Hesperia City Council
October 15, 2024

HESPERIA CITY COUNCIL

SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY

HOUSING AUTHORITY

COMMUNITY DEVELOPMENT COMMISSION

WATER DISTRICT
Meeting Agenda
Tuesday, October 15, 2024
Closed Session - 6:00 PM
Regular Meeting - 6:30PM
City Council Chambers
9700 Seventh Ave., Hesperia CA, 92345
City Clerk's Office: (760) 947-1007
City Council Members
Larry Bird, Mayor
Rebekah Swanson, Mayor Pro Tem
Brigit Bennington, Council Member
Cameron Gregg, Council Member
Allison Lee, Council Member
Rachel Molina, City Manager
Pam K. Lee, City Attorney
NOTE: In compliance with the Americans with Disability Act, if you need special assistance to participate in this meeting, please contact the City Clerk’s Office at (760) 947-1007 or (760) 947-1026. Notification 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility.

To leave a Public Comment by phone, call and leave a recorded message at (760) 947-1056 up to 5:30 pm on the day of the scheduled meeting. City Council meetings may be viewed live or after the event on the City’s website at www.cityofhesperia.us.

October 15, 2024City Council Meeting Agenda

REGULAR MEETING AGENDA

HESPERIA CITY COUNCIL

SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY

HESPERIA HOUSING AUTHORITY

HESPERIA COMMUNITY DEVELOPMENT COMMISSION

HESPERIA WATER DISTRICT
9700 7th Avenue, Council Chambers, Hesperia, CA 92345
As a courtesy, please silence your cell phones and other electronic devices while the meeting is in session. Thank you.

Prior to action of the Council, any member of the audience will have the opportunity to address the legislative body on any item listed on the agenda, including those on the Consent Calendar.

Individuals wishing to speak during General Public Comments or on a particular numbered item must submit a speaker slip to the City Clerk with the agenda item noted. Speaker slips should be turned in prior to the public comment portion of the agenda or before an agenda item is discussed. Comments will be limited to three minutes for General Public Comments, Consent Calendar items and New Business items. Comments are limited to five minutes for Public Hearing items.

In compliance with the Brown Act, the City Council may not discuss or take action on non-agenda items or engage in question and answer sessions with the public. The City Council may ask brief questions for clarification; provide a reference to staff or other resources for factual information and direct staff to add an item to a subsequent meeting.

CLOSED SESSION - 6:00 PM
Roll Call
Mayor Larry Bird
Mayor Pro Tem Rebekah Swanson
Council Member Brigit Bennington
Council Member Cameron Gregg
Council Member Allison Lee
Conference with Legal Counsel – Existing Litigation
Government Code Section 54956.9(d)1

1. General Liability Settlement: Billings, et al. v. City of Hesperia, et al. Claim No.

HS2042

2. County of San Bernardino v. City of Hesperia, San Bernardino Superior Court Case No. CIV SB 2209965
CALL TO ORDER - 6:30 PM
A. Invocation
B. Pledge of Allegiance to the Flag
C. Roll Call
Mayor Larry Bird

October 15, 2024City Council Meeting Agenda
Mayor Pro Tem Rebekah Swanson
Council Member Brigit Bennington
Council Member Cameron Gregg
Council Member Allison Lee
D. Agenda Revisions and Announcements by City Clerk
E. Closed Session Reports by City Attorney

ANNOUNCEMENTS/PRESENTATIONS

1. Presentation by Victor Valley Transit Authority on Route Changes GENERAL PUBLIC COMMENTS (For items and matters not listed on the agenda) Individuals wishing to speak during General Public Comments or on a particular numbered item are requested to submit a speaker slip to the City Clerk with the agenda item noted. Speaker slips should be turned in prior to the public comment portion of the joint agenda or before an agenda item is discussed. Comments will be limited to three minutes for General Public Comments, Consent Calendar items and New Business items. Comments are limited to five minutes for Public Hearing items.

In compliance with the Brown Act, the City Council may not discuss or take action on non-agenda items or engage in question and answer sessions with the public. The City Council may ask brief questions for clarification; provide a reference to staff or other resources for factual information and direct staff to add an item to a subsequent meeting.

JOINT CONSENT CALENDAR

1. Consideration of the Draft Minutes from the Regular Meeting held Tuesday, October 1, 2024.

Recommended Action:

It
is recommended that the City Council approve the Draft Minutes from the Regular Meeting held Tuesday, October 1, 2024.

Staff Person: Assistant City Clerk Erin Baum
Draft CC Min 2024-10-1Attachments:

2. Warrant Run Report (City - Successor Agency - Housing Authority - Community Development Commission - Water)]
Recommended Action:

It is recommended that the Council/Board ratify the warrant run and payroll report for the City, Successor Agency to the Hesperia Community Redevelopment Agency, Hesperia Housing Authority, Community Development Commission, and Water District.

Staff Person: Assistant City Manager Casey Brooksher

October 15, 2024City Council Meeting Agenda
SR Warrant Run 10-15-2024
Attachment 1 - Warrant Run
Attachments:

3. American Rescue Plan Act (ARPA) Grant Vehicle Procurement - (1) Combination Truck
Recommended Action:

It is recommended that the City Council and Board of Directors of the Hesperia Water District authorize the City Manager to enter into an agreement with Haaker Equipment Company for the purchase of one (1) 2025 Vactor Freightliner 2112 in the not-to-exceed amount of $711,716.

Staff Person: Director of Public Works/City Engineer Cassandra Sanchez SR Grant Vehicle Procurement - (1) Combination Truck 10-15-2024Attachments:

4. American Rescue Plan Act (ARPA) Grant Equipment Procurement - One Wheel Loader
Recommended Action:

It is recommended that the City Council and Board of Directors of the Hesperia Water District authorize the City Manager to enter into an agreement with Sonsray Machinery, LLC. for the purchase of one (1) 2024 Case 621G wheel loader in the not-to-exceed amount of $201,360.

Staff Person: Director of Public Works/City Engineer Cassandra Sanchez SR Grant Equipment Procurement - One Wheel Loader 10-15-2024Attachments:

5. American Rescue Plan Act (ARPA) Grant - Citywide Sidewalk Repair Recommended Action:

It
is recommended that the City Council authorize the City Manager to enter into an agreement with H L Hitchcock Construction to repair or replace sidewalks in seventeen (17) locations citywide in the amount of $109,190 and approve an additional 10% contingency of $10,919 for a not-to-exceed amount of $120,109.

Staff Person: Director of Public Works/City Engineer Cassandra Sanchez SR ARPA Grant - Citywide Sidewalk Repair 10-15-2024Attachments:

6. American Rescue Plan Act (ARPA) Grant Equipment Procurement - Sixteen Chlorinators
Recommended Action:

It is recommended that the City Council and Board of Directors of the Hesperia Water District authorize the City Manager to enter into an agreement with Doane and Hartwig Water Systems for the purchase of sixteen (16) Constant Chlor MC-4 chlorinators in the not-to-exceed amount of $260,939.

Staff Person: Director of Public Works/City Engineer Cassandra Sanchez SR Grant Equipment Procurement - Sixteen Chlorinators 10-15-2024 Attachment 1 - Bid Comparison
Attachments:

October 15, 2024City Council Meeting Agenda

7. Public Works Asset Management Software (Cityworks)
Recommended Action:

It
is recommended that the City Council and Board of Directors of the Hesperia Water District (District) authorize the City Manager to enter into a two-year software license and maintenance agreement with Azteca Systems, Inc. in a not-to-exceed amount of $121,700.

Staff Person: Director of Public Works/City Engineer Cassandra Sanchez SR Public Works Asset Management Software (Cityworks) 10-15-2024Attachments:

8. Adopt Measure I Five Year Capital Project Needs Analysis for Fiscal Years 2025/26 through 2029/30
Recommended Action:

It
is recommended that the Mayor and Council Members adopt Resolution No. 2024-49 approving the Measure I Five-Year Capital Project Needs Analysis submittal to the San Bernardino County Transportation Authority (SBCTA) for Fiscal Years 2025/26 through 2029/30.

Staff Person: Director of Public Works/City Engineer Cassandra Sanchez SR Adopt Measure I Five Year Capital Project Needs Analysis 10-15-2024 Resolution 2024-49
Attachment 2 - Measure I CPNA Submittal for FY 25/26 - 29/30 Attachments:

PUBLIC HEARING
Individuals wishing to comment on public hearing items must submit a speaker slip to the City Clerk with the numbered agenda item noted. Speaker slips should be turned in prior to an agenda item being taken up.

Comments will be limited to five minutes for Public Hearing items.

WAIVE READING OF ORDINANCES
Approve the reading by title of all ordinances and declare that said titles which appear on the public agenda shall be determined to have been read by title and further reading waived.

9. Amendments to Chapter 5.50 of the Hesperia Municipal Code Related to Medical Cannabis Business Licenses
Recommended Action:

It is recommended that the City Council introduce and place on first reading Ordinance No. 2024-12 amending Chapter 5.50 of the Hesperia Municipal Code relating to medical cannabis business licenses.

Staff Person: City Attorney Pam K. Lee
SR Cannabis Business Licenses 10-15-2024
Ordinance 2024-12
Attachment 2 - Exhibit A
Attachments:

October 15, 2024City Council Meeting Agenda

NEW BUSINESS

10. Proposition 36 - Homelessness, Drug Addiction, and Theft Reduction Act Recommended Action:

It
is recommended that the City Council consider adopting Resolution No. 2024-53, supporting Proposition 36 - the Homelessness, Drug Addiction, and Theft Reduction Act.

Staff Person: Assistant to the City Manager Tammy Pelayes SR Homeless, Drug Addiction and Theft Reduction Act 10-15-2024 Resolution 2024-53
Attachment 2 - Initiative 23-0017 A1
Attachments:

11. City of Hesperia Community Facilities District 2005-1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Refunding Bonds, Series 2024
Recommended Action:

For the purpose of achieving debt service savings that can be passed through to taxpayers, it is recommended that the City Council adopt Resolution No. 2024-52, authorizing the issuance of the City of Hesperia Community Facilities District 2005-1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Refunding Bonds, Series 2024 (the “Bonds”) to refinance outstanding bonds and approving all related documents and actions.

Staff Person: Assistant City Manager Casey Brooksher
SR CFD 2005-1 Special Tax Refunding Bonds - Series 2024 10-15-2024 Resolution 2024-52
Attachment 2 - Preliminary Official Statment
Attachment 3 - Fiscal Agent Agreement 2024
Attachment 4 - Escrow Deposit and Trust Agreement
Attachment 5 - Bond Purchase Contract
Attachments:

COUNCIL COMMITTEE REPORTS AND COMMENTS
The Council may report on their activities as appointed representatives of the City on various Boards and Committees and/or may make comments of general interest or report on their activities as a representative of the City.

CITY MANAGER/CITY ATTORNEY/STAFF REPORTS
The City Manager, City Attorney or staff may make announcements or reports concerning items of interest to the Council and the public.

ADJOURNMENT

October 15, 2024City Council Meeting Agenda
I, Erin Baum, Assistant City Clerk of the City of Hesperia, California do hereby certify that I caused to be posted the foregoing agenda on Wednesday, October 9, 2024 at 5:30 p.m. pursuant to California Government Code §54954.2.
_____________________________
Erin Baum,
Assistant City Clerk
Documents produced by the City and distributed less than 72 hours prior to the meeting regarding items on the agenda will be made available in the City Clerk's Office during normal business hours.

City of Hesperia
City of Hesperia
Meeting Minutes – Draft
City Council
Tuesday, October 1, 2024 6:30 PM

REGULAR MEETING AGENDA

HESPERIA CITY COUNCIL

SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY

HESPERIA HOUSING AUTHORITY

HESPERIA COMMUNITY DEVELOPMENT COMMISSION

HESPERIA WATER DISTRICT
CLOSED SESSION - 5:00 PM
Roll Call

Present: 5 - Mayor Bird, Mayor Pro Tem Swanson, Council Member Gregg, Council Member Bennington and Council Member Lee
Conference with Legal Counsel – Potential Litigation - Government Code Section 54956.9(d)2

1. Two (2) Cases
Conference with Legal Counsel – Existing Litigation - Government Code Section 54956.9(d)1

1. Assistant Secretary for FHEO v. City of Hesperia, California, et al.; Case Number 09-16-4717-8 CALL TO ORDER - 6:30 PM
A. Invocation
B. Pledge of Allegiance to the Flag
C. Roll Call

Present: 5 - Mayor Bird, Mayor Pro Tem Swanson, Council Member Gregg, Council Member Bennington and Council Member Lee
D. Agenda Revisions and Announcements by City Clerk – None E. Closed Session Reports by City Attorney – No reportable action taken City Council Chambers
9700 Seventh Ave.

Hesperia CA, 92345
www.cityofhesperia.us

City of Hesperia

ANNOUNCEMENTS/PRESENTATIONS

1. Presentation to resident Henry Sierra, Pride Enhancement Program Honoree.

2. Presentation by Advance Disposal with an SB 1383 Update

GENERAL PUBLIC COMMENTS (For items and matters not listed on the agenda)

The following individuals commented via voicemail:

Ava Alvarez
Brielle Han

The following individuals commented in person:

Kim Jones
Robert Davie
Gina Whelan

JOINT CONSENT CALENDAR

A motion was made by Bennington, seconded by Swanson, that the Joint Consent Calendar be approved. The motion carried by the following vote:

Aye: 5 - Bird, Swanson, Gregg, Bennington, and Lee
Nay: 0

1. Consideration of the Draft Minutes from the Regular Meeting held Tuesday, September 17, 2024.

Recommended Action:

It is recommended that the City Council approve the Draft Minutes from the Regular Meeting held Tuesday, September 17, 2024.

Sponsors: Assistant City Clerk Erin Baum

2. Warrant Run Report (City - Successor Agency - Housing Authority - Community Development Commission - Water)

Recommended Action:

It is recommended that the Council/Board ratify the warrant run and payroll report for the City, Successor Agency to the Hesperia Community Redevelopment Agency, Hesperia Housing Authority, Community Development Commission, and Water District.

Sponsors: Assistant City Manager Casey Brooksher

3. American Rescue Plan Act (ARPA) Grant Equipment Procurement - One Trailer Mounted Vacuum Excavator

Recommended Action:

It is recommended that the City Counc il and Board of Directors of the Hesperia Water District authorize the City Manager to enter an agreement with RDO Equipment Co. for the purchase of one (1) 2024 Vermeer LP873XDT trailer-mounted vacuum excavator in the not-to-exceed amount of $84,306.

City of Hesperia
Sponsors: Director of Public Works/City Engineer Cassandra Sanchez

4. American Rescue Plan Act (ARPA) Grant Equipment Procurement - One Flatbed Truck

Recommended Action:

It is recommended that the City Council and Board of Directors of the Hesperia Water District authorize the City Manager to enter an agreement with Fairview Ford for the purchase of one (1) 2024 Ford F -550 flatbed truck in the not-to-exceed amount of $87,286.

Sponsors: Director of Public Works/City Engineer Cassandra Sanchez

5. American Rescue Plan Act (ARPA) Grant Equipment Procurement - One 10-12 Yard Dump Truck

Recommended Action:

It is recommended that the City Council and Board of Directors of the Hesperia Water District authorize the City Manager to enter into an agreement with Westrux International for the purchase of one (1) 2024 International HV607 10-12-yard dump truck in the not-to-exceed amount of $191,289.

Sponsors: Director of Public Works/City Engineer Cassandra Sanchez

6. American Rescue Plan Act (ARPA) Grant Equipment Procurement - One Skid Mounted Valve Exerciser

Recommended Action:

It is recommended that the City Council and Board of Directors of the Hesperia Water District authorize the City Manager to enter an agreem ent with E.H. Wachs for the purchase of one (1) 2024 Wachs ERV-750 skid mounted valve exerciser in the not-to-exceed amount of $91,583.

Sponsors: Director of Public Works/City Engineer Cassandra Sanchez

7. Contract with Badger Meter, Inc.

Recommended Action:

It is recommended that the Board of Directors of the Hesperia Water District authorize the City Manager to enter into a three-year contract with Badger Meter, Inc. in the not-to-exceed amount of $785,000 for the monthly fees associated with cellul ar service and data hosting for the Advanced Metering Infrastructure (AMI) program.

Sponsors: Director of Public Works/City Engineer Cassandra Sanchez

8. Vehicle Repair

Recommended Action:

It is recommended that the Board of Directors of the Hesperia Water District authorize the City Manager to enter into an agreement with Doug’s Autobody for the repair of vehicle 1185 in the not -to-exceed amount of $17,000 and adopt Hesperia Water District (HWD) Resolution No, 2024 -16, amending the Fiscal Year (FY) 2024-25 Budget by appropriating $17,000.

Sponsors: Director of Public Works/City Engineer Cassandra Sanchez

9. Sully-Miller Contracting Co. Construction Contract Change Orders and Contract Amendment

Recommended Action:

It is recommended that the City Council approve and authorize the City Manager or designee to execute an amendment to the contract with Sully Miller Contracting Co. (SMCC) for $6,232,244, plus a 10% contingency of $623,224 for a revised not-to-exceed contract amount of $48,562,661 for the construction of the Ranchero Road Corridor Widening Project, Phase III.

City of Hesperia

Additionally, it is recommended that the City Council adopt Resolution 2024 -50 appropriating $6,855,468 ($6,232,244 contract amendment and $623,224 contingency).

Sponsors: Director of Public Works/City Engineer Cassandra Sanchez

10. Award Professional Services Agreement with LDM & Associates, Inc.

Recommended Action:

It is recommended that the City Council authorize the City Manager, or designee, to execute a three (3) year Professional Service Agreement with LDM & Associates, Inc., in an amount not -to-exceed $350,000, to provide Community Development Block Grant (CDBG), Housing, and Labor Compliance professional services and for the preparation of the City’s 2025 -2029 Consol idated Plan, yearly Action Plan, and Analysis of Impediments to Fair Housing to meet the regulatory requirements of the U.S.

Department of Housing and Urban Development (HUD).

Sponsors: Director of Development Services Nathan Freeman

11. Parcel Map No. 20315

Recommended Action:

It is recommended that the City Council adopt Resolution No. 2024 -48 approving Parcel Map No. 20315 located on approximately 69 gross acres within the Regional Commercial (RC) and Commercial Industrial Business Park (CIBP) z ones of the Main Street and Freeway Corridor Specific Plan located on the east side of Mesa Linda Avenue, at the intersection of Mesa Linda Avenue and Poplar Street (Applicant:

Covington Group; APNs: 3064-601-07 & 3064-621-01).

Sponsors: Administrative Analyst Dena Alcayaga

12. Amendment to Contract with Data Ticket, Inc.

Recommended Action:

It is recommended that the City Council authorize the City Manager to approve an amendment of $150,000 to the existing contract with Data Ticket, Inc., for a revi sed not-to-exceed amount of $452,250, for the management and collection of citations, cost recovery, appeals, and additional hearing officer services for animal control.

Sponsors: Administrative Analyst Jordyn LaSarge

NEW BUSINESS

13. League of California Cities Membership

Recommended Action:

It is recommended that the City Council receive and file this staff report, which provides information regarding membership and annual conference registration fees paid to the League of California Cities.

Sponsors: Assistant to the City Manager Tammy Pelayes

Receive and file item.

COUNCIL COMMITTEE REPORTS AND COMMENTS

The Mayor, Mayor Pro Tem, and Council Members reported from various events and Committees.

City of Hesperia

CITY MANAGER/CITY ATTORNEY/STAFF REPORTS

City Manager thanked staff and other agencies for their work in Hesperia Days festivities.

ADJOURNMENT

The regular meeting was adjourned at 7:42 p.m. in honor of Mayor Bird’s daughter’s birthday.

_____________________________
Erin Baum,
Assistant City Clerk

THIS PAGE LEFT INTENTIONALLY BLANK

City of Hesperia

STAFF REPORT

DATE: October 15, 2024
TO: Mayor and Council Members
City Council, as Successor Agency to the Hesperia Community Redevelopment Agency
Chair and Commissioners, Hesperia Housing Authority
Chair and Commissioners, Community Development Commission Chair and Board Members, Hesperia Water District

FROM: Rachel Molina, City Manager
BY: Casey Brooksher, Assistant City Manager
Anne Duke, Deputy Finance Director
Shirley Domacio Calderon, Accountant

SUBJECT: Warrant Run Report (City – Successor Agency – Housing Authority – Community Development Commission – Water)

RECOMMENDED ACTION

It is recommended that the Council/Board ratify the warrant run and payroll report for the City, Successor Agency to the Hesperia Community Redevelopment Agency, Hesperia Housing Authority, Community Development Commission, and Water District.

BACKGROUND

The Warrant Run totals represented below are for th e period September 07 , 2024 through September 20, 2024.

CITY GOAL SUPPORTED BY THIS ITEM

Financial Health – Maintain a balanced budget and adequate reserves.

ATTACHMENT(S)

1. Warrant Runs
Agency/District Accounts Payable Payroll Wires Totals
City of Hesperia $3,146,676.81 $305,307.34 $0.00 $3,451,984.15 Successor Agency 0.00 0.00 0.00 0.00
Housing Authority 0.00 203.61 0.00 203.61
Community Development Commission 0.00 0.00 0.00 0.00
Water 603,611.86 142,373.25 0.00 745,985.11
Totals $3,750,288.67 $447,884.20 $0.00 $4,198,172.87

YEAR-TO PRIOR FY YTD

W/E W/E WARRANT DATE DATE
FUND # FUND NAME 9/7/2024 9/14/2024 TOTALS Wires TOTALS * TOTALS Accounts Payable
100 GENERAL 147,718.25 $ 2,300,005.18$ 2,447,723.43$ -$ 12,227,117.84$ 9,099,736.73$ 105 PENSION OBLIGATION TRUST -$ -$ -$ -$ -$ -$
106 OPEB TRUST -$ -$ -$ -$ -$ -$
110 SILVERWOOD 4,754.24$ 1,863.42$ 6,617.66$ -$ 6,617.66$ -$ 200 HESPERIA FIRE DISTRICT -$ -$ -$ -$ -$ -$
204 MEASURE I - RENEWAL -$ -$ -$ -$ 12,615.41$ 10,245.62$ 207 LOCAL TRANSPORT-SB 325 -$ -$ -$ -$ -$ 922,727.40$
209 GAS TAX-RMRA -$ -$ -$ -$ -$ -$
210 HFPD (PERS) -$ -$ -$ -$ 1,755,819.00$ 907,316.00$ 251 CDBG -$ 20.00$ 20.00$ -$ 241,353.78$ 186,979.73$ 254 AB2766 - TRANSIT -$ -$ -$ -$ -$ -$
255 AB3229 SUPPLEMENTAL LAW -$ -$ -$ -$ -$ -$
256 ENVIRONMENTAL PROGRAMS GRANT 249.99$ -$ 249.99$ -$ 19,285.66$ 4,283.10$ 262 SB 1383 LOCAL ASSISTANCE GRANT -$ -$ -$ -$ -$ -$
263 STREETS MAINTENANCE 14,252.62$ 17,831.41$ 32,084.03$ -$ 509,844.24$ 718,157.95$ 300
DEV. IMPACT FEES - STREET -$ -$ -$ -$ 22,388.61$ 3,600.00$ 301 DEV. IMPACT FEES - STORM DRAIN -$ -$ -$ -$ -$ -$
303 DEV. IMPACT FEES - POLICE -$ -$ -$ -$ -$ -$
304 DEV. IMPACT FEES - PUBLIC WKS. -$ -$ -$ -$ -$ -$
306 DEV. IMPACT FEES - 2018-STREETS -$ -$ -$ -$ 500,205.04$ 753,016.16$ 312 DIF 2018-POLICE FACILITIES -$ -$ -$ -$ -$ -$
313 DIF A-04 DRAINAGE -$ -$ -$ -$ 498.79$ 317,748.35$
402 WATER RIGHTS ACQUISITION -$ -$ -$ -$ -$ -$
403 2013 REFUNDING LEASE REV BONDS -$ -$ -$ -$ -$ 568,901.39$ 404 2023 REFUNDING LEASE REV BONDS -$ -$ -$ -$ -$ -$
504 CITY WIDE STREETS - CIP -$ -$ -$ -$ 2,593,680.82$ 2,292,744.75$ 509 CITY FACILITIES CIP -$ -$ -$ -$ -$ -$
800 EMPLOYEE BENEFITS 268,166.36$ 202,826.24$ 470,992.60$ -$ 2,478,580.95$ 2,155,604.93$ 801
TRUST/AGENCY 104,571.54$ 84,417.56$ 188,989.10$ -$ 465,353.16$ 309,753.05$ 802 AD 91-1 AGENCY -$ -$ -$ -$ -$ -$
804 TRUST-INTEREST BEARING -$ -$ -$ -$ 41,105.51$ 95,878.50$ 807 CFD 2005-1 -$ -$ -$ -$ 1,016,250.47$ 982,734.24$ 808 HFPD (TRANSITION) -$ -$ -$ -$ 317,435.02$ 347,796.19$ 815 PLAN REVIEW TRUST - FRONTIER -$ -$ -$ -$ -$ -$
CITY 539,713.00$ 2,606,963.81$ 3,146,676.81$ -$ 22,208,151.96$ 19,677,224.09$ 163 REDEVELOP OBLIG RETIREMENT-2018 -$ -$ -$ -$ 7,922,197.73$ 7,828,402.39$ SUCCESSOR AGENCY -$ -$ -$ -$ 7,922,197.73$ 7,828,402.39$ 370 HOUSING AUTHORITY -$ -$ -$ -$ 3,676.97$ 3,254.61$
HOUSING AUTHORITY -$ -$ -$ -$ 3,676.97$ 3,254.61$
170 COMMUNITY DEVELOPMENT COMMISSION -$ -$ -$ -$ -$ -$ COMMUNITY DEVELOPMENT COMMISSION -$ -$ -$ -$ -$ -$
700 WATER OPERATING 461,002.29$ 18,090.84$ 479,093.13$ -$ 2,738,035.25$ 3,237,549.84$ 701
WATER CAPITAL -$ -$ -$ -$ 16,473.00$ 298,109.99$
710 SEWER OPERATING 118,880.74$ 2,774.57$ 121,655.31$ -$ 1,239,611.22$ 1,642,053.72$ 711 SEWER CAPITAL -$ -$ -$ -$ 931,759.89$ 523,404.90$ 720 RECLAIMED WATER OPERATIONS 813.11$ 2,050.31$ 2,863.42$ -$ 21,034.24$ 10,649.56$ WATER 580,696.14$ 22,915.72$ 603,611.86$ -$ 4,946,913.60$ 5,711,768.01$ ACCOUNTS PAYABLE TOTAL 1,120,409.14$ 2,629,879.53$ 3,750,288.67$ -$ 35,080,940.26$ 33,220,649.10$ REG. PAYROLL
City -$ 305,307.34$ 305,307.34$ -$ 1,876,477.98$ 1,813,624.03$ Housing Authority -$ 203.61$ 203.61$ -$ 1,413.90$ 1,196.61$ Water -$ 142,373.25$ 142,373.25$ -$ 923,478.58$ 792,021.15$ PAYROLL TOTAL -$ 447,884.20$ 447,884.20$ -$ 2,801,370.46$ 2,606,841.79$ *No payments were issued on July 1, 2023.

City of Hesperia

WARRANT RUNS
09/07/2024-09/20/2024
Attachment 1

City of Hesperia

STAFF REPORT

DATE: October 15, 2024
TO: Mayor and City Council Members
Chair and Board Members, Hesperia Water District

FROM: Rachel Molina, City Manager
BY: Cassandra Sanchez, Director of Public Works / City Engineer Robert Worby, Fleet / Warehouse Supervisor

SUBJECT: American Rescue Plan Act (ARPA) Grant Vehicle Procurement – (1) Combination Truck

RECOMMENDED ACTION

It is recommended that the City Council and Board of Directors of the Hesperia Water District authorize the City Manager to enter into an agreement with Haaker Equipment Company for the purchase of one (1) 2025 Vactor Freightliner 2112 in the not-to-exceed amount of $711,716.

BACKGROUND

The new combination truck is needed to replace unit 1121 which is seventeen years old and requires a Diesel Particulate Filter (DPF) , annual filter cleaning, and biannual opacity testing to remain compliant with the California Air Resources Board (CARB). The current combination truck has reached the end of its useful life as annual costs attributed to maintaining the asset exceed salvage value. Those units that require higher than expected lifetime maintenance costs to remain operational are recommended for replacement.

ISSUES/ANALYSIS

Hesperia Public Works requested a quote for one (1) Vactor truck on August 28, 2024, which was provided in the amount of $711,716. Vactor is a sole source product manufactured, sold, and distributed exclusively by Haaker Equipment Company. It is recognized as the industry standard for combination trucks in the market . The District has only operated Vactor trucks to provide City services. Staff is familiar with Vactor manufactured vacuum trucks and parts for these trucks can be attained locally.

