MLS resulted in no resales and one current resale listing within the subject property.

Hypothetical Condition
The term “Hypothetical Condition” is defined by USPAP as:
“A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis”

2 USPAP 2018-2019 Edition
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The Hypothetical Condition within this report is that subject property is enhanced by the improvements and/or fee credits to be funded by bonds issued by Fontana CFD No. 100.

Extraordinary Assumptions
The term “Extraordinary Assumption” is defined by USPAP as:
“An assignment specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions”

There is one Extraordinary Assumption within this report which is that the sales information and the cost information as received from TriPointe are true and accurate.

Regarding the sales information, differences occur between the builder’s sales information and public record which, it is the appraiser’s understanding, equates to closing cost concessions which are given to the buyers on a case- by-case basis.

Regarding costs, we have reviewed the remaining land development costs and fees and they appear reasonable; however, we are not experts in the field of cost estimating. It should be noted that these costs were relied upon for the value conclusion and, if the remaining costs differ, it may change the value conclusion.

PROPERTY RIGHTS APPRAISED

The property rights being appraised are of a fee simple estate interest, subject to easements of record and subject to Fontana CFD No. 100. The definition of “fee simple estate” is defined as:
“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 EFFECTIVE DATE OF VALUE

The subject property is valued as of July 17, 2023.

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DATE OF REPORT

The date of this report is August 22, 2023.

SCOPE OF APPRAISAL

As previously stated, the purpose of this appraisal is to report the appraiser ’s best estimate of the market value for the subject property, Fontana CFD No. 100, which is known as the community of Aurora Park. TriPointe is the builder and is actively marketing the homes. Aurora Park offers two-story floorplans ranging in size from 1,879 to 2,264 square feet as marketed for Sienna (conventional small lot detached product), and 2,006 to 2,743 square feet for Goldenrod (detached cluster product). There are a total of 19 3 proposed homes within the subject. This appraisal will be presented in the following format:
• County of San Bernardino Description
• City of Fontana Description
• Immediate Surroundings Description
• Brief Description of Fontana CFD No. 100
• Subject Property Description
• Inland Empire Residential Market Analysis
• Highest and Best Use Analysis
• Valuation Procedure, Analysis and Conclusions
• Appraisal Report Summary

In valuing the subject propert y, the value estimates will be based upon the highest and best use conclusion using the Sales Comparison Approach. The Sales Comparison Approach to value is defined as:
“…a set of procedures in which a value indication is derived by comparing the property being appraised to similar properties that have been sold recently, then applying appropriate units of comparison and making adjustments to the sales prices of the comparables based on the elements of comparison. The Sales Comparison Approach may be used to value improved properties, vacant land or land being considered as though vacant; it is the most common and preferred method of land valuation when an adequate supply of comparables is available.” 4 4 Dictionary of Real Estate Appraisal, Fourth Edition, 2002 554
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In the Sales Comparison Approach, market value is estimated by comparing properties similar to the subject that have recently been sold, are listed for sale or are under contract.

Neither a cost or income approach was utilized as they were not considered necessary to arrive at credible results. In addition, we have utilized a mass appraisal technique which included reviewing all builder sales and searching the MLS for any resales and/or resale listings.

The due diligence of this appraisal report included the following:

1. Compiled demographic information and related that data to the subject propert y to perform a feasibility/demand analysis.

2. Gathered and analyzed information on the subject marketplace, reviewed several real estate brokerage publications on historical and projected growth in the subject market and researched the micro- and macro- economic outlook within San Bernardino County and the Fontana area.

3. Inspected the subject property between July 1, 2023 and July 25, 2023.

4. Had the site flown by an aerial photographer on July 15, 2023.

5. Interviewed representatives from TriPointe and/or their consultants in order to obtain project information.

6. Reviewed a preliminary title report on the subject property.

7. Searched the area for relevant comparable residential land sales , inspected and verified each sale with a buyer or seller or broker familiar with the transaction.

8. Searched the area for relevant comparable new home residential projects, including sales prices and concessions and interviewed representatives from each comparable project.

9. Reviewed the sales brochure and website for the subject community.

10. Reviewed developer sales information on each home within each neighborhood in the community along with reviewing public record on sample lots in each community.

11. Reviewed Multiple Listing Service information to determine if there are any resales, pending resales or listings of resale homes.

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REGIONAL AREA MAP

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COUNTY OF SAN BERNARDINO AREA DESCRIPTION

Location
The subject property is located in the southwestern portion of San Bernardino County, in the northwestern portion of the City of Fontana. More specifically, Aurora Park is located less than 1,000 feet east of Interstate 15 (“I-15”), at the southwest corner of Victoria Street and Kestrel Drive.

San Bernardino County (the “County”) is the largest county in the United States by area containing over 20,100 square miles, and includes large expanses of undeveloped deserts, valleys, canyons and mountains with deserts comprising about 90 percent of the acreage. The County is a major beneficiary of outward urban pressure from Los Angeles, Orange and Riverside Counties. Although located at the periphery of most urban activity in Southern California, the southwestern portion of San Bernardino County has been a major growth area and is perceived by most observers as an area expected to continue to grow. Riverside and San Bernardino Counties are considered distinct from Los Angeles and Orange Counties, and belong to the same Metropolitan Statistical Area (“MSA”). This area, consisting of San Bernardino and Riverside Counties, is commonly referred to as the Inland Empire.

Transportation
The subject property is situated just east of I -15, approximately one- half mile south of Interstate 210 (“I-210”), and approximately four miles north of Interstate 10 (“I-10”). The I-15 and I-210 are the nearest interstates providing access to the subject . While the subject is nearly adjacent to the I-15, there is no on/off ramp from Victoria Street, so the nearest freeway access is via Baseline Avenue (one half mile south of the subject). From I-210, access is possible via Cherry Avenue (0.75 miles east) to Victoria Street. I-15 travels in a northerly/southerly direction and provides access to Barstow and Nevada to the north and San Diego to the south. I-10 begins from the west in Los Angeles and provides access into Arizona to the east. In the vicinity of the subject, I-210 provides additional east/west access about two miles north of I -10 beginning in Santa Clarita in Los Angeles County and provides access near the City of San Bernardino. The subject 557
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is located 1.5 miles north of the historical Route 66, the original Los Angeles to Chicago cross country route.

The County is served by Amtrak and Metrolink as well as several rail -freight lines. The Ontario International Airport provides regional international air service and is located approximately seven miles southwest of the subject property. San Bernardino International Airport is located approximately 1 5 miles southeast of the subject. In addition, the County has extensive trucking corridors along the previously referred to interstates, highways and state freeways.

Population
The County has experienced population growth for several decades and is anticipated to continue to do so in the foreseeable future. Per the California Department of Finance, the January 1, 2023 (latest available) County population was 2.182 million. This represents a one-year increase of 0. 1 percent. This compares to an average annual growth rate over the past 20 years of 2.1 percent. Current projections for San Bernardino County per the California Department of Finance suggest the population is anticipated to reach approximately 2.32 milli on by 2030, indicating an average annual increase of approximately 0.90 percent over the next seven years. The current near zero growth rate is lower than t he previous 20- year annual average of 2.1 percent, likely due to the disruption of the COVID pandemic. The future growth of 0. 90 percent annually was predicted assuming a more stable market than was seen prior to the Great Recession, however doesn’t take into effect the COVID pandemic.

Economy
The U.S. economy is experiencing challenging times due to reactions from the COVID recession. These economic challenges include significant inflation, increasing interest rates, banks’ instability and reaching an agreement on the debt ceiling. During COVID , the Federal, State, County and City Governments (“Governments”) originally shut down non-essential businesses and areas where social gatherings occur in order to slow the spread of the virus. This created a strain on small and large businesses alike. Restaurants 558
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and hotels were hit hard and travel reduced drastically as citizens were urged to stay home. Layoffs occurred with reports of 40 million people filing for unemployment the first few months of the pandemic. The Governments attempted to curtail the job losses and hardships with the approval of over 5.6 trillion in COVID relief to our nation. In addition, the Federal Reserve Board (“Board”) reduced interest rates and started quantitative easing by buying bonds. This legislation helped shore up the U.S. economy ; however, due to the significant amount of new money introduced into the economy, inflation began occurring at a rate not seen for 40 years. As of June 2023, the national inflation rate was at a two year low at 2.97 percent; down from February 2023’s 6.0 percent and from the peak in June 2022 of 9.1 percent. This compares to a 1.24 annual percent rate for 2020 and an average of 1.74 percent annual rate for the previous ten years. Whether it is a result of the Russian/Ukraine war, supply chain issues due to COVID or from the additional money entering the economy, inflation is hitting Americans hard.

In an effort to curb inflation, the Federal Reserve Board began raising interest rates. Since March 2022, there have been ten interest rate increases rising the Federal Funds Rate (“FRR”) from 0.25 – 0.50 percent to 5.0 – 5.25 percent. While these increases appeared to help slow inflation, the quick, significant increases have strained bank balance sheets.

Three major banks failed in early 2023 with the government taking unprecedented action to help shore them up. At the most recent Board meeting (June 14, 2023) they paused the increases; however, additional minimal increases are expected later in the year. In addition to causing bank instability, the FRR increases over the past 15 months increased a typical 30-year fixed mortgage rate from 2.98 percent as of November 10, 2021, to 7.08 percent as of November 10, 2022; however, the rate has dropped to 6. 96 percent as of July 13, 2023 (per Federal Reserve Economic Data-St. Louis). This steep increase over the past 15 months has significantly affected the real estate market.

The COVID disruption to the economy also caused extreme volatility in the stock market with the Dow Jones Industrial Average (“DJIA”) dropping from 29,398 in February 2020 to 19,174 in March, 2020, a drop of 37 percent. The Government interventions resulte d in a bounce back in the DJIA to 27,111 by June 2020 with the stock market then climbing 559
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up to an all-time high of 36,799 in January 2022. In February 2022, Russia began invading Ukraine which caused volatility in world economics followed by U.S. inflation, interest rate increases and instability in the U.S. due to the debt ceiling being reach ed. All of these factors caused a drop in the DJIA of nearly seven percent from January 2022 to July 13, 2023 (34, 395). The nation’s debt limit can only be increased through government approvals. The current partisanship in our government caused a stand- off in increasing the debit limit which was in danger of being reached, and the stock market’s volatility throughout May due to this stand-off was evident. However, a deal was reached in early June (before the deadline), and the stock market has shown less volatility. Current concerns include the Federal reserve decisions on interest rate increases.

The significant increase in mortgage rates over the past year is just one part of the puzzle affecting the impact of new housing on the broader economy. Additional risks include homebuilders trying to find balanced inventory levels, supply chain issues, both wage and price increases, and persistent inflation. Over the past 25 years, the Inland Empire economy has had significant cycles with home prices almost doubling from 1995 to 2005, then falling by over 50 percent during the Great Recession, taking prices back to 2002 levels. Home values appeared to hit bottom in 2009 then remained essentially flat for two to three years with the majority of the Inland Empire housing market seeing an improvement beginning in mid- 2012. Contrary to homebuilder’s original thoughts of a slowdown due to the pandemic, new home buyers stepped up in the spring of 2020 and new home sales were significantly higher during the second half of 2020 versus the previous year and continued extremely strong throughout 2021. This exceptional activity in new home sales was the one bright spot in the COVID recession and is thought to be due to several factors, including: a tight supply of resale homes; historically low interest rates; millennials finally buying homes; and, the work from home factor which began during the pandemic and allowed residents to live in more suburban areas without long commutes. As rates began increasing in early 2022, there was a significant slowdown in sales and softening of prices within the Inland Empire, with year -over-year decreases in sales as of July 2023 of more than 10 percent. The high mortgage rates have significantly slowed existing homeowners from moving. The limited availability of existing homes on 560
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the market has resulted in new homes capturing a much larger share of the total home sales; however, new home sales are also down year-over-year.

While most jobs have come back, job losses were significant during the COVID recession as the Nation’s unemployment rate went from 3.5 percent in February 2020 to 14.4 percent in April 2020, with the June 2023 National unemployment rate at 3. 8 percent (Employment Development Department, not seasonally adjusted). The Congressional Budget Office (“CBO”) Forecast for the U.S. Economy (published February 2023) predicted real GDP growth will come to a halt in 2023 then will average 2.4 percent from 2024 to 2027 and then 1.8 percent between 2028 to 2033. The CBO states they expect unemployment rates to rise through early 2024 reflecting the slowdown in economic growth. In summation, the CBO projects for 2023: stagnant output, rising unemployment, gradually slowing inflation, and interest rates to remain at or above their current levels.

They believe that in 2023, non-interest spending will substantially exceed revenues with rising interest rates driving up the cost of borrowing which results in the government debt steadily increasing. Over the long term, they suggest changes in fiscal policy to address the rising costs of interest and mitigate other adverse consequences of high and rising debt.

The unemployment rate for the MSA was estimated at 5.0 percent (as of June 2023 per the Employment Development Department). This reflects a decrease from the peak during the Great Recession of 15.1 percent in 2010 and a decrease from the peak during COVID of 14.9 percent. As of June 2023, San Bernardino County’s unemployment rate was 4. 9 and Riverside County had a 5.0 percent unemployment rate. The current unemployment rate for the MSA of 5.0 percent is higher than the California rate at 4. 1 percent and higher than the June 2023 National rate of 3. 8 percent. Below is a table comparing San Bernardino County’s unemployment rate to the unemployment rates of the surrounding counties as of June 2023.

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Jurisdiction As of Unemployment Rate*
Los Angeles County June-2023 4.9%
Riverside County June-2023 5.0%
San Bernardino County June-2023 4.9%
Orange County June-2023 3.7%
San Diego County June-2023 3.4%
Source: State of California E.D.D.; *Not Seasonally Adjusted

The latest UCLA Anderson Forecast (“Forecast”) was issued March 15, 2023 and stated that the potential action by the Federal Reserve will determine whether the nation continues to grow or experiences a mild, short-lived recession in 2023. They believe the economy is at a recession- related fork in the road with one path leading to continued economic growth (although slower than the recent 2.4 percent growth rate) and the other would lead to a mild short -lived recession. Whether the economy slips into recession or not will depend largely on inflation stickiness and the additional action the Federal Reserve takes to bring down inflation. The Forecast states that if the Federal Reserve moderates its aggressive tightening, economic growth is expected to slow to 2.3 percent growth in first quarter 2023; 1.8 percent in 2nd quarter and 1.0 percent grow th for the second half of 2023. If the Federal Reserve keeps aggressively tightening, a mild recession will occur with the economy contracting beginning in the third quarter 2023 and deepening in the fourth quarter 2023 and the first quarter 2024 followed by the beginning of a rebound. The Forecast states under both scenarios, inflation will still be elevated but will be more persistent in the recession scenario requiring tighter monetary policy. They believe both outcomes will include persistent inflation with the no -recession scenario resulting in lower inflation and thus, more moderate monetary policy.

The UCLA Forecast for California is more positive than the overall Nation due to a strong demand for defense goods, labor saving equipment and software. In the no- recession scenario unemployment rate averages by year are estimated at 4.0 percent for 2023, 3.9 percent for 2024 and 3.6 percent for 2025. In the recession scenario, unemployment rate averages are expected to be 4.3 percent for 2023, 4.8 percent for 2024 and 3.7 percent for 2025. Under both scenarios the California Forecast projects housing permi ts to grow to 150,000 in 2025 in spite of the higher interest rates. The fact that the California housing 562
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market is not overbuilt will offset the decrease in the housing market. Overall, the Forecast believes that California will have a more moderate slowing or, in the case of a recession, a milder downturn than the U.S. overall.

As a final indicator of overall economic activity for the region, we have reviewed the rise and fall of TEUs (Twenty-foot Equivalent Units – i.e., containers) being processed in the local ports. This is especially important for the Inland communities, as it represents much of the growth in development of west coast distribution centers and warehouses in the Inland Empire linked to supply -chain nodes in the Pacific Rim. The chart below shows TEU activity at the Port of Long Beach. Generally, there has been increases since 2009 with the exception of a slight dip in 2016 and again in 2019 which ended with a 5.6 percent downturn. The 2022 calendar year saw a decrease of 2.6 percent from the previous year.

June 2023 was running 28.5 percent below June of 2022 (597,076 versus 835,412 total TEUs). It should be noted that Spring 2022 was a time when the back-up at the ports was still occurring due to supply chain issues. Per the Orange County Register (“Lack of product demand hurts drivers,” October 31, 2022) consumer demand cooled in mid-2022 leaving fewer TEUs needing to be driven from the ports. They are stating shipments have slowed due to American demand finally waning after the pandemic coupled with some major retailers bypassing the California ports for East C oast ports to avoid a possible upheaval by West Coast dockworkers as they negotiate a new contract. It appears that the slowdown in work for the dray operators (drivers who ship containers in and out of the ports) may be resulting from a slowdown in overall TEU demand.

