Attachment 2 - Preliminary Official Statment — Hesperia City Council, October 15, 2024

Attachment 2Attachment 2This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances 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 solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction .This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances 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 solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction .NEW ISSUE – BOOK ENTRY ONLY INSURED RATING: S&P: “__” Attachment 2
Attachment 2
This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances 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 solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction .

This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances 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 solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction .

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 herein) 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) for 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 BONDS. 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 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
(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, for 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 the 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 the 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 investing 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

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 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

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 entire Official Statement by those interested in purchasing the 2024 Bonds. The sale and delivery of 2024 Bonds 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").

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 2024-25. 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 behalf 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 Bonds. 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 proceedings 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 “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 Bonds involves risks that may not be appropriate for some investors. See “SPECIAL RISK FACTORS” for a discussion of certain risk 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.

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 certain 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.

Estimated Sources and Uses of Funds
The estimated proceeds from the sale of the 2024 Bonds 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.

THE 2024 BONDS
This section generally describes the terms of the 2024 Bonds 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 Bonds 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 Bonds 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, 2025 (each, an “Interest Payment Date”) until the principal 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 authenticated 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.” Payments of Interest and Principal. For so long as DTC is used as depository for the 2024 Bonds, principal of, premium, if any, and interest payments on the 2024 Bonds will be made solely to DTC or its nominee, Cede & Co., as registered owner of the 2024 Bonds, for distribution to the beneficial owners of the 2024 Bonds 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 the 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 Fiscal 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 Bonds on the next Interest Payment Date for which notice 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 2022-23 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 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 Agent 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 thereof not previously called for redemption, by lot in any manner the Fiscal Agent in its sole discretion deems 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 the 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 established 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 Bonds 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 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
$
$
$

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 of 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 THE 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 BONDS. 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 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.

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 rebate 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 collected 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 penalties 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 Tax 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 within 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.

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 indebtedness 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 Property (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, irrevocably offered or dedicated 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 public 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 Association 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 association, 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 by 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 2024-25 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 2024-25 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.

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 2024-25 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 Owner 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 Tax 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 Owner Association Property at up to the Maximum Special Tax for Taxable Public Property and Taxable Property Owner Association Property.

Notwithstanding the above, under no circumstances will the Special Tax 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 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, the 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 foreclosure 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:

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 the 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 Limitations 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 “Teeter Plan”). Accordingly, collections of Special Taxes will reflect actual delinquencies, if any. See “THE DISTRICT – Delinquencies.” Special Tax Fund
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 Bonds 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,
Special Tax Revenues in an amount not to exceed 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 Revenues 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 Interest 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 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 interest due on the 2024 Bonds on such Interest Payment 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 Bonds 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 theretofore paid from the collection of Special Tax delinquencies described in subparagraph (ii) under “Deposits” above, (iii) to the Reserve Fund, an amount, taking into account amounts then on deposit in the Reserve Fund, such that the amount in the Reserve 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 service 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 withdraw 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, deposits will be made to replenish the Reserve Fund as provided in the Fiscal Agent Agreement.

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 in 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 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 Reserve 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 Reserve 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 2024 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 have 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, however, 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 the 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-outstanding 2024 Bonds, subordinate to the pledge of such Special Tax Revenues securing the 2024 Bonds.

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.

BOND INSURANCE
[To come from Bond Insurer]

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 San 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 restructure 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 2005 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 1,037 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 2024-25. Among the 1,006 parcels that are taxes as Developed Property, 60 parcels have very minimal if any structure 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 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 began 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 in 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 building permit and some at final inspection.

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 calculated as the sum of land and improvement value. See “–Value-to-Lien Ratios” below.

Source: NBS.

Assessed Property Values
No Appraisal of Property in the District. The City has not commissioned an appraisal of the Taxable Property in the District in connection with the issuance of the 2024 Bonds. 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 sets 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 as 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 assessment appeals board (a “Proposition 8 appeal”). In addition to reductions in 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 Ratios. 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 property 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 property 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.

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 2024-25 Special Tax levy. Although 31 lots in the District constitute Undeveloped Property, the Fiscal Year 2024-25 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.

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 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.

Delinquencies
Collection and Delinquency History. The following table shows a history of Special Tax levies, collections, and delinquency rates since Fiscal Year 2014-15, 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.

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 parcels 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 Special 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 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 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.

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 reflects 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, according 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 (with 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).

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 the District. Many of these local agencies have outstanding debt.

The current direct 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.

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. This discussion does not purport to be comprehensive or definitive and does not purport to be a complete statement of all factors which may be considered 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 District 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 Property 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 of 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.

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 collection 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 Fiscal 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 BONDS – 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 of 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 collection 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 can also reflect economic difficulties and duress by the property owner.

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 prepayments 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 timely 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 federal 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.