Vactor trucks are known for their innovative features and advanced tech nology. This includes their new patented rapid deployment boom which telescopes out 10 feet and extends the debris hose down 15 feet, eliminating the need for additional suction tubes. This makes them more efficient and effective for cleaning and maintaini ng sewer and stormwater systems . This reduces expenditures, increases productivity, decreases downtime, and improv es the overall quality of service s to both citizens and businesses.

The City has identified available American Rescue Plan Act (ARPA) Grant funds that are an eligible funding source for the equipment.

CITY GOAL SUPPORTED BY THIS ITEM

Public Safety: Ensure public safety resources adequately protect our community.

Financial Health: Maintain a balanced budget and adequate reserves.

FISCAL IMPACT

ARPA Grant funding in the amount of $711,716 has been identified for the proposed purchase of the one (1) vactor. If approved, an amendment to the FY 2024 -25 Budget will be presented at the First Quarter Budget Review to appropriate the necessary funds.

ALTERNATIVE(S)

1. Provide alternative direction to staff.

ATTACHMENT(S)
None

City of Hesperia

STAFF REPORT

DATE: October 15, 2024
TO: Mayor and City Council Members
Chair and Board Members, Hesperia Water District

FROM: Rachel Molina, City Manager
BY: Cassandra Sanchez, Director of Public Works / City Engineer Robert Worby, Fleet / Warehouse Supervisor

SUBJECT: American Rescue Plan Act (ARPA) Grant Equipment Procurement – One Wheel Loader

RECOMMENDED ACTION

It is recommended that the City Council and Board of Directors of the Hesperia Water District authorize the City Manager to enter into an agreement with Sonsray Machinery, LLC. for the purchase of one (1) 2024 Case 621G wheel loader in the not-to-exceed amount of $201,360.

BACKGROUND

Wheel loaders are excellent for loading and transporting materials such as debris, gravel, and soil.

This unit is also suitable for various infrastructure projects , such as laying pipes, due to its ability to handle heavy loads. The City currently possesses two (2) wheel loaders, the oldest being twenty-one (21) years old. This purchase will allow access to three units, with one used as a spare, alleviating downtime if one asset requires maintenance.

ISSUES/ANALYSIS

Hesperia Public Wor ks released Request for Bid (RFB) 2024 -25-010 for one (1) wheel loader on August 21, 2024, soliciting bids from three (3) vendors. The bid closed on September 4, 2024 with three (3) responses received. Staff recommends awarding the bid to Sonsray Machinery, LLC. who have been deemed the lowest responsive / responsible vendor with a total bid amount of $201,360.

CITY GOAL SUPPORTED BY THIS ITEM

Public Safety: Ensure public safety resources adequately protect our community.

Financial Health: Maintain a balanced budget and adequate reserves.

FISCAL IMPACT

The City has identified available American Rescue Plan Act (ARPA) Grant funds that are an eligible funding source for the wheel loader.

ARPA Grant funding in the amount of $201,360 has been identified for the proposed purchase of one (1) wheel loader. If approved, an amendment to the FY 2024-25 Budget will be presented at the First Quarter Budget Review to appropriate the necessary funds.

ALTERNATIVE(S)

1. Provide alternative direction to staff.

Staff Report to the Mayor and City Council Members, Chair and Board Members, Hesperia Water District American Rescue Plan Act (ARPA) Grant Equipment Procurement- One Wheel Loader October 15, 2024

ATTACHMENT(S)

None

City of Hesperia

STAFF REPORT

DATE: October 15, 2024
TO: Mayor and Council Members

FROM: Rachel Molina, City Manager
BY: Cassandra Sanchez, Director of Public Works / City Engineer Brian Blackwell, Streets Operations Manager

SUBJECT: American Rescue Plan Act (ARPA) Grant – Citywide Sidewalk Repair

RECOMMENDED ACTION

It is recommended that the City Council authorize the City Manager to enter into an agreement with H L Hitchcock Construction to repair or replace sidewalks in seventeen (17) locations citywide in the amount of $109,190 and approve an additional 10% contingency of $10,919 for a not to exceed amount of $120,109.

BACKGROUND

Seventeen (17) sidewalk locations citywide have been identified to be in need of repairs or replacement. Sidewalks are an important part of the City’s infrastructure that allows our residents a walking path to navigate around the community to reach needed services. Damaged sidewalks can be difficult to transverse and can create problems for children, seniors, the blind, or others with special needs. All pedestrians benefit from safe sidewalks.

ISSUES/ANALYSIS

The Public Works Division released a Request for Bid (RFB) on September 4, 2024, for the repair or replacement of sidewalks citywide at seventeen (17) locations. Bids closed on September 26, 2024, with one (1) response received. Staff recommends awarding the bid to H L Hitchcock Construction, which has been deemed the lowest responsive/responsible vendor with a total bid amount of $109,190.

CITY GOAL SUPPORTED BY THIS ITEM

Public Safety: Ensure public safety resources adequately protect our community.

FISCAL IMPACT

American Rescue Plan Act (ARPA) Grant funding in the amount of $120,190 has been identified for this project to repair or replace sidewalks in seventeen (17) locations citywide. The City has identified available American Rescue Plan Act (ARPA) Grant funds as an eligible funding source for the sidewalk repairs.

Staff Report to the Mayor and Council Members
APRA Grant- City Wide Sidewalk Repair
October 15, 2024

If approved, an amendment to the fiscal year 2024 -25 budget will be presented at the mid-year Budget review to appropriate the necessary funds.

ALTERNATIVE(S)

1. Provide alternative direction to staff.

ATTACHMENT(S)

None.

City of Hesperia

STAFF REPORT

DATE: October 15, 2024
TO: Mayor and City Council Members
Chair and Board Members, Hesperia Water District

FROM: Rachel Molina, City Manager
BY: Cassandra Sanchez, Director of Public Works / City Engineer Robert Worby, Fleet / Warehouse Supervisor

SUBJECT: American Rescue Plan Act (ARPA) Grant Equipment Procurement – Sixteen Chlorinators

RECOMMENDED ACTION

It is recommended that the City Council and Board of Directors of the Hesperia Water District authorize the City Manager to enter into an agreement with Doane and Hartwig Water Systems for the purchase of sixteen (16) Constant Chlor MC -4 chlorinators in the not-to-exceed amount of $260,939.

BACKGROUND

Chlorination units are necessary for the disinfection of the City’s potable water supply. Calcium hypochlorite, a solid form of chlorine, is added to a storage tank where water is introduced. This creates a liquid chlorine solution which is injected into the potable water supply. The speed rate of the pump within the chlorination unit is adjusted to ensure adequate disinfection levels are achieved.

The current infrastructure is over 20 years old and has sur passed its useful life expectancy. The current system is experiencing frequent failure which requires the well to be taken out of service until repairs are made. The cost effective Constant Chlor System provides reliable chlorine solutions for both private and public municipal applications including water reclamation facilities, water treatment plants, remote wells, wastewater plants, and booster stations. The system will consistently deliver liquid available chlorine for disinfection applications to prevent the formation of coliform bacteria.

ISSUES/ANALYSIS

Hesperia Public Works released Request for Bid (RFB) 2024-25-004 for sixteen (16) chlorinators on August 21, 2024, soliciting bids from the two (2) vendors that sell this product . The bid closed on September 11, 2024, with both vendors responding. Staff recommends awarding the bid to Doane and Hartwig Water Systems who have been deemed the lowest responsive / responsible vendor with a total bid amount of $260,939.

The City has identified available American Rescue Plan Act (ARPA) Grant funds that are an eligible funding source for the chlorinators.

CITY GOAL SUPPORTED BY THIS ITEM

Public Safety: Ensure public safety resources adequately protect our community.

Financial Health: Maintain a balanced budget and adequate reserves.

Staff Report to the City Council and Hesperia Water District Board Members American Rescue Plan Act (ARPA) Grant Equipment Procurement – Sixteen Chlorinators October 15, 2024

FISCAL IMPACT

ARPA Grant funding in the amount of $260,939 has been identified for the proposed purchase of the sixteen (16) chlorinators. If approved, an amendment to the Fiscal Year (FY) 2024-25 Budget will be presented at the Mid-Year Budget Review to appropriate the necessary funds.

ALTERNATIVE(S)

1. Provide alternative direction to staff.

ATTACHMENT(S)

1. Bid Comparison

Item No. Qty Description Unit Cost Extended Amount Unit Cost Extended Amount 1 16 Sixteen Chlorinators 15,164.39 242,630.24 26,317.94 421,087.04 Total Before Taxable Items 242,630.24 421,087.04
Tax At 7.75% 18,307.84 32,634.25
Freight 0.00 19,200.00
Total Bid Amount 260,938.08 472,921.29
Submitted Bid Total 260,938.08 472,921.29
Difference 0.00 0.00
Winning Bidder
RBF 2024-25-004 Sixteen Chlorinators Attachment 1 Bid Comparison Type: Taxable
Bid Comparison Completed By: Robert Worby
Doane & Heartwig Water Systems Automated Water Treatment Date: 09/11/2024

THIS PAGE LEFT INTENTIONALLY BLANK

City of Hesperia

STAFF REPORT

DATE: October 15, 2024
TO: Mayor and City Council Members
Chair and Board Members, Hesperia Water District

FROM: Rachel Molina, City Manager
BY: Cassandra Sanchez, Director of Public Works / City Engineer Jeremy McDonald, Water Operations Manager

SUBJECT: Public Works Asset Management Software (Cityworks)

RECOMMENDED ACTION

It is recommended that the City Council and Board of Directors of the Hesperia Water District (District) authorize the City Manager to enter into a two-year software license and maintenance agreement with Azteca Systems, Inc. in a not-to-exceed amount of $121,700.

BACKGROUND

In 2007, the City transitioned its asset management program to the Cityworks platform. An asset management program is a vital component to tracking life cycle cost of infrastructure maintained by the Public Works department. Cityworks is a geographical information systems (GIS) based program, allowing staff accessibility to critical asset information in a remote environment. Furthermore, an asset management program helps with identifying future capital improvement projects.

ISSUES/ANALYSIS

Since the initial installation of Cityworks, the City has continued to maintain the software license and maintenance agreement with Azteca Systems, Inc. The current agreement will be replaced with a new agreement to add an additional (10) licenses, allowing for fifty-five (55) staff members to use the program. The additional licenses will allow for Utility Billing staff to access work orders completed by field staff. Included in the agreement is the annual maintenance, software updates, an d customer support.

CITY GOAL SUPPORTED BY THIS ITEM

Public Safety: Ensure public safety resources adequately protect our community.

Financial Health: Maintain a balanced budget and adequate reserves.

FISCAL IMPACT

Sufficient funding has been included in the adopted Fiscal Year 2024-25 Budget.

ALTERNATIVES

1. Provide alternative direction to staff.

ATTACHMENT(S)
None

THIS PAGE LEFT INTENTIONALLY BLANK

City of Hesperia

STAFF REPORT

DATE: October 15, 2024
TO: Mayor and Council Members

FROM: Rachel Molina, City Manager
BY: Cassandra Sanchez, Director of Public Works/City Engineer Bethany Hudson, Assistant Project Manager

SUBJECT: Adopt Measure I Five Year Capital Project Needs Analysis for Fiscal Years 2025/26 through 2029/30

RECOMMENDED ACTION

It is recommended that the Mayor and Council Members adopt Resolution No. 2024-49 approving the Measure I Five-Year Capital Project Needs Analysis submittal to the San Bernardino County Transportation Authority (SBCTA) for Fiscal Years 2025/26 through 2029/30.

BACKGROUND

In November of 1989, voters approved passage of Measure I to impose a one-half of one percent retail transactions and use sales tax applicable in the incorporated and unincorporated territory of San Bernardino County. In advance of Measure I expiring in 2010, voters approved Ordinance No. 04 -01 in November 2004 renewing the Measure I half -cent sales tax for 30 years. The renewed Measure I is referred to as Measure I 2010-2040.

One minor difference between the original Measure I and the “2010 -2040” Measure I is the establishment of a s eparate component to jointly fund regional projects among the five communities in the Victor Valley sub-area (Adelanto, Apple Valley, Hesperia, Victorville, and the County of San Bernardino). This fund is known as the “Major Local Highway Program” (MLHP) and constitutes 25% of the Measure I revenue. SBCTA estimates that $269.1 million will be generated over the life of the Measure within our sub -area. This revenue was incorporated into SBCTA’s Strategic Plan, after multiple meetings with member agencies. In addition, to provide direction to SBCTA, each member agency’s legislative body approved an initial expenditure list.

The Council approved the initial list of projects at its August 28, 2008 meeting to be considered for the MHLP funding.

ISSUES/ANALYSIS

Under MLHP, qualifying projects are defined as “major streets and highways serving as primary routes of travel within the subarea, which may include State highways and freeways, where appropriate.” Locally-maintained streets which serve more than one community (e.g., Ranchero Road through Hesperia and the County also serves Apple Valley residents) would qualify. While the intent of this program was to allow communities within our sub -area to pool resources and vote on projects collectively, it be came clear during these meetings that the amount of revenue available would be outstripped by the Victor Valley’s financial needs (S BCTA’s estimate is $1.2 billion for all regional facilities, including US-395 and I-15 widening). In addition, one community’s project needs, while providing a benefit to the sub -area, may not directly benefit another Victor Valley community. As a result, the consensus was reached to divide the MLHP revenue equally

Staff Report to the City Council
Measure I Five Year CPNA
October 15, 2024

among the five agencies, resulting in up to $53.82 million ea ch (the amount of revenue will fluctuate based on the amount of retail sales occurring over the life of the plan). Projects prioritized by each agency can only be partially funded by the MLHP, and funding will be programmed based on the short-term (year 1-10) mid-term (year 11-20) and long term (year 21- 30) availability and priority.

SBCTA is requesting confirmation of the City’s priorities, which is now referred to as the Capital Project Needs Analysis (CPNA). Therefore, in accordance with S BCTA requirements, Staff is recommending that the City C ouncil adopt Resolution 2024-49 approving the Measure I MLHP submittal and adopting the Five-Year CPNA for Fiscal Years 2025/26 through 2029/30.

CITY GOAL SUPPORTED BY THIS ITEM

Capital Improvement: Continually evaluate capital improvement priorities.

Financial Health: Maintain a balanced budget and adequate reserves.

FISCAL IMPACT

There is no fiscal impact.

ALTERNATIVE (S)

1. Provide alternative direction to staff.

ATTACHMENT (S)

1. Resolution No. 2024-49

2. Measure I CPNA Submittal for Fiscal Year 2025/26 through 2029/30

RESOLUTION 2024-49

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HESPERIA,

CALIFORNIA, ADOPTING THE MEASURE I FIVE -YEAR CAPITAL PROJECT NEEDS ANALYSIS FOR FISCAL YEARS 2025/26 TO 2029/30

WHEREAS, San Bernardino County voters approved passage of Measure I in November 1989 and the renewal in November 2004, authorizing the San Bernardino County Transportation Authority to impose a one -half of one percent retail transactions and use tax applicable in t he incorporated and unincorporated territory of the County of San Bernardino; and

WHEREAS, revenue from the tax can only be used for transportation improvement and traffic management programs authorized in the Expenditure Plans set forth in Ordinance No. 89-1 and Ordinance No. 04-1 of the Authority; and

WHEREAS, the Strategic Plan requires each local jurisdiction applying for revenue from certain Measure I Programs to annually adopt and update a Five-Year Capital Project Needs Analysis.

NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF HESPERIA,

STATE OF CALIFORNIA AS FOLLOWS

Section 1. The City Council hereby specifically finds that all of the facts set forth in this resolution are true and correct; and

Section 2. The Measure I Five-Year Capital Project Needs Analysis for Fiscal Years 2025/26 through 2029/30, attached to this resolution, is hereby adopted.

Section 3. That the City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions.

ADOPTED AND APPROVED this 15th day of October, 2024.

______________________________
Larry Bird, Mayor
ATTEST:

____________________________
Erin Baum
Assistant City Clerk

Nexus Project Cost -$
Dev. Loan? No
5-Year Advance? No
Public Share: 41.1%
Dev. Share: 58.90%
Project Information Phase Funding PRIOR* FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FUTURE PA&ED
Total Cost: $876,332.00
Fund Type: MSI MLHP $ 24,729.00 $ - $ - $ - $ - $ - $ - DEV FEE $ 505,958.00 $ - $ - $ - $ - $ - $ - MI LOCAL ST $ 324,125.00 $ - $ - $ - $ - $ - $ - - Select Fund - $ 21,520.00 $ - $ - $ - $ - $ - $ - Other: ______ $ - $ - $ - $ - $ - $ - $ - PS&E
Total Cost: $1,879,782.00
Fund Type: MSI MLHP $ 18,664.00 $ - $ - $ - $ - $ - $ - DEV FEE $ 272,670.00 $ - $ - $ - $ - $ - $ - MI LOCAL ST $ 443,259.00 $ - $ - $ - $ - $ - $ - - Select Fund - $ 1,145,189.00 $ - $ - $ - $ - $ - $ - Other: ______ $ - $ - $ - $ - $ - $ - $ - ROW
Total Cost: $981,297.00
Fund Type: MSI MLHP $ 403,313.00 $ - $ - $ - $ - $ - $ - DEV FEE $ 577,984.00 $ - $ - $ - $ - $ - $ - - Select Fund - $ - $ - $ - $ - $ - $ - $ - - Select Fund - $ - $ - $ - $ - $ - $ - $ - Other: ______ $ - $ - $ - $ - $ - $ - $ - CONST
Total Cost: $50,319,589.00
Fund Type: MSI MLHP $ 13,768,116.00 $ - $ - $ - $ - $ - $ - DEV FEE $ 19,730,950.00 $ - $ - $ - $ - $ - $ - LPP $ 16,095,000.00 $ - $ - $ - $ - $ - $ - MI LOCAL ST $ 456,127.00 $ - $ - $ - $ - $ - $ - OTHER $ 269,396.00 $ - $ - $ - $ - $ - $ - - Select Fund - $ - $ - $ - $ - $ - $ - $ - Other: ______ $ - $ - $ - $ - $ - $ - $ - This includes the county portion
because the City is the lead
agency for construction. County's
share is 41.5% and SBCTA 58.5%.
*Prior should identify any expenses incurred in prior years that have not yet been reimbursed by SBCTA including anticipated FY 2023/2024 expenses.

Capital Project Needs Analysis
City of Hesperia
Victor Valley Major Local Highway Program
Ranchero Road Corridor
Widening Project - Widen
Ranchero Road from Topaz Ave.
to Seventh Ave. from 2 to 5 lanes
Current Total Project Cost
Estimate:
$54,057,000.00
Total Measure I Request:
$14,214,822.00
(Summation of Measure I)
Comments:

FINAL 2026-2030 CPNA Report.xlsx - Ranchero Road
Attachment 2

Nexus Project Cost -$
Dev. Loan? No
5-Year Advance? No
Public Share: 41.1%
Dev. Share: 58.90%
Project Information Phase Funding PRIOR* FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FUTURE PA&ED
Total Cost: $4,125,851.00
Fund Type: MSI MLHP $ - $ - $ - $ - $ - $ - $ - DEV FEE $ 95,307.00 $ - $ - $ - $ - $ - $ - MI LOCAL ST $ - $ 175,000.00 $ - $ - $ - $ - $ 3,469,275.00 OTHER $ 386,269.00 $ - $ - $ - $ - $ - $ - Other: ______ $ - $ - $ - $ - $ - $ - $ - PS&E
Total Cost: $5,481,911.00
Fund Type: MSI MLHP $ - $ - $ - $ - $ - $ - $ - DEV FEE $ 77,280.00 $ - $ - $ - $ - $ - $ 4,914,806.00 MI LOCAL ST $ - $ 75,000.00 $ - $ 45,000.00 $ - $ - $ - OTHER $ 369,825.00 $ - $ - $ - $ - $ - $ - Other: ______ $ - $ - $ - $ - $ - $ - $ - ROW
Total Cost: $5,016,665.00
Fund Type: MSI MLHP $ - $ - $ 439,770.00 $ - $ - $ - $ 1,622,078.00 DEV FEE $ - $ - $ 630,230.00 $ - $ - $ - $ 2,324,587.00 - Select Fund - $ - $ - $ - $ - $ - $ - $ - - Select Fund - $ - $ - $ - $ - $ - $ - $ - Other: ______ $ - $ - $ - $ - $ - $ - $ - CONST
Total Cost: $29,055,573.00
Fund Type: MSI MLHP $ - $ - $ - $ 1,027,500.00 $ 2,209,943.00 $ 1,603,293.00 $ 7,119,601.00 DEV FEE $ - $ - $ - $ 1,427,500.00 $ 3,167,045.00 $ 2,297,661.00 $ 10,203,030.00 - Select Fund - $ - $ - $ - $ - $ - $ - $ - - Select Fund - $ - $ - $ - $ - $ - $ - $ - - Select Fund - $ - $ - $ - $ - $ - $ - $ - - Select Fund - $ - $ - $ - $ - $ - $ - $ - Other: ______ $ - $ - $ - $ - $ - $ - $ - $43,680,000.00
Capital Project Needs Analysis
City of Hesperia
Victor Valley Major Local Highway Program
Main St Widening - Widen Main
St. from Escondido Ave. to 11th
Ave. from 4 to 6 lanes including
the aqueduct bridge widening.

Current Total Project Cost
Estimate:

Comments:
*Prior should identify any expenses incurred in prior years that have not yet been reimbursed by SBCTA including anticipated FY 2023/2024 expenses.

Total Measure I Request:
$14,022,185.00
(Summation of Measure I)
FINAL 2026-2030 CPNA Report.xlsx - Main Street Widening

Nexus Project Cost -$
Dev. Loan? No
5-Year Advance? No
Public Share: 41.1%
Dev. Share: 58.90%
Project Information Phase Funding PRIOR* FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FUTURE PA&ED
Total Cost: $167,000.00
Fund Type: MSI MLHP $ - $ - $ - $ - $ - $ - $ - MI LOCAL ST $ 111,000.00 $ 56,000.00 $ - $ - $ - $ - $ - - Select Fund - $ - $ - $ - $ - $ - $ - $ - - Select Fund - $ - $ - $ - $ - $ - $ - $ - Other: ______ $ - $ - $ - $ - $ - $ - $ - PS&E
Total Cost: $655,000.00
Fund Type: MSI MLHP $ - $ - $ - $ - $ - $ - $ - MI LOCAL ST $ 70,000.00 $ 378,000.00 $ 207,000.00 $ - $ - $ - $ - - Select Fund - $ - $ - $ - $ - $ - $ - $ - - Select Fund - $ - $ - $ - $ - $ - $ - $ - Other: ______ $ - $ - $ - $ - $ - $ - $ - ROW
Total Cost: $2,700,000.00
Fund Type: MSI MLHP $ 411,000.00 $ 411,000.00 $ 287,700.00 $ - $ - $ - $ - DEV FEE $ 589,000.00 $ 589,000.00 $ 412,300.00 $ - $ - $ - $ - - Select Fund - $ - $ - $ - $ - $ - $ - $ - - Select Fund - $ - $ - $ - $ - $ - $ - $ - Other: ______ $ - $ - $ - $ - $ - $ - $ - CONST
Total Cost: $8,182,198.00
Fund Type: MSI MLHP $ - $ - $ - $ 3,363,000.00 $ - $ - $ - DEV FEE $ - $ - $ - $ 4,819,198.00 $ - $ - $ - - Select Fund - $ - $ - $ - $ - $ - $ - $ - - Select Fund - $ - $ - $ - $ - $ - $ - $ - - Select Fund - $ - $ - $ - $ - $ - $ - $ - - Select Fund - $ - $ - $ - $ - $ - $ - $ - Other: ______ $ - $ - $ - $ - $ - $ - $ - $11,740,000.00
Capital Project Needs Analysis
City of Hesperia
Victor Valley Major Local Highway Program
Ranchero Road Street
Improvements - Widen Ranchero
Road from 2 to 4 lanes from
Danbury Ave. to I Ave.

Current Total Project Cost
Estimate:

Comments:
*Prior should identify any expenses incurred in prior years that have not yet been reimbursed by SBCTA including anticipated FY 2023/2024 expenses.

Total Measure I Request:
$4,472,700.00
(Summation of Measure I)
FINAL 2026-2030 CPNA Report.xlsx - Ranchero Road Phase 4

01071.0001/1019111.1
City of Hesperia

STAFF REPORT

DATE: October 15, 2024
TO: Mayor and Council Members

FROM: Rachel Molina, City Manager
BY: Pam K. Lee, City Attorney

SUBJECT: Amendments to Chapter 5.50 of the Hesperia Municipal Code Related to Medical Cannabis Business Licenses

RECOMMENDED ACTION

It is recommended that the City Council introduce and place on first reading Ordinance No. 2024- 12 amending Chapter 5.50 of the Hesperia Municipal Code relating to medical cannabis business licenses.

BACKGROUND

On December 5, 2017, the City Council adopted Ordinance No. 2017 -15 (i) prohibiting all cannabis activities and license types within the City , except for M -Type 10 Retailer, limited to non-storefront medical delivery only services; and (ii) creating land use regulations related to such activities; and (iii) adopting a map detailing the areas where cannabis non-storefront medical delivery only services would be able to operate within the City.

On December 7, 2017, the State of California issued emergency regulations related to licensing of commercial cannabis activities in the State, and created several new license types, including M-Type 9 Non-Storefront Retailer, a retail license that by legal definition does not allow store front activities, and is limited to delivery services only.

On December 19, 2017, adopted Ordinance No. 2017 -22, prohibiting M-Type 10 Retailer, and only allowing M-Type 9-Non-Storefront Retailer licenses within the City.

On March 20, 2018, the City Council repealed Ordinance No. 2017-22 with Ordinance No. 2018- 01, amending Chapter 5.50 of the Hesperia Municipal Code related to business licenses and regulations on dispensing and delivery of medical cannabis, as it applies to businesses engaged in non-storefront medical cannabis delivery only services.

On November 6, 2018, the voters of the City of Hesperia voted to approve and adopt Ordinance No. 2018-08, adding Chapter 3.18 of the Hesperia Municipal Code relating to cannabis business taxes.

On October 18, 2022 the City Council adopted Resolution No. 2022 -75, prohibiting further renewals of business licenses M-Type 9 Non-Storefront Retailer licenses of businesses engaging in non-storefront medical cannabis delivery only services on or after December 1, 2023, pending the repeal of the cannabis program, and directed staff to prepare ordinance(s) for the City Council’s consideration to repeal the commercial cannabis program in its entirety by November 30, 2024.

Staff Report to the Mayor and Council Members
Amendments to Chapter 5.50 of the Hesperia Municipal Code Related to the Medical Cannabis Business Licenses
October 15, 2024

01071.0001/1019111.1

ISSUES/ANALYSIS

The Cannabis Regulations Program will officially end on November 30, 2024 due to the approval of Resolution No. 2022-75. Since the Cannabis Regulations Program will be ending, staff recommends revising Chapter 5.50 of the Hesperia Municipal Code to wind down the Program.

There are currently three non-storefront medical cannabis delivery only services in operation. In order to minimize/avoid any claims of a regulatory takings , staff recommends an amortization appeal process to allow existing businesses with valid permits and currently operating in good standing to continue their operations for a certain amount of time (generally not to exceed five (5) years), based on the docu mentary evidence of their economic and financial situations. The provisions of the amortization hearing process includes the following:

 Requiring the submission of a written appeal to the city manager within 15 days of the effective date of the ordinance, which contains all relevant documents and explanation of the need to continue operations, based on factors including, but not limited to, reasonable investment-backed expections and other economic or financial information. The appeal must be signed under penalty of perjury.

 Within 45 days of the written appeal, or as mutually agreed to by the parties, the city manager or designee will conduct an administrative hearing where oral and written testimony shall be provided.

 Within seven days after the close of the hearing, the city manager or designee will issue a written decision whether to allow the continued operation of the business, and for how long.

The decision shall be binding and final, subject to judicial review under section 1094.5 and 1094.6 of the Code of Civil Procedure.

Any businesses that are allowed to continue operations during the amortization period are still required to comply with all the provisions of the cannabis program under Chapter 5.50 of the Hesperia Municipal Code.

Once all businesses have winded down and completed their amortization period, staff will bring back an ordinance to repeal the entire cannabis program and references to cannabis uses and regulations within the Hesperia Municipal Code (under Chapter 5.50) and the Hesperia Development Code (under Chapter 16.16).

ENVIRONMENTAL REVIEW

Pursuant to the provisions of CEQA and State CEQA Guidelines (Sections 15000 et seq., Title 14 the California Code of Regulations) the City has determined that the Ordinance is exempt from the provisions of CEQA pursuant to CEQA Guidelines Section 15061(b)(3) because it can be seen with certainty that there is no significant effect on the environment. The proposed Ordinance is also exempt from the requirements of Section 16.12.415(B)(10) of the City’s CEQA Guidelines, as the Ordinance does not propose to increase the density or intensity allowed in the General Plan.