4.0 5.0

6.0 7.0

8.0 9.0

10.0 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 TEU's (millions)
Year
Port of Long Beach TEUs
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Education
The subject area is served by the Etiwanda School District (“ESD”) and the Chaffey Joint Union High School District (“CJUHSD”). ESD serves elementary and middle school age children while CJUHSD serves high school and beyond. The subject is assigned to East Heritage Elementary School (K -5), Heritage Intermediate School (6- 8), and Etiwanda High School. ESD and CJUHSD are highly rated and are seen as stronger districts than neighboring District s. Community Colleges are available near the subject at Chaffey College in Rancho Cucamonga (four miles northwest), at Chaffey College’s Fontana campus (4.5 miles southeast), and San Bernardino Valley College (11 miles southeast).

Higher education is available approximately 11 miles northeast of the subject at California State University San Bernardino, about 15 miles southeast is University of California at Riverside, 1 2 miles southwest in the private Claremont Colleges ( which include Claremont McKenna College, Pitzer College, Harvey Mudd College, Pomona College, and Scripps College) and 19 miles to the southwest at Cal Poly Pomona.

Conclusion
Population in the County has increased over the past 2 0 years with predictions for continued population growth. The Nation’s economy has been slowing after the Board increased the F RR five percent to fight historical inflation which began during COVID.

One bright spot during COVID was housing; the region’s relative affordability and low interest rates, coupled with the rising prices in the coastal market and the demand for housing, set up a new housing boom. This was followed by a significant drop in sales due to existing homeowners being unwilling to give up their low -rate mortgages. Current concerns for the Inland Empire economy include: stubborn inflation, the high prices of homes, higher interest rates, supply chain issues, recent bank failures along with the Russian invasion of Ukraine, which are all creating volatility in both local and global financial markets. A possible light recession is forecast for later this year. What effect the recent bank failures will have on the economy is unknown at this time. In conclusion, the County is expected to continue to grow in population due to its Southern California location, the availability of land, and the relatively lower land and housing prices in comparison to adjacent Orange, Los Angeles, and San Diego Counties. 564
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CITY OF FONTANA DESCRIPTION

General Area
The subject property is located along the western border of the City of Fontana (“City”) in southwestern San Bernardino County. The City is situated at the base of the San Gabriel Foothills, east of the cities of Rancho Cucamonga and Ontario, north of Jur upa Valley, west of the City of Rialto and the community of Bloomington, and south of the San Bernardino Mountains. The City encompasses an estimated 43 square miles with generally the northern border the San Gabriel Mountains and the southern border the Jurupa Mountains. The black star on the below map shows the approximate location of Fontana CFD No. 100 within the City limits.

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History
Fontana was founded in 1913 and is the second largest city in San Bernardino County and the 20th largest city in the State of California. The area was a rural farming community with citrus orchards, vineyards and chicken ranches that ran along U.S. Route 66 which is now known as Foothill Boulevard. The historic Route 66, which was built in 1926 to connect Los Angeles to Chicago, is a commercial corridor that runs east/west through the City. During World War II, Henry J. Kaiser opened the Kaiser Steel Mill near Fontana, the only steel mill west of the Mississippi River, which brought industrial employm ent to the area during the war. To provide for the worker’s health needs, Kaiser constructed the Fontana Kaiser Permanente Medical Facility which now employs more than 5,000 people.

In 1994 the San Bernardino Freeway, which later became Interstate 10, was completed connecting Los Angeles to San Bernardino and making accessibility to Fontana relatively easy. This led to substantial growth as Fontana became an industrial hub for the County.

In the 1950s and 1960s the area of Fontana was home to a drag racing strip which served as a significant venue in the National Hot Rod Association (“NHRA”) circuit. In 1997, Roger Penske built the Fontana Speedway, now known as the Auto Club Speedway, which became a major NASCAR sanctioned tract. In 2006, the Auto Club Speedway opened a new NHRA sanctioned drag strip on site to resurrect Fontana’s drag racing heritage. The Auto Club Speedway was purchased by NASCAR in 2019 and hosts at least one major NASCAR race each year. It was recently announced the existing raceway will close due to the redevelopment of the lands; however, a smaller short -track will be developed on a portion of the lands keeping car racing in the area of Fontana.

Population
The January 2023 population of Fontana (per the California Department of Finance) is 213,851, which represents an increase of 0.6 percent over the previous year. The 2000 population of Fontana was 128,928, suggesting the population has increased 66 percent over the past 23 years or an average rate of 2.2 percent per year. The City population represents 9.8 percent of the County population. This compares to an increase of 0.1 percent in the County year -over-year and a negative growth of 0.4 percent in the St ate 566
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year-over-year. Fontana was one of seven cities within the County with positive population growth in the past year compared to 18 cities with negative growth. The City has several new home communities currently under construction, especially in the northern portion of the City. Per the U.S. Census Bureau, the average household size in Fontana is 3.75 persons while in overall San Bernardino County the average household size is 3.26 persons. Over 78 percent of the population of the City are high school graduates and over 28 percent of the population of the City are under 18 years old.

Housing
According to the Southern California Association of Governments (“SCAG”), the City of Fontana has an estimated 55,632 housing units as of 2021 (latest data available), with a growth rate of 56 percent since the year 2000. This compares to the County’s hous ing growth rate of 22.2 percent during this time. This further illustrates Fontana’s growth spurt due to land available for development over the past 20 years. Fontana hosts over eight percent of the total number of households in the County. Below is a graph showing residential units permitted in Fontana between 2002 and 2022.

While the current numbers are not at pre-Great Recession numbers, they are the highest in the past 15 years. Per SCAG, 68 percent of the housing stock is owner occupied and 32 percent are renters. Only 22 percent of the housing stock in the City was built before 1970 and 78 percent was built since that time. There are three residential projects in final planning or under construction: a 489-unit community known as Nara Hills, northwest of I-15 and Duncan Canyon; a 257- unit project at Duncan Canyon and I -15 and a 189-unit project at Duncan Canyon and Citrus. These are in addition to 777 new single- family 1,908
1,545
1,025
209 306 270 261 419 498 865
1,182 1,029
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2021 2022 Fontana Residential Building Permits
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residential permits and 405 multi-family residential that were issued in 2021. Per the City’s 2022 annual report, there are four projects in the planning stage: Courtplace which includes 106 affordable units; Sobrato which includes 143 attached and detached units and Citrus East (75 cluster units) and Citrus West (85 cluster units). It is our understanding that the Citrus East and Citrus West buyer has cancelled both escrows, however entitlements are ongoing on these two sites with one recently entering into a new escrow.

Per the 2022 annual report, there were 629 new single-family residential permits and 400 multi-family residential permits issued. Per SCAG, the median home price in the City went from $129,000 in 2000 to a peak of $450,000 in 2006 and a low of $200,000 i n 2009.

According to Redfin Market Trends, the June 2023 median home price in Fontana was $610,000, which represents a 8.3 percent decrease year-over-year from June 2022 which was the peak of the market at $665,000.

Current new homes communities selling within Fontana include: Aurora Park by Tri Pointe with two neighborhoods (the subject), The Retreat by Lennar, Highland Park by Richmond American with two neighborhoods, Shady Trails with one remaining neighborhood by Tri Pointe, The Arboretum by Lennar with six neighborhoods, Monterado with two neighborhoods by Lennar and Nara Hills with five neighborhoods currently being marketed by LandSea Homes. Per the City web site Ventana is also under development proposed for 257 dwelling units at Duncan Canyon and Citrus Avenues. Per Realtor.com there are currently 388 existing homes for sale within the City (including 90 new homes and 298 existing homes) with the median listing price of $620,000 and the median sold home price of $597,000 (June 2023). Within the subject’s zip code of 92336, there are 234 homes for sale (including 88 new homes and 146 existing homes). The median listing home price is currently $670,000 (within the zip code) and the median sold home price is $690,000. The lower sales price than asking price (within the overall City) is in -line with current resale trends in the Inland Empire of homes selling for lower than their list price.

The higher sold price in relation to the asking price within the subject’s zip code relates to the new home sales where most buyers purchase options or upgrades.

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Access
Fontana has good access with I-15 generally forming the northwest border of the City.

The 210 Freeway provides east-west access through the upper third of the City; Route 66 (also known as Foothill Boulevard) provides east-west access through the approximate middle of the City and the I-10 provides east-west access through the bottom third of the City. Major on/off ramps to the City from I-15 include Foothill Boulevard, Baseline Avenue, the 210 Freeway, Summit Avenue, Duncan Canyon Road and Sierra Avenue. On/off ramps from the 210 Freeway within the City include Cherry Avenue, Citrus Avenue and Sierra Avenue. Route 66/Foothill Boulevard has stop lights at major intersections while the major on/off ramps from I-10 in the City include Etiwanda Avenue, Cherry Avenue, Citrus Avenue and Sierra Avenue. Access to the subject is via Baseline Avenue to North Heritage Circle to Kestrel Drive to Clair Lane, the gated entrance to the subject property.

Economy
Existing commercial property within the City of Fontana is generally along the major thoroughfares including I -10, Route 66/Foothill Boulevard, Sierra Avenue and the 210 Freeway. There are several large shopping centers including Sierra Lakes Marketplace and Falcon Ridge Town Center, both which serve the subject property. The City is home to an Amazon Distribution Center, a Target Distribution Center and a FedEx transfer station. The intersection of the I-10 and I-15 is a major industrial hub which extends into the City of Fontana with generally industrial use south of I-10. The Fontana Speedway is located along Cherry Avenue north of I-10 and the Metrolink station is located along Sierra Avenue. The top-ten employers in the City (from 2018 – latest available per City’s website) include the following:

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Employer No. of
Employees
Kaiser Hospital 5,430
Fontana Unified School District 5,000
City of Fontana 1,030
Target Distribution Center 621
Costco Wholesale 333
U S F Reddaway 320
Estes West 317
Sierra Aluminum Company 312
Crown Technical systems 297
Walmart Store (Foothill Blvd) 290

Summary
Fontana is located at the base of the San Gabriel Mountains and was incorporated over 100 years ago as a rural farming community. Kaiser Steel brought jobs to the area during World War II and the opening of the I-10 Freeway in the 1950s made it an easy commute to Los Angeles and Orange Counties. Almost 80 percent of the housing stock within the City was built since 1970. Between April 2020 and March 2022 residential building permits grew significantly after a lull in the first 10 years since the Great Recession. In the past year permits have slowed due to slowing sales. The area has excellent access via three major freeways and the historic Route 66. The area’s central location, reasonable land prices and the availability of land for development combine to make the area a prime area for future growth.

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IMMEDIATE SURROUNDINGS

The subject property is located east of I-15, at the southwest corner of Victoria Street and Kestrel Drive, about one-half mile south of I-210, in the City of Fontana. The subject has convenient freeway access to the I -15 via the Baseline Avenue exit, or I -210 via the Cherry Avenue exit.

The subject lands are generally surrounded by vacant land to the east and west. To the north, on the north side of Victoria Street, is California Highway Patrol office and a Caltrans facility marked as “State of California Materials Testing Facility.” The facility is large and appears to be newer, with a large parking lot and several buildings of Spanish style architecture. Adjacent east of the subject is several large vacant parcels of land which do not appear to be utilized for any current use, but do include a SoCal Edison easement running through them, in a northeast/southwest direction (southeast of the subject). Adjacent south of the subject is existing residential homes, with the immediate south community known as North Heritage, built in the late 1980s/early 1990s and featuring single family detached homes on generally 7,200 square foot lots. Southwest of the subject is another tract of homes, also part of the North Heritage neighborhood, but includes denser product with detached homes situated on sm aller lots, also built in the late 1980s. In the middle of the North Heritage neighborhood, at the northwest intersection of Baseline Avenue and North Heritage Circle, is North Heritage Park, a neighborhood park less than one quarter mile southwest of the subject. Immediately west of the subject is a drainage channel with a walking/biking path. Beyond the drainage channel (known to the north as East Etiwanda Creek), is a vacant parcel of land and a storage facility (Victoria RV & Boat Storage) which abuts the I -15 freeway. The western boundary of the subject is approximately 1,000 feet east of the freeway.

There are two schools within a half mile radius of the subject: the highly ranked Etiwanda High School is located west of I -15, on the north side of Victoria Street; and Heritage Intermediate School is located on the southside of Baseline Avenue, at South Heritage Drive. Both of these schools serve the subject. Etiwanda High School is in the Chaffey Joint Union High School District, and technically is in the city of Rancho Cucamonga, 571
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despite its close proximity to the subject. Heritage Intermediate School is part of the Etiwanda School District, which also provides elementary schools to the subject. The subject’s assigned elementary school is East Heritage Elementary, which is located approximately one mile southeast of the subject (past Heritage Intermediate School) on Constitution Way, in the West End neighborhood.

There are several parks within close proximity to the subject, the closest being North Heritage Park as mentioned above. South of Baseline Avenue and adjacent to Heritage Intermediate School is Heritage Park which includes a parking lot, snack bar/restroom facility, along with Mcdermott Soccer Field, housing three full size soccer fields. Further southeast, just under one mile from the subject, is Heritage Circle Park, which features a tot lot, walking paths, covered picnic tables and barbeque areas, and a large grassy field. Approximately two miles east of the subject at the northeast corner of Beech Avenue and Walnut Street is Koehler Park, a public recreational park with large fields, basketball courts, tennis courts, play structures, covered tables and restrooms.

There are several shopping centers within one mile of the subject, with the closest retail options being at the I -15 Baseline Avenue intersection which features several dining options, including a Starbucks and Jack in the Box, as well as a gas station and several small stores. The nearest grocery store is a Vons at the southwest corner of Cherry Avenue and Baseline Avenue, located within the Heritage Village Center which includes a multitude of dining options as well as a US Bank, Shell Gas Station, Goodwill, Autozone, and Wells Fargo. At the northeast corner of Cherry Avenue and Baseline Avenue, lies the Anchored Center, complete with a Dollar Tree, Chevron gas station, KFC, Baskin- Robbins, Wienerschnitzel, Chase Bank, and more. These are all within one mi le of the subject property. Slightly farther out approximately 1.5 miles southeast of the subject at Foothill Boulevard and Cherry Avenue, is a WinCo Foods grocery store and a McDonalds.

Larger scale shopping is located just over two miles northeast of the subject on the southwest corner of Beech Avenue and Summit Avenue, where an additional shopping center, known as Summit Heights Gateway, includes a Kohl’s, PetSmart, Aldi grocery store, a Planet Fitness, and several smaller retail stores and restaurants. Directly across 572
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from Summit Heights Gateway is the larger Falcon Ridge Town Center. Falcon Ridge Town Center is located at the corner of Beech Avenue and Summit Avenue on the east side of I-15, and is anchored by a Stater Brothers Market, Target, Michael’s craft store, Ross Dress for Less, CVS, and 24 -Hour Fitness. The center also offers a multitude of dining options. Approximately 3.5 miles northeast of the subject at Sierra Lakes Parkway and Citrus Avenue, just north of I -210. This stretch of retail starts at Citrus Avenue and continues along Sierra Lakes Parkway through the Sierra Avenue on/offramp, and includes a Home Depot, Ralphs Grocery Store, Walgreens, Costco, LA Fitness, Lowes Home Improvement and more. The nearest shopping mall is approximately two miles southwest of the subject on the west side of I-15, where Victoria Gardens is anchored by a Macys and JC Penney department store in addition to a plethora of restaurant and shopping options, all located across the street from a Bass Pro Shop.

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FONTANA CFD NO. 100 – AURORA PARK

We have reviewed the City of Fontana CFD Report for Community Facilities District No. 100 (Victoria) dated November 18, 2020, as prepared by David Taussig & Associates, Inc. The CFD Report provides a brief description of Fontana CFD No. 100, a brief description of the facilities to be funded along with an estimate, a description of the boundaries and an estimate of the cost of financing the bonds used to pay for the facilities.

Resolution No. 2020-129 was adopted on October 13, 2020 and approved the intention to establish Fontana CFD No. 100.

The exterior boundaries of Fontana CFD No. 100 per the Proposed Boundary map are shown below.