Potential Consequences of Future Special Tax Delinquencies Future 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.

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 applicable 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 in 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 consequence 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 obligations 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 the 2024 Bonds. 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. 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 that 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, landslides, 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 related 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.

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 flooding 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 costs 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 circumstances 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 the 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 Substances. 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 or operator of any of the Taxable Property has such a current liability with respect to any of the Taxable Property, it is possible that such liabilities do currently exist, and that the City is not aware of them.

Further, it is possible that liabilities may arise in the future with respect to any of the Taxable Property resulting from the existence, currently, on the parcel of a substance presently classified as hazardous but 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 hazardous 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 tables in the section entitled “DISTRICT – Direct and Overlapping Governmental 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 Rate 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 transaction 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.” In addition, although the Act provides that if property subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property is to be treated as if it were a special assessment, the constitutionality and operation of these provisions of the Act have not been tested, 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 unpaid 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 state 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 interest (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 ability of the 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 property 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 immunity. 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 Bonds 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 annual Special Tax rates, it is possible that no replenishment would be possible if the Special Tax proceeds, together with other available funds, remain insufficient to pay all such amounts. Thus, it is possible that the Reserve Fund will be depleted and not be replenished by the levy and collection of the Special Taxes.

Risks Associated with the Reserve Policy Provider
The City expects to fund a portion of the Reserve Fund with a Reserve Policy. The City can provide no assurances that the provider of the Reserve Policy will be able to meet its obligations under the Reserve Policy, if and when required to do so. In addition, any change in the ratings of the provider could impact the price of the 2024 Bonds in the secondary market.

Bankruptcy and Foreclosure Delays
The payment of the Special Tax and the ability of the City to foreclose the lien of a delinquent unpaid Special Tax, as discussed in “SECURITY FOR THE 2024 BONDS,” may be limited by bankruptcy, insolvency or other laws generally affecting creditors' rights or by the laws of the State of California relating to judicial foreclosure. The various legal opinions to be delivered concurrently with the delivery of the 2024 Bonds (including Bond Counsel's approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditors' rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases.

Although bankruptcy proceedings would not cause the Special Taxes to become extinguished, bankruptcy of a property owner or any other person claiming an interest in the property could result in a delay in superior court foreclosure proceedings and could result in the possibility of Special Tax installments not being paid in part or in full. Such a delay would increase the likelihood of a delay or default in payment of the principal of and interest on the 2024 Bonds.

In addition, the amount of any lien on property securing the payment of delinquent Special Taxes could be reduced if the value of the property were determined by the bankruptcy court to have become less than the amount of the lien, and the amount of the delinquent Special Taxes in excess of the reduced lien could then be treated as an unsecured claim by the court. Any such stay of the enforcement of the lien for the Special Tax, or any such delay or non-payment, would increase the likelihood of a delay or default in payment of the principal of and interest on the 2024 Bonds and the possibility of delinquent Special Taxes not being paid in full.

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

No Acceleration Provisions
The 2024 Bonds do not contain a provision allowing for their acceleration in the event of a payment default or other default under the terms of the 2024 Bonds or the Fiscal Agent Agreement. Under the Fiscal Agent Agreement, a 2024 Bond owner is given the right for the equal benefit and protection of all 2024 Bond owners similarly situated to pursue certain remedies. See “APPENDIX C – Summary of the Fiscal Agent Agreement.” So long as the 2024 Bonds are in book-entry form, DTC will be the sole 2024 Bond owner and will be entitled to exercise all rights and remedies of 2024 Bond holders.

Cyber Security
The City, like many other public and private entities, relies on a large and complex technology environment to conduct its operations. As a recipient and provider of personal, private, or sensitive information, the City is subject to multiple cyber threats including, but not limited to, hacking, viruses, malware and other attacks on computer and other sensitive digital networks and systems. Entities or individuals may attempt to gain unauthorized access to the City’s digital systems for the purposes of misappropriating assets or information or causing operational disruption and damage.

The City is also reliant on other entities and service providers in connection with the administration of the 2024 Bonds, including without limitation the County tax collector for the levy and collection of Special Taxes, the Fiscal Agent, and the Dissemination Agent.

On November 28, 2021, the City detected a cybersecurity incident that impacted its network. Upon becoming aware of the incident, the City notified law enforcement and conducted an internal investigation to assess the nature and scope of the compromise. The investigation concluded on January 7, 2022, and confirmed that certain data had been accessed and acquired by an unauthorized third-party. The investigation further concluded that such data may have contained personal information of certain persons. As of the date of this Official Statement, the City has not experienced a material financial impact as a result of such incident.