CITY GOAL SUPPORTED BY THIS ITEM

Staff Report to the Mayor and Council Members
Amendments to Chapter 5.50 of the Hesperia Municipal Code Related to the Medical Cannabis Business Licenses
October 15, 2024

01071.0001/1019111.1
Future Development - Facilitate balanced growth to ensure cohesive community development and pursue economic development.

FISCAL IMPACT
There are no fiscal impacts identified with this action.

ALTERNATIVE(S)

1. Provide alternative direction to staff.

ATTACHMENT(S)

1. Ordinance 2024-12

2. Exhibit A – Chapter 5.50 of the Hesperia Municipal Code

01071.0005/1007873.1
ORDINANCE NO. 2024-12

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
HESPERIA, CALIFORNIA, AMENDING CHAPTER 5.50 OF

THE HESPERIA MUNICIPAL CODE RELATING TO

MEDICAL CANNABIS BUSINESS LICENSES

WHEREAS, the City of Hesperia has the authority and responsibility to protect the public health, safety, and welfare of the City, and is responsible for adopting and implementing land use regulations within its boundaries; and WHEREAS, on December 5, 2017, the City Council adopted Ordinance No. 2017-15 (i) prohibiting all cannabis activities and license types within the City, except for M-Type 10 Retailer, limited to non-storefront medical delivery only services; and (ii) creating land use regulations related to such activities; and (iii) adopting a map detailing the areas where cannabis non-storefront medical delivery only services would be able to operate within the City; and
WHEREAS, on December 7, 2017, the State of California issued emergency regulations related to licensing of commercial cannabis activities in the State, and created several new license types, including M-Type 9 Non-Storefront Retailer, a retail license that by legal definition does not allow store front activities, and is limited to delivery services only; and
WHEREAS, on December 19, 2017, adopted Ordinance No. 2017-22, prohibiting M- Type 10 Retailer, and only allowing M-Type 9-Non-Storefront Retailer licenses within the City; and
WHEREAS, on March 20, 2018, the City Council repealed Ordinance No. 2017-22 with Ordinance No. 2018-01, amending Chapter 5.50 of the Hesperia Municipal Code related to business licenses and regulations on dispensing and delivery of medical cannabis, as it applies to businesses engaged in non-storefront medical cannabis delivery only services; and
WHEREAS, Section 5.50.040(C) of the Hesperia Municipal Code provides that delivery dispensary permits shall automatically expire after one year, and Section 5.50.040(D) provides that the annual renewal of permits is subject to the same process as new applications; and
WHEREAS, on March 20, 2018, the City Council adopted Ordinance No. 2018-02, amending Section 16.16.470 of the Hesperia Municipal Code relating to minimum distance requirements of businesses engaging in non-storefront medical cannabis delivery only services; and
WHEREAS, on March 20, 2018, the City Council adopted Ordinance No. 2018-03, amending certain provisions of Chapter 16.16 of the Hesperia Municipal Code

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prohibiting additional types of cannabis activities and relating to regulations of M-Type 9 Non-Storefront Retailer licenses of businesses engaging in non-storefront medical cannabis delivery only services; and
WHEREAS, on November 6, 2018, the voters of the City of Hesperia voted to approve and adopt Ordinance No. 2018-08, adding Chapter 3.18 of the Hesperia Municipal Code relating to cannabis business taxes; and
WHEREAS, on October 18, 2022 the City Council adopted Resolution No. 2022-75, prohibiting further renewals of business licenses M-Type 9 Non-Storefront Retailer licenses of businesses engaging in non-storefront medical cannabis delivery only services on or after December 1, 2023, pending the repeal of the cannabis program, and directed staff to prepare ordinance(s) for the City Council’s consideration to repeal the commercial cannabis program in its entirety by November 30, 2024; and WHEREAS, commercial cannabis operations with valid existing permits are allowed to continue operating until the expiration of the permit, and upon expiration of the permit the permit shall not be renewed; and
WHEREAS, pursuant to the provisions of CEQA and State CEQA Guidelines (Sections 15000 et seq., Title 14 the California Code of Regulations) the City has determined that the Ordinance is exempt from the provisions of CEQA pursuant to CEQA Guidelines Section 15061(b)(3) because it can be seen with certainty that the adoption of this Ordinance will not have an effect on the environment since it is prohibitory in nature only.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF HESPERIA DOES HEREBY ORDAIN AS FOLLOWS.

SECTION 1. All of the above recitals are true and correct and incorporated herein.

SECTION 2. AMENDMENTS TO THE HESPERIA MUNICIPAL CODE
Certain provisions of the Hesperia Municipal Code relating to cannabis operations are hereby amended as set forth in Exhibit A, attached hereto and incorporated by this reference.

SECTION 3. SEVERABILITY
If any section, subsection, subdivision, sentence, clause, phrase, or portion of this ordinance or the application thereof to any person or place, is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remainder of this ordinance. The City Council hereby declares that it would have adopted this ordinance, and each and every section, subsection, subdivision, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more sections, subsections, subdivisions, sentences, clauses, phrases, or portions thereof be declared invalid or unconstitutional.

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SECTION 4. CEQA COMPLIANCE
Pursuant to the provisions of CEQA and State CEQA Guidelines (Sections 15000 et seq., Title 14 the California Code of Regulations) the City has determined that the Ordinance is exempt from the provisions of CEQA pursuant to CEQA Guidelines Section 15061(b)(3) because it can be seen with certainty that there is no significant effect on the environment. The proposed Ordinance is also exempt from the requirements of Section 16.12.415(B)(10) of the City’s CEQA Guidelines, as the Ordinance does not propose to increase the density or intensity allowed in the General Plan.

SECTION 5. EFFECTIVENESS OF ORDINANCE
The Mayor shall sign, and the City Clerk shall attest to the passage of this Ordinance.

The City Clerk shall cause this Ordinance, or a summary thereof, to be published in a manner as prescribed by law. This Ordinance shall become effective 30 days after its adoption.

PASSED, APPROVED, AND ADOPTED by the City Council of the City of Hesperia, California, at a regular meeting held on this _____ day of _______________ 2024.

____________________________
Larry Bird, Mayor
ATTEST:

_____________________________
Erin Baum, Assistant City Clerk

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EXHIBIT A

[All additions in bold italics; deletions in strikethrough] AMENDMENT OF CHAPTER 5.50 OF THE HESPERIA MUNICIPAL CODE. Chapter

5.50 [DISPENSING AND DELIVERY OF MEDICAL CANNABIS] of the Hesperia Municipal is hereby amended in its entirety as follows:

5.50.010 – Purpose and intent.

A. The declared purpose of this chapter is to establish a comprehensive set of regulations with an attendant regulatory permit governing the operation of medical cannabis dispensaries located in the city limited to the sole activity of dispensing medical cannabis through deliveries, as provided for herein.

Notwithstanding any other provision of this code, on and after December 1, 2024, the city shall no longer issue new permits for the establishment or operation of a delivery dispensary, except as authorized under section 5.50.040 of this code.

B. This chapter is not intended to interfere with a patient's right to obtain medical cannabis, as provided for in California Health and Safety Code Section 11362.5. This article is not intended to conflict with federal law as contained in the Controlled Substances Act, 21 U.S.C. §§ 800 et seq., nor to otherwise permit any activity that is prohibited under that Act or any other local, state or federal law, statute, rule or regulation.

5.50.020 - Definitions.

Unless otherwise provided herein, the definitions of all terms used within this chapter shall be as defined below and by Section 16.16.445, or as defined by Section 1.04.050 (with these definitions and Section 16.16.445 taking precedence over Section 1.04.050 in the event of conflict). Any ambiguity in the definitions used herein shall be resolved in favor of the City's understanding of the term.
"Delivery dispensary" means a dispensary, with a permanent fixed location within the city, limited to retail sales of medical cannabis, or medical cannabis products, occurring exclusively through delivery. All retail sales are prohibited at the physical location of the delivery dispensary.
"Employee" means any person (whether paid or unpaid) who provides regular labor or regular services for a delivery dispensary, including but not limited to at the location of a delivery dispensary.
"Live scan" means a system for inkless electronic fingerprinting and the automated background check developed by the California Department of Justice

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(DOJ) which involves digitizing fingerprints and electronically transmitting the fingerprint image data along with personal descriptor information to computers at the DOJ for completion of a criminal record check; or such other comparable inkless electronic fingerprinting and automated background check process as determined by the city council.
"Location" means a single building with an assigned address within the city, controlled, leased, or owned by the applicant, or a single suite controlled, leased or owned by the applicant at a single address within the city, or a combination of suites, at a single building with an assigned address within the city, adjacent to one another, controlled, leased or owned by the applicant, from which access is provided between the suites, without the need to exit the building. "Manager" means an employee responsible for management and/or supervision of a delivery dispensary.

5.50.030 – Operation prohibited without delivery dispensary permit.

It shall be unlawful to own, establish, operate, use, or permit the establishment or operation of a delivery dispensary, or to participate with a delivery dispensary as an employee, contractor, agent, volunteer, or in any manner or capacity other than as provided in this chapter and pursuant to a valid permit issued under this chapter, except as authorized under section 5.50.040 of this code. The general prohibition contained in this section shall include renting, leasing, or otherwise permitting a delivery dispensary to occupy or use a location, vehicle, or other mode of transportation.

5.50.040 - Amortization of delivery dispensary permit.

Any existing delivery dispensary with a valid permit and currently operating in good standing may continue operations on and after December 1, 2024 if all of the following conditions are met:

A. The delivery dispensary must submit a written appeal to the City Manager for the continued operation of its business on and after December 1, 2024. The written appeal shall be submitted no later than fifteen (15) days from the effective date of the ordinance.

B. The written appeal must contain the reason(s) for seeking the continued operation of the delivery dispensary, and shall be accompanied by any documents, and information deemed necessary to adequately explain in detail the grounds for the appeal. Such documents and information shall include, but not be limited to, reasonable investment-backed expectations and other economic or financial information. The appeal must also contain a statement in writing by the appellant that he or she certifies under penalty of perjury that all the information contained in the appeal is true and correct.

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C. Within forty-five (45) days, or as mutually agreed to by both parties, the City Manager or designee shall conduct an administrative hearing to determine whether the delivery dispensary is authorized to continue its operations with a valid permit. Notice of the hearing shall be provided in writing at least thirty (30) days before the hearing.

D. During the hearing, the City Manager or designee shall receive written and oral testimony regarding whether the delivery dispensary shall continue operations on and after December 1, 2024, including any additional information that was not provided to the City in the written appeal.

E. Within seven (7) days after the close of the hearing, the City Manager or designee shall issue a written decision with findings, based on the weight of evidence presented, of whether the delivery dispensary shall continue operations on and after December 1, 2024. Said decision shall be binding and final, subject to judicial review under Section 1094.5 and 1094.6 of the Code of Civil Procedure.

F. Except as warranted under the circumstances and based upon factual findings, the continued operations of the delivery dispensary shall not exceed a maximum of five (5) years from the date of the written decision.

A. Prior to initiating operations as a delivery dispensary and as a continuing requisite to conducting operations, the owner of a delivery dispensary shall obtain a permit from the director under the terms and conditions set forth in this chapter.

B. Delivery dispensary permits shall be issued to a single location. Each delivery dispensary must apply for and receive approval for an individual location.

C. Delivery dispensary permits issued pursuant to this chapter shall automatically expire one year from the date of issuance.

D. Renewal of delivery dispensary permits shall follow the same procedures as provided for herein for the issuance of a new delivery dispensary permit, such procedures subject to written modification by the director.

GE. Conditions necessary for the continuing validity of any and all permits issued for the operation of a delivery dispensary include:

1. Strict adherence to each and every requirement of this chapter.

2. Allowing the director, or designee, and the police department to conduct reasonable inspections of the location of the delivery dispensary at the discretion of the city, including but not limited to

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inspection of security, inventory, and written records and files pertaining to the delivery dispensary, for the purposes of ensuring compliance with local and state law.

3. Maintaining with the city current and valid contact information of the owner(s) and manager(s) of the delivery dispensary.

4. Maintaining with the city current and valid contact information of a legal representative of the delivery dispensary.

5. Maintaining a valid State License of the type: M-Type 9 Non-Storefront Retailer.

6. Maintaining a valid city business license.

7. Maintaining a valid certificate of occupancy.

8. Providing the name, address, phone number, and copies of the driver's license or valid identification cards for each person listed on the business license and each person who is managing or responsible for the delivery dispensary's activities.

9. Providing evidence satisfactory to the director of compliance with all insurance requirements of this chapter.

10. Providing the name, address and current phone number of the owner and lessor of the real property upon which the delivery dispensary is to be conducted; and a notarized acknowledgement from the owner of the property that a delivery dispensary will be operated on his/her property.

11. Complying with the previously approved commercial cannabis delivery site plan, security and lighting plan, photometric plan, and any other approved plan.

Satisfactory evidence of the foregoing shall be provided upon each anniversary of the decision to continue operations of the delivery dispensary.

5.50.050 – RESERVED – Application for delivery dispensary permit.

Each person, firm, partnership, or corporation desiring a delivery dispensary permit shall file an application with the director upon a form provided by the city, and shall pay a filing fee as established by resolution adopted by the city council from time to time. An application shall include, but not be limited to, the following:

A. A completed business license application; and

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B. Copies of the driver's license or valid identification cards for each person listed on the license application; and
C. All fees required; and
D. Certification from appropriate city departments that facility inspections by city staff confirm complete compliance with all the requirements of this Chapter, including but not limited to the general operating standards and restrictions contained in Section 5.50.100; and
E. Completed live scan forms (provided by the city for all business owners and applicants) that are both dated within seven days of application submittal and will allow processing by city (or as otherwise authorized by law) of live scan; and
F. Address of the location where the delivery dispensary will be located; and G. A Commercial Cannabis Delivery Site Plan, in the form prescribed by the city, showing the proposed location of the dispensary, location of security cameras, locations of all of entrances and exits, designs of proposed signage, and interior floor plan, including, but not limited to, storage areas, locked rooms designed to store cannabis, or cannabis product, employee areas, and loading and unloading zones; and
H. A Security and Lighting Plan, in accordance with Section 5.50.100 (C), in the form prescribed by the city, detailing the security measures to be in place at the facility, including, but not limited to, all required security and alarm contracts, security camera placement, window and door locking mechanisms, secure inventory system, and any other measures in place to ensure the security of the facility and cannabis or cannabis product; I. A photometric plan of the entire site, inclusive of all existing and proposed outdoor lighting, which shall be professionally prepared and subject to a sample, provided by applicant, taken at night, showing the site is properly lit and the security cameras ability to capture images with the provided lighting; and
J. Reserved.

K. Evidence satisfactory to the director of compliance with all state law requirements governing medical cannabis dispensaries; and L. Evidence satisfactory to the director of compliance with all insurance requirements of this chapter; and
M. The name, address and current phone number of any person who is managing or responsible for the delivery dispensary's activities; and

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N. The name, address and current phone number of the owner and lessor of the real property upon which the delivery dispensary is to be conducted. In the event the applicant is not the legal owner of the property, the application must be accompanied with a notarized acknowledgement from the owner of the property that a delivery dispensary will be operated on his/her property.

O. Authorization for the director to seek verification of the information contained within the application.

P. A statement in writing by the applicant that he or she certifies under penalty of perjury that all the information contained in the application is true and correct.

Q. Any such additional and further information as is deemed necessary by the director to administer this chapter.

5.50.060 – RESERVED Review of delivery dispensary permit applications.

A. Upon receipt of a completed application and payment of the application and required fees, the director shall investigate the information contained in the application to determine whether the applicant shall be issued the requested permit.

B. If the director determines that the applicant has completed the application improperly, the director shall notify the applicant of such fact within sixty (60) days of receipt of the application. The applicant shall make all corrections required and resubmit the application and any other information required to satisfy the corrections. Applicants must successfully complete Part I of the application process within six months of the initial application date.

Applicants must commence with Part II of the application process within ninety days of the approval of Part I. Applications that do not meet these deadlines shall be considered denied.

C. Within ninety (90) days of receipt of the completed application, the director shall complete the investigation, approve or deny the application in accordance with the provisions of this chapter, and so notify the applicant by United States mail, first class postage prepaid, addressed to the applicant at the address stated in the application.

D. Upon completing the review process, the permit shall be deemed a qualified application, unless the director finds:

1. The applicant has made one or more false or misleading statements or omissions, either on the written application or during the application process; or

2. A proposed location for the delivery dispensary is not allowed by state or local law, statute, ordinance, or regulation (including this code); or

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3. The applicant is not a primary caregiver, qualified patient, or otherwise qualified to operate a medical cannabis dispensary under the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA); or

4. The applicant has not satisfied each and every requirement of this chapter and Code; or
E. The applicant does not comply with applicable state law, including, but not limited to, applicable requirements and minimum standards of the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA). If an application is granted a permit will not be issued until and unless full compliance by the successful applicant with the requirements of Section

5.50.90 ("Obligations of Delivery Dispensary").

F. If the Director neither grants nor denies a complete application within ninety (90) days after it is received (except as provided in Section 5.50.060(B)) the application shall be forwarded to the city council at its next regularly scheduled meeting for consideration in strict conformance with the requirements of this chapter.

G. Based on the information set forth in the application and the director's review, the director may impose reasonable terms and conditions on the use of the permit in addition to those specified in this chapter to ensure the safe operation of the delivery dispensary, and to ensure the health, safety and welfare of the citizens and visitors of the City of Hesperia.

5.50.070 - Denial or revocation of delivery dispensary permit.

A. Denial or revocation. The director may deny or revoke a delivery dispensary permit if any of the following is found:

1. No person may apply for, or be granted, a hold a valid permit to operate a delivery dispensary within the city who has been determined (whether by operation of the Hesperia Municipal Code, or other controlling law) to be in violation, within fifteen (15) years prior to the operative date of this chapter, either administratively, criminally or otherwise, of a prohibition on operating a cannabis dispensary of any type within the city, and has not paid such fines and fees as a result of such violations.

2. Additionally, no person shall employ a person at a delivery dispensary within the city who has been determined (whether by operation of the Hesperia Municipal Code, or other controlling law), to be in violation within fifteen (15) years prior to the operative date of this chapter, either administratively, criminally, or otherwise, of a prohibition on operating a cannabis dispensary of any type within the city, and has not paid such fines and fees as a result of such violations.

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3. The results of the live scan reveal a criminal conviction described in Business and Professions Code Section 26057 (4)(A-E), and as may be amended from time to time. Except as provided in subparagraphs (D) and (E) of paragraph (4) of Business and Professions Code Section 26057, a prior conviction, where the sentence, including any term of probation, incarceration, or supervised release, is completed, for possession of, possession for sale, sale, manufacture, transportation, or cultivation of a controlled substance, shall not be the sole ground for denial of a license.

4. Conviction for any controlled substance felony, as that term is used in Business and Professions Code Section 26057, subsequent to licensure shall be grounds for revocation of a license or denial of the renewal of a license.

5. Failure to obtain and maintain a valid seller's permit required pursuant to Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code.

6. Failure to comply with any state or local law pertaining to commercial cannabis activity.

7. If it is found that the applicant is operating an unlicensed cannabis business and does not completely cease operations during the application process until such time that they are licensed by the City and State.

B. Cure Period. Prior to revocation of a delivery dispensary permit, the permittee shall be provided with a written notice which details the violation(s). The permittee shall have seven days to cure the violation to the satisfaction of the director. The seven-day cure period may be extended by the director or the city council for reasonable cause.

5.50.075 - Appeals.

Appeals. Any decision regarding an application for, a renewal of, or the revocation of, a delivery dispensary permit may be appealed to the city manager by an applicant or (former) permit holder as follows: in accordance with section 5.50.040 of this chapter.

1. Appellant must file a written appeal with the Hesperia City Clerk within ten calendar days of the decision. The written appeal shall specify the person making the appeal, identify the decision appealed from, state the reasons for the appeal, and include any evidence in support of the appeal.

2. Notice of the time and place of an appeal hearing shall be provided to the appellant within thirty (30) days of receipt of the written appeal by the Hesperia City Clerk.

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3. The appeal hearing shall be held within sixty (60) days of the filing of the written appeal with the Hesperia City Clerk, unless the 60-day time limit is waived by the appellant, or unless the city manager or designee continues the appeal hearing date for good cause and upon written notification to the appellant.

4. The city manager or designee shall review the facts of the matter, written documents submitted for review, the basis for making the decision which is under appeal, and then determine whether the director's decision should be reversed or affirmed. The determination made shall be in writing, shall set forth the reasons for the determination, and shall be final.5.The provisions of Sections 1094.5 and 1094.6 of the Code of Civil Procedure set forth the procedure for judicial review of any final determination.

5.50.080 - Penalty for violation.

A. Any violation of the provisions of this chapter shall constitute a separate offense for each and every day during which such violation is committed or continued and shall be subject to all remedies and enforcement measures authorized by the Hesperia Municipal Code for violation of the law.

B. To the fullest extent allowed under state law, any person, whether as principal, employee, agent, partner, director, officer, stockholder, or trustee or otherwise, violating or causing the violation of any of the provisions of this chapter shall be guilty of a misdemeanor, and any conviction thereof shall be punishable by a fine of not more than one thousand dollars ($1,000.00) or by imprisonment for not more than six months, or by both such fine and imprisonment.

5.50.090 - Obligations of delivery dispensary.

A. Before receiving possession of an approved delivery dispensary permit, as provided for in this chapter, The delivery dispensary permit holder shall to the satisfaction of the director:

1. Provide written authorization to the director as well as the police department, to conduct reasonable inspections of the location of the delivery dispensary at the discretion of the city, including but not limited to inspection of security, inventory, and records and files pertaining to the delivery dispensary, for the purposes of ensuring compliance with local and state law.

2. Execute an agreement indemnifying the city, its elected officials, employees, agents, officers, and representatives, and each and all of them individually, from all liability in connection with all claims, damages, attorney's fees, costs, and allegations arising from or in any way related to the operation of the delivery dispensary.

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3. Execute an agreement to:
a. Defend, at the delivery dispensary permit holder's sole expense, any action against the city, its elected officials, employees, agents, officers, and representatives, and each and all of them individually, which arises from the operation of the delivery dispensary.
b. To reimburse the city for any court costs and attorney fees that the city may be required to pay as a result of such action. The city may, at its sole discretion, participate at its own expense in the defense of any such action.

B. Upon and after receiving possession of a delivery dispensary permit as provided for in this chapter, the delivery dispensary permit holder shall:

1. Maintain continuing compliance with all of the insurance requirements of Section 5.50.100(F) of this chapter.

2. Immediately update the director in writing with correct and current contact information, when there is any change in the address or phone number, previously provided to the city in compliance with this chapter, for any owner(s), manager(s) or legal representative(s) of the delivery dispensary.

3. Comply with all conditions of approval prescribed by the director for operation of the delivery business.

C. Failure to perform the aforementioned actions of this Section 5.54.090 shall render the operation of a delivery dispensary unlawful.

5.50.100 - General operating standards and restrictions.

A. Hours of operation shall be limited to 7:00 a.m. to 10:00 p.m.

B. Regulations.

1. No delivery dispensary shall offer retail services or dispense in any manner to customers on site of any product, including but not limited to cannabis and cannabis accessories. All products shall be delivered to patients, or qualified caregivers, at a fixed residential address other than the dispensary.

2. There shall be no sale or delivery of industrial hemp products.

3. There shall be no sale or delivery to any person not in possession of a valid identification card denoting the person as a qualified patient or a caregiver as defined by law.

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4. Delivery shall only be made to residential homes, and no delivery or exchange of goods for money shall occur on city streets, sidewalks, or public ways.

5. Consumption of alcohol and cannabis products is prohibited in the establishment as well as in any vehicles used for delivery.

6. All vehicles associated with the business shall carry in the vehicle a copy of the valid, unexpired business license.

C. Security.

1. All cannabis and related products shall be stored in a secured and locked room. As no retail sales are permitted, no display of cannabis or related products is permitted.

2. No person may be an employee of a delivery dispensary who has been convicted of a crime involving the illegal distribution of narcotics within the last seven years, dated from time of conviction, or if the conviction required incarceration, the time of release, whichever is later.

3. The facility and parking area shall be equipped with security lighting at each entrance, and no less than five other points on the building or property as approved by the city, and at all gated entrances.

Entrance lighting and parking area lighting shall not require motion to activate and shall provide adequate lighting without the aid of motion- detecting lights. Security lighting shall illuminate the entire entrance, and the adjacent parking area upon motion detection. Each light shall provide at least 0.1-foot candle intensity. This lighting shall be in addition to any other lighting requirements of this code.

4. The facility shall be alarmed with a centrally monitored fire and burglar alarm system, and monitored by an alarm company properly licensed by the State of California Department of Consumer Affairs Bureau of Security and Investigative Services in accordance with California Business & Professions Code section 7590 et seq. and whose agents are properly licensed and registered under applicable law.

5. Security cameras shall be installed on the property, maintained in good condition, and shall provide a clear, unobstructed view of the parking area, all entrances, loading areas, bays, windows, and any other areas as determined by the director. The cameras shall be in use twenty-four (24) hours per day, seven days per week. All recordings shall be digitally recorded and kept for no less than ninety (90) days and shall be made available to the police department upon

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request. All recordings shall be time and date stamped. All security cameras shall be properly maintained and kept in working order.

6. Cannabis or cannabis product shall not be stored, kept, or otherwise accessed from outside the building. Loading and unloading of cannabis or cannabis products is allowed during business operating hours only and must be completed at the rear of the building. Loading and unloading may be allowed at the front of the building, at the discretion of the director, providing that all of the below is true:
i. That there is a roll-up door or doors, which are attached to and part of the cannabis business location; and
ii. That the interior of the building accessible by the roll-up door(s) is large enough to accommodate a vehicle, completely inside the facility; and
iii. That the roll-up door(s) can be closed completely, concealing the vehicle during the loading, and unloading of cannabis product; and
iv. That the roll-up door(s) remain closed and locked when not in use; and
v. All loading and unloading of cannabis occurs inside of the building with the roll-up door closed.

7. All exterior doors shall remain locked and be accessible for operation by employees only, and all windows shall be secured against entry from the outside. Exterior doors shall be properly equipped with panic hardware as required by all applicable state codes.

8. All cannabis present or kept at the premises shall be securely stored against both unauthorized access as well as theft.9. Cannabis and cannabis products prepared for delivery shall be stored in secure containers within the trunk of the delivery vehicle during delivery.

D. Odor Control. A delivery dispensary shall have an air treatment system that ensures off-site odors shall not result from its operations. This requirement at a minimum means that the delivery dispensary shall be designed to provide sufficient odor absorbing ventilation and exhaust systems so that any odor generated inside the location of the delivery dispensary is not detected outside the building, on adjacent properties or public rights-of-way, or within any other unit located within the same building as the delivery dispensary, if the use only occupies a portion of a building.

E. Records.

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1. Delivery dispensaries shall maintain records reflecting:
a. The full name, address, and telephone number(s) of the owner and lessee of the property.
b. The full name, address, and telephone number(s) of all employees.
c. The delivery of medical cannabis, including but not limited to the identity of the recipient using the unique identifier supplied to them by the state, the amount delivered, the date of the delivery, the address of the delivery, the name of the employee making the delivery, and a written receipt confirming the delivery by signature of the receiving person(s).
d. A written accounting of all expenditures, costs, revenues, and profits of the delivery dispensary.
e. A copy of the delivery dispensary's required insurance policy and all other insurance policies related to the operation of the delivery dispensary.
f. An inventory record documenting the dates and amounts of medical cannabis received at the medical cannabis dispensary, the daily amounts of medical cannabis stored at the location of the medical cannabis dispensary, and the daily amounts
distributed.
g. Proof of a valid and current permit issued by the city in accordance with this chapter. Every medical cannabis
dispensary shall display at all times during business hours the permit issued pursuant to the provisions of this chapter in a conspicuous place.

2. Records shall be maintained on-site, either in paper or electronic form, and secured and verified by the director as needed (consistent with requirements pertaining to patient confidentiality pursuant to applicable State and Federal law).

3. All records required to be maintained by the delivery dispensary must be maintained for no less than three years and are subject to immediate inspection upon written request by the director. a. Records pertaining to the operation of the delivery dispensary, including but not limited to taxation remittance to state, county or city, revenue, product inventory, etc. shall be subject, at the city's discretion, to an audit, performed by a company selected by the city. The business owner shall pay any required fees, as

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adopted by the city council, for the performance of the audit.

Upon notification by city that there is an intent to perform an audit, the business owner shall remit the fee for the audit to the city within thirty (30) days.