Per the CFD Report, at time of formation, Fontana CFD No. 100 encompassed approximately 21.6 gross acres (13.9 acres subject to the Special Tax) proposed for 193 single family detached residential units with estimated sizes ranging from 2,154 to 2,915 square feet. Actual square footage ranges from 1,879 to 2,743 square feet. 574
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Per the CFD Report, the types of facilities to be eligible for funding are streets, including grading, paving, curbs and gutters, sidewalks, street signalization and signage, streetlights and parkway and landscaping related thereto, sewers, storm drains, fire protection facilities, police facilities, public facilities, landscaping, library facilities, park and recreational facilities and land, rights -of-way, and easements necessary for any of such facilities. The types of public facilities proposed to be purchased as completed facilities by CFD No. 100 are streets, including grading, paving, curbs and gutters, sidewalks, street signalization and signage, street lights and parkway and landscaping related thereto, sewers, storm drains, park and recreational facilities and land, rights-of-way, and easements necessary for any of such facilities. Furthermore, additional public facilities authorized to be purchased as completed facilities by CFD No. 100 are additional streets, including grading, paving , curbs and gutters, sidewalks, street signalization and signage, street lights and parkway and landscaping related thereto, additional sewers, additional storm drains, fire protection facilities, police facilities, public facilities, additional landscaping, library facilities, additional park and recreational facilities, and land, rights - of-way and easements necessary for any of such facilities. The types of public services to be financed by CFD No. 100 are fire protection and suppression services, maintenance and lighting of parks, parkways, streets, roads and open space, flood and storm protection services and maintenance and operation of any real property or other tangible property with an estimated useful life of five or more years that is owned by the City. Incidental expenses also included are the cost of planning and designing public facilities to be financed, including the cost of environmental evaluations of those facilities; the costs associated with the creation of CFD No. 100, issuance of bonds, determination of the amount of taxes, collection of taxes, payment of taxes, or costs otherwise incurred in order to carry out the authorized purposes of CFD No. 100; and, any other expenses incidental to the construction, completion, and inspection of the authorized work.

Per the Rate and Method, the Assigned Facilities Special Tax for Developed Property for Fontana CFD No. 100 (Victoria) are estimated as follows:

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Land Use
Class

Description

Product Type

Special Tax
1 Residential Property Alley Load Product $2,348 per unit 2 Residential Property Cluster Product $2,229 per unit
3 Non-Residential Property N/A $31,660 per acre

The estimated cost of public facilities at the time the Fontana CFD No. 100 Report was created were estimated as:

PUBLIC FACILITIES AMOUNT AMOUNT
Acquisition Facilities: $3,877,579(1)
Sewer Improvements $1,342,032
Park Development Improvements $980,709
Circulation and Traffic Improvements $880,282
Storm Drain Improvements $674,556
Other Public Facilities: $3,682,270(2) $1,248,411(3)
Park and Recreational Facility $1,154,468 $173,759
Circulation Facility Improvements $1,106,662 $226,380
Storm Drain Improvements $403,682 $0
Inclusionary Housing Improvements $260,550 $260,550
Sewer Improvements $169,186 $0
Public Facility Improvements $153,678 $153,678
Landscape Facility Improvements $110,628 $110,628
Library Facility Improvements $102,927 $102,927
Police Facility Improvements $101,618 $101,618
Flood Control Improvements $87,219 $87,219
Fire Service Protection Improvements $31,652 $31,652
Additional Capital Facilities Infrastructure Improvements $1,281,498 TOTAL ESTIMATED COSTS $6,407,488
(1) Estimates provided by builder and inclusive of 10% contingency for hard costs and 25% contingency for soft costs.
(2) Estimated amount of Permit Fees PRIOR to the application of anticipated City fee credits (3) Estimated among of Permit Fees AFTER the application of anticipated City fee credits.

The maximum bonded indebtedness for CFD No. 100 is $8,000,000 . Per the latest sources and uses of funds (dated August 15, 2023) for the proposed bond issuance, there will be an estimated $ 5,330,000 in Bond Par Amount and a Net Premium of $33,870 along with $190,081 Special Tax Collection Funds on Hand for a total bond fund deposit of $5,553,951 with $ 4,770,199 going to the Project Fund, $ 361,212 in Debt Service Reserve Fund and $387,640 in Underwriter’s Discount and C ost of Issuance along with $34,900 in Initial Deposit for Administrative Expenses (all amounts subject to change). A larger copy of the Fontana CFD No. 100 boundary map is located in the Addenda for your review.

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SUBJECT PROPERTY DESCRIPTION

The subject property consists of 193 proposed units being developed as Sienna at Aurora Park and Goldenrod at Aurora Park, both being built and marketed by TriPointe Homes.

The subject site is described below.

Location: Southwest corner of Victoria Street and Kestrel Drive, east of I -15, Fontana, California
Legal Property
Description: Lot 1 of Tract No. 20229 in the City of Fontana, County of San Bernardino, State of California.

Property Owner: Sienna: Individual Owners as Units 58-61 and 185-189 of Module G; Units 157-162 and 170-172 of Module A; Units 163-166 and 173-176 of Module C; Units 167- 169 and 177-178 and 190-193 of Module E of Lot 1 of Tract 20229.

TriPointe Homes Holdings, Inc. as to Units 55-57 and 179- 184 of Module I; Units 86- 90 of Module K; Units 91- 93 and 121- 123 of Module M; and Units 108-110 of Module AA of Lot 1 of Tract 20229.

Rescal Victoria 193, LLC (dba Resmark) as to Units 94-97 and 119- 120 of Module O; Units 98-101 and 117-118 of Module Q; Units 102- 577
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105 and 113-116 of Module S; Units 106-107 and 111-112 of Module U of Lot 1 of Tract 20229.

Goldenrod: Individual Owners as Units 1-6 of Module J; Units 43-48 and 62-65 of Module H; Units 49- 54 of Module F; Units 142 -147 of Module B; Units 148-156 of Module D of Lot 1 of Tract 20229.

TriPointe Homes Holdings, Inc. as to Units 7 -12 of Module L; Units 13-18 and 82-85 of Module N; Units 136-141 of Module BB1 of Lot 1 of Tract 20229.

Rescal Victoria 193, LLC (dba Resmark) as to Units 19 -24 and 78- 81 of Module P; Units 25-30 and 74-77 of Module R; Units 31-36 and 70-73 of Module T; Units 37- 42 and 66-69 of Module V; Units 124- 129 of Module W; Units 130- 135 of Module X; Units 137- 138 of Module BB1 of Lot 1 of Tract 20229.

Assessors
Parcel Nos.: The subject covers the following APNs: 0228-192-04 through - 47; 0228-193-01 through -38; 0228- 194-01 through - 57; 0228- 195-01 through -54.

Property Taxes: We have reviewed the property tax invoice for sample parcel 0228- 194-48-0000. The parcel has an assessed net value of $ 629,156.

The property taxes include $6,291.56 for the general levy , $203.21 for the Etiwanda Elementary Bond , $184.97 for the Chaffey High Bond, $86.19 for the Chaffey College Bond, and $22.02 in miscellaneous charges. The tax invoice (as of July 19, 2023 per the County of San Bernardino Tax Collector) shows the first installment paid. The subject Fontana CFD No. 100 is not shown on this tax invoice. It is an assumption of this report that the overall property taxes and special assessments are not over two percent.

Three-Year
Sales History: Per TriPointe, Rescal Victoria 193, LLC (dba “Resmark”) purchased the subject property for $ 25,315,146 on December 23, 2020. On June 7, 2021, TriPointe Homes Holding s, Inc. purchased the first takedown from Resmark, purchasing six of the pads/lots. To date, TriPointe has taken down 115 of the lots/pads with the most recent takedown occurring July 10, 2023, and the next take down anticipated for September 5, 2023. TriPointe began closing homes within the subject to individual owners in June 2022, and has closed 72 houses between June 14, 2022, and July 14, 2023.

Size and Shape: Tract Map 20229 is generally rectangular in shape and contains

21.539 gross acres and 19.147 net acres per the recorded map which subdivides the subject into one numbered lot and two lettered lots. Per the condominium plans, the lot was subdivided into 28 lettered modules and two recreation modules. The approved 193 578
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units results in an overall density of 10.08 dwelling units per acre based on the net acreage of 19.147 acres per the tract map.

Zoning: Per the current City of Fontana General Plan Land Use Map dated April 2022, the site is designated as R -M (or Medium Density Residential 5.1-12 du/acre). The subject lands fall within the West Gate Specific Plan, which denotes the subject as PA 50 with R- 1- 10,000 zoning, which represents 0- 5 du/acre, per the Specific Plan dated February 14, 2017. While we were unable to obtain a copy of any further amendment, we were able to find the EIR to the Westgate Specific Plan Amendment No. 18-004 (dated April 2019) and the City of Fontana Planning Commission Documents which approved Specific Plan Amendment 18-004 and General Plan Amendment No. 18-007. Specific Plan 18- 004 modified the designation on the subject property from R -1-10,000 to R-2 Cluster (Residential 5. 1 to

12.0 dwelling units per acre). The subject’s approved density of

10.08 dwelling units per acre is within this designation.

Entitlements: The subject is entitled by Tract Map No. 20229 which was recorded on June 17, 2021 and divides the subject into one numbered lot.

Subsequent condominium maps further divide the subject: Sienna at Aurora Park Condominium Plans and Goldenrod at Aurora Park Condominium Plans . While all 13 Goldenrod Condominium plans have been recorded, 10 of the 12 Sienna Condominium plans have been recorded, with the final two (for Phase 8 and Phase 12) were not yet recorded at the time of this appraisal. A copy of Tract Map No. 20229 and subsequent condominiums maps are located in the Addenda for your review.

Home Owner’s
Association: Aurora Park ’s monthly HOA fee is estimated by TriPointe representatives as $193 per month at build out. The HOA covers maintenance of the community gate, swimming pool, spa, fire pit, barbeques, clubhouse and restrooms, community park s, as well as all walkways and community landscaping. The pool, spa and clubhouse areas appear to be complete, but there are four smaller neighborhood park areas spread throughout the community that are under construction. Per the builder’s website’s site plan rendering, these appear to include a tot lot with jungle gym, a park with outdoor exercise equipment, a green belt with gazebo and seating areas, and grassy area with tables and chairs. The TriPointe website currently quotes the monthly HOA fee at $ 230, which is more conservative than the DRE budget provided.

Topography: The subject lands are generally flat and at grade with streets on the north (Victoria Street), east (Kestrel Drive), and south (generally North Heritage Circle) borders. The eastern border is the East Etiwanda Creek drainage channel which generally travels south to 579
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the Santa Ana River. The subject has been fully graded with the lots and pads generally level with the internal streets.

Soils Condition: We have reviewed a “Geotechnical Report Update” for the subject site dated June 8, 2020, prepared by Leighton and Associates, Inc. of Rancho Cucamonga. The Report presents a summary of the observation and testing services provided by Leighton and Associates as well as their findings and suggestions for developing the site into Tract 20229. The Report concludes that the proposed development is geotechnically feasible, provided that the recommendations contained in the report are incorporated into the design and earthwork construction of the project as was currently planned.

It is an assumption of this appraisal that the soils are adequate to support the highest and best use conclusion and that all recommendations made within any and all reports were adhered to during construction. The appraiser is not a soils expert and it is recommended that any concerns relating to soils should be addressed to the appropriate experts.

Seismic
Information: Per San Bernardino County’s Geological Hazard Overlay map, the subject property is not located within a County Designated Fault Zone or an Earthquake Fault Zone Boundary.

Environmental
Concerns: We have reviewed a “Master Property Disclosure Report” (“PDR”) dated February 12, 2021, prepared by First American Natural Hazard Disclosures. The report determines that the subject is located in: a Special Flood Hazard Area (FEMA designated Flood Zone AE, X500 – one percent chance of flood discharge contained in a structure); a mapped area of low landslide susceptibility; a fire hazard zone designated “Very High” (Not VHRHSZ which is the highest) ; within one mile of property zoned to allow for commercial or industrial use; in a climate zone where properties are usually subject to duct sealing and testing requirement; and in a one- mile radius of designated “Important Farmland” that requires a statutory “Notice of Right to Farm.”

It is an assumption of this report that there are no environmental issues which would slow or thwart development of the subject property. This is evidenced by construction of homes on the site and City inspectors on site during construction.

Flood Information: Per FEMA Map No. 06071C7895J dated September 26, 2014 the property is shown as being located in Zone AE which states 1 percent annual chance flood discharge contained in structure (the Etiwanda Creek Channel, eastern border of the stie).
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Easements and
Encumbrances: We have reviewed a Preliminary Title Report prepared by First American Title Company as Order Number NHSC -6553867 dated April 10, 2023, issued for the Rescal Victoria 193, LLC and TriPointe Homes Holdings, Inc. ownerships.

Item Nos. 1-6 refers to property taxes and special assessments including CFD No. 2; CFD No. 10 and the subject CFD. Item Nos. 7 and 12 refer to abutter’s rights. Item No. 8 pertains to the development agreement. Item Nos. 9, 10, 13, 14, 15 and 16 refer to easements for sewer, storm drain, utilities, roads and equipment and incidental purposes for Spectrum Pacific West LLC . Item No. 11 refers to matters shown or disclosed by Tract No. 229. Item No. 17 refers to CC & Rs. Item Nos. 18 through 43 refers to Condominium Plans for each module within both Sienna and Goldenrod. Item No. 44 is in regard to the master dispute resolution declaration. Item Nos. 45 through 53 pertains to Easements, Covenants and Conditions between Tri Pointe Homes Holdings, Inc. and t he Aurora Park Homeowners Association. Item No. 54 refers to the rights of the public in any land lying within a road, street, alley or highway. Item No. 55 pertains to water rights and Item No. 56 is in regard to the rights of parties in possession.

It is an assumption of this appraisal report that the subject lands are free and clear of any liens and/or encumbrances other than Fontana CFD No. 100, the above referenced CFD Nos. 2 and 10 and the easements noted above. The appraiser is not a title expert and it is recommended that any concerns relating to title should be addressed to the appropriate experts.

Utilities: All normal utilities are available to serve the subject site by the following companies:

Electrical: Southern California Edison Company
Natural Gas: SoCal Gas
Sewer: Inland Empire Utilities Agency
Water: Fontana Water Company
Schools: Etiwanda School District and Chaffey Joint
Union High School District

Streets/Access: Access to the subject property is convenient via I-15 to exit 113 Base Line Road, east one-half mile to North Heritage Circle, then north on North Heritage Circle. There’s an entrance to the subject from North Heritage Circle at Mallow Drive, or from Kestrel Drive (where North Heritage Circle dead ends) via Clair Lane (main gated entrance) .

There’s a third entrance to the subject on the north from Victoria Street. For access via the I -210 exit 64B Cherry Avenue, south on 581
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Cherry for one- half mile to Victoria Street, and west on Victoria Street. The subject is on the south side of Victoria Street, approximately three-quarters mile west of Cherry Avenue.

I-15 (less than 0.25 miles west of the subject) is a major north/south freeway, which provides access to both international borders with Mexico and Canada.

I-210 (approximately 0.6 miles north of the subject) is an east/west freeway. It begins in Santa Clarita in Los Angeles County and ends near downtown San Bernardino. I -210 provides additional access parallel to I-10 which gets congested at commuting times.

I-10 (4.0 miles south of the subject) is a major east/west freeway in San Bernardino across Los Angeles and San Bernardino Counties.

I-10 provides access to Los Angeles to the west and through San Bernardino County and Riverside County to Arizona to the east. I-10 is an interstate providing a southern route across the U.S. to Florida

Base Line Road is a major east/west arterial passing through several cities. Base Line Road starts 16 miles west of the subject at Foothill Boulevard in La Verne, passes through Claremont where it provides access to the I-210/Foothill Freeway and through Upland. In Upland, it briefly becomes 16
th Street, but returns to Base Line Road in
Rancho Cucamonga. Base Line continues 20 miles east of the subject in the city of Highland, after passing through the cities of Fontana, Rialto, and San Bernardino. Base Line Road has on/off ramps at I-15, I-210, and I-215.

North Heritage Circle is a smaller local arterial that crosses Base Line Road twice, providing access from Base Line into shopping centers and residential neighborhoods to the north, and Heritage Intermediate School and additional residential lands to the south.

The road currently terminates near the subject at Kestrel Drive, but appears to possibly be built to continue and make a full circle in the future.

Cherry Avenue has on/off ramps at I -10 and I -210 and provides access into central and south Fontana. Cherry Avenue turns into Duncan Canyon Road in the Hunter’s Ridge neighborhood,
approximately three miles north east of the subject and ends at Mulberry Avenue, in the southwest industrial park area of Fontana, approximately six miles south of the subject.

Victoria Street is a smaller local arterial that runs from east/west and passes under I -15 just west of the subject, but does not provide freeway access. Victoria Street begins approximately 1.5 miles west 582
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of the subject in the Etiwanda neighborhood, and terminates 0.75 miles east of the subject at Cherry Avenue.