In an effort to reduce the likelihood of additional cyber incidents in the future, the City has implemented additional security features to its network, conducted employee trainings and hired third-party consultants to monitor the network and notify the City of any suspicious activity. However, no assurance can be given that the City’s efforts to manage cyber threats and attacks will be successful in all cases, or that any such attack will not materially impact the operations or finances of the City, or the administration of the 2024 Bonds. Nor can any assurance be given that the other entities the City relies on will not be affected by cyber threats and attacks in a manner that may affect the Bond owners.

Loss of Tax Exemption
As discussed under the caption “TAX MATTERS,” interest on the 2024 Bonds might become includable in gross income for purposes of federal income taxation retroactive to the date the 2024 Bonds were issued as a result of future acts or omissions of the City in violation of its covenants in the Fiscal Agent Agreement. The Fiscal Agent Agreement does not contain a special redemption feature triggered by the occurrence of an event of taxability. As a result, if interest on the 2024 Bonds were to become includable in gross income for purposes of federal income taxation, the 2024 Bonds would continue to remain outstanding until maturity unless earlier redeemed pursuant to optional or mandatory redemption or redemption upon prepayment of the Special Taxes. See “THE 2024 BONDS – Redemption.” Future legislative proposals, if enacted into law, clarification of the Tax Code (defined herein) or court decisions may cause interest on the 2024 Bonds to be subject, directly, or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Bond owners from realizing the full current benefit of the tax status of such interest.

IRS Audit of Tax-Exempt Bond Issues
The Internal Revenue Service (the “IRS”) has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the 2024 Bonds will be selected for audit by the IRS. It is also possible that the market value of such 2024 Bonds might be affected as a result of such an audit of such 2024 Bonds (or by an audit of similar bonds or securities).

Impact of Legislative Proposals, Clarifications of the Code and Court Decisions on Tax Exemption Future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the 2024 Bonds to be subject, directly, or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Bondholders from realizing the full current benefit of the tax status of such interest.

For example, various proposals have been made in Congress and by the President which, if enacted, would subject interest on bonds that is otherwise excludable from gross income for federal income tax purposes, including interest on the 2024 Bonds, to a tax payable by certain 2024 Bond owners that are individuals, estates or trusts with adjusted gross income in excess of certain specified thresholds.

The introduction or enactment of any such legislative proposals, clarification of the Code or court decisions may also affect the market price for, or marketability of, the 2024 Bonds. Prospective purchasers of the 2024 Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations, or litigation.

Voter Initiatives and State Constitutional Provisions
Under the California Constitution, the power of initiative is reserved to the voters for the purpose of enacting statutes and constitutional amendments. Since 1978, the voters have exercised this power through the adoption of Proposition 13 and similar measures, including Proposition 218, which was approved in the general election held on November 5, 1996, and Proposition 26, which was approved on November 2, 2010.

Proposition 218. Proposition 218—Voter Approval for Local Government Taxes—Limitation on Fees, Assessments, and Charges—Initiative Constitutional Amendment, added Articles XIIIC and XIIID to the California Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property-related fees and charges. Among other things, Section 3 of Article XIIIC states that “. . . the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge.” The Act prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the Act unless the legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt.

Proposition 26. On November 2, 2010, California voters approved Proposition 26, entitled the “Supermajority Vote to Pass New Taxes and Fees Act.” Section 1 of Proposition 26 declares that Proposition 26 is intended to limit the ability of the State Legislature and local government to circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as “fees.” Proposition 26 amended Articles XIIIA and XIIIC of the State Constitution. The amendments to Article XIIIA limit the ability of the State Legislature to impose higher taxes (as defined in Proposition 26) without a two-thirds vote of the Legislature.

Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes require a majority vote and taxes for specific purposes (“special taxes”) require a two-thirds vote. The Special Taxes and the 2024 Bonds were each authorized by not less than a two-thirds vote of the landowners within the District who constituted the qualified electors at the time of such voted authorization, and the statute of limitations period for any challenges to the formation of the District and the levy of the Special Taxes has expired. The City believes, therefore, that issuance of the 2024 Bonds does not require the conduct of further proceedings under the Act, Proposition 218 or Proposition 26.

Like their antecedents, Proposition 218 and Proposition 26 have undergone, are likely to undergo, both judicial and legislative scrutiny.

For example, in August 2014, in City of San Diego. v. Melvin Shapiro, an Appellate Court invalidated an election held by the City of San Diego to authorize the levying of special taxes on hotels City-wide pursuant to a City charter ordinance creating a convention center facilities district which specifically defined the electorate to consist solely of (1) the owners of real property in the City on which a hotel is located, and (2) the lessees of real property owned by a governmental entity on which a hotel is located. The court held that such landowners and lessees are neither “qualified electors” of the City for purposes of Articles XIII A, Section 4 of the California Constitution, nor a proper “electorate” under Article XIIIC, Section 2(d) of the California Constitution. The court specifically noted that the decision did not require the Court to consider the distinct question of whether landowner voting to impose special taxes under Section 53326(b) of the Act (which was the nature of the voter approval through which the District was formed) violates the California Constitution in districts that lack sufficient registered voters to conduct an election among registered voters. Accordingly, this case should have no effect on the levy of the Special Taxes.