F. Insurance.

1. A delivery dispensary shall procure and maintain, at its sole cost and expense, in a form and content satisfactory to the director, the following policies of insurance in the amounts and of the types that are acceptable to the director, with minimal coverage provided of:

2. Throughout the life of the license, the licensee shall pay for and maintain in full force and effect all policies of insurance required hereunder with an insurance company(ies) either (i) admitted by the California Insurance Commissioner to do business in the State of California and rated not less than "A-VIII" in Best's Insurance Rating Guide, or (ii) authorized by city manager or his/her designee and in his/her sole discretion. The following policies of insurance are required:

3. Commercial general liability insurance which shall be at least as broad as the most current version of Insurance Services Office (ISO) Commercial General Liability Coverage Form CG 00 01 and include insurance for "bodily injury," "property damage" and "personal and advertising injury" with coverage for premises and operations (including the use of owned and non-owned equipment), products and completed operations, and contractual liability (including, without limitation, indemnity obligations under the Contract) with limits of not less than one million dollars ($1,000,000.00) per occurrence for bodily injury and property damage, one million dollars
($1,000,000.00) per occurrence for personal and advertising injury, two million dollars ($2,000,000.00) aggregate for products and completed operations and two million dollars ($2,000,000.00) general aggregate.

4. Commercial automobile liability insurance which shall be at least as broad as the most current version of Insurance Services Office (ISO) form CA 00 01 and shall include coverage for "scheduled auto", "hired auto" and "non-owned auto" with limits of liability of not less than one million dollars ($1,000,000.00) per accident for bodily and property damage.

5. Workers' compensation insurance as required under the California Labor Code.

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6. Employers' liability insurance with minimum limits of one million dollars ($1,000,000.00) each accident, one million dollars ($1,000,000.00) disease each employee and one million dollars ($1,000,000.00) disease policy limit.

7. Licensee shall be responsible for payment of any deductibles or self- insured retentions contained in any insurance policies required hereunder.

8. All policies of insurance required hereunder shall be endorsed to provide that the coverage shall not be cancelled, non-renewed, reduced in coverage or in limits except after thirty (30) calendar day written notice by certified mail, return receipt requested, has been given to the city. Upon issuance by the insurer, broker, or agent of a notice of cancellation, non-renewal or reduction in coverage or limits, licensee shall furnish city with a new certificate and applicable endorsements for such policy(ies). In the event any policy(ies) is due to expire during the license, licensee shall provide a new certificate and all applicable endorsements evidencing renewal of such policy(ies) not less than fifteen (15) calendar days prior to the expiration date of the expiring policy(ies).

9. The general liability (including ongoing operations, and products, and completed operations) and automobile liability insurance policies shall be endorsed to name the city and its officers, officials, employees, agents, and volunteers as an additional insured. Such policy(ies) of insurance shall be endorsed so permittee's insurance shall be primary, and no contribution shall be required of city, its officers, officials, employees, agents, and volunteers. Any workers' compensation insurance policy shall contain a waiver of subrogation as to city, its officers, officials, employees, and agents. The coverage shall contain no special limitations on the scope of protection afforded to city and its officers, officials, employees, agents, and volunteers. Should licensee maintain insurance with broader coverage and/or limits of liability greater than those shown above, the city requires and shall be entitled to the broader coverage and/or the higher limits of liability maintained by the licensee. Licensee shall furnish city with the certificate(s) and applicable endorsements for all required insurance fourteen (14) days prior to the issuance of the permit.

10. If the general liability insurance policy is written on a claims-made form:(1)The retroactive date must be shown, and must be before the effective date of the agreement or the commencement of work by consultant.(2)Insurance must be maintained and evidence of insurance must be provided for at least three years after any expiration or termination of the agreement or, in the alternative, the

01071.0005/1007873.1
policy shall be endorsed to provide not less than a 3-year discovery period.(3)If coverage is canceled or non-renewed, and not replaced with another claims-made policy form with a retroactive date prior to the effective date of the agreement or the commencement of work by consultant, consultant must purchase extended reporting coverage for a minimum of three years following the expiration or termination of the agreement.(4)A copy of the claims reporting requirements must be submitted to city for review.(5)These requirements shall survive expiration or termination of the article.

11. Upon request of city, licensee shall immediately furnish city with a complete copy of any insurance policy required under this agreement, including all endorsements, with said copy certified by the underwriter to be a true and correct copy of the original policy.

This requirement shall survive the expiration or revocation of the license.

12. If at any time during the license, licensee fails to maintain the required insurance in full force and effect, all work licensed thereunder shall be discontinued immediately until notice is received by city that the required insurance has been restored to full force and effect and that the premiums therefore have been paid for a period satisfactory to city. Any failure to maintain the required insurance shall be sufficient cause for the city to revoke the license.

13. Note: The certificate of insurance must be accompanied by the additional insured, primary insurance, and waiver of subrogation endorsements, as required above.

14. All of the above policies of insurance shall be primary insurance and shall name the city, its elected and appointed officers, employees and agents as additional insureds and any insurance maintained by city or its officers, employees or agents may apply in excess of, and not contribute with the above policies of insurance.

15. No permit may be issued pursuant to this chapter until the applicant for a medical cannabis dispensary permit has provided the city with certificates of insurance, additional insured endorsement forms or appropriate insurance binders evidencing the above insurance coverages and said certificates of insurance or binders are approved by the city. City reserves the right to inspect complete, certified copies of and endorsements to all required insurance policies at any time.

G. The regulations contained in this chapter shall not apply to a medical cannabis dispensary engaged in the following uses, as long as such use complies strictly with applicable law regulating such use and the location of

01071.0005/1007873.1
such use, including, but not limited to, Health and Safety Code sections 11362.5 and 11362.7 et seq.; a clinic permitted pursuant to Chapter 1 of Division 2 of the Health and Safety Code; a health care facility permitted pursuant to Chapter 2 of Division 2 of the Health and Safety Code; a residential care facility for persons with chronic life-threatening illness permitted pursuant to Chapter 3.01 of Division 2 of the Health and Safety Code; a residential care facility for the elderly licensed pursuant to Chapter

3.2 of Division 2 of the Health and Safety Code; a residential hospice; or a home health agency permitted pursuant to Chapter 8 of Division 2 of the Health and Safety Code.

5.50.110 - Fees.

A. Fees. An application fee set by resolution of the city council shall be required for formal processing of every application made under this chapter.

The city council is authorized to pass resolutions to recover any and all fees and costs incurred by the implementation of this chapter through an appropriate fee recovery mechanism to be imposed upon delivery dispensaries and their operations.

B. State Board of Equalization Seller's Permit Required. The State Board of Equalization has determined that medical cannabis transactions are subject to sales tax, regardless of whether the individual or group makes a profit, and those engaging in transactions involving medical cannabis must obtain a seller's permit from the State Board of Equalization.

5.50.120 - Public nuisance and abatement.

In addition to the penalties set forth in this chapter, any delivery dispensary that is operating in violation of any provisions of this chapter is hereby declared to constitute a public nuisance and, as such, may be abated or enjoined from further operation, in accordance with the procedures set forth in Chapter 1.12 (Municipal Code Enforcement) of Title 1 (General Provisions) of the Hesperia Municipal Code.

5.50.130 - Suspension and revocation.

A. The director is authorized to suspend and/or revoke delivery dispensary permits issued pursuant to this chapter upon the determination through written findings of a failure to comply with any provision of this chapter, any condition of approval, or any agreement or covenant as required pursuant to this chapter.

B. The director may suspend or revoke a delivery dispensary permit if any of the following occur:

01071.0005/1007873.1

1. The director determines that the delivery dispensary has failed to comply with any aspect of this chapter, any condition or approval, or any agreement or covenant as required pursuant to this chapter; or

2. Operations cease for more than ninety calendar days: or

3. Ownership is changed without securing a new delivery dispensary permit; or

4. The delivery dispensary fails to maintain required security camera recordings; or

5. The delivery dispensary fails to allow inspection of the security recordings, the activity logs, the records, or of the premise by authorized city officials.

6. The delivery dispensary's state license is suspended, revoked, or denied. Should the license be suspended the delivery dispensary owner shall provide up to date information to the City regarding the reinstatement of the license. Should the license remain suspended for more than ninety days, the City may revoke the City license.

C. Conditions (if any) of suspension or revocation are at the discretion of the director and may include, but are not limited to, a prohibition on all owners, operators and employees of the suspended or revoked delivery dispensary from operating within the city for a period of time set forth in writing and/or a requirement (when operations may resume, if at all, pursuant to the director's determination) for the holder of the suspended or revoked delivery dispensary permit to resubmit an application for a delivery dispensary permit pursuant to the requirements of this chapter.

D. Suspension or revocation of a delivery dispensary permit pursuant to this chapter shall constitute a "revocation" for purposes of Business and Professions Code section 19320.

5.50.140 - Nonconforming use.

No use which purports to have distributed cannabis prior to the enactment of this chapter shall be deemed to have been a legally established use under the provisions of the Hesperia Zoning Code, the Hesperia Municipal Code, or any other local ordinance, rule or regulation, and such use shall not be entitled to claim legal nonconforming status.

City of Hesperia

STAFF REPORT

DATE: October 15, 2024
TO: Mayor and Council Members

FROM: Rachel Molina, City Manager
BY: Melinda Sayre, Deputy City Manager/City Clerk
Tammy Pelayes, Assistant to the City Manager

SUBJECT: Proposition 36 – Homelessness, Drug Addiction, and Theft Reduction Act

RECOMMENDED ACTION

It is recommended that the City Council consider adopting Resolution No. 2024-53, supporting Proposition 36 – the Homelessness, Drug Addiction, and Theft Reduction Act.

BACKGROUND

The League of California Cities has contacted cities across the state to seek resolutions in support of Proposition 36, a bi -partisan measure. Because the Hesperia City Council has continued to include language in its annual legislative platform seeking legislative tools to increase community safety, this resolution is being presented for City Council consideration.

On November 4, 2014, California voters approved Proposition 47 (Prop 47), also known as the Safe Neighborhoods and Schools Act. Although Prop 47 resulted in some positive changes such as allowing the State to provide $100 million annually to victim services, mental health, and substance use services, local jurisdictions are feeling the negative side effects of Prop 47.

California has experienced a spike in retail theft, violent smash-and-grab robberies, fentanyl deaths and illicit drug use, which many attribute in-part to Prop 47.

Prop 47 recharacterized most drug offenses and thefts of property valued under $950 from felonies to misdemeanors. Under Prop 47, offenders of these crimes receive little to no punishment for their behavior. To address these issues, Proposition 36 (Prop 36) was developed, which aims to reform laws contributing to these issues. Prop 36, t he Homelessness, Drug Addiction, and Theft Reduction Act, seeks to combat the negative outcomes experienced by the passage of Prop 47. Prop 36 has garnered widespread support, with endorsements from the League of California Cities, public safety leaders, local governments, and businesses across California.

ISSUES/ANALYSIS

Prop 36 is intended to reform Prop 47 and has qualified for the November 2024 ballot. The measure will reform laws that have dramatically increased homelessness, drug addiction and theft throughout California. Key provisions include:

Staff Report to the City Council
Resolution No. 2024-53
October 15, 2024

Addressing the Fentanyl Crisis
• Allows those who possess illegal drugs (fentanyl, heroin, methamphetamine, etc.) to be charged with a treatment -mandated facility, instead of a misdemeanor, in some cases;
• Enables stricter penalties for dealers whose trafficki ng causes death or serious injury;
• Sentences for selling certain drugs (fentanyl, heroin, methamphetamine) can be lengthened based on the amount sold.

Addressing Theft Related Crimes
• Classifies repeated theft as a felony for individuals who steal less than $950 if they have two or more prior theft related convictions (burglary, carjacking, shoplifting); • Allows stolen property values from multiple thefts to be combined, so repeat offenders can be charged with a felony if the total exceeds $950, countering tactics by career criminals to avoid harsher penalties;
• Lengthens felony sentences for theft or damage of property up to three years if three or more offenders commit the crime together;
• Proposes reinstating felony charg es for repeat theft offenders and enhancing penalties for "smash and grab" thefts.

CITY GOAL SUPPORTED BY THIS ITEM

Public Safety - Ensure public safety resources adequately protect our community.

FISCAL IMPACT

There is no fiscal impact associated with approval of the recommended action.

ALTERNATIVE(S)

Provide alternative direction to staff.

ATTACHMENT(S)

1. Resolution No. 2024-53

2. Initiative Text 23-0017 A1

RESOLUTION NO. 2024-53

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HESPERIA, CALIFORNIA , SUPPORTING PROPOSITION 36 – THE HOMELESSNESS, DRUG ADDICTION, AND THEFT REDUCTION ACT (INITIATIVE NO. 23-0017A1)

WHEREAS, Proposition 36, the Homelessness, Drug Addiction , and Theft Reduction Act, is intended to reform Proposition 47 and has qualified as a state -wide measure for the November 2024 ballot; and

WHEREAS, this measure will reform laws that have dramatically increased homelessness, drug addiction and theft throughout California; and

WHEREAS, Proposition 36 addresses organized retail theft, confronts the fentanyl crisis , and prioritizes drug treatment; and

WHEREAS, the measure would increase penalties for trafficking hard drugs including fentanyl, increase penalties for those who repeatedly engage in theft, add new laws to address smash and grab crimes, and provide diversion programs for repeat offenders.

NOW THEREFORE, BE IT RESOLVED BY THE CITY OF HES PERIA CITY COUNCIL A S FOLLOWS:

Section 1. That the City Council of the City of Hesperia does hereby support Proposition 36 – The Homelessness, Drug Addiction, and Theft Reduction Act (Initiative No. 23 - 0017A1).

Section 2. That the City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions.

ADOPTED AND APPROVED this 15th day of October 2024.

______________________________
Larry Bird, Mayor

ATTEST:

____________________________
Erin Baum, Assistant City Clerk

Attachment 2

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City of Hesperia

STAFF REPORT

DATE: October 15, 2024
TO: Mayor and Council Members

FROM: Rachel Molina, City Manager
BY: Casey Brooksher, Assistant City Manager
Anne M. Duke, Deputy Finance Director

SUBJECT: City of Hesperia Community Facilities District 2005-1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Refunding Bonds, Series 2024

RECOMMENDED ACTION
For the purpose of achieving debt service savings that can be passed through to taxpayers, it is recommended that the City Council adopt Resolution No. 2024-52, authorizing the issuance of the City of Hesperia Community Facilities District 2005 -1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Refunding Bonds, Series 2024 (the “Bonds”) to refinance outstanding bonds and approving all related documents and actions.

BACKGROUND
The CFD. The City of Hesperia (the “City”) previously conducted proceedings under the Mello-Roos Community Facilities Act of 1982, as amended (the “ Mello-Roos Act”), to form “City of Hesperia Community Facilities District 2005-1 (Belgate Development Restructuring), County of San Bernardino, State of California” (the “CFD”).

2005 Bonds. On April 14, 2005, the City issued $18,554,508 initial principal amount City of Hesperia Community Facilities District No. 2005 -1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Bonds, 2005 Series A (the “2005 CFD Bonds”). The 2005 CFD Bonds were issued to cause a refinancing and exchange of the $10,000,000 original principal amount of Community Facilities District No. 91 -3 of the City of Hesperia, Special Tax Bonds (the “1992 Bonds”), which were in payment default.

Also on April 14, 2005, the Hesperia Public Financing Authority (the “PFA”), issued its $18,554,508 initial principal amount Hesperia Public Financing Authority 2005 Local Agency Revenue Bonds, Series A (Tranches A Through C) (the “2005 PFA Bonds”) for the purpose of financing the acquisition by the 2005 PFA Bonds’ trustee of the 2005 CFD Bonds.

Both the 2005 CFD Bonds and the 2005 PFA Bonds were structured as convertible capital appreciation bonds, meaning that they did not pay current interest and instead accreted interest to a set conversion date. The conversion date was September 1, 2006. At conversion, the principal amount of both series of bonds was $20,260,000.

2014 Bonds. On December 18, 2014, for the purpose of achieving debt service savings that were available as a result of the development of property in the CFD since 2005 and favorable market conditions, the City issued $18,450,000 initial principal amount City of Hesperia

Staff Report to the Mayor and City Council
City of Hesperia Community Facilities District 2005-1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Refunding Bonds, Series 2024 October 15, 2024

Community Facilities District No. 2005 -1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Refunding Bonds, Series 2014 (the “2014 Bonds”).

The 2014 Bonds were issued to cause a refunding of the 2005 CFD Bonds and the 2005 PFA Bonds.

ISSUES/ANALYSIS
Refinancing Opportunity. The 2014 Bonds are subject to optional redemption on March 1, 2025, without any prepayment premium. The underwriter of the proposed Bonds, Stifel Nicolaus & Company, Incorporated (the “Underwriter”), estimates that, under current market conditions, the net present value of the savings that could be realized by the City as a result of the issuance of the Bon ds (after deducting the costs of issuing the Bonds) is approximately $858,497 or approximately 6.69% of the outstanding principal amount of the 2014 Bonds. Market conditions could change between the date of this repor t, and the date on which the Bonds are sold to the Underwriter, particularly because of the upcoming presidential election.

No Change in the CFD; Benefits of the Refinancing. The refinancing of the 2014 Bonds will not result in a change in the existing CFD or the rate and method of apportionment of special tax for the CFD. The refinancing does not extend the term of the debt. Instead, the refinancing allows the levy on property owners in the CFD to be reduced.

City staff expects all the savings from the proposed refinancing to accrue to property owners in the CFD in the form of lower special taxes because the special tax levied by the CFD pays for both debt service on bonds of the CFD and police and fire services, but the City is already levying the maximum authorized amount for police/fire services (which escalates every year).

Required Documentation. The following documents are required to accomplish the proposed lease financing:

Fiscal Agent Agreement: The City will issue the Bonds on behalf of the CFD pursuant to the Fiscal Agent Agreement, which is between the City, on behalf of the CFD, and U.S.

Bank Trust Company, National Association , as fiscal agent . The Bonds will be payable only from proceeds of the special taxes and not from any other funds of the City.

Escrow Deposit and Trust Agreement: Under this agreement between the City and U.S.

Bank Trust Company, National Association, the proceeds of the Bonds and other available funds related to the 2014 Bonds will be used to refinance the 2014 Bonds on March 1, 2025. Between the date of issuance of the Bonds in December 2024, proceeds of the Bonds will be invested in federal securities to further increase the debt service savings for the benefit of the taxpayers in the CFD.

Bond Purchase Contract: On a “pricing date,” the Underwriter and the City will enter into the Bond Purchase Contract that will detail the principal amount and interest rate on the Bonds and the conditions under which the Underwriter will buy the Bonds. The Bond Purchase Contract will establish a “closing date,” which will be approximately 2 -3 weeks after the pricing date.

Official Statement: Prior to execution of the Bond Purchase Contract, the Underwriter will distribute to potential investors a “Preliminary Official Statemen t” that is prepared by the City. After execution of the Bond Purchase Contract, the Underwriter provides each

Staff Report to the Mayor and City Council
City of Hesperia Community Facilities District 2005-1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Refunding Bonds, Series 2024 October 15, 2024

investor with a copy of a final Official Statement, which is identical to the Preliminary Official Statement except that it includes the princi pal amount and interest rates agreed upon in the Bond Purchase Contract.

The attached Preliminary Official Statement has been reviewed and approved for transmittal to the City Council by City staff and its financing team. The distribution of the Preliminary Official Statement is subject to federal securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934. These laws require the Preliminary Official Statement to include all facts that would be material to an inv estor in the Bonds.

Material information is information that there is a substantial likelihood would have actual significance in the deliberations of the reasonable investor when deciding whether to buy or sell the Bonds. If the City Council concludes th at the Preliminary Official Statement includes all facts that would be material to an investor in the Bonds, it must adopt a resolution that authorizes staff to execute a certificate to the effect that the Preliminary Official Statement has been “deemed final.”

The Securities and Exchange Commission (the “SEC”), the agency with regulatory authority over the City’s compliance with the federal securities laws, has issued guidance as to the duties of the City Council with respect to its approval of the Preli minary Official Statement. In its “Report of Investigation in the Matter of County of Orange, California as it Relates to the Conduct of the Members of the Board of Supervisors” (Release No. 36761 / January 24, 1996) (the “Release”), the SEC stated that, if a member of the City Council has knowledge of any facts or circumstances that an investor would want to know about prior to investing in the Bonds, whether relating to their repayment, tax -exempt status, undisclosed conflicts of interest with interested parties, or otherwise, he or she should endeavor to discover whether such facts are adequately disclosed in the Preliminary Official Statement. In the Release, the SEC stated that the steps that a member of the City Council could take include becoming fa miliar with the Preliminary Official Statement and questioning staff and consultants about the disclosure of such facts.”

As described above, the Bonds will be payable from special taxes only, so the focus of the Official Statement is on the taxable prope rty in the CFD. The security for the Bonds is described in the section of the Preliminary Official Statement entitled “SECURITY FOR THE 2024 BONDS”; information about the CFD is set forth in “THE DISTRICT”. The District is primarily built-out. Since issuance of the 2014 Bonds, there has been no need to levy special taxes on Undeveloped Property (property without a building permit) , and staff does not expect that to change following issuance of the Bonds. The key risk factors associated with the Bonds are described in the section of the Preliminary Official Statement entitled “SPECIAL RISK FACTORS”.

Continuing Disclosure Certificate . Under Securities and Exchange Commission Rule 15c2-12, the Underwriter may only purchase the Bonds if it has determin ed that the City is obligated to provide continuing disclosure, including annual updates of the financial and operating data included in the Official Statement.

CITY GOAL SUPPORTED BY THIS ITEM

Financial Health – Maintain a balanced budget and adequate reserves.

Staff Report to the Mayor and City Council
City of Hesperia Community Facilities District 2005-1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Refunding Bonds, Series 2024 October 15, 2024

FISCAL IMPACT

Subject to market conditions, which could be impacted by , among other things, the upcoming presidential election, the City expects to generate significant savings for p roperty owners in the CFD. All costs of the refinancing will be paid with the proceeds of the Bonds.

The City Council resolution authorizes issuance of the Bonds only if they will result in at least 3% net present value savings, which is a minimum industry savings standard for refinancings.

ALTERNATIVES

Provide alternative direction to staff.

ATTACHMENTS

1. Resolution No. 2024-52

2. Preliminary Official Statement (including the Continuing Disclosure Certificates as an appendix)

3. Fiscal Agent Agreement between the City and U.S. Bank Trust Company, National Association (On file in the City Clerk’s Office)

4. Escrow Deposit and Trust Agreement by and between the City and U.S. Bank Trust Company, National Association (On file in the City Clerk’s Office)

5. Bond Purchase Contract (On file in the City Clerk’s Office)

RESOLUTION NO. 2024-52
RESOLUTION NO. 2024-52

RESOLUTION OF THE CITY OF HESPERIA AUTHORIZING THE ISSUANCE AND SALE OF

SPECIAL TAX REFUNDING BONDS AND APPROVING AND AUTHORIZING RELATED

DOCUMENTS AND ACTIONS

City of Hesperia
Community Facilities District 2005-1 (Belgate Development Restructuring), County of San Bernardino, State of California
Special Tax Refunding Bonds, Series 2024

WHEREAS, the City Council of the City of Hesperia (the “City”) has conducted proceedings under and pursuant to the Mello -Roos Community Facilities Act of 1982, as amended, Chapter 2.5 of Part 1 of Division 2 of Title 5 (commencing with Section 53311) of the California Government Code (the “Act”), to form “City of Hesperia Community Facilities District 2005-1 (Belgate Development Restructuring) , County of San Bernardino, State of California ” (the “CFD”), to authorize the levy of special taxes upon the land within the CFD, and to issue bonds secured by said special taxes the proceeds of which are to be used to finance certain public improvements (the “Facilities”), all as described in those proceedings; and

WHEREAS, under the provisions of the Act and pursuant to a Fiscal Agent Agreement, dated as of December 1, 2014 (the “2014 Fiscal Agent Agreement”), by and between the City and U.S. Bank Trust Company, National Association, as successor fiscal agent (the “2014 Fiscal Agent ”), the City issued its $ 18,450,000 initial principal amount City of Hesperia Community Facilities District No. 2005 -1 (Belgate Development Restructuring) , County of San Bernardino, State of California Special Tax Refunding Bonds, Series 2014 (the “2014 Bonds”); and

WHEREAS, the 2014 Bonds are subject to optional redemption on March 1, 2025, without premium; and

WHEREAS, the City has determined that, due to favorable interest rates, it is in the best interests of the City and the CFD that the 2014 Bonds be refinanced; and

WHEREAS, this City Council now proposes to issue its City of Hesperia Community Facilities District 2005-1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Refunding Bonds, Series 2024 (the “Bonds”), and there have been submitted to this City Council certain documents described below providing for the issuance of the Bonds for the CFD and the use of the proceeds of those Bonds to refund the 2014 Bonds , and this City Council with the aid of its staff, has reviewed the documents and found them to be in proper order; and

WHEREAS, there has also been submitted to this City Council a form of preliminary Official Statement in connection with the marketing of the Bonds and the City Council, with the aid of its staff, has reviewed the preliminary Official Statement; and

WHEREAS, in accordance with Government Code Section 5852.1, the City Council has obtained and wishes to disclose the information set forth in Appendix A hereto; and

WHEREAS, all conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance of the Bonds and the levy of the special

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taxes as contemplated by this resolution and the documents referred to herein exist, h ave happened and have been performed in due time, form and manner as required by the laws of the State of California, including the Act;

NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Hesperia , as follows:

Section 1. Bonds Authorized. Pursuant to the Act, this Resolution, and the Fiscal Agent Agreement (as defined in Section 3 of this Resolution), bonds designated the “City of Hesperia Community Facilities District 2005 -1 (Belgate Development Restructuring), County of San Bernardino, State of California Special Tax Refunding Bonds, Series 2024” (the “Bonds”) in the principal amount not to exceed thirteen million dollars ($13,000,000) are hereby authorized to be issued. The Bonds shall be dated, shall bear interest at the rates, shall m ature on the dates (provided that the final maturity date of the Bonds shall not exceed the final maturity date of the 2014 Bonds), shall be issued in the form, shall be subject to redemption, shall be executed, and shall otherwise be issued and secured on the terms and conditions, all as set forth in the Fiscal Agent Agreement and in accordance with this Resolution; provided, however, that the net present value of the savings to be realized by the City as a result of the issuance of the Bonds (after deducting the costs of issuing the Bonds) must be at least 3% of the outstanding principal amount of the 2014 Bonds. The Fiscal Agent (as defined in Section 3 of this Resolution), an Authorized Officer (as defined in Section 2 of this Resolution) and other res ponsible officers of the City are hereby authorized and directed to take such actions as are required to cause the delivery of the Bonds upon receipt of the purchase price thereof.

The City Council hereby finds that:

(a) The Bonds constitute “refunding bonds” within the meaning of the Act because the proceeds thereof will be used to refund the 2014 Bonds. For the purposes of these proceedings for the issuance of the Bonds, the City Council hereby determines that (i) the total interest cost to maturity on the Bonds plus the principal amount of the Bonds is less than the total interest cost to maturity of the 2014 Bonds plus the principal amount of the 2014 Bonds to be refunded and (ii) the final maturity date of the Bonds is not later than the final maturity date of the 2014 Bonds.

(b) It would be prudent in the management of the City’s fiscal affairs to issue the Bonds to refund the 2014 Bonds and, as a result, to cause a refunding of the 2014 Bonds.

(c) The fiscal year 2024-25 assessed value of the real property in the CFD that would be subject to the special tax to pay debt service on the Bonds will be at least three times the principal amount of the sum of the following: (i) the principal amount of the Bonds and (ii) the principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to the Act on property within the CFD or a special assessment levied on property within the CFD.

Section 2. Authorities Granted. Each of the Mayor, the City Manager and the Assistant City Manager, or the written designee of any one of them as set forth in Section 9 below (each, an “Authorized Officer”), acting alone, is hereby authorized and directed to execute and deliver the documents approved herein in substantially the form on file with the City Clerk, together with such additions or changes as are approved by such Authorized Officer, including such additions or changes as are necessary or advisable to permit the timely issuance, sale and delivery of the

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Bonds. The approval of such additions or changes shall be conclusively evidenced by the execution and delivery by an Authorized Officer of the documents herein specified.

Section 3. Fiscal Agent Agreement. The Council hereby approves the form of the Fiscal Agent Agreement by and between the City, for and on behalf of the CFD, and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent Agreement”) with respect to the Bonds, in substantially the form on file with the City Cle rk. The terms and provisions of the Fiscal Agent Agreement, as executed, are incorporated herein by this reference as if fully set forth herein. An Authorized Officer is hereby authorized and directed to execute the Fiscal Agent Agreement on behalf of the City and the City Clerk is hereby authorized and directed to attest thereto.