Internal streets within the subject include: Kestral Drive, Clair Lane, Calla Lily Drive, Bell Way, Stonecrop Lane, Gazania Lane, Prickly Pear Lane, Mallow Drive, Sedum Lane, Mangrave Lane, Birch Way, Aloe Lane, and Orbea Way. The main entrance is from Kestrel Drive via Clair Lane (main gated entrance) , directly across f rom the community pool and recreation center. The models are located adjacent to the community pool and clubhouse at Calla Lily Drive and Orbea Way.

Current Condition: The subject is being developed into 193 single-family homes consisting of motorcourt cluster pads for 111 detached condominiums and alley load pads for 82 detached condominiums.

Upon our inspection, 88 of the homes were over 95 percent complete including 72 individually owned homes, six model homes, and ten additional production homes owned by the builder ( nine in escrow).

In addition, there were 11 homes under construction (less than 95 percent complete, ten in escrow) and 94 additional finished lots/pads (none in escrow).

Costs to Complete: The subject property has been developed into 193 finished lots/pads with internal streets complete and utilities stubbed to each lot. Per TriPointe representatives there are minimal remaining hard costs which include $300,000 for a pedestrian bridge, $590,000 for remaining in-tract landscaping and $50,000 for remaining paving for a total of $940 ,000 in remaining hard costs for land development , however $300,000 (the pedestrian bridge) will be funded by the CFD proceeds. In addition, there is $2,841,662 in remaining DIF fees plus $978,286 in remaining school fees. This appraisal assumes the bonds are in place, thus there are $ 640,000 ($940,000 less $300,000) in remaining land development costs and remaining fees of $3,819,948 ($2,841,662 plus $978,286) for total rema ining costs of $4,459,948. It is our understanding that these costs are the builder’s responsibility and will be spread between the TriPointe and Resmark owned lots as the individual owners are not responsible.

Out of the total 193 lots/pads, 72 are individually owned leaving 121 lots, pads or homes owned by TriPointe and Resmark. TriPointe owns 43 which includes six models, ten houses over 95 percent complete and 11 houses under construction and 16 lot/pads .

Resmark owns 78 lots/pads. Dividing the $ 4,459,948 by the 121 lots/pads results in remaining land development costs of $36,859.072 per lot/pad.

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Improvement
Description: Aurora Park is a gated community with two detached product lines.

Sienna is alley loaded detached condominiums and features three floorplans sized 1,879 to 2,264 square feet. The floorplans all feature two stories with three to four bedrooms and two to three-car garages.

Goldenrod features detached condominiums arranged in motor courts and has three floorplans sized 2,006 to 2,743 square feet, with three to five bedrooms and two to three-car garages. Note that there are two variations of Plan 2, one at 2,292 square feet and the other at 2,301 square feet due to architectural differences in the elevation.

We will utilize the smaller sized home of 2,292 square feet in our analysis. In addition, there have been some arc hitectural changes after Phase 6 which adjusted the square footage of some of the plans. These are not taken into account in this appraisal as the homes which are over 95 percent complete are all within Phases 1 through 6. The models of the co mmunity are located at the eastern entrance to the subject off of Kestrel Drive at Calla Lily Drive and Orbea Way. There are four Goldenrod models (one of which is being utilized as a sales office) and three Sienna models. Aurora Park features two story floorplans with three exterior architectural styles:

Traditional, Spanish, and Farmhouse. Home exteriors feature dual glazed low-E windows, insulated roll-up sectional garage doors, rain gutters, and 8-foot entry doors with black hardware and Smart Wi-Fi deadbolt. Aurora Park homes include tankless water heaters, 220V outlet in garage for electric car chargers, Eero Wi-Fi systems, Merv 13 air filters, and smart home system including Amazon voice control for automation of smart deadbolt, Ring doorbell, and Smart programmable Wi -Fi thermostat. Kitchens include granite countertops and white thermofoil flat panel cabinets, stainless teel double basin sinks, and GE stainless steel appliances. Seventy -two of the proposed 19 3 homes in the subject property have closed to individuals with closing dates betwee n June 14, 2022 and July 14, 2023. Per TriPointe, actual closed sales prices (including premium, upgrades, options, and net all incentives) have ranged from $529,451 to $852,048 . Current reported base asking prices range from $567,000 to $742,000 while grand opening base asking prices in December 2021 ranged from $648,000 to $752,000. Our search of the MLS revealed no resales and one current resale listing. Our physical search noted all homes appear to be in excellent condition.

It should be noted that the seller is offering varying concessions including some rate buy downs, on a case- by-case basis. The closing cost/rate buy down incentives have ranged from $ 0 to $38,500 with an average amount of $13,341.60 per home for the 91 home sales to date. The houses which are over 95 percent complete are detailed below.

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*Each asterisk designates one model home per that plan. In addition to the above, there are 11 homes under construction (five at Sienna and six at Goldenrod) and an additional 94 finished lots/pads (30 at Sienna and 64 at Goldenrod).

Aurora Park by TriPointe Homes

Plan

Bed/Bath
Floors/
Parking Sq. Ft. Ind.

Owned
Bldr.

THE INLAND EMPIRE HOUSING MARKET

In analyzing the area’s housing market, population growth and economic conditions need to first be considered.

Population
The San Bernardino County population showed minimal 0. 1 percent growth between January 2022 and January 2023, and an average of about two percent the previous 20 years. The stagnant growth during this time is thought to be due to the disruption during COVID. Prior to the COVID pandemic, predictions were for the County to grow at an average annual rate of 0.75 percent over the next eight years. This equates to an increase of approximately 20,000 residents per year suggesting the need for about 7,000 homes per year within the County. The COVID influence is still unknown on the County’s population growth. New home sales in most cities in the County from 2020 were higher than the coastal communities due to affordability, the work from home factor, and the fact that millennials are finally entering the housing market. These factors may increase actual County population growth in 2023 . This has been offset by minimal existing home sales resulting in less overall home sales over the past year as compared to one year ago and also as compared to 2019, before COVID.

Economic Conditions
Over the past twenty-five years the Inland Empire has seen various cycles in the housing market. The Great Recession impacted the Inland Empire significantly and resulted in a longer recovery period than that of other Southern California regions. The rise and then fall of housing prices in the Inland Empire between 2004 and 2009 was considerably steeper than almost anywhere in the State. Unfortunately, this meant that the people who bought near the peak of the market likely faced significant negative equit y. After essentially remaining flat for a few years, housing prices began to increase in late 2012 through January 2020. Once the COVID pandemic hit in March 2020, the economy entered what is now known as the COVID Recession. The housing market slowed down significantly early on, but by May 2020, new homes were going under contract and selling at well above average absorption rates from May 2020 through Spring of 2022 in the 586
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region. Since May 2022, the new home market has seen a shake-up due to the increasing interest rates, the high prices of homes, and the high rate of inflation which is shaking consumer confidence , however this is partially offset by the extremely limited resale housing market which is fueling new home sales.

Economic growth in the Inland Empire was strong generally between 2015 (after the Great Recession), and until the economic shutdown due to COVID. The second half of 2020 and all of 2021 saw economic growth, however the first two quarters of 2022 saw GDP shrinking while the third and fourth quarters saw minimal growth with 2022’s growth at 2.6 percent. The most recent unemployment rate for the County is 4.9 percent (per the June 2023 EDD report – most recent published), slightly higher than the County’s pre- COVID unemployment rate in February 2020 of 3.7 percent. While unemployment rates are near historical lows, the inflation factor is significantly affecting the economy.

The housing market played a large role in the past two recessions. In the Great Recession, due to increased interest rates and rising home prices between June 2004 and mid-2006, the market reaction was to create non-conventional financing alternatives, such as sub- prime and non- conventional mortgages, to artificially maintain the boom housing market of 2004 and 2005. By 2007, the housing market saw a shake-up because of the problems in the sub-prime and non-conventional mortgage markets, which played a rol e in the 2008 upheaval of Wall Street and contributed significantly to the U.S. economic downturn of the Great Recession. Due to stricter income verification on new loans and the lack of available credit, coupled with job losses and declining home prices, sales of new homes slowed for the next few years and essentially remained flat until mid- 2012 when home prices began a steady climb.

During the COVID recession, new home sales were one of the brightest spots in both the local and national economies. While new home sales slowed in March and April 2020 due to the onset of the COVID pandemic, both sales and prices increased significantly throughout COVID until spring 2022 when interest rate increases began affecting the home-buying market. The rising interest rates alone did not seem to slow sales in Spring 587
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2022. However, a combination of increasing home prices and falling consumer confidence, added to the significant interest rate increases slowed new home sales significantly in late 2022 and the beginning of 2023.

Per the Zonda National Economic and Housing Market Update in July 2023, the rate of growth of new home sales is off from recent highs but up from pre- pandemic numbers, suggesting a healthy market. Per their survey of over 300 new-home builders nationally, the builders are stating sales are continuing but report they had to adjust pricing and incentives to “find the market.” In the January 2023 survey, 50 percent of builders surveyed were lowering their prices and the remaining 50 percent stated their pricing was flat. In July, the survey resulted in 54 percent of the builders stating they are raising their prices and 46 percent of builders stating they were keeping prices flat or decreasing pricing. This is a very different dynamic which is partly due to seasonality, partly due to builder’s readjusting concessions (interest rate buy -downs), and partly due to price changes. The larger public homebuilders are typically offering significant interest rate buy-downs in order to keep absorption rates steady, which is reportedly costing between $30,000 to $100,000 in incentives. The builders are attempting to find the “sweet spot” in incentives. Per Zonda a combination of price cuts of between 10- 15 percent combined with a rate buy down is obtaining the best results in the marketplace.

Home loan mortgage rates have been and are still playing a huge part in the housing market. The Board held mortgage rates at all -time lows after the Great Recession and again after the COVID Recession in an attempt to assist the housing market’s recovery.

Low rates helped home sales during this time. However, first-time buyers are now having a hard time entering the housing market due to rising prices and rising interest rates. Per FRED, the average 30-year fixed mortgage has gone from 2.65 percent in January 2021 to 7.08 percent as in October 2022, with a decrease since then with current rates at 6.96 percent as of July 13, 2023. Mortgage applications had been spiking in late 2020 and 2021 due to the low rates and the fear rates were going to start ticking up, which began happening in March 2022. The Board has increased the rate ten times in the past 15 months, which increased the FRR from 0-0.25 percent to 5.00-5.25 percent. At the latest 588
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Board meeting in mid-June, they paused the increases for the month and suggested there may be additional increases later this year. Most economists believe there will be an increase at the July Board meeting with the anticipated increase of 0.25 percent. The FRR increases are supposed to help slow the high inflation rate in the Nation, which appears to be occurring as the latest reports are showing inflation in June 2023 at 3.1 percent, down from a high of 9.1 percent in June 2022. The Board has other considerations including employment numbers, wage growth and consumer confidence to balance along with inflation.

While new home builders slowed production as sales slowed in 2022, the spring of 2023 brought optimism to builders once again. Sales were up month- over-month as buyers adjusted to higher mortgage rates and existing home inventory is at all-time lows. Existing homeowners that are locked into a 3 percent mortgage are not moving up due to the current 6+ percent rates. This is creating a supply issue for exi sting homes. New home sales are benefiting from this supply issue as in some cases, the only option for homebuyers are new homes. Per Zonda, historically, new homes capture 10 to 13 percent of all home sales; however, due to the limited supply of existing homes currently on the market, new homes are capturing well over 30 percent of all home sales in the Inland Empire.

Residential Land Development
While there had been little land development going on in most of the Inland Empire during the Great Recession years 2008-2011, the second half of 2012 saw a resurgence in the more coveted areas of the Inland Empire. The increase in housing prices since 2012 combined with the limited availability of supply made land development feasible once again for homebuilders. It is thought that the increase in regulations, which has significantly increased the timeline for processing entitlements, has limited the master developers’ further entitlement of developable land in California. While prior to the recession it was not unusual to see numerous large master-planned communities selling lots to various builders, there are few currently available in the subject area. The majority of land sales over the past few years include single tracts of land with maps ready to 589
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record or a public builder buying a larger piece of land but develops the land for its own use, such as Aurora by TriPointe Homes (subject property), The Arboretum by Lennar , Monterado by Lennar and Nara Hills by Landsea Homes, all located in Fontana.

Land sales in the Inland Empire slowly grew from 2012 up to a peak in 2017, with 2018 and 2019 showing lower land transactions. Once home sales exploded in May 2020, land sales followed with a significant number of residential land sales to builders in the Inland Empire during the second half of 2020 and throughout 2021. In late 2021 and early 2022, prior to the F RR increases, builders were paying significantly more for residential land that was ready to develop as demand was up and supply was shrinking. The beginning of 2022 continued with strong residential land sales until May, when sales began to fall sharply. According to Zonda’s survey of builders regarding residential land purchases, as of January 2023 only 2 percent of builders surveyed were “full steam ahead,” and almost 40 percent were pausing transactions or bidding lower on land transactions. As of July 2023, these percentages have changed drastically with 35 percent stating they are going “full steam ahead” and 41 percent moving “cautiously forward.” The increase in optimism from new home builders outlook since January is partially due to the extreme slowdown of existing home inventory.

New Home Sales and Pricing
We have researched new single- family homes within the subject’s market in order to reflect residential trends. It should be noted these sales numbers and prices pertain to new home sales while later in this section we discuss existing home sales. In review ing new home sales in the Inland Empire market area, per the July 16, 2023 Ryness Report, the year-to-date average sales rate (4.03 sales per month) is 10 percent lower than the same time period of the previous year (4.46 sales per month). Surprisingly, even with the increases in pricing and mortgage rates, sales of new homes are occurring at a very good pace; however this is partially due to the extreme limited supply of existing homes which is creating more demand for new homes. New home sales rates started to level off in late Spring 2022, likely due to the increase in mortgage interest rates. As rates go down, purchasing power becomes larger, which gives new-home buying a boost. However, the 590
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flip side is that as interest rates rise, purchasing power becomes lower and therefore fewer people purchase new homes. Along with home sales comes a demand for appliances, furniture, building materials and services such as insurance, mortgage services, in spections, interior designers, and landscapers, all contributing to the area economy.

When comparing the July 16, 2023, Inland Empire Ryness Report to one year prior, there are 36 additional projects (213 in July 2022 and 249 in July 2023) and sales are about 10 percent lower year -to-date than the previous year. This does not appear to be due to limited inventory as there are additional projects, but rather because of an actual slowdown in sales activity likely due to the increase in interest rates. It should be noted that current sales rates are being compared to t he shifting market of Spri ng/Summer of 2022. To put this in perspective, when comparing year to date average new home sales from July 2022 to July 2023, average sales numbers in the Inland Empire are down 10 percent (per the Ryness Report dated July 16, 2023); however, when comparing year to date average new home sales from July 2019 (prior to the pandemic) to July 2023, sales are actually 20 percent stronger (3.38 sales per month year-to-date average in July 2019 versus 4.03 sales per month year-to-date average in July 2023).

New single -family home pricing (combines both attached and detached) in the Inland Empire has also seen changes. The median new home price in the Inland Empire changed from the peak value of $437,200 in the third quarter of 2006 to $268,155 in early 2009 (decrease of 39 percent) while the current Inland Empire median new home price is $525,000 which is down from a record high of $646,000 in July 2022 per Zonda’s latest market report (Riverside-San Bernardino-Ontario, CA CBSA April 2023). This reflects an increase of over 95 percent from the bottom of the cycle and an increase of more than 20 percent over its peak during the Great Recession, however a decrease from the 2022 peak of 18.7 percent. In reality, this decrease is actually larger as builders are buy ing down interest rates which costs the builder at times, up to $100,000, however, the amount is not reflected in the recorded sales price. New home sale prices fluctuate based on the land value and competition more than on the cost of building the home. While finishes 591
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and sizes of homes can change, the basic costs on a per square foot basis typically do not fluctuate as much as land values; however, there have been inflationary increases in construction costs adding to this increase.

We have reviewed Empire Economics’ Price Point Review Study on Fontana CFD No. 100 (Victoria) dated July 17, 2023. Empire Economics did an original Price Point Study on the project in August 2020 in order to determine their market value for the various plans within the Aurora (formerly known as Victoria). The “Review Study” is to ascertain if the prices have increased or decreased since the original Study. The Empire Economics Price Point Review Study concluded that, in all cases, the current market value conclusions of the homes was, on average, 29 – 30 percent higher than the original market value conclusions in 2020.

Within our search for the most comparable actively selling new home communities, we searched the subject’s city of Fontana, which currently features a multitude of actively selling new home communities . We found 10 communities comparable to Aurora Park.

The comparables have base prices ranging from $514,990 to $857,105 While both Goldenrod’s and Sienna’s base prices range from $567,000 to $742,000, which falls well within the range of comparable new homes in the area.