The City cannot predict the ultimate outcome or effect of any such judicial scrutiny, legislative actions, or future initiatives. These initiatives, and any future initiatives, may affect the collection of fees, taxes and other types of revenue by local agencies such as the City. Subject to overriding federal constitutional principles, such collection may be materially and adversely affected by voter-approved initiatives, possibly to the extent of creating cash-flow problems in the payment of outstanding obligations such as the 2024 Bonds.

Risks Associated with Bond Insurance
Before the delivery of the 2024 Bonds, the City will pay the premiums for the Policy and the Reserve Policy. The City can provide no assurances that the Bond Insurer will be able to meet its obligations under the Policy or the Reserve Policy, if and when required to do so. In addition, any change in the ratings of the Bond Insurer could impact the price of the 2024 Bonds in the secondary market.

Public Health Emergencies
In recent years, public health authorities have warned of threats posed by outbreaks of disease and other public health threats. Pandemic diseases arising in the future could have significant adverse health and financial impacts throughout the world, leading to loss of jobs and personal financial hardships, and/or actions by federal, State, and local governmental authorities to contain or mitigate the effects of an outbreak.

Taxpayer assistance measures may include deferral of due dates of property taxes, which was an assistance program during the COVID-19 pandemic, and with or without a deferral some taxpayers may be unable to make their property and Special Tax payments. No assurance can be given that the property tax payment dates will not be deferred in the future, which may cause a delay in the receipt of Special Taxes. In addition, home values may be affected by a reduction in demand stemming from personal finances, or general widespread economic circumstances resulting from pandemic diseases.

Secondary Market for 2024 Bonds
There can be no guarantee that there will be a secondary market for the 2024 Bonds or, if a secondary market exists, that any 2024 Bonds can be sold for any particular price. Prices of bond issues for which a market is being made will depend upon then-prevailing circumstances. Such prices could be substantially different from the original purchase price.

No assurance can be given that the market price for the 2024 Bonds will not be affected by the introduction or enactment of any future legislation (including without limitation amendments to the Internal Revenue Code), or changes in interpretation of the Internal Revenue Code, or any action of the Internal Revenue Service, including but not limited to the publication of proposed or final regulations, the issuance of rulings, the selection of the 2024 Bonds for audit examination, or the course or result of any Internal Revenue Service audit or examination of the 2024 Bonds or obligations that present similar tax issues as the 2024 Bonds.

TAX MATTERS
Federal Tax Status. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to the qualifications set forth below, 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.

The opinions set forth in the preceding paragraph are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the "Tax Code") that must be satisfied subsequent to the issuance of the 2024 Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The City has made certain representations and covenants in order to comply with each such requirement. Inaccuracy of those representations, or failure to comply with certain of those covenants, may cause the inclusion of such interest in gross income for federal income tax purposes, which may be retroactive to the date of issuance of the 2024 Bonds.

Tax Treatment of Original Issue Discount and Premium. If the initial offering price to the public at which a 2024 Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes "original issue discount" for purposes of federal income taxes and State of California personal income taxes. If the initial offering price to the public at which a 2024 Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes "bond premium" for purposes of federal income taxes and State of California personal income taxes.

Under the Tax Code, original issue discount is treated as interest excluded from federal gross income and exempt from State of California personal income taxes to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the 2024 Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such 2024 Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such 2024 Bond. The Tax Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the 2024 Bonds who purchase the 2024 Bonds after the initial offering of a substantial amount of such maturity. Owners of such 2024 Bonds should consult their own tax advisors with respect to the tax consequences of ownership of 2024 Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering to the public at the first price at which a substantial amount of such 2024 Bonds is sold to the public.

Under the Tax Code, bond premium is amortized on an annual basis over the term of the 2024 Bond (said term being the shorter of the 2024 Bond's maturity date or its call date). The amount of bond premium amortized each year reduces the adjusted basis of the owner of the 2024 Bond for purposes of determining taxable gain or loss upon disposition. The amount of bond premium on a 2024 Bond is amortized each year over the term to maturity of the 2024 Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). Amortized 2024 Bond premium is not deductible for federal income tax purposes. Owners of premium 2024 Bonds, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect to State of California personal income tax and federal income tax consequences of owning such 2024 Bonds.

California Tax Status. In the further opinion of Bond Counsel, interest on the 2024 Bonds is exempt from California personal income taxes.