Section 4. Escrow Agreement. The form of Escrow Deposit and Trust Agreement by and among the City, for and on behalf of the CFD, and U.S. Bank Trust Company, National Association, as escrow holder, in substantially the form on file with the City Clerk (the “Escrow Agreement”), is hereby approved. An Authorized Officer is hereby directed to execute the same for the City. For the purposes hereof, the “Escrow Fund ” established under the Escrow Agreement shall constitute the “refunding fund ” under the Act and the “designated costs of issuing the refunding bonds” under the Act shall include the Costs of Issuance as defined in the Fiscal Agent Agreement and costs set forth in the Escrow Agreement. The City Council anticipates that the refunding of the 2014 Bonds will occur on or about March 1, 2025.

Section 5. Official Statement . The Council hereby approves the Official Statement prepared in connection with the Bonds in sub stantially the form submitted to the Council, together with any changes therein or additions thereto deemed advisable by an Authorized Officer. The Council hereby approves and authorizes the distribution by Stifel, Nicolaus & Co., Incorporated, the underw riter of the Bonds (the “Underwriter”), of the Official Statement to prospective purchasers of the Bonds, and authorizes and directs an Authorized Officer on behalf of the City to deem the Official Statement “final” pursuant to Rule 15c2 -12 under the Securities Exchange Act of 1934 (the “Rule”) prior to its distribution to prospective purchasers of the Bonds. The execution of the final Official Statement, which shall include then -current material financial informati on regarding the City and the CFD and such other changes and additions thereto deemed advisable by an Authorized Officer and such information permitted to be excluded from the preliminary version of the Official Statement pursuant to the Rule, shall be conclusive evidence of the approval of the Official Statement by the City for and on behalf of the CFD.

Section 6. Continuing Disclosure . The Council hereby approves the form of the Continuing Disclosure Certificate with respect to the Bonds in substantial ly the form thereof attached to the Official Statement on file with the City Clerk. An Authorized Officer is hereby authorized and directed to complete and execute the Continuing Disclosure Certificate on behalf of the City (for and on behalf of the CFD) w ith such changes, additions or deletions as may be approved by the Authorized Officer.

Section 7. Sale of the Bonds; Bond Purchase Agreement . The City Council her eby approves the appointment of Stifel, Nicolaus & Company, Incorporated, as Underwriter. The Bond Purchase Agreement, between the City and the Underwriter, in substantially the form on file with the City Clerk and made a part hereof as though set forth in full herein, is hereby approved by the City Council. An Authorized Officer is hereby aut horized and directed to execute and deliver the Bond Purchase Agreement in such form, together with such changes,

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insertions and omissions which are approved by an Authorized Officer and which are in accordance with the provisions of this Resolution, such execution to be conclusive evidence of such approval; subject to the requirement that the Underwriter’s discount on the purchase of the Bonds may not exceed 1.0% and the interest rate may not exceed the rate specified in Section 1 hereof. The City Council hereby approves the negotiated sale of the Bonds to the Underwriter pursuant to such Bond Purchase Agreement on the basis that such negotiated sale will result in a lower overall cost than would a competitive sale of the Bonds; such negotiated sale may be on a forward basis, as determined by an Authorized Officer.

Section 8. Approval of Agreements with Bond Counsel and Disclosure Counsel , Municipal Advisor and Special Tax Consultant . The Council hereby approves the form of the agreement for legal services with Jones Hall, A Professional Law Corporation, as bond counsel and disclosure counsel to the City in connection with the Bonds, in substantially the form on file with the City Clerk. An Authorized Officer is hereby authorized and directed to complete a nd execute the Agreement for Legal Services on behalf of the City with such changes, additions or deletions as may be approved by the Authorized Officer.

The Council hereby approves the form of the agreement for municipal advisor services with Fieldman Rolapp & Associates, as municipal advisor to the City in connection with the Bonds, in substantially the form on file with the City Clerk. An Authorized Officer is hereby authorized and directed to complete and execute the agreement on behalf of the City w ith such changes, additions or deletions as may be approved by the Authorized Officer.

The Council hereby approves the form of the agreement for special tax consulting services with NBS Government Finance Group, in substantially the form on file with the City Clerk. An Authorized Officer is hereby authorized and directed to complete and execute the agreement on behalf of the City with such changes, additions or deletions as may be approved by the Authorized Officer.

Section 9. Actions Authorized. All actions heretofore taken by the officers and agents of the City with respect to the establishment of the CFD and the sale and issuance of the Bonds are hereby approved, confirmed and ratified, and the appropriate officers of the City are hereby authorized and directed to do any and all things and take any and all actions and execute any and all certificates, agreements and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and delivery of the Bonds in accordance with this resolution, including but not limited to any actions required in connection with issuance of ratings or one or more municipal bond insurance policies with respect to the Bonds, and any certificate, agreement, and ot her document described in the documents herein approved. All actions to be taken by an Authorized Officer, as defined herein, may be taken by such Authorized Officer or any designee, with the same force and effect as if taken by the Authorized Officer.

Section 10. Effectiveness. This resolution shall take effect from and after its adoption.

The provisions of any previous resolutions in any way inconsistent with the provisions hereof in and for the issuance of the Bonds as herein described are hereby repealed.

* * * * * * * * * * * *

-5-

ADOPTED AND APPROVED by the City Council of the City of Hesperia at a regular meeting held this 15th day of October 2024.

Larry Bird, Mayor
ATTEST:

Erin Baum, Assistant City Clerk

RESOLUTION NO. 2024-52
Appendix A

Government Code Section 5852.1 Disclosure

The good faith estimates set forth herein are provided with respect to the Bonds in accordance with California Government Code Section 5852.1. Such good faith estimates have been provided to the City by Fieldman Rolapp & Associates , the City’s Municipal Ad visor, in consultation with Stifel, Nicolaus & Company, Incorporated, Underwriter of the Bonds.

Principal Amount . The Municipal Advisor has informed the City that, based on the CFD financing plan and current market conditions, its good faith estimate of the aggregate principal amount of the Bonds to be sold is $11,280,000 (the “Estimated Principal Amount”).

True Interest Cost of the Bonds . The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the true interest cost of the Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the Bonds, is 3.09%.

Finance Charge of the Bonds . The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Bonds is sold and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the finance charge for the Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the Bonds), is $477,994. Such fees and charges include fees for bond and disclosure counsel, municipal advisor, appraiser, market absorption consultant, special tax consultant, fiscal agent, city attorney and staff time related to bond issuance, set-aside for Fiscal Year 2024-25 CFD administrative expenses, printing, and underwriting.

Amount of Proceeds to be Received . The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the amount of proceeds expected to be received on behalf of the CFD for sale of the Bonds, less the finance charge of the Bonds, as estimated above, and any reserves or cap italized interest paid or funded with proceeds of the Bonds, is $11,556,091.

Total Payment Amount . The Municipal Advisor has informed the City that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prev ailing at the time of preparation of such estimate, its good faith estimate of the total payment amount, which means the sum total of all payments that the CFD property owners will make to pay debt service on the Bonds, plus the finance charge for the Bond s, as described above, not paid with the proceeds of the Bonds (including the Bond proceeds deposited into a debt service reserve fund), calculated to the final maturity of the Bonds, is $14,834,833.

The foregoing estimates constitute good faith estimates only. The actual principal amount of the Bonds issued and sold, the true interest cost thereof, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to (a) the actual date of the sale of the Bonds being different than the date assumed for purposes of such estimates, (b) the actual principal amount of Bonds sold being different from the Estimated Principal Amount, (c) the actual amortization of the Bonds being different than the amortization assumed for purposes of such estimates, (d) the actual

Resolution 2024-52

-2-
market interest rates at the time of sale of the Bonds being different than those estimated for purposes of such estimates, (e) other market conditions, or (f) alterations in the CFD financing plan, delays in the financing, or a combination of such factors. The actual date of sale of the Bonds and the actual principal amount of Bonds sold will be determined by the City based on the timing of the need for proc eeds of the Bonds and other factors. The actual interest rates borne by the Bonds will depend on market interest rates at the time of sale thereof. The actual amortization of the Bonds will also depend, in part, on market interest rates at the time of sale thereof. Market interest rates are affected by economic and other factors beyond the control of the City.

PRELIMINARY OFFICIAL STATEMENT DATED _____________, 2024

NEW ISSUE – BOOK ENTRY ONLY INSURED RATING: S&P: “__”
UNDERLYING RATING: S&P: “__”
See “RATINGS.”
In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications described herein, under existing law, the interest on the 2024 Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax. Interest on the 2024 Bonds may be subject to the corporate alternative minimum tax. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See “TAX MATTERS.”

$11,280,000*

CITY OF HESPERIA
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(BELGATE DEVELOPMENT RESTRUCTURING)

COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA
SPECIAL TAX REFUNDING BONDS, SERIES 2024

Dated: Date of Delivery Due: September 1, as shown on inside cover

Authority for Issuance. The bonds captioned above (the “ 2024 Bonds”) are being issued under the Mello -Roos Community Facilities Act of 1982, as amended (the “Act”), the Resolution of Issuance (as defined herein), and a Fiscal Agent Agreement dated as of December, 1 2024 (the “Fiscal Agent Agreement”), by and between the City of Hesperia, California (the “ City”), for and on behalf of the City of Hesperia Community Facilities District No. 2005-1 (Belgate Development Restructuring), County of San Bernardino, State of California (the “District”) , and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”). See “THE 2024 BONDS – Authority for Issuance.”

Security and Sources of Payment. The 2024 Bonds are payable from Special Tax Revenues (as defined her ein) levied on property within the District according to the rate and method of apportionment of special tax approved by the City Council and the eligible landowner voters in the District. The 2024 Bonds are secured by a first pledge of the Special Tax Revenues and the moneys on deposit in certain funds and accounts held by the Fiscal Agent under the Fiscal Agent Agreement. See “SECURITY FOR THE 2024 BONDS.”

Use of Proceeds. The 2024 Bonds are being issued to (i) refund in full an outstanding series of bonds previously issued with respect to the District captioned “City of Hesperia Community Facilities District No. 2005 -1 (Belgate Development Restructuring), County of San Bernardino, State of California, Special Tax Refunding Bonds, Series 2014,” (ii) purchase a debt service reserve policy to satisfy 50% of the initial Reserve Requirement (as defined herein) f or the 2024 Bonds concurrently with the delivery of the 2024 Bonds , (iii) make a deposit into the Reserve Fund in an amount equal to the remaining 50% of the initial Reserve Requirement for the 2024 Bonds, (iv) pay the premium for a municipal bond insurance policy, and (v) pay costs of issuing the 2024 Bonds. See “FINANCING PLAN.”

Municipal Bond Insurance Policy and Reserve Policy . The scheduled payment of principal of and interest on the 2024 Bonds when due will be guaranteed under a municipal bond insurance policy to be issued concurrently with the delivery of the 2024 Bonds by [BOND INSURER FULL NAME] (“[BOND INSURER]”). See “ BOND INSURANCE.” [BOND INSURER] will also issue a debt service reserve policy for deposit into the Reserve Fund being established for the 2024 Bonds in order to satisfy 50% of the initial Reserve Requirement (as defined herein) for the 2024 Bonds. See “SECURITY FOR THE 2024 BONDS – Reserve Fund.”

Bond Terms. Interest on the 2024 Bonds is payable semiannually on each March 1 and September 1, commencing March 1, 2025. The 2024 Bonds will be issued in denominations of $5,000 or integral multiples of $5, 000. The 2024 Bonds, when delivered, will be initially registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”), New York, New York. DTC will act as securities depository for the 2024 Bonds. See “THE 2024 BONDS – General Bond Terms” and “APPENDIX F – DTC and the Book-Entry Only System.”

Redemption. The 2024 Bonds are subject to special mandatory redemption from prepaid Special Taxes. See “THE 2024 BONDS - Redemption.”

THE 2024 BONDS, THE INTEREST THEREON, AND ANY PREMIUMS PAYABLE ON THE REDEMPTION OF ANY OF THE 2024 BONDS, ARE NOT AN INDEBTEDNESS OF THE CITY OR THE DISTRICT (EXCEPT TO THE LIMITED EXTENT DESCRIBED IN THIS OFFICIAL STATEMENT), THE STATE OF CALIFORNIA (THE “STATE”) OR ANY OF ITS

POLITICAL SUBDIVISIONS, AND NEITHER THE CITY NOR THE DISTRICT (EXCEPT TO THE LIMITED EXTENT

DESCRIBED IN THIS OFFICIAL STATEMENT), THE STATE NOR ANY OF ITS POLITICAL SUBDIVISIONS IS LIABLE ON THE 2024 BOND S. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY OR THE

DISTRICT (EXCEPT TO THE LIMITED EXTENT DESCRIBED IN THIS OFFICIAL STATEMENT) OR THE STATE OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE 2024 BOND S. OTHER THAN THE SPECIAL TAX REVENUES, NO TAXES ARE PLEDGED TO THE PAYMENT OF THE 2024 BONDS. THE 2024 BONDS

ARE NOT A GENERAL OBLIGATION OF THE CITY OR THE DISTRICT BUT ARE LIMITED OBLIGATIONS OF THE

CITY AND THE DISTRICT PAYABLE SOLELY FROM THE SPECIAL TAX REVENUES AS MORE FULLY DESCRIBED IN THIS OFFICIAL STATEMENT.

MATURITY SCHEDULE
This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no cir cumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer solic itation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction .

Attachment 2

(see inside cover)

This cover page contains certain information for quick reference only. It is not a summary of the issue.

Potential investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. Investment in the 2024 Bonds involves risks which may not be appropriate for some investors. See “ SPECIAL RISK FACTORS” for a discussion of special risk factors that should be considered in evaluating the investment quality of the 2024 Bonds.

The 2024 Bonds are offered when, as and if issued, subject to approval as to their legality by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, and certain other conditions. Certain legal matters with respect to the 2024 Bonds will be passed upon for the City by the City Attorney, and by Jones Hall, A Professional Law Corporation, San Francisco, California, acting as Disclosure Counsel. Certain legal matters will be passed upon for the Underwriter by Stradling Yocca Carlson & Rauth LLP, Newport Beach, California. It is anticipated that the 2024 Bonds, in book-entry form, will be available for delivery through the facilities of DTC in New York, New York, on or about _____________, 2024.

The date of this Official Statement is December _______, 2024.

* Preliminary; subject to change.

MATURITY SCHEDULE*

$___________ Serial Bonds
Base CUSIP: † ______

Maturity Date
(September 1)
Principal
Amount
Interest
Rate

Yield

Price

CUSIP†

* Preliminary; subject to change.
† CUSIP Global Services (CGS) is managed on behalf of American Bankers Association by FactSet Research Systems Inc. Copyright 2024 CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP numbers are provided for convenience of reference only. Neither the City nor the Underwriter or their agents or counsel assume responsibility for the accuracy of such numbers.

GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT

No Offering May Be Made Except by this Official Statement. No dealer, broker, salesperson, or other person has been authorized to give any information or to make any representations with respect to the 2024 Bonds other than as contained in this Official Statement, and if given or made, such other information or representation must not be relied upon as having been authorized.

No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation.

Effective Date. This Official Statement speaks only as of its date, and the information and expressions of opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the 2024 Bonds will, under any circumstances, create any implication that there has been no change in the affairs of the City, the District, any other parties described in this Official Statement, or in the condition of property within the District since the date of this Official Statement.

Use of this Official Statement. This Official Statement is submitted in connection with the sale of the 2024 Bonds referred to herein and may not be reproduced or used, in whole or in part, f or any other purpose. This Official Statement is not a contract with the purchasers of the 2024 Bonds.

Preparation of this Official Statement. The information contained in this Official Statement has been obtained from sources that are believed to be reliable, but this information is not guaranteed as to accuracy or completeness.

The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

Document References and Summaries. All references to and summaries of the Fiscal Agent Agreement or other documents contained in this Official Statement are subject to the provisions of those documents and do not purport to be complete statements of those documents.

Stabilization of and Changes to Offering Prices. The Underwriter may over allot or take other steps that stabilize or maintain the market prices of the 2024 Bonds at levels above those that might otherwise prevail in the open market. If commenced, the Underwriter may discontinue such market stabilization at any time. The Underwriter may offer and sell the 2024 Bonds to certain securities dealers, dealer banks and banks acting as agent at prices lower than the public offering prices stated on t he inside cover page of this Official Statement, and those public offering prices may be changed from time to time by the Underwriter.

Exemption from Securities Laws Registration. The issuance and sale of the 2024 Bonds have not been registered under th e Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, in reliance upon exemptions for the issuance and sale of municipal securities provided under Section 3(a)(2) of the Securities Act of 1933 and Section 3(a)(12) of the Securities Exchange Act of 1934.

Estimates and Projections. Certain statements included or incorporated by reference in this Official Statement constitute “forward -looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “budget” or other similar words.

The achievement of certain results or other expectations contained in such forward -looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward -looking statements. The City does not plan to issue any updates or revisions to those forward -looking statements if or when its expectations, or events, conditions, or circumstances on which such statements are based occur.

City Internet Site. The City maintains an Internet website, but the information on the website is not incorporated in this Official Statement.

Bond Insurance Policy . [BOND INSURER FULL NAME] (“[BOND INSURER]”) makes no representation regarding the 2024 Bonds or the advisability of i nvesting in the 2024 Bonds. In addition, [BOND INSURER] has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding [BOND INSURER], supplied by [BOND INSURER] and presented under the heading “BOND INSURANCE” and APPENDIX G – “Specimen Municipal Bond Insurance Policy.”

CITY OF HESPERIA

City Council

Larry Bird, Mayor
Rebekah Swanson, Mayor Pro Tem
Allison Lee, Council Member
Cameron Gregg, Council Member
Brigit Bennington, Council Member

City Officials

Rachel Molina, City Manager
Casey Brooksher, Assistant City Manager
Melinda Sayre, City Clerk

PROFESSIONAL SERVICES

Bond Counsel and Disclosure Counsel

Jones Hall, A Professional Law Corporation
San Francisco, California

Special Tax Administrator

NBS
Temecula, California

Escrow Agent

U.S. Bank Trust Company, National Association
Los Angeles, California

Fiscal Agent

U.S. Bank Trust Company, National Association
Los Angeles, California

Verification Agent

Causey Public Finance, LLC
Denver, Colorado

i

TABLE OF CONTENTS

INTRODUCTION ................................ ....... 1 Authority for Issuance ............................. 1
The District ................................ ............. 1 Purpose of Issuance ............................... 2
Security for the 2024 Bonds ................... 2
Bond Insurance ................................ ...... 2 Redemption ................................ ............ 3 Risk Factors ................................ ........... 3 FINANCING PLAN ................................ ..... 4 Refunding Plan ................................ ....... 4 Estimated Sources and Uses of Funds ... 5
THE 2024 BONDS ................................ ..... 6 Authority for Issuance ............................. 6
General Bond Terms .............................. 6
Redemption ................................ ............ 7 Registration, Transfer or Exchange ........ 8
Scheduled Debt Service ......................... 9
SECURITY FOR THE 2024 BONDS ........ 10
General ................................ ................ 10 Limited Obligation ................................ . 10 Special Taxes ................................ ....... 11 Rate and Method ................................ .. 12
Covenant to Foreclose.......................... 15
Special Tax Fund ................................ .. 16 Bond Fund ................................ ............ 18 Reserve Fund ................................ ....... 18 Qualified Reserve Account Credit
Instruments ................................ ....... 19 Investment of Moneys in Funds ............ 20
No Parity Bonds................................ .... 20 Subordinate Bonds ............................... 20
Limits on Special Tax Waivers and
Bond Tenders ................................ ... 22
BOND INSURANCE................................ . 23
THE DISTRICT ................................ ........ 24 Background and Formation .................. 24
Location and Description of the District . 24
Land Use Distribution ........................... 26
Assessed Property Values .................... 27
Value-to-Lien Ratios ............................. 28
Major Land Owners .............................. 30
Delinquencies ................................ ....... 31 Projected Debt Service Coverage ......... 32
Direct and Overlapping Governmental
Obligations ................................ ........ 33 SPECIAL RISK FACTORS....................... 35
Limited Obligation ................................ . 35 Levy and Collection of the Special Tax . 35
Property Tax Delinquencies .................. 36
Potential Early Redemption of Bonds
from Prepayments or Assessment
Bond Proceeds ................................ . 37
Risks Related to Economic Cycles........ 37
Risks Related to Homeowners With
High Loan to Value Ratios ................. 37
Potential Consequences of Future
Special Tax Delinquencies ................ 38
Payment of Special Tax is not a
Personal Obligation of the Property
Owners ................................ ............. 38 Assessed Valuations ............................ 38
Property Values ................................ .... 39 Other Possible Claims Upon the Value
of Taxable Property ........................... 41
Exempt Properties ................................ 41
FDIC/Federal Government Interests in
Properties ................................ ......... 42 Depletion of Reserve Fund ................... 43
Risks Associated with the Reserve
Policy Provider ................................ .. 44
Bankruptcy and Foreclosure Delays ..... 44
Disclosure to Future Purchasers ........... 44
No Acceleration Provisions ................... 45
Cyber Security ................................ ...... 45 Loss of Tax Exemption ......................... 45
IRS Audit of Tax-Exempt Bond Issues .. 46
Impact of Legislative Proposals,
Clarifications of the Code and Court
Decisions on Tax Exemption ............. 46
Voter Initiatives and State
Constitutional Provisions ................... 46
Risks Associated with Bond Insurance . 48
Public Health Emergencies ................... 48
Secondary Market for 2024 Bonds ........ 48
TAX MATTERS ................................ ........ 49 LEGAL OPINIONS ................................ ... 50
RATINGS ................................ ................. 50 LITIGATION ................................ ............. 51

VERIFICATION OF MATHEMATICAL
ACCURACY ................................ ......... 51
UNDERWRITING ................................ ..... 52
PROFESSIONAL FEES ........................... 52
CONTINUING DISCLOSURE .................. 52
EXECUTION ................................ ............ 53

APPENDIX A CITY OF HESPERIA AND COUNTY OF SAN BERNARDINO GENERAL

DEMOGRAPHIC INFORMATION

ii

APPENDIX B RATE AND METHOD

APPENDIX C SUMMARY OF THE FISCAL AGENT AGREEMENT

APPENDIX D FORM OF OPINION OF BOND COUNSEL

APPENDIX E FORM OF CONTINUING DISCLOSURE CERTIFICATE

APPENDIX F DTC AND THE BOOK-ENTRY ONLY SYSTEM

APPENDIX G SPECIMEN MUNICIPAL BOND INSURANCE POLICY

REGIONAL LOCATION MAP

AERIAL PHOTO

1 OFFICIAL STATEMENT

$11,280,000*

CITY OF HESPERIA
COMMUNITY FACILITIES DISTRICT NO. 2005-1
(BELGATE DEVELOPMENT RESTRUCTURING)

COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA
SPECIAL TAX REFUNDING BONDS SERIES 2024

INTRODUCTION

This Official Statement, including the cover page, inside cover and attached appendices, is provided to furnish information regarding the bonds captioned above (the “ 2024 Bonds”) to be issued by the City of Hesperia, California (the “ City”), for and on behalf of the City of Hesperia Community Facilities District No. 2005-1 (Belgate Development Restructuring), County of San Bernardino, State of California (the “District”).

This introduction is not a summary of this Official Statement and is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement and the documents summarized or described in this Official Statement. A full review should be made of the en tire Official Statement by those interested in purchasing the 2024 Bond s. The sale and delivery of 2024 Bond s to potential investors is made only by means of the entire Official Statement.

Capitalized terms used but not defined in this Official Statement have the meanings set forth in APPENDIX C – “Summary of the Fiscal Agent Agreement —Definitions” and in APPENDIX B – “Rate and Method.”

Authority for Issuance

The 2024 Bonds are authorized to be issued under the Mello-Roos Community Facilities Act of 1982, as amended, commencing at Section 53311, et seq., of the California Government Code (the “Act”), a resolution adopted on October 15, 2024 by the City Council of the City (the “City Council ”) acting as the legislative body of the District, and a Fiscal Agent Agreement dated as of December, 1 2024 (the “Fiscal Agent Agreement”), between the City, for and on behalf of the District, and U.S. Bank Trust Company, National Association , as fiscal agent (the “Fiscal Agent”). See “THE 2024 BONDS – Authority for Issuance.”

The District

Formation. The District was established in proceedings carried out by the City under the Act in 2005 , including a landowner election at which the qualified electors of the District authorized the District to incur bonded indebtedness and approved the levy of special taxes under the Rate and Method of Apportionment of Special Taxes (the “ Rate and Method”). The District is located in the western portion of the City, which is located in the western portion of the County of San Bernardino (the "County").

* Preliminary; subject to change.

2 See “THE DISTRICT – Background and Formation.”

Property Ownership and Development Status. The District currently contains 1,037 parcels of Taxable Property, of which 31 parcels are classified as Undeveloped Property and the remaining parcels are classified as Developed Property for Fiscal Year 20 24-25. Of the 1,006 parcels classified as Developed Property, 60 parcels that are classified as such because a building permit has been issued, but such parcels have very minimal if any structure value.

See “THE DISTRICT.”

Purpose of Issuance

The 2024 Bonds are being issued primarily to defease and refund in full an outstanding series of bonds previously issued by the City on b ehalf of the District captioned “City of Hesperia Community Facilities District No. 2005-1 (Belgate Development Restructuring), County of San Bernardino, State of California, Special Tax Bonds, Series 2014” (the “2014 Bonds”).

Proceeds of the 2024 Bonds will also be used to (i) pay the premium for a municipal bond insurance policy, (ii) purchase a debt service reserve policy for the 2024 Bonds concurrently with the delivery of the 2024 Bonds to satisfy 50% of the initial Reserve Requirement with respect to the 2024 Bonds, (iii) make a deposit to the reserve fund to satisfy the remaining 50% of the initial Reserve Requirement with respect to the 2024 Bonds, and (iv) pay the costs of issuing the 2024 Bonds.

See “FINANCING PLAN.”

Security for the 2024 Bonds

Security and Sources of Payment for the 2024 Bond s. The City annually levies special taxes on real property in the District (the “ Special Taxes”) in accordance with the Rate and Method. The 2024 Bonds are secured by and payable from a first pledge of the “Special Tax Revenues” (as more particularly defined in the Fiscal Agent Agreement ). The 2024 Bonds will be additionally secured by certain funds and accounts established and held under the Fiscal Agent Agreement. See “SECURITY FOR THE 2024 BONDS.”

Covenant to Foreclose. The City has covenanted in the Fiscal Agent Agreement to cause foreclosure proc eedings to be commenced and prosecuted against certain parcels with delinquent installments of the Special Taxes. For a more detailed description of the foreclosure covenant see “SECURITY FOR THE 2024 BONDS – Covenant to Foreclose.”

Reserve Fund; Reserve Policy. The Fiscal Agent Agreement establishes a Reserve Fund to be held by the City as a reserve for the payment of principal of and interest on the 2024 Bonds. As further security for the 2024 Bonds, the District will use a portion of the proceeds of the 2024 Bonds to purchase a debt service reserve policy (the “ Reserve Policy ”) to be deposited in the Reserve Fund established under the Fiscal Agent Agreement. The Reserve Policy will satisfy 50% of the initial Reserve Requirement. See “SECURITY FOR THE 2024 BONDS—Reserve Fund.”

Bond Insurance

Concurrently with the issuance of the 2024 Bonds, [BOND INSURER NAME] (“[___]” or the “ Bond Insurer ”) will issue its Municipal Bond Insurance Policy for the 2024 Bonds (the

3 “Policy”). The Policy guarantees the scheduled payment of principal of and interest on the 2024 Bonds when due as set forth in the form of the Policy included as APPENDIX G to this Official Statement. See “BOND INSURANCE.”

Redemption

The 2024 Bonds are subject to mandatory redemption from Special Tax prepayments.

See “THE 2024 BONDS – Redemption.”

Risk Factors

Investment in the 2024 Bond s involves risks that may not be appropriate for some investors. See “SPECIAL RISK FACTORS” for a discussion of certain r isk factors which should be considered, in addition to the other matters set forth in this Official Statement, in considering the investment quality of the 2024 Bonds.

4 FINANCING PLAN

Refunding Plan

The 2014 Bonds were issued on December 18, 2014, by the City, on behalf of the District, in the original principal amount of $18,450,000, and are currently outstanding in the principal amount of $[12,835,000].

All the outstanding 2014 Bonds will be redeemed in full, on a current basis, on March 1, 2025, at a redemption price equal to their outstanding principal amount, together with accrued interest to the redemption date, without premium.

In order to accomplish the refunding plan, a portion of the net proceeds of the 2024 Bonds, together with certai n other funds on hand with respect to the 2014 Bonds, will be transferred to U.S. Bank Trust Company, National Association , as escrow agent (the “Escrow Agent”) pursuant to an Escrow Deposit and Trust Agreement dated as of December, 1 2024 (the “Escrow Agreement”), among the City and the Escrow Agent.

The Escrow Agent will invest certain amounts on deposit under the Escrow Agreement in federal securities consisting of United States Treasury Securities – State and Local Government Series, and hold the remainder in cash, uninvested. These funds will be sufficient to pay and redeem the 2014 Bonds in full on March 1, 2025. See “VERIFICATION OF MATHEMATICAL ACCURACY.”