Existing Homes Sales and Pricing
While the previous section looked at new home sales and pricing, this section refers to existing homes in the Inland Empire. According to the California Association of Realtors’ most recent data, within overall Southern California, the median price paid for an existing single-family home in June 2023 ($815,000) reflects a decrease of 1.8 percent from the previous year ($830,000 June 2022) however a 1.9 percent increase from the previous month ($800,000 in May 2023). Existing home sales in Southern Californi a overall were down 19.4 percent year -over-year as of June 2023. The overall Southern California numbers compare to San Bernardino County with $470,000 as the median price paid for an existing home in the County in June 2023, down 4.1 percent from the previous year ($490,000 June 2022) and an increase of 3.3 percent from the previous month ($455,000 in May 2023). Sales of existing homes in the County were down 23.2 percent year-over- 592
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year due to higher mortgage rates and high home prices. It is interesting to note that San Bernardino County has had a similar drop in price in the past year and increase in price since the past month, in line with what’s happening in the Southern California market. The slower sales rates in the existing home sales market are reflective of homeowners not ready to sell due to the changing market. Historically, the new home market captures 10- 13 percent of the overall home sales; however, in the past year, new home sales are capturing over 30 percent of total home sales. Below is a table showing the sales and prices for the Southern California area by County per the California Association of Realtors.

Southern California Existing Home Sales
County June 2023 May 2023 June 2022
Price MTM
% Change
Price YTY
% Change
Sales YTY
% Change
Los Angeles $832,310 $744,770 $860,230 11.8% -3.2% -19.1% Orange $1,260,000 $1,256,500 $1,265,000 0.3% -0.4% -12.2% Riverside $628,000 $629,000 $645,000 -0.2% -2.6% -16.0% San Bernardino $470,000 $455,000 $490,000 3.3% -4.1% -23.2% San Diego $958,250 $935,000 $950,000 2.5% 0.9% -24.3%
Ventura $927,500 $925,500 $930,000 0.2% -0.3% -24.3%
Southern Calif. $815,000 $800,000 $830,000 1.9% -1.8% -19.4% Source: California Association of Realtors

Based on June 2023 median existing homes prices, in comparison to all of the surrounding counties, San Bernardino County has a definite price advantage. The “San Bernardino County Advantage” (price difference between San Bernardino and surrounding counties) is $158,000 as compared to Riverside County, $362,310 as compared to Los Angeles County, $457,500 as compared to Ventura County, $488,250 as compared to San Diego County and $790,000 as compared to Orange County. That is, in June 2023, the median priced home in San Bernar dino County was $790,000 less than the median priced home in Orange County ($1, 260,000). Typically, as the price advantage widens, homebuyers are more open to commuting to further out areas. With the current work-from-home concept, the suburban areas have seen more growth which put pressure on home prices in the Inland Empire. It’s worth noting that June of 2022 was the first month where the majority of Southern California counties showed medi an price decreases from the previous month and May 2023 showed median prices beginning to 593
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rise suggesting that pricing may have hit bottom; however, this is due to minimal inventory/supply which is upsetting the balance in the housing market.

In a separate attempt to capture the amount of increase in home prices, the resale activity of existing homes in the subject’s immediate area (per Redfin.com) has been reviewed.

The number of sales and sale prices of existing homes within market areas surrounding the subject are shown in the table below.

Community
Name
Location
To Subject
No. of
Sales
June ‘23
Sales %
Change from
June ‘22
Jan. ‘23
Median
Sale Price
Price %
Change
from Jan.
‘22
North Fontana Larger Subject Vicinity 66 N/A $691,000 -3.8% Etiwanda West 26 -27.7% $1,132,000 8.7%
Rancho Fontana South 9 -66.6% $692,000 -1.8%
Citrus Heights South Northeast 4 -33.3% $821,500 2.7%
Walnut Village Immediate East 7 -46.1% $570,000 -9.5%
Rialto Far East 45 -6.0% $550,000 0.0%
Summit Heights North 7 -41.6% $715,000 -8.7%
Sierra Lakes Northeast 17 13/0% $718,000 1.1%
West End Southwest 24 -14.3% $647,500 -6.2%
Source: Redfin Housing Market Trends January 2023

The median home price of a detached resale home in the subject’s vicinity of North Fontana in June 2023 was $691,000, which is within the range of the resale detached home prices in the subject area. The low -end of the range relates to the Walnut Village and Rialto areas, which have older homes, while the high- end of the range relates to Etiwanda. Etiwanda is an upscale Rancho Cucamonga neighborhood on the west side of I-15, and stands as an outlier in the subject’s marketplace. This is because of Rancho Cucamonga’s more desirable address as well as Etiwanda’s highly ranked public schools.

The above price fluctuations from year-to-year relate to the California Department of Real Estate’s overall San Bernardino County detached home resale price increase of 3.3 percent year-over-year from June 2022 to June 2023 . This s uggests that the subject’s immediate marketplace is largely outperforming the County as a whole.

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According to the Ryness Report dated July 16 , 2023, there are currently 38 new home projects in the subject’s Central and East San Bernardino submarket s, with the City of Fontana housing 20 of them (including the subject’s two).

Aurora Park - Sales and Pricing
Aurora Park is comprised of 193 single family homes with marketed sizes from 1,879 to 2,743 square feet. Aurora Park grand opened in December of 2021, with opening base pricing ranging from $ 648,000 to $752,000. Current base pricing at Aurora Park ranges from $567,000 to $742,000 which is 1.3 to 12.8 percent lower than opening base prices.

Specifically, Sienna appears to have had a larger price reduction, with differences of $70,000 to $87,000 (10.1 to 12.8 percent), while Goldenrod’s prices have dropped significantly less ($10,000 to $17,000, or 1.3 to 2.7 percent). Actual closed prices, including options, upgrades, premiums, and concessions, have ranged from $529,451 to $852,048. The difference between the base pricing and the actual pricing is options, upgrades and premiums paid by the buyer offset by concessions given by the builder.

The net closing cost and rate buy down concessions for the 91 sales within the subject property average $13,341.60 per unit. These concessions are not considered in the reported sales prices and are decided on a case-by-case basis and have increased over the past eight months due to fluctuating mortgage rates. Within the subject, TriPointe has sold and closed 72 homes to individuals, with an additional 19 homes in escrow which are due to close at completion. The total of 91 sales equates to an absorption rate of 4.8 sales per month spread across the two product types (2.6 sales per month for Sienna and

2.2 sales per month for Goldenrod). This is considered to be a slower absorption rate for the subject marketplace. It should be noted that the community has had large time lapses in between phase releases, and therefore have been temporarily sold out with no available homes for sale from time to time, due to construction and weather delays, along with some architectural changes. Per the Ryness Report, a new home tracking service, as of July 16 , 2023 the year -to-date average sales per project per month in the Inland Empire is 4.5 homes; nearly double the average sales pace of Sienna and Goldenrod.

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Summary

The Inland Empire had seen substantial increases in pricing since 2012 with most areas, including the subject, showing astronomical increases from mid-2020 through early 2022.

While existing home sales were originally down when COVID began in spring/early summer 2020, new home sales subsequently shot up due to the existing home market supply being constrained and interest rates hitting all -time lows. The latest statistics indicate a slowdown in sales as interest rates have risen substantially. The Fontana new- home submarket is performing in line with the Inland Empire market as a whole. The subject market area saw an increase in pricing consistent with most of Southern California throughout 2020 and 2021 and appeared to be continuing in the beginning of 2022. The past year has seen sales slow and prices lowering; however, the past couple months have seen new home builders’ optimism return as new home absorption is generally increasing. Despite uncertainty hitting the market due to rising interest rates and inflation, most observers agree that the Inland Empire housing market is healthy and population growth is still estimated to occur in the area. It is believed that as the population continues to increase, housing growth will also continue, despite a slowdown. 596
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HIGHEST AND BEST USE ANALYSIS

The highest and best use is a basic concept in real estate valuation due to the fact that it represents the underlying premise (i.e., land use) upon which the estimate of value is based. In this report, the highest and best use is defined as:

"the reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value”
5 Proper application of this analysis requires the subject properties to first be considered “As If Vacant” in order to identify the “ideal” improvements in terms of use, size and timing of development. The existing improvements (if any) are then compared to the “i deal” improvements to determine if the use should be continued, altered or demolished preparatory to redevelopment of the site with a more productive or ideal use.

“As If Vacant”
In the following analysis, we have considered the sites probable uses, or those uses which are physically possible; the legality of use, or those uses which are allowed by zoning or deed restrictions; the financially feasible uses, or those uses which generate a positive return on investment; and the maximally productive uses, or those probable permissible uses which combine to give the owner of the land the highest net return on value in the foreseeable future.

Physically Possible Uses
The subject property is rectangular in shape, consists of 21.539 gross acres and 19.147 net acres per recorded Tract Map No. 20229 . The site is located in the northwestern portion of the City of Fontana, at the southwest corner of Victoria Street and Kestrel Drive, just east of I-15. The lands are generally at street grade of surrounding streets and I-15, with existing residential homes to the south, vacant lands to the east, a California Highway Patrol and Caltrans facility to the north, and RV/Boat storage facility to the west, beyond which is I-15.

5 The Appraisal of Real Estate, 11th Edition
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The subject site has been graded for 193 single family homes: 82 pads for detached alley load homes and 111 pads for detached cluster homes. The homes area all detached but are technically condominiums, sitting on HOA owned parcels containing approximately 2,000 square feet. We have reviewed an Environmental Site Assessment along with a Soils Report on the subject site. All reports reviewed concluded that the development of the site into single- family residential use is feasible; however, all mitigation measures recommended within the reports should be adhered to during const ruction. It is an assumption of this report that the soils are adequate to support the highest and best use, and that there are no environmental issues which would slow or thwart development of the property. This is evidenced by existing homes on the site which were recently built with City inspectors on site during construction.

An engineered drainage system appears to have been designed into a street drainage system for the entire tract. All standard utilities are available to serve the subject property.

The site has good access via I-15, exit Baseline Avenue to North Heritage Circle Drive; or from I -210 exit Cherry Avenue to Victoria Street . There is neighborhood shopping within one mile of the subject at Baseline and Cherry Avenue.

Based on the physical analysis, the size and access make the subject property physically suited for numerous types of development; however, the grading that has occurred on the site suggests residential development.

Legality of Use
The subject property is located within the City of Fontana in the County of San Bernardino.

Per the City’s General Plan Land Use Map, the subject site is shown as R-M, or Medium Density Residential with 5.1 -12 du/acre. The subject lands fall within the West Gate Specific Plan, which denotes the subject as Planning Area 50 with 10,000 square foot lots (or 0 -5 du/acre) . Specific Plan Amendment No. 18- 004 was approved by the City to change the designation to R-2 Cluster (Residential 5.1 – 12.0 dwelling units per acre). In addition to the General Plan and Specific Plan zoning, the subject is covered by recorded Tract Map No. 20229 (recorded June 17, 2021) which subdivides the subject property into a single lot along with condominium maps which divide the property into 1 93 single- 598
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family units (pads for 82 alley load detached condominiums and 111 cluster detached condominiums), along with a community center and pool /spa, tot lot, gazebo area, outdoor exercise area, covered eating areas, setback areas and internal streets . The approved mapping results in a density of 10.08 dwelling units per acre based on the net acreage which is within the approved designation.

Based on the legality of use analysis, the type of development for which the subject properties can be utilized is narrowed to residential use. This is consistent with the findings of the physically possible uses.

Feasibility of Development
The third and fourth considerations in the highest and best use analysis are economic in nature, i.e., the use that can be expected to be most profitable. As discussed under the Inland Empire Housing Market section earlier within this report, the market showed strong increases in both sales and pricing in 2020, 2021 and the beginning of 2022. The second half of 2022 and the beginning of 2023 reflected a slowdown in sales and a softening in prices as interest rates have risen substantially. The slowdown in the second half of 2022 resulted in builder’s either pausing on escrows or dropping escrows resulting in few actual closings in the past twelve months. However, builders are once again entering escrows and moving forward on older escrows as new home buyers are continuing to purchase homes, even with the higher mortgage rates. Within Fontana CFD No. 100, out of 193 proposed houses, there have been 91 home sales to date including 72 home closings.

All structures appear to be in excellent condition with no physical depreciation apparent.

Within the new home market in the Fontana area, we found ten projects to be comparable to the subject ’s product lines. Homebuilding ha d not been able to keep up with the demand in 2020 and 2021 due to several factors including historically low interest rates, millennials joining the home buying market and the work from home factor which all add to the demand. While the market softened in the second half of 2022, the Inland Empire is still seeing demand and new homes are still selling. Our search for land sales found 10 land sales in the market area that we consider to be comparable. Population growth is still occurring in the area and will continue to create the need for housing. Based on the 599
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above analysis, the highest and best use for the subject property appears to be for single- family detached residential development at the right price points.

Maximum Productivity
Based on the market activity of residential lands in the immediate area, we have concluded there is a need/demand for residential lands.

Highest and Best Use Conclusion – “As If Vacant”
The final determinant of highest and best use, as if vacant, is the interaction of the previously discussed factors (i.e., physical, legal, financial feasibility and maximum productivity considerations). Based upon the foregoing analysis, it is our opinion that the highest and best use for the subject property is for residential land use.

Highest and Best Use – “As Improved”
The subject property consists of Sienna at Aurora Park and Goldenrod at Aurora Park, with 193 total proposed homes which are currently being marketed by TriPointe Homes.

Aurora Park began selling in December of 2021 and has sold 91 homes, reflecting a sales rate of approximately 4.8 sales per month spread across the two product lines .

Independently, Sienna has an average absorption rate of 2.6 sales per month while Goldenrod has an average absorption rate of 2.2 homes per month. Base prices at Aurora Park have decreased since grand opening, with base price decreases of 10.1 to 12.8 percent at Sienna (with most recent base pricing ranging from $567,000 to $622,000) and

1.3 to 2.5 percent at Goldenrod (with most recent base pricing ranging from $657,000 to $742,000). In marketing the homes, the builder is offering closing cost and rate buy down concessions on a case-by-case basis. These concessions have ranged from $ 0 to $38,500 with an average of $13,341.60 on the 91 sales to date. While the incentives are showing a softening market, per Empire Economics’ Price Point Review Study, the plan pricing has increased on aver age 33-34 percent between proposed pricing in 2020 and current pricing. The sales absorption rate within Aurora Park is considered to be slower than the average, however they have struggled with having homes available to sale with long lapses between phase releases due to construction and weather delays . As discussed under the Inland Empire Housing Market section, within the Inland Empire, the 600
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year-to-date average sales per project is 4.0 homes per month, which the subject is underperforming (at 2.6 and 2.2 sales per month per product line) . This is due in part to delays between phase releases and a lack of homes to sell. All of the homes are of good design and appear to be of good quality workmanship. There is currently one home listed as a resale that has been on the market for 78 days with no offers. The seller is asking for over 25 percent above the base price of the plan. It appears the sel ler may be attempting to take advantage of the current low supply of homes on the market. It appears that Aurora Park is being generally well received, despite the phase release lags, and the neighborhood is selling at the correct price points for the area. Based on the above information, it is concluded that the highest and best use for the subject property, is for the continued use, as improved.
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VALUATION ANALYSIS AND CONCLUSIONS

The Sales Comparison Approach will be used to value the subject property. This approach compares similar properties that have recently sold or are in escrow. In determining the value for the property, a unit of comparison needs to be addressed. For both attached and small lot cluster residential lands, they are typically sold on the basis of a finished pad for a townhome unit or finished lot for a detached unit. That is, the sales price is determined by a finished pad or lot value and then the remaining costs to develop the property to a finished condition are taken into account in the sales price. Therefore, in determining a current market value for the lands, the current condition of the lots will be considered. Our search revealed several projects similar to the subject in that they have some attached and some cluster lots. These transactions are typically looked at on a blended price per unit, taking into consideration the overall density of the project.

In the case of the completed home valuations , a single new -home is the unit of comparison. Our search will include all new home projects within the subject’s immediate and surrounding market area to find comparable new homes for sale. In determining the value for each house, a base value will be concluded for each plan which will be considered a minimum market value as most buyers typically purchase some premiums, upgrades or options which increase the price of the home.

For the completed (over 95 percent complete) builder -owned models and production houses, the homes will be valued using the Sales Comparison Approach to conclude on a retail value for each plan, followed by a Discounted Cash Flow (“DCF”) Analysis due to the s ingle ownership. The DCF will take into account the fair market value of the completed homes (utilizing the Sales Comparison Approach), remaining development costs (if any), the marketing and carrying costs associated with selling off the homes, a profit due to the developer of the homes, and a discount rate reflecting both the risk associated with selling off the homes along with the time value of money during the estimated absorption period. A home under construction (under 95 percent complete) will be valued as a finished lot rather than attribute value to a partially complete improvement. 602
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In the case of the individually owned homes, the concluded base value will be used for each plan and a mass appraisal technique will be addressed. In determining the concluded base value, new home sales in the area will be reviewed and compared with sales of the subject completed homes using standard methodology and statistical testing.