Other Tax Considerations. Current and future legislative proposals, if enacted into law, clarification of the Tax Code or court decisions may cause interest on the 2024 Bonds to be subject, directly, or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals, clarification of the Tax Code or court decisions may also affect the market price for, or marketability of, the 2024 Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, such legislation would apply to bonds issued prior to enactment.

The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of such opinion, and Bond Counsel has expressed no opinion with respect to any proposed legislation or as to the tax treatment of interest on the 2024 Bonds, or as to the consequences of owning or receiving interest on the 2024 Bonds, as of any future date. Prospective purchasers of the 2024 Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations, or litigation, as to which Bond Counsel expresses no opinion.

Owners of the 2024 Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the 2024 Bonds may have federal or state tax consequences other than as described above. Other than as expressly described above, Bond Counsel expresses no opinion regarding other federal or state tax consequences arising with respect to the 2024 Bonds, the ownership, sale, or disposition of the 2024 Bonds, or the amount, accrual or receipt of interest on the 2024 Bonds.

Legal Opinions
Concurrently with the issuance of the 2024 Bonds, Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, will render its opinion substantially in the form set forth in APPENDIX D to this Official Statement. Certain legal matters with respect to the 2024 Bonds will be passed upon for the City and the District by the City Attorney, and for the City 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.

RATINGS
S&P Global Ratings is expected to assign its municipal bond rating of “__” to the 2024 Bonds with the understanding that the Bond Insurer will issue the Policy concurrently with the delivery of the 2024 Bonds. S&P Global Ratings has assigned an underlying rating of “__” to the 2024 Bonds.

Such ratings reflect only the views of such rating agency, and an explanation of the significance of such ratings, and any outlook associated with such ratings, may be obtained by contacting the rating agency at: S&P Global Ratings, 55 Water Street, New York, New York 10041. Such ratings are not a recommendation to buy, sell or hold the 2024 Bonds. There is no assurance that such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by such organizations, if in the rating agency’s judgment circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the 2024 Bonds.

LITIGATION
The City is not aware of any pending or threatened litigation challenging the validity of the 2024 Bonds, the Special Taxes securing the 2024 Bonds, or any action taken by the City in connection with the formation of the District, the levying of the Special Taxes or the issuance of the 2024 Bonds.

VERIFICATION OF MATHEMATICAL ACCURACY
Causey Public Finance, LLC, Denver, Colorado, upon delivery of the 2024 Bonds, will deliver one or more reports on the mathematical accuracy of certain computations contained in schedules provided to them relating to the sufficiency of the anticipated receipts from the monies deposited under the Escrow Agreement to pay, when due, the principal, interest, and redemption requirements of the 2014 Bonds.

UNDERWRITING
The 2024 Bonds are being purchased by Stifel, Nicolaus & Company, Incorporated, at a purchase price of $________ (which represents the aggregate principal amount of the 2024 Bonds ($________), plus a net original issue premium of $_________, less an Underwriter's discount of $________).

The purchase agreement relating to the 2024 Bonds provides that the Underwriter will purchase all of the 2024 Bonds, if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in such purchase agreement.

The Underwriter may offer and sell the 2024 Bonds to certain dealers and others at prices lower than the offering prices stated on the inside cover page hereof. The offering prices may be changed from time to time by the Underwriter.

PROFESSIONAL FEES
In connection with the issuance of the 2024 Bonds, fees or compensation payable to certain professionals are contingent upon the issuance and delivery of the 2024 Bonds. Those professionals include:
• the Underwriter;
• Fieldman, Rolapp & Associates, Inc., as Municipal Advisor; • Jones Hall, A Professional Law Corporation, as Bond Counsel and Disclosure Counsel; • Stradling Yocca Carlson & Rauth LLP, as Underwriter’s Counsel; • U.S. Bank Trust Company, National Association, as Fiscal Agent; • Causey Public Finance, LLC, as verification agent.

CONTINUING DISCLOSURE
The City will covenant for the benefit of owners of the 2024 Bonds to provide certain financial information and operating data relating to the District and the 2024 Bonds by not later than 9 months after the end of the City’s fiscal year, or March 31 each year based on the City’s current fiscal year end of June 30 (the “Annual Report”) and to provide notices of the occurrence of certain listed events.

These covenants have been made in order to assist the Underwriter in complying with Securities Exchange Commission Rule 15c2-12(b)(5) (the “Rule”). The specific nature of the information to be contained in the Annual Report or the notices of listed events is set forth in APPENDIX E. [The City has not, on several occasions during the past five years, fully complied with its prior continuing disclosure undertakings under the Rule. Specific instances of noncompliance, which the City has not determined were material or immaterial, include the following:
• [NTD: To be determined]
The City has made additional filings to correct these instances of non-compliance. The City believes it has established processes to ensure it will make required filings on a timely basis in the future.]

EXECUTION
The execution and delivery of this Official Statement have been duly authorized by the City on behalf of the District.