Upon such irrevocable deposit with the Escrow Agent and in accordance with the Escrow Agreement, the 2014 Bonds will be legally defeased and will no longer be entitled to the benefits of, or be secured by, any pledge of or lien on the Special Taxes.

Amounts on deposit under the Escrow Agreement are not available to pay debt service on the 2024 Bonds.

5 Estimated Sources and Uses of Funds

The estimated proceeds from the sale of the 2024 Bond s will be deposited into the following funds established under the Fiscal Agent Agreement:

SOURCES
Principal Amount of 2024 Bonds $
Plus: [Net] Original Issue Premium
Plus: Funds Related to Prior Bonds [1]
Total Sources $

USES
Deposit into Costs of Issuance Fund [2] $
Deposit into Reserve Fund [3]
Transfer to Escrow Agent [4]
Underwriter’s Discount
Deposit to Administrative Expense Fund
Total Uses $

[1] Represents funds on hand related to the 2014 Bonds. See “– Refunding Plan” above. [2] Includes, among other things, the cost of printing the Preliminary and final Official Statements, the fees and expenses of Bond Counsel, Disclosure Counsel , the Fiscal Agent, the Escrow Agent, the Special Tax Consultant , and the Verification Agent, and the premiums for the Policy and the Reserve Policy.
[3] Reflects the 50% of the initial Reserve Requirement to be funded with cash from the proceeds of the 2024 Bonds; the remainder of the initial Reserve Requirement will be satisfied by the deposit of the Reserve Policy in the Reserve Fund. See “SECURITY FOR THE 2024 BONDS—Reserve Fund.”
[4] Will be used to refund and defease the 2014 Bonds. See “– Refunding Plan” above.

6 THE 2024 BONDS

This section generally describes the terms of the 2024 Bond s contained in the Fiscal Agent Agreement, which is summarized in more detail in APPENDIX C. Capitalized terms used but not defined in this section are defined in APPENDIX C.

Authority for Issuance

The 2024 Bond s are authorized to be issued under the Act, a resolution adopted on October 15, 2024 , by the City Council, acting as the legislative body of the District, and the Fiscal Agent Agreement. Under this authority, the 2024 Bonds may be issued in the maximum principal amount of $[___________].

General Bond Terms

Dated Date, Maturity and Authorized Denominations. The 2024 Bonds will be dated the Closing Date and will mature in the amounts and on the dates set forth on the inside cover page of this Official Statement. The 2024 Bond s will be issued in fully registered form in denominations of $5,000 each or any integral multiple of $5,000.

Interest. The 2024 Bonds will bear interest at the annual rates set forth on the inside cover page of this Official Statement, payable semiannually on each March 1 and September 1, commencing March 1, 20 25 (each, an “ Interest Payment Date ”) until the pri ncipal sum of the 2024 Bonds has been paid.

Interest will be calculated on the basis of a 360-day year composed of twelve 30 -day months. Each 2024 Bond will bear interest from the Interest Payment Date next preceding the date of authentication thereof unless

(i) it is authenticated on an Interest Payment Date, in which event it will bear interest from such date of authentication, or

(ii) it is authenticate d prior to an Interest Payment Date and after the close of business on the Record Date preceding such Interest Payment Date, in which event it will bear interest from such Interest Payment Date, or

(iii) it is authenticated on or before the Record Date preceding the first Interest Payment Date, in which event it will bear interest from the Closing Date;

provided, however, that if at the time of authentication of a 2024 Bond , interest is in default thereon, such 2024 Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon.

Record Date. “Record Date” means the 15th day of the calendar month preceding an Interest Payment Date whether or not such day is a business day.

DTC and Book-Entry Only System. DTC will act as securities depository for the 2024 Bonds. The 2024 Bonds will be issued as fully registered securities registered initially in the name of Cede & Co. (DTC’s partnership nominee). See APPENDIX F – “DTC AND THE BOOK-ENTRY ONLY SYSTEM.”

7 Payments of Interest and Principal. For so long as DTC is used as depository for the 2024 Bond s, principal of, premium, if any, and interest payments on the 2024 Bond s will be made solely to DTC or its nominee, Ced e & Co., as registered owner of the 2024 Bonds, for distribution to the beneficial owners of the 2024 Bond s in accordance with the procedures adopted by DTC.

Interest on the 2024 Bonds (including the final interest payment upon maturity or earlier redemption), is payable on the applicable Interest Payment Date by check of the Fiscal Agent mailed by first class mail to the registered Owner thereof at such registered Owner’s address as it appears on the registration books maintained by the Fiscal Agent at t he close of business on the Record Date preceding the Interest Payment Date, or by wire transfer made on such Interest Payment Date upon written instructions of any Owner of $1,000,000 or more in aggregate principal amount of 2024 Bonds delivered to the Fi scal Agent prior to the applicable Record Date, which will continue in effect until revoked in writing, or until such 2024 Bonds are transferred to a new Owner.

The principal of the 2024 Bonds and any premium on the 2024 Bonds are payable in lawful money of the United States of America upon surrender of the 2024 Bonds at the Principal Office of the Fiscal Agent.

Redemption*

No Optional Redemption. The 2024 Bonds are not subject to optional redemption prior to their maturity dates.

Mandatory Redemption From Special Tax Prepayments. Special Tax Prepayments and any corresponding transfers from the Reserve Fund under the Fiscal Agent Agreement will be used to redeem 2024 Bond s on the next Interest Payment Date for which noti ce of redemption can timely be given, among maturities so as to maintain substantially the same debt service profile for the 2024 Bonds as in effect prior to such redemption and by lot within a maturity, at a redemption price (expressed as a percentage of the principal amount of the 2024 Bonds to be redeemed), as set forth below, together with accrued interest to the date fixed for redemption:

Redemption Dates Redemption Prices
Any Interest Payment Date before September 1, 20__ %
September 1, 20__, and March 1, 20__
September 1, 20__, and March 1, 20__
September 1, 20__, and any Interest Payment Date thereafter

To date, there has been one prepayment of Special Taxes within the District , which occurred in Fiscal Year 20 22-23 in the amount of $ 13,600.79 of principal . See the caption “SPECIAL RISK FACTORS – Potential Early Redemption of Bonds from Prepayments or Assessment Bond Proceeds” for a discussion of the potential for a lower-than-expected yield on the 2024 Bonds as a result of a mandatory redemption thereof due to the prepayment of Special Taxes.

Purchase of 2024 Bonds In Lieu of Redemption . In lieu of redemption as described above, moneys in the Bond Fund or other funds provided by the City may be used and

* Preliminary; subject to change.

8 withdrawn by the Fiscal Agent for purchase of Outstanding 2024 Bonds, upon the filing with the Fiscal Agent of an Officer’s Certificate requesting such purchase, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer’s Certificate may provide, but in no event may 2024 Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase and any premium which would otherwise be due if such 2024 Bonds were to be redeemed in accordance with the Fiscal Agent Agreement. Any 2024 Bonds purchased under this provision of the Fiscal Agent Agreement will be treated as outstanding Bonds, except to the extent otherwise directed by the Finance Director.

Notice of Redemption . The Fiscal Agen t will cause notice of any redemption to be mailed by first class mail, postage prepaid, at least 20 days but not more than 60 days prior to the date fixed for redemption, to the Securities Depositories, to the Municipal Securities Rulemaking Board, and to the respective registered Owners of any 2024 Bonds designated for redemption, at their addresses appearing on the 2024 Bond registration books in the Principal Office of the Fiscal Agent; but such mailing will not be a condition precedent to such redemption and failure to mail or to receive any such notice, or any defect therein, will not effect the validity of the proceedings for the redemption of such 2024 Bonds.

Selection of 2024 Bonds for Redemption. Whenever provision is made in the Fiscal Agent Agreement for the redemption of less than all of the 2024 Bonds of any maturity or any given portion thereof, the Fiscal Agent will select the 2024 Bonds to be redeemed from all 2024 Bonds or such given portion th ereof not previously called for redemption, by lot in any manner the Fiscal Agent in its sole discretion deem s appropriate; provided, however, that if 2024 Bonds are to be redeemed as a result of Special Tax Prepayments, 2024 Bonds will be selected for redemption on a pro-rata basis among maturities.

Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the principal of, and interest and any premium on, the 2024 Bonds so called for redemption have been deposited in the Bond Fund, such 2024 Bonds so called will cease to be entitled to any benefit under th e Fiscal Agent Agreement other than the right to receive payment of the redemption price, and no interest will accrue thereon on or after the redemption date specified in the notice of redemption.

Registration, Transfer or Exchange

The following provisions regarding the exchange and transfer of the 2024 Bonds apply only during any period in which the 2024 Bonds are not subject to DTC’s book -entry system.

While the 2024 Bonds are subject to DTC’s book -entry system, their exchange and transfer will be affected through DTC and the Participants and will be subject to the procedures, rules and requirements establis hed by DTC. See APPENDIX F – “DTC and the Book -Entry Only System.”

Registration. The Fiscal Agent will keep, or cause to be kept, at its Principal Office sufficient books for the registration and transfer of the 2024 Bonds, which will show the series number, date, amount, rate of interest and last known owner of each 2024 Bond, and will at all times be open to inspection by the City during regular business hours upon reasonable notice; and, upon presentation for such purpose, the Fiscal Agent will, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books, the ownership of the 2024 Bond s as described below. The City and the Fiscal Agent will treat the Owner of any 2024 Bond whose name appears on the 2024 Bond register as

9 the absolute Owner of such 2024 Bond for any and all purposes, and the City and the Fiscal Agent will not be affected by any notice to the contrary. The City and the Fiscal Agent may rely on the address of the Owner as it appears in the 2024 Bond register for any and all purposes.

Transfer and Exchange . Any 2024 Bond may, in accordance with its terms, be transferred, upon the 2024 Bond register, by the person in whose name it is registered, in person or by such person’s duly authorized attorney, upon surrender of such 2024 Bond for cancellation, accompanied by delivery of a duly written instrument of transfer in a form acceptable to the Fiscal Agent.

2024 Bonds may be exchanged at the Principal Office of the Fiscal Agent solely for a like aggregate principal amount of 2024 Bonds of authorized denominations and of the same maturity.

The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such transfer or exchange will be paid by the City. The Fiscal Agent will collect from the Owner requesting such transfer or exchange any tax or other governmental charge required to be paid with respect to such transfer or exchange.

Whenever any 2024 Bond or 2024 Bonds are surrendered for transfer or exchange, the City will execute and the Fiscal Agent will authenticate and deliver a new 2024 Bond or 2024 Bonds, for a like aggregate principal amount.

No transfers or exchanges of 2024 Bonds will be required to be made (i) 15 days prior to the date established by the Fiscal Agent for selection of 2024 Bonds for redemption, or (ii) with respect to a 2024 Bond after such 2024 Bond has been selected for redemption, or (iii) between a Record Date and the succeeding Interest Payment Date.

Scheduled Debt Service

The following is the debt service schedule for the 2024 Bonds, assuming no mandatory redemption from Special Tax prepayments.

Period Ending
September 1 Principal Interest Total Debt Service
2025 $ $ $
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Total $ $ $

10 SECURITY FOR THE 2024 BONDS

This section generally describes the security for the 2024 Bonds set forth in the Fiscal Agent Agreement, which is summarized in more detail in APPENDIX C. Capitalized terms used but not defined in the section are defined in APPENDIX C.

General

The payment of the principal of, and interest and any premium on, the 2024 Bonds are secured by a first pledge of the following:

 all of the Special Tax Revenues, and

 all moneys deposited in the Bond Fund (including the Special Tax Prepayments Account) and, until disbursed as provided in the Fiscal Agent Agreement , the Special Tax Fund.

In addition, the 2024 Bonds are secured by a first pledge (which pledge is affected in the manner and to the extent provided in the Fiscal Agent Agreement) of all moneys and Qualified Reserve Account Credit Instruments deposited in the Reserve Fund. The Reserve Policy is a Qualified Reserve Account Credit Instrument. The moneys and Qualified Reserve Account Credit Instruments in the Reserve Fund (except as otherwise provided in the Fiscal Agent Agreement) are dedicated to the payment o f the principal of, and interest and any premium on, the 2024 Bonds as provided in the Fiscal Agent Agreement and in the Act until all of the 2024 Bonds have been paid and retired or until moneys or Federal Securities have been set aside irrevocably for that purpose under the Fiscal Agent Agreement

The term “Special Tax Revenues” is defined in the Fiscal Agent Agreement to mean the proceeds of the Special Taxes received by the City, including any scheduled payments thereof and any Special Tax Prepayments, interest thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and interest thereon, but does not include any interest in excess of the interest due on the 2024 Bonds or any penalties collected in connection with any such foreclosure.

Amounts in the Administrative Expense Fund and the Costs of Issuance Fund are not pledged to the repayment of the 2024 Bonds. The amounts transferred to the Escrow Agent are not in any way pledged to pay the debt service on the 2024 Bonds.

Limited Obligation

THE 2024 BONDS, THE INTEREST THEREON, AND ANY PREMIUM PAYABLE ON THE REDEMPTION OF ANY OF THE 2024 BONDS, ARE NOT AN INDEBTEDNESS OF THE

CITY OR THE DISTRICT (EXCEPT TO TH E LIMITED EXTENT DESCRIBED IN THIS OFFICIAL STATEMENT), THE STATE OF CALIFORNIA (THE “STATE”) OR ANY OF ITS

POLITICAL SUBDIVISIONS, AND NEITHER THE CITY OR THE DISTRICT (EXCEPT TO THE

LIMITED EXTENT DESCRIBED IN THIS OFFICIAL STATEMENT), THE STATE NOR ANY OF ITS POLITICAL SUBDIVISIONS IS LIABLE ON THE 2024 BOND S. NEITHER THE FAITH

AND CREDIT NOR THE TAXING POWER OF THE CITY OR THE DISTRICT (EXCEPT TO

THE LIMITED EXTENT DESCRIBED IN THIS OFFICIAL STATEMENT) OR THE STATE OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE 2024 BONDS. OTHER THAN THE SPECIAL TAX REVENUES, NO TAXES ARE PLEDGED TO

11 THE PAYMENT OF THE 2024 BOND S. THE 2024 BOND S ARE NOT A GENERAL

OBLIGATION OF THE CITY OR THE DISTRICT BUT ARE LIMITED OBLIGATIONS OF THE

CITY AND THE DISTRICT PAYABLE SOLELY FROM THE SPECIAL TAX REVENUES AS MORE FULLY DESCRIBED IN THIS OFFICIAL STATEMENT.

Special Taxes

Levy of Special Taxes. The City will agree in the Fiscal Agent Agreement to comply with all requirements of the Act to assure the timely collection of Special Taxes, including the enforcement of delinquent Special Taxes.

Under the Act and the Fiscal Agent Agreement, the City is required to levy the Special Taxes each year in an amount required for the following (in each case taking into account the balances on hand in the funds held under the Fiscal Agent Agreement):

 the payment of principal of and interest on any outstanding Bonds becoming due and payable during the ensuing calendar year,

 any necessary replenishment or expenditure of the Reserve Fund, and

 an amount estimated to be sufficient to pay the Administrative Expenses (including amounts necessary to discharge any reb ate obligation) during the ensuing year.

In addition, under the Rate and Method, the City is permitted to levy additional Special Taxes as needed to pay for certain authorized services. It is the City’s practice to include a levy for authorized services.

See “– Special Tax Fund” below.

Duration of Special Tax Levy. The Rate and Method provides that Special Taxes levied to pay debt service and related costs with respect to bonds will not be levied after Fiscal Year 2040 -41. Subsequently, the Special Tax will continue to be levied for administrative expenses and authorized services so long as the City determines that such Special Taxes are necessary.

The Fiscal Agent Agreement provides that, in general, the Special Taxes are payable and will be collec ted in the same manner and at the same time and in the same installment as the general taxes on real property, and will have the same priority, become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalt ies and interest after delinquency as do the general taxes on real property.

The Special Tax levy is limited to the maximum Special Tax rates set forth in the Rate and Method. Additionally, pursuant to the Act , under no circumstances will the Special Ta x levied against any Assessor's Parcel of Residential Property for which an occupancy permit for private residential use has been issued be increased by more than 10% as a consequence of delinquency or default by the owner of any other Assessor's Parcel wi thin the District .

Accordingly, no assurance can be given that, in the event of Special Tax delinquencies, the receipts of Special Taxes will, in fact, be collected in sufficient amounts in any given year to pay debt service on the 2024 Bonds.

12 Rate and Method

General. The Special Tax is levied and collected according to the Rate and Method, which provides the means by which the City may annually levy the Special Taxes within the District, up to the Maximum Special Tax, and to determine the amount of the Special Tax that will need to be collected each Fiscal Year from the Taxable Property within the District.

The following is a synopsis of the Rate and Method, which should be read in conjunction with the complete text of the Rate and Method attached as APPENDIX B. The meaning of the capitalized terms used but not defined in this section are as set forth in APPENDIX B. This section provides only a summary of the Rate and Method, and is qualified by more complete and detailed information contained in the entire Rate and Method attached as APPENDIX B.

Special Tax Requirement. Annually, at the time of levying the Special Tax, the City will determine the minimum amount to be levied on Taxable Property in the District (the “ Special Tax Requirement”), which is defined in the Rate and Method as the amount required in any Fiscal Year to:

(i) pay debt service on all outstanding bonds or in debtedness issued with respect to the District;

(ii) pay periodic costs on the bonds or indebtedness issued with respect to the District, including but not limited to, credit enhancement and rebate payments;

(iii) pay Administrative Expenses;

(iv) pay any amounts required to establish or replenish any debt service reserve funds;

(v) pay for Authorized Services; and

(vi) pay for reasonably anticipated Special Tax delinquencies based on the delinquency rate for the Special Tax levy in the previous Fiscal Year;

less a credit for funds available to reduce the annual Special Tax levy, as determined by the CFD Administrator.

Assignment to Land Use Categories. Each Fiscal Year, all Taxable Property will be classified as Developed Property, Taxable Public Property, Taxable Property Owner Association Property, or Undeveloped Property (all as defined below) , and will be subject to Special Taxes in accordance with the Rate and Method.

“Developed Property ” means , for each Fiscal Year, all Taxable Prop erty (exclusive of Taxable Public Property and Taxable Property Owner Association Property) for which a building permit for new construction was issued after January 1, 2004 and prior to March 1 of the previous Fiscal Year.

"Taxable Public Property" means, for each Fiscal Year, all Assessor's Parcels of Public Property that are not exempt from the Special Tax (as further described below), and “Public Property” means property within the boundaries of the District owned by,

13 irrevocably offered or dedica ted to, or for which an easement for purposes of public right-of-way has been granted to the federal government, the State, the County of San Bernardino, the City, or any local government or other public agency, provided that any property leased by a publi c agency to a private entity and subject to taxation under Section 53340.1 of the Act will be taxed and classified according to its use.

"Taxable Property Owner Association Property" means, for each Fiscal Year, all Assessor's Parcels of Property Owner As sociation Property that are not exempt from the Special Tax (as further described below), and "Property Owner Association Property" means, for each Fiscal Year, any property within the boundaries of the District that was owned by a property owner associati on, including any master or sub - association, as of January 1 of the prior Fiscal Year.

"Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Taxable Public Property or Taxable Property Owner Association Property.

Maximum Special Tax. The Maximum Special Tax is defined in the Rate and Method as follows:

Developed Property . The Maximum Special Tax for each Assessor's Parcel classified as Developed Property is the greater of (i) the amount derived b y application of the Assigned Special Tax or (ii) the amount derived by application of the Backup Special Tax.

Assigned Special Tax Rates . The Fiscal Year 20 24-25 Assigned Special Tax rates for Developed Property in each Land Use Class are shown in the table below.

Assigned Special Tax Rates
Fiscal Year 2024-25

Land Use
Class Description Residential Floor Area Assigned Special Tax 1 Residential > 3,300 sq. ft. $3,270.57 per Unit
2 Residential 3,151-3,300 sq. ft. 3,052.13 per Unit 3 Residential 3,001-3,150 sq. ft. 2,989.72 per Unit 4 Residential 2,851 -3,000 sq. ft. 2,958.52 per Unit 5 Residential 2,701 -2,850 sq. ft. 2,842.61 per Unit 6 Residential 2,551-2,700 sq. ft. 2,759.40 per Unit 7 Residential 2,401 - 2,550 sq. ft. 2,676.19 per Unit 8 Residential 2,251 - 2,400 sq. ft. 2,175.42 per Unit 9 Residential 2,101 - 2,250 sq. ft. 2,123.41 per Unit 10 Residential 1,951 - 2,100 sq. ft. 2,071.41 per Unit 11 Residential 1,801- 1,950 sq. ft. 1,903.49 per Unit 12 Residential <= 1,800 sq. ft. 1,601.85 per Unit 13 Non-Residential N/A 21,179.21 per Unit

Backup Special Tax Rate . The Fiscal Year 20 24-25 Backup Special Tax for an Assessor's Parcel of Developed Property equals $ 0.4862 per square foot of land area within the Assessor's Parcel.

14 Annual Increases. On each July 1, the Assigned Special Tax and the Backup Special Tax will be increased by an amount equal to 2% of the amount in effect for the previous Fiscal Year.

Multiple Land Use Classes . In some instances, an Assessor's Parcel of Developed Property may contain more than one Land Use Class. The Assigned Special Tax levied on an Assessor's Parcel will be the sum of the Assigned Special Taxes for all Land Use Classes located on that Assessor's Parcel. The Maximum Special Tax that can be levied on an Assessor's Parcel will be the sum of the Maximum Special Taxes that can be levied for all Land Use Classes located on that Assessor's Parcel. For an Assessor's Parcel that contains both Residential Property and Non-Residential Property, the Acreage of such Assessor's Parcel will be allocated to each type of 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 CFD Administrator's allocation to each type of property will be final.

Undeveloped Property, Taxable Public Property and Taxable Property Owner Association Property. The Fiscal Year 20 24-25 Maximum Special Tax for Undeveloped Property, Taxable Public Property and Taxable Property Owner Association Property is $21,179.21 per Acre.

On each July 1, the Maximum Special Tax for Undeveloped Property, Taxable Public Property and Taxable Property O wner Association Property will be increased by an amount equal to 2% of the amount in effect for the previous Fiscal Year.

Method of Apportionment of the Special Tax . Under the Rate and Method, for each Fiscal Year, the City will determine the Special Ta x Requirement and levy the Special Taxes until the amount of Special Taxes equals the Special Tax Requirement. The Special Tax will be levied each Fiscal Year as follows:

First: The Special Tax will be levied on each Assessor's Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax.

Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax will be levied Proportionately on each Assessor's Parcel of Undeveloped Property at up to 100% of the Maximum Special Tax for Undeveloped Property.

Third: If additional monies are needed to satisfy the Special Tax Requirement after the first two steps have been completed, then the levy of the Special Tax on each Assessor's Parcel of Developed Property whose Maximum Special Tax is determined through the application of the Backup Special Tax will be increased Proportionately from the Assigned Special Tax up to the Maximum Special Tax for each such Assessor's Parcel.

Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special Tax will be levied Proportionately on each Assessor's Parcel of Taxable Public Property and Taxable Property Own er Association Property at up to the Maximum Special Tax for Taxable Public Property and Taxable Property Owner Association Property.

15 Notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor's Parcel of Residentia l Property for which an occupancy permit for private residential use has been issued be increased by more than 10% as a consequence of delinquency or default by the owner of any other Assessor's Parcel within the District. See “SPECIAL RISK FACTORS – Potential Consequences of Future Special Tax Delinquencies.”

Exemptions. No Special Tax will be levied on up to 92.3 Acres of Public Property and/or Property Owner Association Property. Tax -exempt status will be assigned by the CFD Administrator in the chronological order in which property 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, its tax-exempt status will be revoked.

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

Appeals and Interpretations. Any landowner or resident who feels that the amount of the Special Tax levied on their Assessor's Parcel is in error may submit a written appeal to the District. The CFD Administrator will review the appeal and if the CFD Administrator concurs, the amount of the Special Tax levied will be appropriately modified.

The City Council may interpret the Rate and Method for purposes of clarifying any ambiguity and make determinations relative to the annual administration of the Special Tax and any landowner or resident appeals. Any decision of the City Council will be final and binding as to all persons.

Prepayment of Special Tax . The obligation of an Assessor's Parcel to pay the Bond Portion of the Special Tax (as defined in the Rate and Method) may be prepaid, in full or in part, provided the conditions set forth in the Rate and Method are satisfied. See APPENDIX B.

Covenant to Foreclose

Sale of Property for Nonpayment of Taxes . The Fiscal Agent Agreement provides that, in general, the Special Tax is to be collected in the same manner as ordinary ad valorem property taxes are collected and, except as provided in the special covenant for foreclosure described below and in the Act, is to be subject to the same penalties and the same procedure, sale and lien priority in case of delinquency as is provided for ad valorem property taxes. Under these procedures, if taxes are unpaid for a period of five years or more, the property is subject to sale by the County.

Foreclosure Under Mello -Roos Act. Under Section 53356.1 of the Act, if any delinquency occurs in the payment of the Special Tax, t he City 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.

While judicial foreclo sure is not mandatory, the City will agree in the Fiscal Agent Agreement that, on or about August 1 of each Fiscal Year, the Finance Director will compare the amount of Special Taxes previously levied in the District to the amount of Special Tax Revenues received by the City, and if delinquencies have occurred, proceed as follows:

16 Individual Delinquencies. If the Finance Director determines that any single parcel subject to the Special Tax in the District is delinquent in the payment of Special Taxes in the aggregate amount of $7,500 or more, then the Finance Director will send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the property owner within 45 days of such determination, and (if the delinquency remains uncured) foreclosure proceedings will be commenced by the City within 90 days of such determination. Notwithstanding the foregoing, in its sole discretion, the Finance Director may defer such action if the amount in the Reserve Fund is at least equal to t he Reserve Requirement.

Aggregate Delinquencies. If the Finance Director determines that the total amount of delinquent Special Tax for the prior Fiscal Year for the entire District, (including the total individual delinquencies described above), exceeds 5% of the total Special Tax due and payable for the prior Fiscal Year, the Finance Director will notify or cause to be notified all property owners who are then delinquent in the payment of Special Taxes (and demand immediate payment of the delinquency) within 45 days of such determination, and will commence foreclosure proceedings within 90 days of such determination against each parcel of land in the District with a Special Tax delinquency.

Sufficiency of Foreclosure Sale Proceeds; Foreclosure Limitat ions and Delays .

No assurances can be given that the real property subject to a judicial foreclosure sale will be sold or, if sold, that the proceeds of sale will be sufficient to pay any delinquent Special Tax installment. The Act does not require the City to purchase or otherwise acquire any lot or parcel of property foreclosed upon if there is no other purchaser at such sale.

Section 53356.6 of the Act requires that property sold by foreclosure be sold for not less than the amount of judgment in the foreclosure action, plus post -judgment interest and authorized costs, unless the consent of the owners of 75% of the outstanding 2024 Bonds is obtained. However, under Section 53356.6 of the Act, the City, as judgment creditor, is entitled to purchase any property sold at foreclosure using a “credit bid,” where the City could submit a bid crediting all or part of the amount required to satisfy the judgment for the delinquent amount of the Special Tax. If the City becomes the purchaser under a credit bid, the City must pay the amount of its credit bid into the Bond Fund, but this payment may be made up to 24 months after the date of the foreclosure sale.

Foreclosure by court action is subject to normal litigation delays, the nature and extent of which are largely dependent on the nature of any defense by the debtor and the Superior Court calendar. Also, the ability of the City to foreclose the lien of delinquent unpaid Special Taxes may be limited in certain instances and may require prior consent of the property owner if the property is owned by or in receivership of the Federal Deposit Insurance Corporation (the “FDIC”). See “ SPECIAL RISK FACTORS – Exempt Properties ” and “SPECIAL RISK FACTORS – FDIC/Federal Government Interests in Properties.”

No Teeter Plan. Collection of the Special Taxes is not subject to the “Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds,” as provided for in Section 4701 et seq. of the California Revenue and Taxation Code (known as the “Te eter Plan”). Accordingly, collections of Special Taxes will reflect actual delinquencies, if any. See “THE DISTRICT – Delinquencies.”

Special Tax Fund

17 Deposits. Under the Fiscal Agent Agreement, the City must remit, immediately upon receipt, all Special Tax Revenue received by it to the Fiscal Agent for deposit into the Special Tax Fund. The Fiscal Agent will hold moneys in the Special Tax Fund for the benefit of the City and the Owners of the 2024 Bond s and will disburse those moneys as described below.

Pending any disbursement, moneys in the Special Tax Fund will be subject to a lien in favor of the Owners of the 2024 Bonds.