All of the value conclusions will take into consideration improvements and/or benefits to be funded by the Fontana CFD No. 100 Special Tax Bonds and their lien. A summary of the final value conclusions will be reported at the end of this valuation section.

Market Data Discussion – Residential Lots

Within Aurora Park , there are 19 3 pads in a physically finished condition, with 72 completed homes individually owned, 16 TriPointe-owned homes that are complete or nearly complete ( including six model homes and an unfurnished, but completed production home being utilized as the sales center, located in the model complex ), 11 TriPointe-owned homes that are under construction (under 95 percent complete), and 94 additional finished lots/pads (16 owned by TriPointe and 78 owned by Resmark) . As we are valuing a home under construction (under 95 percent complete) on the basis of a finished lot/pad, we will be valuing 105 lots/pads in our analysis: 27 owned by TriPointe and 78 owned by Resmark. Please refer to Page 2 of this Appraisal Report to see the detailed ownership per unit.

We have searched the area and found the ten transactions summarized in the Addenda to be most comparable to the subject property. The sales are reported both on a purchase price basis and on a finished lot basis. The actual purchase price is typically less, depending on the condition of the land (lots or pads) at the time the property was acquired.

Although some sales refer to “finished lots/pads,” they are typically physically finished lots/pads with some fees remaining to be paid to be considered true fi nished lots/pads.

Below are the details of each of the comparable land sales along with a discussion of each transaction in relationship to the subject property.

Land Sale No. 1 refers to the purchase of a 6.79-acre site located in Fontana about 2.75 miles east of the subject site. RC Homes is planning a new product which includes homes 603
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on approximately 6,000 square foot lots, however each home will have an ADU for separate living. Based on the sales price and cost estimates from brokers familiar with the transaction, the site was purchased for $3,525,000 which relates to $76,630 per lot based on the detached 6,000 square foot lots with an estimated finished lot value of $315,000. When looking at the site on the basis of 92 units (total number of units including the ADUs) the cost is $38,315 per unit or $165,000 per finished pad. In comparison to the subject property this location is considered to be slightly inferior (further out from Los Angeles/Orange Counties for commuters). When comparing the 92 units to the subject, this transaction is also considered to be inferior in overall density (13.5 dwelling units per acre versus the subject’s 10 dwelling units per acre. When comparing the 46 unit to the subject, this transaction is considered superior in overall density (6.7 dwelling units per acre versus the subject’s 10 dwelling units per acre).

Land Sale No. 2 refers to the purchase of proposed townhomes located at the northwest corner of Pine and Meadowhouse Avenues within the master planned community of the Preserve, located in Chino about f ourteen miles southwest of the subject. The Preserve is a successful master planned community with significant amenities which has been offering lots to homebuilders over the past 10 years. Beazer Homes purchased the site in June 2022 for $19,952,500 or $133,909 for each of the 149 units based on a reported finished lot price of $205,000. The product consists of 2 and 3-story attached townhomes with an overall density of 14 dwelling units pe r acre. The lands closed in an unimproved condition with an approved tentative tract map. In comparison to the subject property, this transaction is considered to be inferior due to the higher density and the fact that this product is for all attached units versus the subject’s detached product. In addition, this sale is considered to be superior due to closing in June 2022, prior to the majority of the softening in the subject market.

Land Sale No. 3 pertains to the Meritage Homes purchase of an assemblage of land in Redlands, northwest of Texas Street and Domestic Avenue about 18 miles southeast of the subject site. The parcels were all raw land at time of sale. The site was in the East Valley Corridor Specific Plan designated for science research park; however, in May 604
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2021, Meritage Homes processed the Bergamot Specific Plan which was approved by the City along with a change of zoning allowing for 317 dwelling units including: 53 single- family detached (“SFD”) lots with a minimum square footage of 7,200; 144 SFD lots with a minimum size of 3,500 square feet; and, 120 motor-court cluster SFD lots with a density of 10 dwelling units per acre. Meritage assembled and purchased the parcels from four landowners and closed between April 13
th and June 8 th, 2022. The lands were tied up
over one-year prior. The total price for the lands was $16,657,000 and the finish lot price (blended for all three products) equated to $193,000. In comparison to the subject property this location is considered to be superior due to the lot size (7,200, 3,500 and 2,000 square feet versus the subject’s alley loaded and clust er units). This transaction was negotiated in early 2021, prior to a substantial amount of appreciation in the subject marketplace. The condition of the lands for this transaction is considered to be significantly inferior as they were in a raw land state and the buyer changed the zoning and processed the mapping as compared to the subject finished lots, ready to build.

While the co sts are accounted for in the estimated finished lot price, the risk of development, processing time and market conditions are not considered.

Land Sale No. 4 and 5 refer to two land sales in Pomona which is located about 15 miles west of Fontana. Land Sale No. 4 refers to a land sale for 156 proposed units about 15 miles southwest of the subject at Garey and Rio Rancho Road. Century Communities purchased the site with entitlements for 41 detached cluster lots and 115 three story attached townhomes in April 2022. The seller of the property was the Pomona Unified School District with another builder (Melia Homes) optioning the property and processing entitlements and then selling their position to Century Communities. The overall density of the site is 17 dwelling units per acre which is considered to be significantly inferior to the subject property’s 10 dwelling units per acre. Century Communities purchased the stie for $13,400,000 or for $85,897 per unit. We were not able to obtain actual finishing costs; however, based on historical costs and development fees in the area, the blended finished pad is es timated at $185,897 per unit. Land Sale No. 5 refers to Crestwood Communities purchase of 38 lots, located about 14 miles west of the subject site.

Crestwood purchased the site for $4,695,000 or $123,553 per unit for the 38 small, 605
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detached lots. The overall density of this site is 10 dwelling units per acre which is considered to be similar to the subject. Again, we were unable to obtain actual finishing costs. However, based on historical costs and development fees, the finished lot is estimated at around $238,553. This transaction also closed in April 2022. Crestwood is planning to continue their previously sold -out Crestwood at Valencia project on the site.

Due to the finished lot numbers being estimates, less emphasis will be placed on th ese two transactions. We have included them to show the activity in the subject marketplace.

Data No. 7 pertains to the January 2022 purchase of 56 units located at the southwest corner of Bonnie View Drive and Willow Avenue in Rialto, about ten miles south of the subject site. Century Communities purchased the property from Koba Properties for $3,290,000 or $58,750 per unit based on a reported finished lot estimated at $188,000 per brokers familiar with the transaction. The site was unimproved at time of sale with an approved Tentative Tract Map and entitlements for 56 units with an overall densit y of 12 dwelling units per acre. In comparison to the subject site, the density is higher (considered inferior) and the Rialto location is considered to be inferior to the subject’s Fontana location; however, this comparable is superior in terms of the date of sale.

Land Sale No. 8 refers to the sale of 526 lots which are known as the Gardens at Arboretum. Lennar Homes purchased the acreage which is located about four miles northeast of the subject site, from Lewis Group of Companies (North Fontana Investment Company) in December 2021 for $91,935,500 per public record. The purchase included at total of 526 units made up of 69 triplex units, 99 cluster lots with a minimum size of 2,200, 109 cluster lots with a minimum size of 2,600, 97 lots with a minimum lot size of 4,000 square feet, 88 lots with a minimum lot size of 4,100 square feet and 64 lots with a minimum lot size of 6,000 square feet. We were unable to obtain finished lot /pad estimates on each product however brokers familiar with the transaction reported the blended finished lot price is estimated at $274,000. In comparison to the subject property, this transaction is considered to be superior in date of sale and lot size /overall density (4.0 dwelling units per acre versus the subject’s 10 dwelling units per acre). It should be noted that this transaction is considered a bulk sale due to the number of lots/pads which 606
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would have commanded a discount, making this transaction inferior to the subject when looking at number of pads/lots.

Land Sale No. 9 pertains to the purchase of 107 lots located at the northeast corner of San Savaine Road and South Highland Avenue in Fontana, about 1.8 miles northeast of the subject property. Richmond American purchased the lands which had approvals for 46 alley loaded lots and 61 motorcourt cluster lots from the Stratham Group in December 2021 for $18,691,821 based on a reported blended finished lot price of $285,000. The site is adjacent to the 210 Freeway. Richmond American Homes is currently selling their Cascade at Highlands project is on the conventional small lots with homes from 1,860 to 2,060 square feet and current base pricing from $56 0,990 to $596,990; and their Talise product with sizing from 1,410 to 1,950 square feet with current base pricing from $499,990 to $573,990. The overall density of this transaction is 10 dwelling units per acre, similar to the subject . This transaction is considered to be most similar to the subject property with the exception of date of sale. This property sold in December 2021 when mortgage rates were in the 3.0 percent range and average sales rates were in the 4 to 6 homes per month range.

Land Sale No. 10 refers to the purchase by Landsea Homes of 489 units located about

3.5 miles north of the subject , northwest of Duncan Canyon Road and Interstate 15.

Landsea purchased the site in September 2021 from Richland Communities who had entitled and processed engineering on the site. The site is raw land with mapping for 129 townhomes, 127 motorcourt cluster lots, 79 lots with a minimum size of 5,000 square feet, and 154 lots with a minimum lot size of 10,000 square feet. The property was reportedl y purchased for $42,736,000 or a blended per unit price of $87, 395, based on a blended finished lot/pad price of $2 85,000. The significant cost to develop the lots/pads (almost $200,000 per unit) is due to the hillside condition of a portion of the site. In comparison to the subject property, this transaction is considered to be superior due about one-half of the lots being minimum 5,000 and minimum 10,000 square feet. In addition, this transaction is considered to be i nferior due to the number of lots (considered a bulk purchase) and due to the amount of grading needed on the property. While the actual 607
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costs of land development are taken into consideration, there is higher risk associated with the development (both time of development and grading risk), while the subject lots are all graded and finished.

The chart below summarizes the considerations used in adjusting the market data to the subject property.

Data
No. Location Date of
Sale
Lot Size /
Density
Finished
Lot Price Comparison to Subject
1 Fontana 10/22 13.5 du/ac
Det w/ ADU
$315,000 /
$165,000 Slightly inferior – location
2 Chino 6/22
14 du/ac
Attached

$205,000 Superior - Amenities, Date of Sale,
Inferior – Density / all attached
3 Redlands 4 / 22
7,200
3,500
Cluster

5.3 du/ac
$193,000
Blended
Superior – Overall density & Date of
Sale
Inferior – Condition
4 Pomona 4 / 22 17 du/ac
Attached $185,897* Superior – Date of Sale
Inferior – Density / All Attached
5 Pomona 4 / 22 10 du/ac
Cluster $238,553* Similar
6 Rialto 1/22 12 du/ac $188,000 Superior – Date of Sale Inferior - Location
7 Jurupa Valley 12 / 21 Cluster

3.7 du/ac $205,000 Superior – Date of Sale, Density
Inferior - Condition
8 Arboretum,
Fontana 12 / 21
Triplex up to
6,000 sf / 4
du/ac
$274,000 Superior – Date of Sale
Inferior – Number of Lots & Condition
9 Fontana 12 / 21 Small Lot /

10.3 du/ac $285,000 Superior – Date of Sale
Inferior – Freeway Frontage
10 Fontana 9 / 21
Attach to
10,000 sf /
N/A
$285,000 Superior – Lot size & Density
Inferior – Number of Lots & Condition

As discussed under the Inland Empire County Housing Market section earlier within this report the Inland Empire real estate market rose significantly between January 2020 and June 2022, softened in mid-2022 and appears to have found its bottom and stabilized in mid-2023. Median home pricing rose approximately fifty percent between January 2020 and June 2022, however a decrease was seen for about a year, with pricing appearing to rise, once again more recently in 2023 (according to the California Association of Realtor’s). The increases for ex isting single-family homes in San Bernardino were 16.5 percent in 2020; 1 7.9 percent in 2021, 8.8 percent the first six months of 2022, a 9.5 percent decline until the end of 2022 and an approximate 4.0 percent increase since then. 608
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While the new home price fluctuations do affect the quality of the home (higher finishes with higher prices), most of the price fluctuations fall to the land value.

The above market data depicts a wide range of overall finished lot/pad price range from $165,000 to $315,000 with the low end being for a new product type consisting of a home with an ADU on the same lot (based on two units per lot) and the high end being based on only the single home on the lot. The remainder of the market data ranges from $185,000 to $285,000. The market data that sold based on a finished lot under $200,000 relates to unimproved lands (Data No. 3), a significantly higher density (Data No. 4) and an inferior location (Data No. 6). While the estimated costs of the improvements to get to a finished lot are included in the finished lot price, raw land also includes risk of development and the time it takes to process entitlements and plans on the site. The higher density product (Data No. 5) includes all attached units, while the subject lots are all detached, which is considered significantly superior. Data No. 6 is located in Rialto with a median home price of $550,000 while Fontana has a median home price of $615,000. The subject was purchased in June 2021 based on a finished lot value estimate of approximately $221,000, however this was prior to significant appreciation in the marketplace. From June 2021 through June 2022 , land transactions became more frequent as homes were selling at increased rates due to the low interest rates and work from home factor; thus builders, at times, paid a premium for the land. In the past year , land sale closings have become sparse as new home prices have fallen with no new closings in the subject market since October of 2022. New homebuilders had purchased land based on the higher new home sales rates and now that sales have slowed significantly, they are bui lding out the land purchased over the past year or two much slower than originally anticipated.

Our search of the subject area resulted in two escrows for similar density projects in Fontana which were cancelled in early 2023, however one has recently gone back under contract. These were located at the northeast and northwest corner of Citrus and Summit Avenues in Fontana.

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Based on the market data, we have concluded that the subject lots/pads have a blended finished price of $ 230,000. There are 11 homes under construction (under 95 percent complete), all of which are owned by TriPointe. In addition, there are 94 finished lots/pads, 16 of which are owned by TriPointe and 78 of which are owned by Resmark. Based on the above and considering the remaining costs as discussed in the Property Description section, the land value is calculated as follows:

TriPointe Ownership of Lots/Pads:
27 Lots/Pads x $230,000 $ 6,210,000
Less: Remaining Costs ($36,859.07 x 27) ( 995,195) Current Value of 27 Lots/Pads $ 5,214,805
Resmark Ownership:
78 Lots/Pads x $230,000 $17,940,000
Less: Remaining Costs ($36,859.07 x 78) (2,875,007) Current Value of 78 Lots/Pads $15,064,993

Retail House Valuation – Aurora Park
Within Aurora Park, there are 72 individually owned homes and 16 homes over 95 percent complete owned by TriPointe. The builder -owned homes over 95 percent complete include nine production homes and seven model homes.

Due to the single ownership of multiple houses ( 16 homes) by the builder within the subject property, a Discounted Cash Flow (“DCF”) analysis is needed in order to arrive at a bulk value for the homes within each neighborhood. First, a retail value for each plan within Aurora Park will be concluded followed by a DCF for the builder owned homes which will take into account the absorption time to sell off the homes, the costs associated with selling off the homes and any remaining costs owed by the builder, if any. The resulting revenue will be discounted using an appropriate rate to determine the builder - owned bulk value for the builder -owned homes. The DCF builder -owned final value will be followed by a reporting of the concluded values for the individually owned homes within each neighborhood using the concluded base retail value for each plan with a separate check of the analysis utilizing a mass appraisal technique based on actual sales prices of the homes.
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Below is a summary of the floor plans within Aurora Park , with both the Sienna and Goldenrod product lines. A listing of the improved residential comparable properties is located in the Addenda of this report. All new home comparables are located within the city of Fontana, which currently houses a multitude of actively selling new home communities.

Our search of the subject property and the local Multiple Listing Service (MLS) has resulted in no resales or and one current resale listing within Sienna and Goldenrod at Aurora Park. It should be noted that some architectural changes caused floorplan square footage to alter slightly in homes built after Phase 6, due to value engineering, per TriPointe. However, all of the homes that are 95 percent complete fall into the marketed square footages seen on the builder’s website and brochure (built before the value engineering architectural changes). In our analysis, we will use the brochure square footage which appears to be the most widely used and applies to the existing homes over 95 percent complete. The floorplans are detailed below.

The most appropriate new home comparable data for Sienna at Aurora Park Plan 1 are shown as follows.

Aurora Park by TriPointe Homes

Plan

Bed/Bath
Floors/
Parking Sq. Ft. Ind.

Owned
Bldr.