CITY OF HESPERIA, CALIFORNIA,
for and on behalf of
City of Hesperia Community Facilities District No. 2005-1 (BELGATE DEVELOPMENT RESTRUCTURING) By:
[NAME],
[TITLE]

APPENDIX A

GENERAL INFORMATION ABOUT THE CITY OF HESPERIA

AND THE COUNTY OF SAN BERNARDINO
The following information concerning the City of Hesperia and the County of San Bernardino is included only for the purpose of supplying general information. The 2024 Bonds are not a debt of the City of Hesperia, the County, the State or any of its political subdivisions, and neither the City of Hesperia, the County, the State nor any of its political subdivisions is liable therefor.

General
The City. The City of Hesperia (the “City”) is located in the Mojave Desert in the southwestern portion of San Bernardino County. The City encompasses approximately 75 square miles, and is located 35 miles north of the City of San Bernardino and 90 miles northeast of the City of Los Angeles. The City was incorporated in 1988 and is governed by a five member City Council under the Council-Manager form of government.

The County. The County of San Bernardino (the "County") is located in the southeastern portion of the State of California (the "State"). It is the fifth most populous County in the State and the twelfth most populous County in the United States and has a total area of 20,105 square miles. The county seat is the city of San Bernardino. The terrain of the County is mostly mountains and desert, and majority of the county population resides south of the San Bernardino Mountains, in San Bernardino Valley. The County is bordered on the west by the Counties of Los Angeles and Kern, on the north by the County of Inyo, and on the south by the County of Riverside.

Population
Population figures and trends for the City, the County and the State of California are shown in the following table.

CITY OF HESPERIA, THE COUNTY OF SAN BERNARDINO

AND STATE OF CALIFORNIA
Population Estimates
(as of January 1)
Area
2020
2021
2022
2023
2024
City of Hesperia
95,834
99,767
99,741
99,338
100,087
San Bernardino County
2,175,424
2,179,006
2,179,845
2,172,694
2,181,433
State of California
39,648,938
39,327,868
39,114,785
39,061,058
39,128,162
Source: State Department of Finance estimates (as of January 1).

Employment and Industry
The City is included in the Riverside-San Bernardino-Ontario Metropolitan Statistical Area (“MSA”), which includes Riverside and San Bernardino Counties.

The unemployment rate in the MSA was 5.8% in July 2024, up from a revised 5.3% in June 2024, and above the year-ago estimate of 4.9%. This compares with an unadjusted unemployment rate of 5.8% for California and 4.5% for the nation during the same period. The unemployment rate was 5.9% in Riverside County, and 5.7% in San Bernardino County.

The table below lists employment by industry group for the County for the past five years for which data is available.

RIVERSIDE-SAN BERNARDINO-ONTARIO MSA
(RIVERSIDE AND SAN BERNARDINO COUNTIES)
Annual Average Civilian Labor Force, Employment and Unemployment, Employment by Industry
(March 2023 Benchmark)
2019
2020
2021
2022
2023
Civilian Labor Force
2,071,600
2,091,700
2,120,600
2,148,700
2,171,500
Employment
1,987,500
1,885,400
1,964,300
2,058,400
2,068,800
Unemployment
84,000
206,200
156,300
90,200
102,700
Unemployment Rate

4.1%

9.9%

7.4%

4.2%

4.7%
Wage and Salary Employment: (1)
Agriculture
15,400
14,100
13,700
13,800
13,100
Mining and Logging
1,200
1,300
1,400
1,500
1,500
Construction
107,200
104,900
110,100
114,700
115,700
Manufacturing
101,300
96,000
96,100
100,000
98,900
Wholesale Trade
67,700
65,600
67,400
69,500
68,700
Retail Trade
180,700
168,800
177,000
181,000
182,700
Trans., Warehousing, Utilities
146,600
172,500
198,800
214,400
205,100
Information
14,100
12,400
12,500
13,000
13,300
Financial and Insurance
24,800
24,600
24,400
23,800
22,300
Real Estate, Rental & Leasing
20,200
19,500
20,700
22,200
22,500
Professional and Business Services
155,300
152,100
166,600
173,900
164,800
Educational and Health Services
250,300
248,800
254,300
267,500
287,500
Leisure and Hospitality
175,900
141,300
160,200
180,900
186,500
Other Services
46,200
40,200
43,600
47,400
49,300
Federal Government
21,100
22,100
21,100
20,900
21,200
State Government
31,100
31,300
30,400
28,400
28,800
Local Government
209,000
194,600
190,500
200,700
210,900
Total All Industries (2)
1,568,100
1,509,900
1,588,800
1,673,500
1,692,900
(1) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. (2) May not add due to rounding.

Source: State of California Employment Development Department.

Major Employers
The following table lists the major manufacturing and non-manufacturing employers in the County for the fiscal year ended June 30, 2023.