Notwithstanding the foregoing,

(i) Special Tax Revenues in an amount not to exc eed the amount included in the Special Tax levy for such Fiscal Year for Administrative Expenses will be separately identified by the Finance Director and will be deposited by the Fiscal Agent in the Administrative Expense Fund;

(ii) any Special Tax Rev enues constituting the collection of delinquencies in payment of Special Taxes will be separately identified by the Finance Director and will be disposed of by the Fiscal Agent first, for transfer to the Bond Fund to pay any past due debt service on the 2024 Bonds; second, for transfer to the Reserve Fund to the extent needed to increase the amount then on deposit in the Reserve Fund up to the then -applicable Reserve Requirement; and third, to be held in the Special Tax Fund for use as described below; and

(iii) any proceeds of Special Tax Prepayments will be separately identified by the Finance Director and will be deposited by the Fiscal Agent in the Special Tax Prepayments Account.

Disbursements. No later than the fifth Business Day prior to each Int erest Payment Date, the Fiscal Agent will withdraw from the Special Tax Fund and transfer the following amounts in the following order of priority:

(i) with respect to any Interest Payment Date that is a March 1, to the Bond Fund an amount, taking into a ccount any amounts then on deposit in the Bond Fund and any expected transfers from the Reserve Fund and the Special Tax Prepayments Account to the Bond Fund such that the amount in the Bond Fund equals the interest due on the 2024 Bonds on such Interest P ayment Date, one-third of the principal due on the 2024 Bonds on the immediately succeeding September 1, and any past due principal or interest on the 2024 Bond s not theretofore paid from the collection of Special Tax delinquencies described in subparagraph (ii) under “Deposits” above, and

(ii) with respect to any Interest Payment Date that is a September 1, to the Bond Fund an amount, taking into account any amounts then on deposit in the Bond Fund and any expected transfers from the Reserve Fund and the Special Tax Prepayments Account to the Bond Fund such that the amount in the Bond Fund equals the principal, premium, if any, and interest due on the 2024 Bonds on such Interest Payment Date and any past due principal or interest on the 2024 Bonds not the retofore paid from the collection of Special Tax delinquencies described in subparagraph (ii) under “Deposits” above,

18 (iii) to the Reserve Fund , an amount, taking into account amounts then on deposit in the Reserve Fund, such that the amount in the Reserv e Fund is equal to the Reserve Requirement, and

(iv) to the City, the remaining amount, which will be used by the City for any lawful purpose, including the payment of authorized services.

Amounts levied for authorized services in any Fiscal Year are payable from Special Taxes only after the payment of debt service on the 2024 Bonds due in the calendar year that begins in such Fiscal Year , meaning that the amount of Special Taxes levied for authorized services in any Fiscal Year provides debt servi ce coverage for the 2024 Bonds during that Fiscal Year.

Bond Fund

Deposits. The Fiscal Agent will hold the moneys in the Bond Fund for the benefit of the City and the Owners of the 2024 Bonds and will disburse those funds for the payment of the principal of, and interest and any premium on, the 2024 Bonds as described below.

The Fiscal Agent Agreement also creates in the Bond Fund a separate account to be held by the Fiscal Agent, designated the “Special Tax Prepayments Account,” to the credit of which deposits of Special Tax Prepayments will be made, as described above.

Disbursements. On each Interest Payment Date, the Fiscal Agent will withdraw from the Bond Fund and pay to the Owners of the 2024 Bonds the principal of, and interest and any premium, due and payable on such Interest Payment Date on the 2024 Bonds.

At least 5 Business Days prior to each Interest Payment Date, the Fiscal Agent will determine if the amounts then on deposit in the Bond Fund are sufficient to pay the debt service due on the 2024 Bonds on the next Interest Payment Date. If amounts in the Bond Fund are insufficient for this purpose, the Fiscal Agent promptly will notify the Finance Director by telephone (and confirm in writing) of the amount of the insufficiency, and wi thdraw from the Reserve Fund, in accordance with the provisions of the Fiscal Agent Agreement, to the extent of any funds or Permitted Investments therein, amounts to cover the amount of such Bond Fund insufficiency, and deposit these amounts in the Bond Fund.

If, after the foregoing transfers, there are insufficient funds in the Bond Fund to make the payments of the principal of, and interest and any premium, due and payable on the 2024 Bonds, the Fiscal Agent will apply the available funds first to the payment of interest on the 2024 Bonds, then to the payment of principal due on the 2024 Bonds.

Reserve Fund

Establishment. Under the Fiscal Agent Agreement, the Reserve Fund is established as a separate fund to be held by the Fiscal Agent to the credit of which the Fiscal Agent will deposit a portion of the proceeds of the 2024 Bonds in an amount equal to 50% of the initial “Reserve Requirement” for the 2024 Bonds, as defined below , and the Reserve policy, which, as of the Closing Date, satisfies the remaining 50% of the initial Reserve Requirement . See “ESTIMATED SOURCES AND USES OF FUNDS”. Thereafter, d eposits will be made to replenish the Reserve Fund as provided in the Fiscal Agent Agreement.

19 Moneys and the Reserve Policy in the Reserve Fund will be held in trust by the Fiscal Agent for the benefit of the Owners of the 2024 Bonds as a reserve for the payment of the principal of, and interest and any premium on, the 2024 Bonds, and will be subject to a lien in favor of the Owners of the 2024 Bonds.

Reserve Requirement. The Fiscal Agent Agreement defines the Reserve Requirement, as of the date of any calculation, as the least of:

(i) the Maximum Annual Debt Service on the Outstanding 2024 Bonds,

(ii) 125% of average Annual Debt Service on the Outstanding 2024 Bonds, and

(iii) 10% of the original principal amount of the 2024 Bonds.

Disbursements. Except as otherwise provided in the Fiscal Agent Agreement , all amounts deposited in the Reserve Fund will be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Bond Fund in the event of any deficiency at any time in the Bond Fund of the amount then required for payment of the principal of, and interest and any premium on, the 2024 Bonds or, in accordance with the provisions of this Section, for the purpose of redeeming 2024 Bonds from the Bond Fund.

See APPENDIX C for a description of the timing, purpose, and manner of disbursements from the Reserve Fund.

Qualified Reserve Account Credit Instruments

The City shall have the right at any time to direct the Fiscal Agent to release funds from the Reserve Fund, in whole or in part, by tendering to the Fiscal Agent: (i) a Qualified Reserve Account Credit Instrument, and (ii) an opinion of Bond Counsel stating that neither the release of such funds nor the acceptance of such Qualified Reserve Account Credit Instrument will cause interest on the 2024 Bonds the interest on which is excluded from gross income of the owners thereof for federal income tax purposes to become includable in gross income for purposes of federal income taxation. Upon tender of such items to the Fiscal Agent, and upon delivery by the City to the Fiscal Agent of a written calculation of the amount permitted to be released from the Reserve Fund (upon which calculation the Fiscal Agent may conclusively rely), the Fiscal Agent shall transfer such funds from the Reserve Fund to the Special Tax Fund or the Bond Fund to be used for the purposes thereof, as directed i n writing by an Authorized Officer.

“Qualified Reserve Account Credit Instrument ” means the Reserve Policy and an irrevocable standby or direct -pay letter of credit, insurance policy, or surety bond issued by a commercial bank or insurance company and deposited with the Fiscal Agent, provided that all of the following requirements are met at the time of acceptance thereof by the Fiscal Agent: (a) in the case of a commercial bank, the long-term credit rating of such bank at the time of delivery of the irrevocable standby or direct-pay letter of credit is at least "A" from S&P or "A" from Moody’s and, in the case of an insurance company, the claims paying ability of such insurance company at the time of delivery of the insurance policy or surety bond is at least "A" from S&P, or "A" from Moody’s or, if not rated by S&P or Moody’s but rated by A.M. Best & Company, is rated at the time of delivery in the highest rating category by A.M. Best & Company; (b) such letter of credit, insurance policy or surety bond has a term of at least 12 months; (c) such letter of credit or surety bond has a stated amount at least equal to the portion of the Reserve Requirement with

20 respect to which funds are proposed to be released; and (d) the Fiscal Agent is authorized pursuant to the terms of such letter of credit, insurance policy or surety bond to draw thereunder an amount equal to any deficiencies which may exist from time to time in the Bond Fund for the purpose of making payments with respect to the 2024 Bonds.

If the Res erve Requirement is being maintained partially in cash and partially with a Qualified Reserve Account Credit Instrument, the City shall reimburse the provider of the Qualified Reserve Account Credit instrument before replenishing the cash amount.

If the R eserve Requirement is being maintained partially in cash and partially with a Qualified Reserve Account Credit Instrument, the amount that will be transferred to the Bond Fund from the Reserve Fund due to a prepayment of Special Taxes and redemption of 202 4 Bonds shall be the product of (i) the amount that would have been transferred to the Bond Fund pursuant to the previous paragraph if the Reserve Requirement were being met completely with cash multiplied by (ii) the percentage of the Reserve Requirement that is being maintained in cash. Concurrently, to the extent provided in the Qualified Reserve Account Credit Instrument, the available amount thereunder shall be reduced by the product of (iii) the amount that would have been transferred to the Bond Fund pursuant to the previous paragraph if the Reserve Requirement were being met completely with cash multiplied by (iv) the percentage of the Reserve Requirement that is being maintained with the Qualified Reserve Account Credit Instrument.

The City will ha ve no obligation to replace a Qualified Reserve Account Credit Instrument or to fund the Reserve Fund with cash if, at any time that the 2024 Bonds are Outstanding, the Qualified Reserve Account Credit Instrument (or its provider) is downgraded or the provider becomes insolvent, if there is an unscheduled termination of the Qualified Reserve Account Credit Instrument or if for any reason insufficient amounts are available to be drawn upon under the Qualified Reserve Account Credit Instrument; provided, howe ver, that the City shall reimburse the provider, in accordance with the terms of the Qualified Reserve Account Credit Instrument, for any draws made thereon.

The City and the Fiscal Agent shall comply with the terms of the Qualified Reserve Account Credit Instrument as shall be required to receive payments thereunder in the event and to the extent required under the Fiscal Agent Agreement.

Investment of Moneys in Funds

Moneys in any fund or account created or established by the Fiscal Agent Agreement and held by the Fiscal Agent or the Finance Director will be invested by the Fiscal Agent or the Finance Director, as applicable, in Permitted Investments. See APPENDIX C for a definition of “Permitted Investments.”

No Parity Bonds

Under t he Fiscal Agent Agreement, the City is not authorized to issue bonds that are secured by Special Tax Revenues on a parity basis with the 2024 Bonds.

Subordinate Bonds

Under the Fiscal Agent Agreement, the City may issue bonds or other debt secured by a pledge of Special Tax Revenues, including bonds issued to refund all or a portion of any then -

21 outstanding 2024 Bonds, subordinate to the pledge of such Special Tax Revenues securing the 2024 Bonds.

22 Limits on Special Tax Waivers and Bond Tenders

The City will covenant in the Fiscal Agent Agreement not to exercise its rights under the Act to waive delinquency and redemption penalties related to the Special Taxes or to declare Special Tax penalties amnesty program if to do so would materially and adversely effect the interests of the Owners of the 2024 Bonds.

The City will further covenant not to permit the tender of 2024 Bonds in payment of any Special Taxes except upon receipt of a certificate of an Independent Financial Consultant that to accept such tender will not result in the City having insufficient Special Tax Revenues to pay the principal of and interest on the 2024 Bonds remaining Outstanding following such tender.

23 BOND INSURANCE

[To come from Bond Insurer]

24 THE DISTRICT

Background and Formation

Background. The Act provides an alternative method of financing certain public capital facilities and services, especially in developing areas of the State. The Act authorizes local governmental entities to establish community facilities districts as legally constituted governmental entities within defined boundaries, with the legislative body of the local applicable governmental entity acting on behalf of the district. Subject to approval by at least a two -thirds vote of the votes cast by the qualified electors within a district and compliance with the provisions of the Act, the legislative body may issue bonds for the community facilities district established by it and may levy and collect a special tax within such district to repay such bonds.

Formation and History. The City formed the District under the Act on March 23, 2005, following a public hearing. At a subsequent landowner election, the qualified electors of the District authorized the District to incur bonded indebtedness in the maximum principal amount of $25,000,000 and approved the levy of special taxes within the District under the Rate and Method. In 2005, the City issued bonds on behalf of the District captioned “ City of Hesperia Community Facilities District No. 2005 -1 (Belgate Development Restructuring) , County of S an Bernardino, State of California, Special Tax Bonds, 2005 Series A” (the “2005 CFD Bonds”). At the time of their issuance, the 2005 CFD Bonds were purchased by the City of Hesperia Public Financing Authority and used to secure the issuance of a series of revenue bonds captioned “City of Hesperia Public Financing Authority 2005 Local Agency Revenue Bonds, Series A (Tranches A through C)” (the “2005 PFA Bonds”).

The District was created as part of a plan to refinance and restructur e debt of a community facilities district previously formed by the City entitled “ Community Facilities District No. 91-3 of the City of Hesperia ( “CFD No. 91-3”) which, as of March 2 , 2005 was in default in the payment of interest and principal on its $9,880,000 Special Tax Bonds issued in 1992 (the “1992 Bonds”).

The District encompasses approximately 242 acres of property , which is within the original CFD No. 91 -3 boundaries, that was acquired by the City through foreclosure in April 2004. Through the issuance of the 2005 CFD Bonds and the 2005 PFA Bonds, the lien of CFD No. 91-3 on the property within the District was satisfied, and the 1992 Bonds were defeased in full.

Through the issuance of the 2014 Bonds, the 20 05 CFD Bonds and 2005 PFA Bonds were defeased in full.

Location and Description of the District

The District is generally located in the western portion of the City, southeast of Interstate

15. The District currently contains 1,03 7 parcels of Taxable Property , of which 31 parcels are classified as Undeveloped Property and the remaining parcels are classified as Developed Property for Fiscal Year 20 24-25. Among the 1,006 parcels that are taxes as Developed Property, 60 parcels have very minimal if any structur e value. The building permits of ___ of these parcels have expired. See “–Major Landowners” below.

The land within the District is primarily developed with a community known as “Mission Crest.” The development was first approved in 1989. The development approvals called for 940

25 residential lots, as well as lots zoned for commercial, and office uses. Bonds issued with respect to CFD No. 91-3 financed approximately $10 million in infrastructure improvements, but no development occurred. Development bega n in 2005, when Frontier Homes bought the property out of foreclosure. Frontier Homes’ development continued through 2007, although not all parcels have been developed with completed homes . Currently, there are 1,006 parcels of Developed Property and 31 parcels of Undeveloped Property in the District.

Community amenities currently include an elementary school (Mission Crest Elementary School) a joint use park (which the school uses during the day and the City uses at night), and a landscaped walkway throughout the development.

Infrastructure improvements and development fees required i n order for a property owner to build out the vacant lots include the following: streets must be capped; curbs, gutters and sidewalks must be completed; the lots must annex into a lighting and landscaping district for landscaping and lighting maintenance; and development impact fees of $11,065, park fees of $4 ,090, and school fees of $ [4.94]/square foot must be paid, some at bu ilding permit and some at final inspection.

26 Land Use Distribution

Fiscal Year 2024-25. The following table shows the distribution of land uses of Taxable Property within the District based on the Fiscal Year 2024-25 Special Tax levy, the outstanding principal amount of the 2024 Bonds, and Fiscal Year 2024-25 assessed values.

Table 1
Distribution of Land Uses
Fiscal Year 2024-25
(Taxable Property)

Land
Uses
Residential Floor
Area
Number
of
Parcels[1]
FY 2024-25
Assigned
Special Tax
Rates[2]
Total
FY 2024-25
Assigned
Special Tax
FY 2024-25
Actual
Special Tax
Rates
Total
FY 2024-25
Special Tax
Levy[3]
% of
Total
Special Tax
Pro Rata
Share
of 2024
Bonds
FY 2024-25
Assessed
Valuation[4]
Value-
to-Lien
Ratio
1 >3,300 sq. ft. 49 $3,270.57 $160,258 $2,714.72 $133,021 6.16% $695,188 $15,796,420 22.72 2 3,151-3,300 sq. ft. 22 3,052.13 67,147 2,533.40 55,735 2.58 291,278 6,895,389 23.67 3 3,001-3,150 sq. ft. 114 2,989.72 340,828 2,481.60 282,902 13.11 1,478,488 36,564,280 24.73 4 2,851-3,000 sq. ft. 71 2,958.52 210,055 2,455.70 174,355 8.08 911,203 21,654,776 23.77 5 2,701-2,850 sq. ft. 134 2,842.61 380,910 2,359.50 316,173 14.65 1,652,365 43,847,345 26.54 6 2,551-2,700 sq. ft. 122 2,759.40 336,647 2,290.42 279,431 12.95 1,460,348 35,741,268 24.47 7 2,401-2,550 sq. ft. 141 2,676.19 377,343 2,221.36 313,212 14.51 1,636,890 40,721,492 24.88 8 2,251-2,400 sq. ft. 153 2,175.42 332,839 1,805.70 276,263 12.80 1,443,791 46,158,394 31.97 9 2,101-2,250 sq. ft. 54 2,123.41 114,664 1,762.54 95,173 4.41 497,386 13,276,994 26.69 10 1,951-2100 sq. ft. 66 2,071.41 136,713 1,719.36 113,478 5.26 593,051 21,248,070 35.83 11 1,801-1,950 sq. ft. 49 1,903.49 93,271 1,579.98 77,419 3.59 404,603 14,166,283 35.01 12 <=1,800 sq. ft. 31 1,601.85 49,657 1,329.60 41,218 1.91 215,409 10,138,096 47.06 Developed Property Subtotal 1,006 $2,600,332 $2,158,379 100.00% $11,280,000 306,208,807 27.15 Undeveloped 31
$21,179.20
/Acre $120,861 $0.00 /acre 0.00% $0 $721,597 N/A

Total 1,037 $2,721,193 $2,158,379 100.00% $11,280,000 $306,930,404 27.19

[1] Excludes parcels that are exempt from the Special Tax. Certain parcels in certain Land Use Classes have a building permit issued, but no structure value , as follows: Land Use Class 3: 20 parcels; Land Use Class 4: 1 parcel; Land Use Class 6: 18 parcels; Land Use Class 8: 2 parcels; and Land Use Class 9: 19 parcels. [2] Maximum Special Taxes are shown for Undeveloped Property. [3] Includes $31,195.52 for Administrative Expenses, $1,379,187.50 for debt service on the 2014 Bonds, and $747,996.40 for Authorized Services. [4] Per the San Bernardino County Assessor's roll data for Fiscal Year 2024-25, with a January 1 valuation date. Assessed value does not reflect any changes made to valuation after July 2024 as a result of assessment appeal, correction or any other changes. Assessed value is calcul ated as the sum of land and improvement value. See “–Value-to- Lien Ratios” below.

Source: NBS.

27 Assessed Property Values

No Appraisal of Property in the District. The City has not commissioned an appraisal of the Taxable Propert y in the District in connection with the issuance of the 2024 Bond s.

Therefore, the valuation of the taxable property in the District set forth in this Official Statement is based on the County Assessor’s Fiscal Year 2024-25 assessed values.

Since the beginning of Fiscal Year 2023 -24, 64 homes were conveyed to new homeowners according to the County Assessor’s records of ownership. The average assessed value for these 64 homes is $508,631 and the weighted average square footage is 2,488 square feet. Excluding those homes, the average Fiscal Year 2024-25 assessed value for homes in the District is $306,340.

Assessed Valuation. The valuation of real property in the County is established by the County Assessor. Assessed valuations are reported at 100% of the “full cash value” of the property, which is defined in Article XIIIA of the California Constitution as the appraised value as of March 1, 1975, plus adjustments not to exceed 2% per year to reflect inflation . An assessment of “full cash value” is required upon change of ownership or new construction.

Accordingly, the gross assessed valuation presented in this Official Statement may not necessarily be representative of the actual market value of certain property in the District.

Historic Assessed Valuation in the District. The table below set s forth historic assessed values within the District since Fiscal Year 2015-16.

Table 2
History of Assessed Values
(Taxable Property)

Fiscal
Year Net Assessed Value[1]
Increase/(Decrease)
in Net Assessed Value
2015-16 $161,818,601 N/A
2016-17 172,363,926 6.52%
2017-18 181,502,969 5.30%
2018-19 190,553,090 4.99%
2019-20 200,747,776 5.35%
2020-21 209,716,462 4.47%
2021-22 222,244,093 5.97%
2022-23 246,385,844 10.86%
2023-24 282,225,403 14.55%
2024-25 306,930,404 8.75%

[1] Per the San Bernardino County Assessor's roll data for Fiscal Year 2024 -25, with a January 1 valuation date. Assessed value does not reflect any changes made to valuation after July 2024 as a result of assessment appeal, correction or any other changes. Assessed value is calculated a s the sum of land and improvement value.

Excludes parcels, if any, for which the Special Tax obligation has been prepaid.

Source: NBS.

Proposition 8 Reductions. Pursuant to California law, a property owner may apply for a reduction of the property tax assessment for the owner's property by filing a written application, in the form prescribed by the State Board of Equalization, with the appropriate county assessm ent appeals board (a “ Proposition 8 appeal ”). In addition to reductions in

28 assessed value resulting from Proposition 8 appeals, Proposition 8 also allows assessors to reduce assessed value unilaterally to reflect reductions in market value.

This information is included to provide historical context for the assessed valuations set forth in this Official Statement. The Special Taxes are not levied based on the assessed valuation of the Taxable Property in the District. See “SECURITY FOR THE 2024 BONDS – Rate and Method.”

Value-to-Lien Ratios

General Information Regarding Value-to-Lien Ratio s. The value-to-lien ratio on bonds secured by special taxes will generally vary over the life of those bonds as a result of changes in the value of the propert y that is security for the special taxes and the principal amount of the bonds.

In comparing the aggregate assessed value of the real property within the District and the principal amount of the 2024 Bonds, it should be noted that an individual parcel may only be foreclosed upon to pay delinquent installments of the Special Taxes attributable to that parcel.

The principal amount of the 2024 Bonds is not allocated pro -rata among the parcels within the District; rather, the total Special Taxes have been allocated among the parcels within the District according to the Rate and Method.

Economic and other factors beyond the property owners’ control, such as economic recession, deflation of land values, financial difficulty or bankruptcy by one or more propert y owners, or the complete or partial destruction of Taxable Property caused by, among other possibilities, earthquake, flood, fire or other natural disaster, could cause a reduction in the assessed value within the District . See “SPECIAL RISK FACTORS - Property Value” and “Bankruptcy Delays.”

Aggregate Value-to-Lien Ratio.* The aggregate value-to-lien ratio of Taxable Property in the District, based on Fiscal Year 2024-25 assessed values ($ 306,930,404) and the initial principal amount of the 2024 Bonds ($11,280,000)* is 27.21:1*.

California Municipal Statistics, Inc., reports that there is no overlapping special tax or assessment debt. There is, however, overlapping general obligation debt, and the properties in the District are subject to a number of taxes, direct charges and assessments . See “ —Direct and Overlapping Governmental Obligations” below.

* Preliminary; subject to change.

29 Value-to-Lien Ratio Distribution Based on 2024-25 Special Tax Levy. The following table sets forth the distribution of assessed value-to-lien ratios based on Fiscal Year 2024-25 assessed values and the lien of the 2024 Bonds, which has been allocated based on the Fiscal Year 20 24-25 Special Tax levy. Although 31 lots in the District constitute Undeveloped Property, the Fiscal Year 20 24-25 Special Taxes are levied only on Developed Property . This table assumes no further development within the District.

Table 3
Distribution of Value-to-Lien Ratios *
Based on Fiscal Year 2024-25 Special Tax Levy

Value-to-Lien Ratio
Category
Parcel
Count
FY 2024-25
Assessed
Value [1]
% of
Total
Value
Pro Rata Share
of 2024
Bonds [2]
% of
2024 Bonds
15:1 and above 870 $289,718,875 94.61% $9,658,789 85.63% 10:1 – 14.99:1 76 13,025,445 4.25 939,714 8.33
5:1 - 9.99:1 [3] 30 1,848,372 0.60 312,203 2.77
3:1 - 4.99:1 [3] 25 1,499,730 0.49 319,234 2.83
Less than 3:1 [3] 5 116,385 0.04 50,060 0.44
Total 1,006 $306,208,807 100.00% $11,280,000 100.00%

* Preliminary; subject to change.
[1] Per the San Bernardino County Assessor's roll data for Fiscal Year 2024-25, with a January 1 valuation date. Assessed value does not reflect any changes made to valuation after July 2024 as a result of assessment appeal, correction or any other changes. Assessed value is calculated as the sum of land and improvement value. [2] Allocated based on the Fiscal Year 2024-25 Special Tax levy, which is levied only on Developed Property. [3] Represents parcels that are classified as Developed Property under the RMA because they had previously been issued a building permit, but which remain undeveloped (the County Assessor has assigned land values to these parcels but no structure values), including certain parcels for which the building permits have expired.

Source: NBS.

30 Major Landowners

The following table lists the top 10 payers of Special Taxes in the District with respect to Taxable Property for Fiscal Year 2024-25, based on the Fiscal Year 2024-25 Special Tax levy and assessed values.

Table 4
Summary of Top 10 Taxpayers
Fiscal Year 2024-25
(Taxable Property)

Name
No. of
Parcels
Development
Status
Actual Special
Taxes Levied
Percentage of
FY 2024-25
Special Taxes
FY 2024-25
Assessed Value[1]
Pro Rata Share
of 2024 Bonds
Value-to-
Lien Ratio
APEX HM LLC [2] 93 Developed $187,003 8.66% $18,390,345 $977,306 18.82 MAAT INVESTMENTS LLC 20 Developed 43,032 1.99% 4,538,977 224,892 20.18 BANG STEIN TAE & YEOUN-SOO LIVING T 4 Developed 9,682 0.45% 892,309 50,601 17.63 OZEL DEVELOPING INC [2] 5 Developed 9,579 0.44% 116,385 50,060 2.32 NATKER ROSLYN & ANDY LIV TR 12/20/0 4 Developed 9,327 0.43% 998,069 48,744 20.48 YAO KATHIE FAMILY TR 9/21/12 3 Developed 7,651 0.35% 561,382 39,984 14.04 SAMDARIA LALIT 3 Developed 7,434 0.34% 607,869 38,850 15.65 LIU XIAO DONG 3 Developed 7,228 0.33% 521,388 37,773 13.80 HCX GROUP LLC 3 Developed 6,940 0.32% 607,095 36,271 16.74 NATKER ROSLYN & ANDY LIVING TR 12/2 3 Developed 5,191 0.24% 757,613 27,131 27.92 Total 141 $293,067 13.58% $27,991,432 $1,531,612 18.28

[1] Per the San Bernardino County Assessor's roll data for Fiscal Year 2024-25, with a January 1 valuation date. Assessed value does not reflect any changes made to valuation after July 2024 as a result of assessment appeal, correction or any other changes. Assessed value is calculated as the sum of land and improvement value. [2] Includes parcels that are classified as Developed Property under the RMA because they had previously been issued a buil ding permit, but which remain undeveloped (the County Assessor has assigned land values to these parcels but no structure values), including certain parcels for which the building permits have expired.

Source: NBS.

31 Delinquencies

Collection and Delinquency History. The following table shows a history of Special Tax levies, collections, and delinquency rates since Fiscal Year 20 14-15, based on amounts levied and outstanding delinquencies as of June 30 each Fiscal Year.

Table 5
Special Tax Collections and Delinquencies

Fiscal Year Delinquencies (June 30)[1] Delinquencies as of June 30, 2024 Fiscal
Year Amount Levied
Parcels
Levied
Parcels
Delinquent
Amount
Delinquent
Percent
Delinquent
Parcels
Delinquent
Amount
Delinquent
Percent
Delinquent
2014-15 $1,954,944.86 1,038 9 $13,612.44 0.70% 0 $0.00 0.00% 2015-16 1,665,151.52 885 18 24,382.81 1.46% 1 1,934.26 0.12% 2016-17 1,703,753.26 885 9 15,569.60 0.91% 0 0.00 0.00% 2017-18 1,728,332.98 885 24 32,679.76 1.89% 0 0.00 0.00% 2018-19 1,783,701.20 885 9 14,365.68 0.81% 0 0.00 0.00% 2019-20 1,808,764.00 884 8 16,695.42 0.92% 1 2,325.16 0.13% 2020-21 1,856,874.14 884 6 13,350.96 0.72% 2 4,849.56 0.26% 2021-22 1,900,885.88 884 6 13,083.80 0.69% 2 4,946.48 0.26% 2022-23 2,009,839.46 963 7 12,860.26 0.64% 3 7,269.00 0.36% 2023-24 2,087,133.26 973 10 16,311.55 0.78% 10 16,311.55 0.78%

[1] As of June 30 of each Fiscal Year shown.

Source: NBS.