Owned
Sienna at Aurora Park (Alley Load)
1 3 / 2.5 2 / 2 1,879 12 4*
2 3 + Den / 2.5 2 / 3 1,997 12 4*
3 4 + Loft / 3 2 / 3 2,264 11 4*
Sienna Subtotals: 35 12
Goldenrod at Aurora Park (Cluster)
1 3 + Den / 2.5 2 / 2 2,006 13 1*
2 4 + Loft / 3 2 / 2 2,292-2,301 14 1*
3 5 + Loft / 4 2 / 3 2,743 10 2*
Goldenrod Subtotals: 37 4
Aurora Park Total: 72 16
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Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 1 3 / 2.5 2 / 2 1,879 --
1 2 3 / 2.5 2 / 3 1,997 $296.44
3 1 3 / 2.5 2 / 2 1,860 $312.36
4 3 3 / 2.5 2 / 2 1,710 $312.86
4 4 4 / 3 2 / 2 1,950 $303.07
5 1 3 / 3 2 / 2 1,724 $321.64
5 2 3 / 2.5 2 / 2 1,961 $285.51
6 2 3 / 2.5 2 / 2 1,832 $293.28
7 1 3 / 2.5 2 / 2 1,822 $313.69
7 2 3 / 2.5 2 / 2 1,932 $297.58
9 2 3 / 2.5 2 / 2 1,761 $322.48
9 3 4 / 2.5 2 / 2 1,969 $297.40

The comparable communities are all located in Fontana. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, school districts, lot size, master plan amenities, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $285.51 to $322.48 per square foot, with generally the larger homes at the lower end of the range and the smaller homes at the higher end of the range. This is typical due to the economies of scale obtained during construction of the homes. Aurora Park’s Sienna Plan 1 has a current base asking price of $301.76 per square foot. There have been 12 closings of Sienna Plan 1 with sales prices ranging from $281.77 to $381.18 per square foot. There are five current escrows of Sienna Plan 1 with a sales price range of $279.70 to $319.88 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home, however, are a cost of selling the home. It has been concluded that Sienna Plan 1 has a base current market value of $278.00 per square foot. This calculates as follows:

1,879 sf x $278.00 = $522,362

The most appropriate new home comparable data for Sienna at Aurora Park Plan 2 are shown as follows.

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Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 2 3 / 2.5 2 / 3 1,997 --
1 1 3 / 2.5 2 / 2 1,879 $301.76
2 1 3 / 2.5 2 / 2 2,006 $327.52
3 2 3 / 2.5 2 / 3 1,930 $309.32
3 3 4 / 3 2 / 3 2,065 $299.75
4 4 4 / 3 2 / 2 1,950 $303.07
5 3 3 / 2.5 2 / 2 1,987 $291.31
5 4 3 / 2.5 2 / 2 2,046 $287.71
6 3 3 / 2.5 2 / 2 2,007 $284.72
7 2 3 / 2.5 2 / 2 1,932 $297.58
9 3 4 / 2.5 2 / 2 1,969 $297.40
9 4 4 / 3 2 / 2 1,970 $300.50
11 1 3 / 2.5 2 / 2 2,099 $307.27

Aurora Park’s Sienna Plan 2 has a current base asking price of $296.44 per square foot.

There have been 12 closings of Sienna Plan 2 with sales prices ranging from $280.69 to $356.23 per square foot. There are four current escrows of Sienna Plan 2 with a sales price range of $282.48 to $309.68 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the home at this time, however, are a cost of selling the home at this time. There is currently one Sienna Plan 2 on the resale market with an asking price of $375.56 per square foot.

The home has been on the multiple listing service for 78 days with no offers to date. It has been concluded that Sienna Plan 2 has a base current market value of $280.00 per square foot. This calculates as follows:

1,997 sf x $280.00 = $559,160

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The most appropriate new home comparable data for Sienna at Aurora Park Plan 3 are shown as follows.

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 3 4 / 3 2 / 3 2,264 --
2 2 4 / 3 2 / 2 2,292 $294.50
3 3 4 / 3 2 / 3 2,065 $299.75
7 3 3 / 2.5 2 / 2 2,207 $274.13
8 1 3 / 2.5 2 / 2 2,213 $282.28
8 2 3 / 2.5 2 / 2 2,358 $270.80
10 1 4 / 3 2 / 2 2,449 $290.47
11 1 3 / 2.5 2 / 2 2,099 $307.27
11 2 4 / 3 2 / 2 2,136 $310.77
11 3 4 / 3 2 / 2 2,311 $298.99

The comparable communities are all located in Fontana. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, school districts, lot size, master plan amenities, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $270.80 to $310.77 per square foot, with generally the larger homes at the lower end of the range and the smaller homes at the higher end of the range. This is typical due to the economies of scale obtained during construction of the homes. Aurora Park’s Sienna Plan 3 has a current base asking price of $274.73 per square foot. There have been 11 closings of Sienna Plan 3 with sales prices ranging from $277.73 to $337.44 per square foot. There are five current escrows of Sienna Plan 3 with a sales price range of $255.62 to $291.03 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price at this time however, are a cost of selling the home at this time . It has been concluded that Sienna Plan 3 has a base current market value of $253.00 per square foot. This calculates as follows:

2,264 sf x $253.00 = $572,792

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The most appropriate new home comparable data for Goldenrod at Aurora Park Plan 1 are shown as follows.

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 1 3 / 2.5 2 / 2 2,006 --
1 2 3 / 2.5 2 / 3 1,997 $296.44
3 3 4 / 3 2 / 3 2,065 $299.75
5 3 3 / 2.5 2 / 2 1,987 $291.31
5 4 3 / 2.5 2 / 2 2,046 $287.71
6 3 3 / 2.5 2 / 2 2,007 $284.72
9 3 4 / 2.5 2 / 2 1,969 $297.40
9 4 4 / 3 2 / 2 1,970 $300.50
11 1 3 / 2.5 2 / 2 2,099 $307.27

The comparable communities are all located in Fontana. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, school districts, lot size, master plan amenities, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $284.72 to $307.27 per square foot, with generally the larger homes at the lower end of the range and the smaller homes at the higher end of the range. This is typical due to the economies of scale obtained during construction of the homes. Aurora Park’s Goldenrod Plan 1 has a current base asking price of $327.52 per square foot. There have been 13 closings of Goldenrod Plan 1 with sales prices ranging from $313.51 to $382.59 per square foot. There is one current escrow of Goldenrod Plan 1 with a sales price of $342.55 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price for the home, however, are a cost of selling the home at this time . It has been concluded that Goldenrod Plan 1 has a base current market value of $3 05.00 per square foot. This calculates as follows:
2,006 sf x $305.00 = $611,830

The most appropriate new home comparable data for Goldenrod at Aurora Park Plan 2 are shown as follows.

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Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 2 4 / 3 2 / 2 2,292 --
1 3 4 / 3 2 / 3 2,264 $274.73
7 3 3 / 2.5 2 / 2 2,207 $274.13
8 1 3 / 2.5 2 / 2 2,213 $282.28
8 2 3 / 2.5 2 / 2 2,358 $270.80
8 3 4 / 2.5 2 / 2 2,472 $263.09
10 1 4 / 3 2 / 2 2,449 $290.47
11 2 4 / 3 2 / 2 2,136 $310.77
11 3 4 / 3 2 / 2 2,311 $298.99

The comparable communities are all located in Fontana. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, school districts, lot size, master plan amenities, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $263.09 to $310.77 per square foot, with generally the larger homes at the lower end of the range and the smaller homes at the higher end of the range. This is typical due to the economies of scale obtained during construction of the homes. Aurora Park’s Goldenrod Plan 2 has a current base asking price of $294.50 per square foot. It's important to note that Goldenrod Plan 2 is being marketed with a square footage range of 2,292 to 2,301 square feet, with a slight variation depending upon exterior elevation and front door orientation. We have used the smaller size to represent the base Plan 2 footage; thus the 2,292 square feet is valued here. There have been 14 closings of Goldenrod Plan 2 with sales prices ranging from $300.01 to $358.60 per square foot. There are two current escrows of Goldenrod Plan 2 with a sales price range of $292.39 to $298.87 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the homes, however, are a cost to the seller. It has been concluded that Goldenrod Plan 2 has a base current market value of $285.00 per square foot. This calculates as follows:

2,292 sf x $285.00 = $653,220

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The most appropriate new home comparable data for Goldenrod at Aurora Park Plan 3 are shown as follows.

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 3 5 / 4 2 / 3 2,743 --
1 3 4 / 3 2 / 3 2,264 $274.73
2 2 4 / 3 2 / 2 2,292 $294.50
8 3 4 / 2.5 2 / 2 2,472 $263.09
10 1 4 / 3 2 / 2 2,449 $290.47
10 2 4 / 3 2 / 2 2,666 $273.70
10 3 4 / 3 2 / 2 2,877 $261.37
11 4 4 / 3 2 / 2 2,552 $278.27
12 1 4 / 3.5 2 / 2 2,747 $298.17
12 2 4 / 4 2 / 2 2,961 $289.46

Aurora Park’s Goldenrod Plan 3 has a current base asking price of $270.51 per square foot.

There have been 10 closings of Goldenrod Plan 3 with sales prices ranging from $272.61 to $310.63 per square foot. There are two current escrows of Goldenrod Plan 3 with a sales price range of $281.48 to $282.67 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder, while the concluded value relates to a base price for the plan including closing cost concessions. Closing cost concessions do not show up in the reported sales price of the homes, however, are a cost to the seller. It has been concluded that Goldenrod Plan 3 has a base current market value of $270.00 per square foot. This calculates as follows:

2,743 sf x $270.00 = $740,610

Builder Owned Retail Value – Aurora Park

Within the subject property, there are 1 6 TriPointe-owned houses over 95 percent complete, six of which are decorated models. Per interviews with builders, upgrades and landscape/hardscape of up to $100,000 are installed in the model homes, however, the 617
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builders generally consider this a marketing cost and do not anticipate recovering this investment on a dollar -for-dollar basis. Based on historical information, home sizes and fixtures, actual model home sales within the subject area and the current real estate market, a consideration of a $50,000 premium has been included with each of the model homes. As concluded above, the retail base value conclusions for the builder -owned homes within Aurora Park are calculated as follows:

Sienna Plan 1 (4 x $522,362) $ 2,089,448
Sienna Plan 2 (4 x $559,160) 2,236,640
Sienna Plan 3 (4 x $572,792) 2,291,168
Goldenrod Plan 1 (1 x $611,830) 611,830
Goldenrod Plan 2 (1 x $653,220) 653,220
Goldenrod Plan 3 (2 x $740,610) 1,481,220
Model Upgrades (6 x $50,000) 300,000
Total Retail Value $ 9,663,526

Absorption Period
In order to arrive at an absorption period for the 16 builder-owned homes, the absorption rate for the subject neighborhood along with the surrounding developments has been reviewed. Aurora Park grand opened in December 2021 and consists of 193 homes. There have been 91 sales since December 2021 suggesting an average absorption of 4.8 homes per month across the two product lines, which is considered to be a bit slow for the subject area with the subject’s price points. When looking at each product line individually, Sienna have averaged a sales pace of 2.6 sales per month while Goldenrod has averaged a sales pace of 2.2 sales per month. It should be noted that there was some value engineering which created some slight changes in square footage for the future homes which has taken time to go through the approval process and delayed construction. In addition, the rainy season of 2022/23 delayed construction. Taking into consideration the product, concluded sales prices and current escrows, along with the current unstable interest rates, it has been concluded that the 16 builder-owned homes will be absorbed within a six-month period at the concluded values.

Remaining Costs
As discussed under the remaining costs section earlier within this report, there are $36,859.07 per lot in remaining land development costs associated with the builder - 618
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owned homes, which equates to a total of $ 589,745 for the subject 16 homes. It is an assumption of this analysis that the remaining costs will be spread evenly over the six - month absorption time period.

Expenses
In determining an expense rate, several builders in the subject area have been interviewed as to their expenses on selling existing inventory. Expenses include marketing and general administrative costs. These costs typically range from six to ten percent depending on varying factors such as absorption period, intensity of marketing, etc. Due to the volatile market, we are considering e ight percent for marketing expenses and two percent for general and administrative costs for a total of ten percent in expenses for this analysis.

Profit
Several interviews with merchant builders in the area were conducted in order to determine an appropriate profit percentage for the subject properties. In the early 2000s, developers typically attempted to achieve a 10 to 12 percent profit based on gross s ales proceeds. During the early great recession, this range was lowered considerably to six to 10 percent with some builders drastically lowering their profit potential in order to maintain their work force. A ten percent profit is considered appropriate i n the analysis for this project.

Discount Rate
In selecting a discount rate, the following was completed:

1. Interviews with merchant builders in the San Bernardino area

2. Review of current market conditions including current market rates as well as yields reflected in other markets (i.e., municipal bonds, corporate bonds, etc.)

3. The quality, construction, historical sales and product on the subject property

The homes within Aurora Park began selling in December 2021 with the product being well received in the marketplace with a 4.8 sales per month average across the two product lines.

While this sales pace is a bit below the area average, it’s important to note that construction and weather delays have caused large gaps between phase releases, so there have been times when there were no homes available to sell. Based on the sales rate within both 619
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communities in the subject project, the competition, the product and location, and current market conditions, a 10 percent discount rate is considered appropriate for this analysis.

Discounted Cash Flow Summary
The discounted revenue (see DCF Analyses in addenda) for the builder -owned homes within Aurora Park is $6,937,338.

Aurora Park – TriPointe Homes Ownership

27 Lots/Pads owned by TriPointe $ 5,214,805
16 Houses (including 7 models) TriPointe-owned 6,937,338 Total TriPointe Ownership $12,152,143

Aurora Park – Resmark Ownership

78 Lots/Pads owned by Resmark $ 15,064,993

Individual Owners Value Conclusion – Aurora Park
There are 72 individually owned homes within the subject property. Based on the concluded value for each plan, the individually owned homes within the subject property have a minimum market value of:

Sienna Plan 1 (12 x $522,362) $ 6,268,344
Sienna Plan 2 (12 x $559,160) 6,709,920
Sienna Plan 3 (11 x $572,792) 6,300,712
Goldenrod Plan 1 (13 x $611,830) 7,953,790
Goldenrod Plan 2 (14 x $653,220) 9,145,080
Goldenrod Plan 3 (10 x $740,610) 7,406,100
Total Individual Owned $43,783,946

In an additional review, we have reviewed the original builder sales prices for the homes within the subject property. Closings for the 72 homes occurred between June 16, 2022, and July 14, 2023. The reported closing prices by the builder for the 72 individually owned homes total $5 1,177,361, which is 16.9 percent higher than the concluded value. The builder’s reported prices include premiums, upgrades and purchased options as well as took into consideration the concessions given by the builder , which would typically be higher than the base pricing. However, in the past year , public builders have increased 620
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concessions with rate buy -downs occurring which have totaled up to $100,000 in concessions with an average of over $13,000 per sale within Aurora Park. These closing cost concessions are not included in the sales prices of the homes. The current market and most recent sales not only reflect higher incentives, but also include lower pricing.

Opening base prices in December 2021 ranged from $ 648,000 to $692,000 for Sienna, while Goldenrod’s opening base prices were from $674,000 to $752,000. Current base prices are from $ 567,000 to $622,000 for Sienna and from $ 657,000 to $742,000 for Goldenrod. This shows that prices have decreased and demonstrates the adjusting of prices to meet the market. The decreasing market and the increasing incentives have been taken into account in our analysis . The above valuation is for the minimum market value, as it takes into consideration the base plan price only and does not take into account any options, premiums or upgrades which were purchased by the buyers ; however, it does take concessions into consideration. It is our conclusion that the original builder sales prices further substantiate the concluded minimum market value for the individually owned homes

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APPRAISAL REPORT SUMMARY

The appraisal assignment was to value the subject property within Fontana CFD No. 100 which consists of 193 proposed residential units. The 193 units are known as Aurora Park, being marketed, and sold by TriPointe Homes, and are located in the northwestern portion of the City of Fontana . The subject includes two product lines: Sienna, 82 all ey load detached condominiums; and Goldenrod, 111 cluster detached condominiums. As of July 17, 2023, individuals have purchased and closed on 72 of the total 193 proposed houses, with an additional 19 homes in escrow which are due to close upon completion. The community has had a slower than average sales pace, in part due to the construction and weather delays causing large breaks between phase releases. All structures appear to be in excellent condition with no visible depreciation. We have reviewed builder sales and reviewed the local MLS for current listings or resales and found one current listing which is included in the report.