CITY OF HESPERIA
Major Employers
Company Name
Number of Employees
Percent of Total Employment
Hesperia Unified School District
2,974

7.91%
County of San Bernardino
423

1.13 Walmart Supercenter
425

1.13 Stater Brothers Markets (3 locations)
338

0.90 Arizona Pipeline Company
175

0.47 Super Target
275

0.73 City of Hesperia
193

0.51 In-N-Out (2 locations)
188

0.50 Robar Enterprises, Inc.
120

0.32 Hesperia Recreation & Park District
111

0.30 St. Mary High Dessert
170

0.45 Source: City of Hesperia Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2023.

The following table lists the largest manufacturing and non-manufacturing employers within the County as of August 2024, in alphabetical order.

SAN BERNARDINO COUNTY
Largest Employers
August 2024
Employer Name
Location
Industry
Amazon Fulfillment Ctr
Redlands
Mail Order Fulfillment Service
Amazon Fulfillment Ctr
San Bernardino
Mail Order Fulfillment Service
Arrowhead Regional Medical Ctr
Colton
Hospitals
Big Bear Mountain Resorts
Big Bear Lake
Resorts
Burlington Distribution Ctr
San Bernardino
Distribution Centers (whls)
California State Univ Sn
San Bernardino
Schools-Universities & Colleges Academic
Dignity Health Cmnty Hosp-Sn
San Bernardino
Hospitals
Dignity Health-St Bernardine
San Bernardino
Hospitals
Environmental Systems Research
Redlands
Geographics Information Systems
Fedex Ground
Bloomington
Delivery Service
Inland Empire Health Plan
Rancho Cucamonga
Health Plans
Loma Linda Univ Health Board
Loma Linda
Univ/Clg-Governing Body/Regent/Trustee
Loma Linda University Med Ctr
Loma Linda
Hospitals
Mountain High Ski Resort
Wrightwood
Skiing Centers & Resorts
Ontario International Airport
Ontario
Airports
Ontario-Montclair School Dist
Ontario
School Districts
Patton State Hospital
Patton
Hospitals
Primary Care Assoc Med Group
Ontario
Physicians & Surgeons
Redlands Community Hospital
Redlands
Hospitals
San Antonio Regional Hospital
Upland
Hospitals
San Bernardino County Sch Supt
San Bernardino
Schools & Educational Services NEC
San Bernardino County Sheriff
San Bernardino
General Justice Public Order & Safety Activity
St Mary's Medical Ctr
Apple Valley
Hospitals
Transportation Department
San Bernardino
State Government-Regulation & Administration-
YRC Freight
Bloomington
Trucking-Motor Freight
Source: State of California Employment Development Department, extracted from The America's Labor Market Information System (ALMIS) Employer Database, 2024 2nd edition.

Effective Buying Income
“Effective Buying Income” is defined as personal income less personal tax and non-tax payments, a number often referred to as “disposable” or “after-tax” income. Personal income is the aggregate of wages and salaries, other labor-related income (such as employer contributions to private pension funds), proprietor’s income, rental income (which includes imputed rental income of owner-occupants of non-farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local), non-tax payments (fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as “disposable personal income.” The following table summarizes the total effective buying income for the City, the County, the State, and the United States for the period 2021 through 2025.

CITY OF HESPERIA, SAN BERNARDINO COUNTY,

STATE OF CALIFORNIA AND UNITED STATES
Effective Buying Income
2021 through 2025
Year
Area
Total Effective Buying Income (000’s Omitted)
Median Household Effective
Buying Income
2021
City of Hesperia
$1,861,008
$53,854
San Bernardino County
48,859,973
59,285
California
1,290,894,604
67,956
United States
9,809,944,764
56,790
2022
City of Hesperia
$2,007,122
$58,778
San Bernardino County
54,797,008
66,785
California
1,452,426,153
77,058
United States
11,208,582,541
64,448
2023
City of Hesperia
$2,096,711
$58,670
San Bernardino County
57,619,256
67,680
California
1,461,799,662
77,175
United States
11,454,846,397
65,326
2024
City of Hesperia
$2,196,941
$61,802
San Bernardino County
61,583,897
72,724
California
1,510,708,521
80,973
United States
11,987,185,826
67,876
2025
City of Hesperia
$2,230,072
$64,160
San Bernardino County
61,385,031
72,440
California
1,557,429,767
82,725
United States
12,525,577,707
69,687
Source: Claritas, LLC.

Commercial Activity
Total taxable sales during the first quarter of calendar year 2024 in the City were reported to be $284,114,628, a 2.68% decrease from the total taxable sales of $291,940,642 reported during the first quarter of calendar year 2023.