32 Projected Debt Service Coverage

As discussed above under “THE DISTRICT – Location and Description of the District,” 60 of the 1,006 parcels of Developed Property have no structure value currently. No assurances can be given as to when, if ever, such parce ls will be fully developed with structure values. The following table shows a comparison of projected debt service coverage on the 2024 Bonds between all parcels of Developed Property and only those parcels of Developed Property with a structure value.

Table 6
Debt Service Coverage from Special Taxes
Comparison of Developed Property with Structure Value to Developed Property Without Structure Value

Special Tax Requirement
Est. Sp. Tax Levy, Assuming
0% Delinquency
Est.

Coverage Maximum Special Taxes[4] Maximum Coverage
Fiscal/Bond
Year
2024 Bonds
Debt Service*
Admin.

Expenses
[1]
Authorized
Services[2] Total Levy
Developed
Parcels w/
Structure
Developed
Parcels w/o
Structure
of Bonds
from
Parcels w/
Structure
Developed
Parcels w/
Structure
Developed
Parcels w/o
Structure
Undev.

Property
of 2024
Bonds from
Parcels w/
Structure[3]
of 2024
Bonds
from All
Property
2024-25 $1,379,188 $31,195 $747,996 $2,158,379 $2,027,978 $130,415 145% $2,230,776 $143,456 $120,861 159% 179% 2025-26 1,230,500 31,819 762,956 2,025,275 1,902,904 122,372 152% 2,093,194 134,609 123,278 168% 188% 2026-27 1,254,750 32,455 778,215 2,065,421 1,940,623 124,797 152% 2,134,686 137,277 125,744 168% 189% 2027-28 1,276,000 33,104 793,780 2,102,884 1,975,823 127,061 152% 2,173,406 139,767 128,259 168% 189% 2028-29 1,304,250 33,767 809,655 2,147,672 2,017,905 129,767 152% 2,219,695 142,744 130,824 168% 189% 2029-30 1,334,000 34,442 825,848 2,194,290 2,061,706 132,584 152% 2,267,877 145,842 133,440 167% 188% 2030-31 1,355,000 35,131 842,365 2,232,496 2,097,604 134,892 152% 2,307,364 148,382 136,109 168% 189% 2031-32 1,387,500 35,833 859,213 2,282,546 2,144,630 137,917 152% 2,359,093 151,708 138,831 167% 188% 2032-33 1,410,750 36,550 876,397 2,323,697 2,183,294 140,403 152% 2,401,623 154,443 141,608 168% 189% 2033-34 1,440,000 37,281 893,925 2,371,206 2,227,932 143,274 152% 2,450,726 157,601 144,440 168% 189% 2034-35 1,464,750 38,027 911,803 2,414,580 2,268,686 145,894 152% 2,495,554 160,484 147,329 168% 189%

* Preliminary; subject to change.
[1] Fiscal Year 2024-25 is actual and is assumed to increase at 2% per year thereafter. [2] Fiscal Year 2024-25 is actual and is assumed to increase at 2% per year thereafter. The Rate and Method provides for annual increases based on CPI, with a minimum increase of 2% and a maximum of 6%.
[3] Maximum coverage of 2024 Bonds from parcels of Developed Property with structure values is calculated as the estimated Specia l Tax Levy from "Developed Parcels w/ Structure" minus "Administrative Expenses," divided by "2024 Bonds Debt Service". [4] Pursuant to the Act, under no circumstances may the Special Tax levied against any Assessor Parcel of Residential Property fo r which an occupancy permit for private residential use has been issued be increased by more than 10% as a consequence of delinquency or default by the owner of any other Assessor Parcel. For purposes of this Table 6, parcels with a building permit but without a structure have been assumed to be constrained by this limitation.

Source: Underwriter.

33 Direct and Overlapping Governmental Obligations

Taxes, Charges and Assessments. The base property tax rate on property in the District is 1.00% (including ad valorem tax overrides). Property in the District is also subject, or will be subject, to certain annual charges and assessments (which are billed to property owners on a semi -annual basis). The following table reflect s the tax bills of three separate representative properties in the District for Fiscal Year 2023-24 and are representative of the applicable annual charges and assessments of all tax rate areas in the District.

Table 7
Taxes, Charges and Assessments for Representative Properties Fiscal Year 2023-24

Land Use
Class 3
Land Use
Class 6
Land Use
Class 10
3,110
Square Feet
2,700
Square Feet
2,029
Square Feet
Estimated Property Characteristics
Average Land Value $61,111 $67,839 $57,372
Average Assessed Value [1] 464,854 442,526 290,160
Homeowner’s Exemption (7,000) (7,000) (7,000)
Estimated Net Assessed Value $457,854 $435,526 $283,160

Ad Valorem Property Taxes Tax Rate Amount Amount Amount General Purpose Ad Valorem Tax (Prop 13) 1.0000% $4,579 $4,355 $2,832 Victor Valley Community College Meas. JJ 0.0250 114 109 71 Mojave Water Bond Debt #1 (Land Only Rates) [2] 0.1125 69 76 65 Mojave Water Bond Debt #2 [3] 0.0550 256 243 160
Subtotal Ad Valorem Property Taxes 1.1925% $5,017 $4,784 $3,127

Special/Direct Assessments and Taxes Amount Amount Amount CFD No. 2005-1 $2,931 $2,705 $2,031
City of Hesperia Fire CFD 94-1 158 158 158
Hesperia Recreation & Park Dist LLD #1 64 64 64
Hesperia Recreation & Park Dist LLD #2W 335 335 335
Subtotal Special/Direct Assessments and Taxes $3,489 $3,263 $2,589

Total Estimated Annual Property Taxes $8,506 $8,047 $5,715

Effective Tax Rate 1.8299% 1.8184% 1.9697%

[1] Fiscal Year 2023-24 assessed valuation data as of January 1, 2023. See “THE DISTRICT – Assessed Property Values – No Appraisal of Property in the District.”
[2] Tax rate only applies to land value.
[3] Tax rate applies to assessed value of land and improvements.

Source: NBS.

Recent Sales Comparison. For comparison to Table 7 above, a ccording to data available from the County Assessor’s office, the average new assessed values of the parcels in Land Use Class 3 (with 3,110 square feet), Land Use Class 6 (with 2,700 square feet), and Land Use Class 10 (w ith 2,029 square feet) that have sold since the beginning of Fiscal Year 2023-24 are, respectively, $581,319 (based on 7 sales) , $ 607,314 (based on 6 sales) , and $480,889 (based on 5 sales).

34 Overlapping Public Debt . Contained within the boundaries of the District are certain overlapping local agencies providing public services and assessing property taxes, assessments, special taxes and other charges on the property in t he District. Many of these local agencies have outstanding debt.

The current direc t and overlapping obligations affecting the property in the District are shown in the following table. The table was prepared by California Municipal Statistics, Inc., and is included for general information purposes only. The City has not reviewed this report for completeness or accuracy and makes no representation in connection therewith.

Table 8
Direct and Overlapping Bonded Debt
As of September 1, 2024

2023-24 Assessed Valuation: $282,676,403

DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 9/1/24 Victor Valley Joint Community College District 0.639% $ 1,022,085 City of Hesperia Community Facilities District No. 2005-1 100.000 12,835,000(1) TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $13,857,085

OVERLAPPING GENERAL FUND DEBT:

San Bernardino County General Fund Obligations 0.088% $ 116,117 San Bernardino County Flood Control District General Fund Obligations 0.088 32,916 Hesperia Unified School District General Fund Obligations 2.762 3,127,759 City of Hesperia Lease Revenue Bonds 3.165 862,011
Hesperia Recreation and Park District General Fund Obligations 3.080 152,318 TOTAL OVERLAPPING GENERAL FUND DEBT $4,291,121

COMBINED TOTAL DEBT $18,148,206(2)

Ratios to 2023-24 Assessed Valuation:

Direct Debt ($12,835,000)..................................... 4.54% Total Overlapping Tax and Assessment Debt ....... 4.90% Combined Total Debt ............................................. 6.42%

Source: California Municipal Statistics.
(1) Excludes issue to be sold.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.

35 SPECIAL RISK FACTORS

The purchase of the 2024 Bonds described in this Official Statement involves a degree of risk that may not be appropriate for some investors. The following includes a discussion of some of the risks which should be considered before making an investment decision. T his discussion does not purport to be comprehensive or definitive and does not purport to be a complete statement of all factors which may be cons idered as risks in evaluating the credit quality of the 2024 Bonds. There can be no assurance that other risk factors will not become material in the future.

Limited Obligation

The City has no obligation to pay principal of and interest on the 2024 Bonds if Special Tax collections are delinquent or insufficient, other than from amounts, if any, on deposit in the Reserve Fund or funds derived from the tax sale or foreclosure and sale of parcels for Special Tax delinquencies. Neither the City nor the Dis trict is obligated to advance funds to pay debt service on the 2024 Bonds.

Levy and Collection of the Special Tax

General. The principal source of payment of principal of and interest on the 2024 Bonds is the proceeds of the annual levy and collection of the Special Tax against property within the District.

Limitation on Maximum Special Tax Rate. The annual levy of the Special Tax is subject to the maximum annual Special Tax rate authorized in the Rate and Method. The levy cannot be made at a higher rate even if the failure to do so means that the estimated proceeds of the levy and collection of the Special Tax, together with other available funds, will not be sufficient to pay debt service on the 2024 Bonds. Pursuant to Section 53321 of the Act, under no circumstances will the Special Tax levied against any parcel used for private residential purposes be increased as a consequence of the delinquency or default by the owner of any other parcel or parcels by more than 10%. For such purposes, a parcel will be considered used for private residential purposes not later than the date on which an occupancy permit for private residential use is issued.

Generally, the City levies Special Taxes at the Assigned Special Tax rate on Developed Property. If delinquencies occur in the receipt of Special Taxes in any Fiscal Year, the City may increase the Special Tax levy up to the maximum rates as permitted in the Rate and Method in the following fiscal years if determined necessary to cure any delinquencies on the 2024 Bonds.

There may be little or no difference between the Assigned Special Tax rate and the maximum rates where the property is all categorized as Developed Property.

No Relationship Between Pro perty Value and Special Tax Levy. Because the Special Tax formula set forth in the Rate and Method is not based on property value, the levy of the Special Tax will rarely, if ever, result in a uniform relationship between the value of particular parcels o f Taxable Property and the amount of the levy of the Special Tax against those parcels. Thus, there will rarely, if ever, be a uniform relationship between the value of the parcels of Taxable Property and their proportionate share of debt service on the 2024 Bonds, and certainly not a direct relationship.

36 Factors that Could Lead to Special Tax Deficiencies. The following are some of the factors that might cause the levy of the Special Tax on any particular parcel of Taxable Property to vary from the Special Tax that might otherwise be expected:

Transfers to Governmental Entities. The number of parcels of Taxable Property could be reduced through the acquisition of Taxable Property by a governmental entity and failure of the government 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 taxation, thereby resulting in an increased tax burden on the remaining taxed parcels.

Property Tax Delinquencies. Failure of the owners of Taxable Property to pay property taxes (and, consequently, the Special Tax), or delays in the collection of or inability to collect the Special Tax by tax sale or foreclosure and sale of the delinquent parcels, could result in a deficiency in the collecti on of Special Tax revenues. See “ – Property Tax Delinquencies” below. For a summary of recent property tax collection and delinquency rates in the District, see “THE DISTRICT.”

Delays Following Special Tax Delinquencies and Foreclosure Sales. The Fisca l Agent Agreement generally provides that the Special Tax is to be collected in the same manner as ordinary ad valorem property taxes are collected and, except as provided in the special covenant for foreclosure described in “SECURITY FOR THE 2024 BOND S – Covenant to Foreclose” and in the Act, is subject to the same penalties and the same procedure, sale and lien priority in case of delinquency as is provided for ordinary ad valorem property taxes. Under these procedures, if taxes are unpaid for a period o f five years or more, the property is deeded to the State and then is subject to sale by the County.

If sales or foreclosures of property are necessary, there could be a delay in payments to owners of the 2024 Bonds pending such sales or the prosecution of foreclosure proceedings and receipt by the City of the proceeds of sale if the Reserve Fund is depleted . See “SECURITY FOR THE 2024 BONDS – Covenant to Foreclose.”

The ability of the City to collect interest and penalties specified by State law and to foreclose against properties having delinquent Special Tax installments may be limited in certain respects with regard to properties in which a federal governmental agency has or obtains an interest. See “– FDIC/Federal Government Interests in Properties” below.

Other laws generally affecting creditors’ rights or relating to judicial foreclosure may affect the ability to enforce payment of Special Taxes or the timing of enforcement of Special Taxes. For example, the Soldiers and Sailors Civil Relief Act of 1940 affords protections such as a stay in enforcement of the foreclosure covenant, a six -month period after termination of such military service to redeem property sold to enforce the coll ection of a tax or assessment and a limitation on the interest rate on the delinquent tax or assessment to persons in military service if the court concludes the ability to pay such taxes or assessments is materially affected by reason of such service.

Property Tax Delinquencies

Delinquencies in the payment of property taxes and, consequently, the Special Taxes, can occur because the owners of delinquent parcels may not have received property tax bills from the County in a timely manner. Delinquencies ca n also reflect economic difficulties and duress by the property owner.

37 Sustained or increased delinquencies in the payment of the Special Taxes could cause a draw on the Reserve Fund established for the 2024 Bonds and perhaps, ultimately, a default in the payment on the 2024 Bonds.

Potential Early Redemption of Bonds from Prepayments or Assessment Bond Proceeds

Property owners within Improvement Area No. 1 are permitted to prepay the Special Tax obligation on their property at any time. Such prepayment s could also be made from the proceeds of bonds issued by or on behalf of an overlapping special assessment district or community facilities district. Such prepayments will result in a redemption of the 2024 Bonds on the Interest Payment Date for which ti mely notice may be given under the Fiscal Agent Agreement following the receipt of the prepayment. The resulting redemption of 2024 Bonds that were purchased at a price greater than par could reduce the otherwise expected yield on such 2024 Bonds. See the caption “THE 2024 BONDS – Redemption – Mandatory Redemption from Special Tax Prepayments.”

Risks Related to Economic Cycles

The history of development and special tax delinquencies in the District and its predecessor community facilities district , CFD No. 91 -3, suggests the cyclical nature of the economy in the City and the impact of the economic cycle on development in the City. There have been two periods of significant delinquencies . The first occurred after CFD No. 91 -3 was first formed in 1991. No private development within CFD No. 91 -3 occurred before such community facilities district was dissolved and until the District was formed in 2005, and during that period the developer did not pay taxes on the property. The District was formed as part of a workout of delinquencies in CFD 91 -3. The property in the District was largely, but not completely, developed in the two-year period after the formation of the District. Currently, all but 31 parcels have become Developed Property . However, 60 of the 1,0006 parcels classified as Developed Property have no structure value. The City can provide no assurances that the owners of Taxable Property will pay their Special Taxes or that the remaining parcels of undeveloped property (including parcels with no structure value that are nonetheless classified as Developed Property) will be developed.

Risks Related to Homeowners with High Loan to Value Ratios

Properties with high loan -to-value ratios in the District could result in property owner unwillingness or inability to pay mortgage payments, as well as ad valorem property taxes and Special Taxes, when due. Under such circumstances, bankruptcies are likely to increase.

Bankruptcy by homeowners with delinquent Special Taxes would delay the commencement and completion of foreclosure proceedings to collect delinquent Special Taxes.

It is possible that laws could be enacted in the future to assist homeowners in default in the payment of mortgages and property taxes. It is further possible that fede ral laws could be enacted that would adversely impact the ability of the City to foreclose on parcels with delinquent Special Taxes. No assurance can be given that any such laws will be enacted, or if enacted will be effective in assisting affected homeowners.

38 Potential Consequences of Future Special Tax Delinquencies

Future delinquencies in the payment of the Special Taxes c ould cause a draw on the Reserve Fund established for the 2024 Bonds and perhaps, ultimately, a default in the payment on the 2024 Bonds.

In such an event, the City could receive additional funds for the payment of debt service through foreclosures sales of delinquent property, but no assurance can be given as to the amount of foreclosure sale proceeds or when foreclosure sale proceeds would be received.

The City has covenanted in the Fiscal Agent Agreement to commence and pursue foreclosure proceedings against delinquent parcels under the terms and conditions described herein. See “SECURITY FOR THE 2024 BONDS — Covenant to Foreclose.”

Special Tax Enforcement and Collection Procedures. Foreclosure actions would include, among other steps, mailing multiple demand letters to the record owners of the delinquent parcels advising them of the consequences of failing to pay the appl icable special taxes and contacting secured lenders to obtain payment , and formal action to authorize commencement of foreclosure proceedings . If these efforts were unsuccessful, they would be followed (as needed) by the filing of an action to foreclose i n superior court against each parcel that remained delinquent.

Limitations on Increases in Special Tax Levy. If owners are delinquent in the payment of the Special Tax, the City may not increase Special Tax levies to make up for delinquencies for prior fiscal years above the Maximum Special Tax rates specified in the Rate and Method.

In addition, the City’s ability to increase Special Tax levies on residential property to make up for delinquencies for prior Fiscal Years is limited by Government Code § 53321(d), which provides that the special tax levied against any parcel for which an occupancy permit for private residential use has been issued may not be increased as a conseque nce of delinquency or default by the owner of any other parcel by more than 10% above the amount that would have been levied in such Fiscal Year had there never been any such delinquencies or defaults.

In cases of significant delinquency, these factors may result in defaults in the payment of principal of and interest on the 2024 Bonds.

Payment of Special Tax is not a Personal Obligation of the Property Owners

An owner of Taxable Property is not personally obligated to pay the Special Taxes.

Rather, the Special Taxes are an obligation running only against the parcels of Taxable Property. If, after a default in the payment of the Special Tax and a foreclosure sale by the City, the resulting proceeds are insufficient, taking into account other obligati ons also constituting a lien against the affected parcels of Taxable Property, the City has no recourse against the owner.

Assessed Valuations

The City has not commissioned an appraisal of the parcels in the District in connection with the issuance of th e 2024 Bond s. Therefore, the estimated valuation of the Taxable Property in the District set forth in this Official Statement are based on the County Assessor’s values. The assessed value is not an indication of what a willing buyer might pay for a property.

39 The assessed value is not evidence of future value because future facts and circumstances may differ significantly from the present.

No assurance can be given that any of the Taxable Property in the District could be sold for the assessed value if t hat property should become delinquent and subject to foreclosure proceedings.

Property Values

The value of Taxable Property within the District is a critical factor in determining the investment quality of the 2024 Bonds. If a property owner defaults in the payment of the Special Tax, the City’s only remedy is to foreclose on the delinquent property in an attempt to obtain funds with which to pay the delinquent Special Tax. Land values could be adversely affected by economic and other factors beyond the City’s control, such as a general economic downturn, relocation of employers out of the area, shortages of water, electricity, natural gas or other utilities, destruction of property caused by earthquake, flood, landslid es, wildfires, or other natural disasters, environmental pollution or contamination, or unfavorable economic conditions.

The following is a discussion of specific risk factors that could affect the value of property in the District.

Prolonged Economic Downturn. Land values are affected by economic conditions and to the extent that an economic downturn is prolonged, property values could decline or remain flat for an indefinite period. Declines in home values in the District could also result in property owner unwillingness or inability to pay mortgage payments, as well as ad valorem property taxes and Special Taxes, when due. Under such circumstances, bankruptcies are likely to increase. Bankruptcy by homeowners with delinquent Special Taxes would delay the commencement and completion of foreclosure proceedings.

Natural Disasters. The value of the Taxable Property in the future can be adversely affected by a variety of natural occurrences, particularly those that may affect infrastructure and other public improvements and private improvements on the Taxable Property and the continued habitability and enjoyment of such private improvements. In addition to many other potential natural disasters, the areas in and surrounding the City and the District may be subject to the following risks:

 Seismic Activity. The area of the District , like that in much of California, may be subject to unpredictable seismic activity. The City is located within a regional network of several active and potentially active faults. Some of the faults that could cause significant ground shaking in the City include the San Andreas, North Frontal, Cleghorn, Cucamonga, San Jacinto, and Helendale faults.

 Drought. As with much of the State, the City experiences recurring drought as a result of its climate conditions. Drought’s impact public health and safety re lated to both water supply and wildfire risk and may impact overall economic activities and outputs. On October 19, 2021, the Governor declared a Statewide drought state of emergency and requested that all water users voluntarily reduce water use by 15%.

While some drought -related water restrictions were eased in May 2023, no assurance can be given that drought conditions will not continue in future years or subside only to return in the future, potentially impacting the value of property within the District, or economic activity within the City.

40  Wildfire. In recent years, wildfires have caused extensive damage to cities throughout the State. In some instances, entire neighborhoods have been destroyed. Areas affected by wildfires may be more prone to flood ing and mudslides. In addition to the direct impact of wildfires on health and safety and property damage, the smote from wildfires has negatively impacted the quality of life in the City and may have short -term and future impacts on residential and commercial activity in the City. Recent wildfires in the State have been driven in large measure by drought conditions and low humidity. Experts expect that California will continue to be subject to wildfire conditions as a result of changing weather patterns due to climate change. Although the District is not in a special fire hazard severity zone, land to the south and west of the District is classified as high- or very high fire hazard severity zones and there can be no assurances that wildfires will not occur within the City or the region or that the City will not be negatively impacted by sustained smoky conditions caused by wildfires. Damage resulting from such an event could have a material adverse effect on the value of property within the District.

Other natural disasters could include, without limitation, floods, landslides, or tornadoes.

One or more natural disasters could occur and could result in damage to improvements of varying seriousness. The damage may entail significant repair or replacement c osts and that repair or replacement may never occur either because of the cost, or because repair or replacement will not facilitate habitability or other use, or because other considerations preclude such repair or replacement. Under any of these circums tances there could be significant delinquencies in the payment of Special Taxes, and the value of the Taxable Property may well depreciate or disappear.

Legal Requirements . Other events that may affect the value of Taxable Property include changes in t he law or application of the law. Such changes may include, without limitation, local growth control initiatives, local utility connection moratoriums and local application of statewide tax and governmental spending limitation measures.

Hazardous Substa nces. One of the most serious risks in terms of the potential reduction in the value of Taxable Property is a claim with regard to a hazardous substance. In general, the owners and operators 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.

The property values set forth in this Official Statement do not take into account the possible reduction in marketability and value of any of the Taxable Property by reason of the possible liability of the owner or operator for the remedy of a hazardous substance condition of the parcel. Although the City is not aware that the owner o r operator of any of the Taxable

41 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 City is not aware of them.

Further, it is possible that liabilities m ay 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 that 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 that may in the future be so classified.

Further, such liabilities may arise not simply from the existence of a hazard ous substance but from the method of handling it. All of these possibilities could significantly affect the value of Taxable Property that is realizable upon a delinquency.

Other Possible Claims Upon the Value of Taxable Property

While the Special Taxes are secured by the Taxable Property, the security only extends to the value of such Taxable Property that is not subject to priority and parity liens and similar claims.

The table s in the section entitled “DISTRICT – Direct and Overlapping Governmenta l Obligations” shows the presently outstanding amount of governmental obligations (with stated exclusions), the tax or assessment for which is or may become an obligation of one or more of the parcels of Taxable Property.

In addition, other governmental obligations may be authorized and undertaken or issued in the future, the tax, assessment, or charge for which may become an obligation of one or more of the parcels of Taxable Property and may be secured by a lien on a parity with the lien of the Special Tax securing the 2024 Bonds.

In general, as long as the Special Tax is collected on the County tax roll, the Special Tax and all other taxes, assessments and charges also collected on the tax roll are on a parity, that is, are of equal priority. Questions of priority become significant when collection of one or more of the taxes, assessments or charges is sought by some other procedure, such as foreclosure and sale. In the event of proceedings to foreclose for delinquency of Special Taxes securing the 2024 Bonds, the Special Tax will be subordinate only to existing prior governmental liens, if any. Otherwise, in the event of such foreclosure proceedings, the Special Taxes will generally be on a parity with the other taxes, assessments, and charges, and will share the proceeds of such foreclosure proceedings on a pro -rata basis. Although the Special Taxes will generally have priority over non -governmental liens on a parcel of Taxable Property, regardless of whether the non-governmental liens were in existence at the time of the levy of the Special Tax or not, this result may not apply in the case of bankruptcy. See “ – Bankruptcy and Foreclosure Delays” below.

Exempt Properties

Certain properties are exempt from the Special Tax in accordance with the Ra te and Method and the Act, which provides that properties or entities of the state, federal or local government are exempt from the Special Tax; provided, however, that property within the District acquired by a public entity through a negotiated transacti on or by gift or devise, which is not otherwise exempt from the Special Tax, will continue to be subject to the Special Tax. See “SECURITY FOR THE 2024 BONDS – Rate and Method.”

42 In addition, although the Act provides that if property subject to the Spe cial 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, meaning that such property could become exempt from the Special Tax. The Act further provides that no other properties or entities are exempt from the Special Tax unless the properties or entities are expressly exempted in a resolution of consideration to levy a new special tax or to alter the rate or method of apportionment of an existing special tax.

FDIC/Federal Government Interests in Properties

General. The ability of the City to foreclose the lien of delinquent unpai d Special Tax installments may be limited with regard to properties in which the FDIC, the Federal National Mortgage Association, the Drug Enforcement Agency, the Internal Revenue Service, or other federal agency has or obtains an interest.

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.

The supremacy clause of the United States Constitution reads as follows: “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the contrary notwithstanding.”

This means that, unless Congress has otherwise provided, if a federal governmental entity owns a parcel that is subject to Special Taxes but does not pay taxes and assessments levied on the parcel (including Special Taxes), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments.

Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and the City wishes to foreclose on the parcel as a result of delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on a parity with the Special Taxes and preserve the federal government’s mortgage interest. In Rust v. Johnson (9th Circuit; 1979) 597 F.2d 174, the United States Court of Appeal, Ninth Circuit held that the Federal National Mortgage Association (“FNMA”) is a federal instrumentality for purposes of this doctrine, and not a private entity, and that, as a result, an exercise of s tate power over a mortgage interest held by FNMA constitutes an exercise of state power over property of the United States.

The City has not undertaken to determine whether any federal governmental entity currently has, or is likely to acquire, any inter est (including a mortgage interest) in any of the parcels subject to the Special Taxes, and therefore expresses no view concerning the likelihood that the risks described above will materialize while the 2023 Bonds are outstanding.

FDIC. In the event that any financial institution making any loan which is secured by real property within the District is taken over by the FDIC, and prior thereto or thereafter the loan or loans go into default, resulting in ownership of the property by the FDIC, then the abi lity of the

43 City to collect interest and penalties specified by State law and to foreclose the lien of delinquent unpaid Special Taxes may be limited.

The FDIC’s policy statement regarding the payment of state and local real property taxes (the “Policy Statement”) provides that property owned by the FDIC is subject to state and local real property taxes only if those taxes are assessed according to the property’s value, and that the FDIC is immune from real property taxes assessed on any basis other than p roperty value.

According to the Policy Statement, the FDIC will pay its property tax obligations when they become due and payable and will pay claims for delinquent property taxes as promptly as is consistent with sound business practice and the orderly administration of the institution’s affairs, unless abandonment of the FDIC’s interest in the property is appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law, to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts. If any property taxes (including interest) on FDIC -owned property are secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay those claims. The Policy Statement further provides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure, or sale without the FDIC’s consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC’s consent.

The Policy Statement states that the FDIC generally will not pay non -ad valorem taxes, including special assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it purports to secure the payment of any such amounts.

Special taxes imposed under the Act and a special tax formula which determines the special tax due each year are specifically identified in the Policy Statement as being imposed each year and therefore covered by the FDIC’s federal im munity. The Ninth Circuit has issued a ruling on August 28, 2001, in which it determined that the FDIC, as a federal agency, is exempt from Mello-Roos special taxes.

The City is unable to predict what effect the application of the Policy Statement would have in the event of a delinquency in the payment of Special Taxes on a parcel within the District in which the FDIC has or obtains an interest, although prohibiting the lien of the Special Taxes to be foreclosed out at a judicial foreclosure sale could reduce or eliminate the number of persons willing to purchase a parcel at a foreclosure sale. Such an outcome could cause a draw on the Reserve Fund and perhaps, ultimately, if enough property were to become owned by the FDIC, a default in payment on the 2024 Bonds.

No investigation has been made as to whether the FDIC, Fannie Mae, Freddie Mac, or any other governmental entity currently owns or has an interest in any property in the District.

Depletion of Reserve Fund

The Reserve Fund is to be maintained at an amount equal to the Reserve Requirement.

See “SECURITY FOR THE 2024 BONDS – Reserve Fund.” The Reserve Fund will be used to pay principal of and interest on the 2024 Bond s if insufficient funds are available from the proceeds of the levy and collection of the Special Tax against property within the District. If the Reserve Fund is depleted, it can be replenished from the proceeds of the levy and collection of the Special Taxes that exceed the amounts to be paid to the 2024 Bond owners under the Fiscal Agent Agreement. However, because the Special Tax levy is limited to the maximum