The subject properties were valued utilizing the Sales Comparison Approach to value, a Discounted Cash Flow Analysis, and a Mass Appraisal Technique for the individually owned homes. A minimum value was determined by concluding at a base value for the individually owned homes. The valuation took into account the improvements/benefits to be funded by the special tax Fontana CFD No. 100 bond proceeds along with the Fontana CFD No. 100 special tax lien. The concluded aggregate value for the subject properties, subject to their respective special tax lien, is:

Aurora Park:

Resmark Ownership (78 pads) $ 15,064,993
TriPointe Homes Ownership (27 lots/pads & 16 houses) $ 12,152,143 Individual Owners (72 houses) $ 43,783,946
Total Aggregate Value CFD No. 100 $ 71,001,082

The above values are stated as of said date of value and subject to the attached Assumptions and Limiting Conditions and Appraiser’s Certification. 622
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APPRAISER’S CERTIFICATION

The appraiser certifies that to the best of his 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 my personal, unbiased, professional analyses, opinions and conclusions.

3. The appraiser has no present or prospective interest in the property that is the subject of this report, and no personal interest or bias with respect to the parties involved.

4. The appraiser’s compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result or the occurrence of a subsequent event.

5. This appraisal was not based on a requested minimum valuation, a specific valuation or the approval of a loan.

6. The analyses, opinions and conclusions were developed, and this report was prepared, in conformity with the Uniform Standards of Professional Appraisal Practice.

7. Kitty Siino has made a personal inspection of the property that is the subject of this report.

8. Kitty Siino has performed any appraisal services on the subject property in the past three years. In January 2023 an appraisal was completed with a date of value of January 3, 2023. Due to a time delay, an update was needed which is this report.

9. No other appraisers have provided significant professional assistance to the persons signing this report.

10. The reported analyses, opinions and conclusions were developed, and this report was prepared, in conformity with the requirements of the Appraisal Institute’s Code of Professional Ethics and Standards of Professional Appraisal Practice, which include the Uniform Standards of Professional Appraisal Practice.

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

12. As of the date of this report, Kitty Siino has completed the requirements of the continuing education program of the Appraisal Institute.

Kitty S. Siino, MAI
State Certified General
Real Estate Appraiser (AG004793)
623

ADDENDA

624

FONTANA CFD NO. 100

BOUNDARY MAP

625

626

TRACT MAP No. 20229
& CONDOMIUM PLANS

627

628

629

630

DISCOUNTED CASH FLOW ANALYSIS

631

Aurora Park Builder-Owned Houses Discounted Cash Flow Analysis

MONTH MONTH 1 MONTH 2 MONTH 3 MONTH 4 MONTH 5 MONTH 6 TOTAL

INCOME:

Retail Sales $1,610,588 $1,610,588 $1,610,588 $1,610,588 $1,610,588 $1,610,588 $9,663,526

TOTAL INCOME $1,610,588 $1,610,588 $1,610,588 $1,610,588 $1,610,588 $1,610,588 $9,663,526

EXPENSES:

Remaining Costs ($98,291) ($98,291) ($98,291) ($98,291) ($98,291) ($98,290) ($589,745) Marketing & Carrying Expenses ($161,059) ($161,059) ($161,059) ($161,059) ($161,059) ($161,059) ($966,353) Profit ($161,059) ($161,059) ($161,059) ($161,059) ($161,059) ($161,059) ($966,353)

TOTAL EXPENSES ($420,409) ($420,409) ($420,409) ($420,409) ($420,409) ($420,408) ($2,522,450)

NET CASH FLOW $1,190,179 $1,190,179 $1,190,179 $1,190,179 $1,190,179 $1,190,180 $7,141,076 Discount Factor 0.9917 0.9835 0.9754 0.9673 0.9594 0.9514

DISCOUNTED CASH FLOW $1,180,343 $1,170,588 $1,160,914 $1,151,319 $1,141,804 $1,132,369

CUMULATIVE DISCOUNTED $1,180,343 $2,350,931 $3,511,845 $4,663,164 $5,804,969 $6,937,338

CASH FLOW
632

FINISHED LOT LAND SALES MAP
& SUMMARY CHART
633

FINISHED LOT LAND SALES MAP

634

FINISHED LOT LAND SALES SUMMARY CHART

Data
No. Location / APN / Buyer / Seller Sales
Date
#
Lots Lot Size Sales Price /
Price per Lot
Est.

Finished
Lot Price
Comments
1 Glen at Fontana, N/S Chase Road,
W/O Citrus Avenue, Fontana / 0228-
151-17, 18 & 19 / RC Homes / Masjedi
Family
Oct- 22 46
(92)

6.7 du/ac
(13.5 du/ac)

$3,525,000 /
$76,630
($38,315)
$315,000
($165,000)
Product is for a house on small lot with a
separate ADU which creates the 92 units
rather than 46. The information is reported for
both first, just the main houses and secondly
for both the main house and the ADU.
2 Zinnia at the Preserve, NE/W of Pine
Avenue & Meadowhouse Avenue,
Chino / 1057-041-13, 1057-061-12 /
Beazer Homes / Lewis Group of
Companies
Jun-22 149 14 du/ac

$19,952,500 /
$133,909 $205,000
Closed in unimproved condition with an
approved tentative tract map. This project
consists of 2/3-story attached townhomes.
3 Bergamont, NW of Texas Street &
Domestic Avenue, Redlands / 0167-
031-02 / Meritage Homes / Various
Investors (Assemblage)
Apr-22 –
Jun-22 317
7,200
3,500
10 du/ac
$16,657,000 / $193,000
(blended)
Closed in unimproved condition with an
approved Specific Plan, Environmental Impact
Report, and Tentative Tract Map. It consists of
three planning areas:
- PA 1: 53 lots, SFD, 7,200 sf
- PA 2: 144 lots, SFD, 3,500 sf
- PA 3: 120 lots, Motorcourt Cluster, 10 du/ac
$52,546
4 2121 South Garey, SWC South Garey
Ave and Rio Rancho Rd, Pomona /
8344-033-902+ / Century Communities
/ Pomona Unified School District
Apr-22 156 17 du/ac

$13,400,000 /
$85,897
***
$185,897
Estimate
Another builder was involved in the transaction
however public record shows it going straight
from school district to Century
-41 two-story detached homes
-115 three-story townhomes
F/L amount estimate based on historical costs
5 Crestwood at Arboleda, SE East
Grove Street and Hollander Street,
Pomona / 8367-011-007 / Crestwood
Communities / Arboleda 38 LLC
Apr-22 38 10 du/ac
$4,695,000 /
$123,553 ***
$238,553
Estimate
Two story all detached homes, continuation of
Crestwood's previous sold-out Pomona
community (Crestwood at Valencia). F/L
amount estimated based on historical costs
6 The Depot, SWC Bonnie View Dr and
Willow Avenue, Rialto / 0131-021-36,
37 and 38 / Century Communities /
Koba Properties
Jan-22 56 12 du/ac

$3,290,000 /
$58,750 $188,000 Closed in an unimproved condition with an approved TTM
7 Appaloosa Springs, SW of Limonite
Avenue & Clay Street, Jurupa Valley /
163-400-001, -052 / DR Horton /
Inland Harbor
Dec-21 254 3,600 $22,200,000 / $205,000
Closed in unimproved condition with an
approved tentative tract map. Single product
line SFD with lots ranging 3,600-5,000 sf $87,402
635

8 Gardens at Arboretum, NWC of Sierra
Avenue & Casa Grande Avenue,
Fontana / 0239-131-45 / Lennar /
Lewis Group of Companies
Dec-21 526
4 du/ac
(blended)
Triplex up to
6,000 sf

$91,935,447 /
$174,782

$274,000
(blended)
Gardens at Arboretum was closed in
unimproved condition with an approved
tentative tract map. It consists of six (6)
product lines:
• Triplex, 69 Units
• SFD (2,200 sf), 99 Lots
• SFD (2,600 sf), 109 Lots
• SFD (4,000 sf), 97 Lots
• SFD (4,990 sf), 88 Lots
• SFD (6,000 sf), 64 Lots
9 Highland, NW of Beech Avenue &
South Highland Avenue, Fontana /
0228-021-09 / Richmond American
Homes / Stratham Group
Dec-21 107
10 du/ac
(blended)
Small
Detached
$18,691,821 / $285,000
(blended)
Highland was closed in unimproved condition
with final engineering in process. It consists of
two (2) product lines:
• Alley-Load, 46 Lots
• Motorcourt Cluster, 61 Lots
$174,690
10 Monarch Hills (Narra Hills), NW of
Duncan Canyon Road & Interstate 15,
Fontana / 0226-075-18 / Landsea
Homes / Richland Communities
Sept-21 489 Varies
$42,736,000 /
$285,000*
*Represents blended price for townhomes,
cluster, 5,000 sf lots and 10,000 sf lots. Sold in
unimproved condition. Portion is hillside
allowing for views.
-PA1, 154 lots, 10,000 sf ($360,000 FLV)
- PA 2, 79 lots, 5,000 sf ($295,000 FLV)
-PA 3, 127 lots, cluster product ($245,000
FLV)
-PA 4, 129 units, townhomes ($175,000 FLV)
$87,395*

636

IMPROVED RESIDENTIAL

SALES MAP & SUMMARY CHART

637

IMPROVED RESIDENTIAL SALES SUMMARY MAP

638

IMPROVED RESIDENTIAL SALES SUMMARY CHART

Data
No.

Project Name
Location/Developer Plan Room
Count
Floors/
Parking
Size
(SF)
Lot Size /
Absorption
Base
Sales
Price
Price/SF
1 Sienna at Aurora Park, Victoria Street and Kestral
Drive, Fontana / TRI Pointe Homes
1 3 / 2.5 2 / 2 1,879 2,000 sf lots $567,000 $301.76
2 3 / 2.5 2 / 3 1,997 (Alley-load) $592,000 $296.44
3 4 / 3 2 / 3 2,264 2.6 sales/mo $622,000 $274.73
2 Goldenrod at Aurora Park, Victoria Street and Kestral Drive, Fontana / TRI Pointe Homes
1 3 / 2.5 2 / 2 2,006 2,000 sf lots $657,000 $327.52
2 4 / 3 2 / 2 2,292 (Det. Cluster) $675,000 $294.50
3 5 / 4 2 / 3 2,743 2.2 sales/mo $742,000 $270.51
3 Cascade at Highland Park, South Highland Avenue
and San Servaine Road, Fontana / Richmond
American
1 3 / 2.5 2 / 2 1,860 5,000 sf lot $580,990 $312.36
2 3 / 2.5 2 / 3 1,930 2.1 sales/mo $596,990 $309.32
3 4 / 3 2 / 3 2,065 $618,990 $299.75
4 Talise at Highland Park, South Highland Avenue and
San Servaine Road, Fontana / Richmond American
1 3 / 2.5 2 / 2 1,410 $514,990 $365.24
2 3 / 2.5 2 / 2 1,650 5,000 sf lots $547,990 $332.12
3 3 / 2.5 2 / 2 1,710 3.4 sales/mo $534,990 $312.86
4 4 / 3 2 / 2 1,950 $590,990 $303.07
5 Chateau at The Retreat, South Highland Avenue and
Beech Avenue, Fontana / Lennar
1 3 / 3 2 / 2 1,724 $554,505 $321.64
2 3 / 2.5 2 / 2 1,961 3,000 sf lots $559,885 $285.51
3 3 / 2.5 2 / 2 1,987 4.5 sales/mo $578,840 $291.31
4 3 / 2.5 2 / 2 2,046 $588,650 $287.71
6 Rivello at Monterado, Citrus Avenue and Duncan
Canyon Road, Fontana / Lennar
1 3 / 2.5 2 / 2 1,795 3,000 sf lots $564,350 $314.40
2 3 / 2.5 2 / 2 1,832 (Alley-load) $537,290 $293.28
3 3 / 2.5 2 / 2 2,007 4.8 sales/mo $571,440 $284.72
7 Salerno at Monterado, Citrus Avenue and Duncan
Canyon Road, Fontana / Lennar
1 3 / 2.5 2 / 2 1,822 3,000 sf lots $571,545 $313.69
2 3 / 2.5 2 / 2 1,932 (Det. Cluster) $574,915 $297.58 3 3 / 2.5 2 / 2 2,207 3.6 sales/mo $605,015 $274.13
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8 Acacia at Arboretum, Sierra Avenue and Casa
Grande Avenue, Fontana / Lennar
1 3 / 2.5 2 / 2 2,213 2,500 sf lots $624,680 $282.28
2 3 / 2.5 2 / 2 2,358 3.8 sales/mo $638,555 $270.80
3 4 / 2.5 2 / 2 2,472 $650,365 $263.09
9 Blue Sage at Arboretum, Sierra Avenue and Casa
Grande Avenue, Fontana / Lennar
1 3 / 2.5 2 / 2 1,651 2,000 sf lots $559,290 $338.76
2 3 / 2.5 2 / 2 1,761 (Zero Lot Line) $567,890 $322.48
3 4 / 2.5 2 / 2 1,969 4.0 sales/mo $585,590 $297.40
4 4 / 3 2 / 2 1,970 $591,990 $300.50
10 Silverberry at Arboretum, Sierra Avenue and Casa
Grande Avenue, Fontana / Lennar
1 4 / 3 2 / 2 2,449 4,000 sf lots $711,355 $290.47
2 4 / 3 2 / 2 2,666 4.7 sales/mo $729,680 $273.70
3 4 / 3 2 / 2 2,877 $751,950 $261.37
11 Strata at Narra Hills, Lytle Creek Road and Duncan
Canyon Road, Fontana / Landsea
1 3 / 2.5 2 / 2 2,099 2,700 sf lots $644,967 $307.27
2 4 / 3 2 / 2 2,136 (Det. Cluster) $663,803 $310.77
3 4 / 3 2 / 2 2,311 10.3 sales/mo $690,967 $298.99
4 4 / 3 2 / 2 2,552 $710,154 $278.27
12 Wildstar at Narra Hills, Lytle Creek Road and Duncan Canyon Road, Fontana / Landsea
1 4 / 3.5 2 / 2 2,747 5,000 sf lots $819,073 $298.17
2 4 / 4 2 / 2 2,961 8.5 sales/mo $857,105 $289.46
3 5 / 4.5 2 / 3 3,079 $840,744 $273.06

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APPRAISER’S QUALIFICATIONS

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QUALIFICATIONS OF KITTY S. SIINO, MAI

Education

Bachelor of Arts in Business Administration, Financial Investments, California State University, Long Beach, California (1980)

Post-Graduate Study, Real Estate Development, University of California, Irvine, California

Appraisal Institute Classes: Uniform Standards of Professional Appraisal Practice, A & B; Appraisal Principles; Appraisal Procedures; Basic Income Capitalization; Advanced Income Capitalization; Narrative Report Writing; Advanced Applications, Case Studies.

Successfully completed all classes in addition to successfully completing the writing of a Demonstration Report and taking the Comprehensive Exam. Became a Member of the Appraisal Institute in December 1996. Have completed over 100 hours of continuing education through the Appraisal Institute every five years.

Employment

1988 - Present:

Self-Employed Real Estate Appraiser. Duties include the appraisal of various types of properties such as commercial, retail, industrial and vacant land. More complex assignments include easements, right-of-ways and special assessment districts. From 1996 to present, specialized in special assessment districts and community facilities districts appraisals for public entities, including Jurupa Community Services District, Corona Norco Unified School District, City of Corona, City of Chula Vista, City of Sa n Marcos and City of Moreno Valley.

1986-1988:

Project Manager of Development for Ferguson Partners, Irvine, California. Duties included land acquisitions; review of fee appraisals and valuations; analysis of proposed development; planning and design; and management of development, construction and lease-up. The types of properties developed were commercial and industrial. Duties ranged from raw, vacant site development through property management of recently developed projects.

1981 - 1986
Manager of Finance, Construction for Community Development Division, The Irvine Company, Irvine, California. Duties included originating and managing a newly formed division of finance to bridge between the accounting functions and project management functions. Worked with analysis and budgets for Community Development Division. Coordinated with cities in form ing new Assessment Districts and Community Facilities Districts to finance major infrastructure improvements.

Types of properties were apartments and single-family residential lots on a for sale basis to apartment and homebuilders.

1980 - 1981
Investment Counselor, Newport Equity Funds, Newport Beach, California. Duties included obtaining private financing for residential properties, working with appraisals of properties and analyzing the investments.

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Licenses
Real Estate Sales Person, State of California, 1980
Certified General Appraiser, State of California (#AG004793)

Organizations
MAI #11145 - The Appraisal Institute

Public Financing
CASTOFF Meetings, 2006, 2007, 2008, 2009, 2010, 2011, 2013, 2014, 2015, 2016, 2017, 2018, 2019 and 2022

Speaker, Mello- Roos & Special Assessment Financing, UCLA Extension Publi c Policy Program, February 2009 and March 2011
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Fontana City CouncilSeptember 26, 2023

Fontana City Council
September 26, 2023