CITY OF HESPERIA
Number of Permits and Valuation of Taxable Transactions Calendar Years 2019 through 2023
(Dollars in Thousands)
Retail Stores
Total Outlets
Year
Number
of Permits
Taxable Transactions
Number
of Permits
Taxable Transactions
2019
1,340
$737,925
2,186
$890,186
2020
1,473
761,407
2,473
910,277
2021
1,372
985,962
2,314
1,160,336
2022
1,478
1,082,444
2,482
1,279,416
2023
1,389
1,001,598
2,367
1,204,717
Source: State Department of Tax and Fee Administration.

Total taxable sales during the first quarter of calendar year 2024 in the County were reported to be $13,638,865,147, a 0.80% increase over the total taxable sales of $13,530,928,670 reported during the first quarter of calendar year 2023.

SAN BERNARDINO COUNTY
Number of Permits and Valuation of Taxable Transactions Calendar Years 2019 through 2023
(Dollars in Thousands)
Retail Stores
Total Outlets
Year
Number
of Permits
Taxable Transactions
Number
of Permits
Taxable Transactions
2019
40,964
$27,564,216
64,771
$41,770,309
2020
44,330
28,518,285
71,145
42,884,767
2021
40,801
38,345,912
66,585
55,378,097
2022
41,690
40,003,128
68,480
59,745,218
2023
40,632
38,103,700
67,336
57,475,070
Source: State Department of Tax and Fee Administration.

Construction Activity
Building activity for the years 2019 through 2023 in the City is shown in the following table:

CITY OF HESPERIA
Total Building Permit Valuations
($ in Thousands)
2019
2020
2021
2022
2023
Permit Valuation
New Single-family
$43,234.1
$33,881.9
$50,092.3
$69,344.5
$40,650.9
New Multi-family
21,356.1
31,393.7
20,752.3
209.3
2,870.6
Res. Alterations/Additions
3,944.3
2,499.3
2,728.4
4,862.1
2,130.1
Total Residential
68,534.5
67,774.9
73,573.0
74,415.9
45,651.6
New Commercial
10,975.6
2,821.1
2,368.6
74,207.0
16,886.5
New Industrial

0.0 3,299.6

0.0 0.0

0.0 New Other
5,624.5
8,817.9
9,005.6
15,413.3
8,625.0
Com. Alterations/Additions
13,498.6
4,467.3
4,842.6
7,956.6
2,237.4
Total Nonresidential
30,098.7
19,405.9
16,216.8
97,576.9
27,748.9
New Dwelling Units
Single Family
206
165
255
326
193
Multiple Family
225
278
226
2 26
TOTAL
431
443
481
328
219
Source: Construction Industry Research Board, Building Permit Summary.

Building activity for the years 2019 through 2023 in the County is shown in the following table:

COUNTY OF SAN BERNARDINO
Total Building Permit Valuations
($ in Thousands)
2019
2020
2021
2022
2023
Permit Valuation
New Single-family
$1,078,797.7
$934,304.4
$1,086,398.2
$1,028,474.4
$970,669.8
New Multi-family
232,079.3
143,366.2
310,255.4
345,433.5
241,890.6
Res. Alterations/Additions
139,761.1
61,788.5
88,244.1
89,903.3
91,790.6
Total Residential
1,450,638.1
1,139,459.1
1,484,897.7
1,463,811.2
1,304,351.0
New Commercial
449,998.5
274,080.5
399,988.1
782,359.6
214,328.0
New Industrial
476,322.3
330,960.1
385,616.5
588,067.9
441,848.8
New Other
85,651.8
123,121.9
91,860.5
436,144.6
503,523.1
Com. Alterations/Additions
365,127.0
336,533.1
288,180.8
277,379.3
243,899.6
Total Nonresidential
1,377,099.6
1,064,695.6
1,165,645.9
2,083,951.4
1,403,599.5
New Dwelling Units
Single Family
4,096
3,631
4,376
3,701
3,937
Multiple Family
1,884
910
2,636
2,852
2,239
TOTAL
5,980
4,541
7,012
6,553
6,176
Source: Construction Industry Research Board, Building Permit Summary.

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
$________
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
This CONTINUING DISCLOSURE CERTIFICATE (this “Disclosure Certificate”) is executed and delivered by the City of Hesperia, California (the “City”), on behalf of itself and the City of Hesperia Community Facilities District No. 2005-1 (Belgate Development Restructuring) (the “District”), in connection with the execution and delivery of the bonds captioned above (the “2024 Bonds”). The 2024 Bonds are being executed and delivered pursuant to a Fiscal Agent Agreement, dated as of December 1, 2024 (the “Fiscal Agent Agreement”), by and between the City, for and on behalf of the District, and U.S. Bank Trust Company, National Association, as fiscal agent.

The City covenants and agrees as follows:

Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City, on behalf of itself and the District, for the benefit of the holders and beneficial owners of the 2024 Bonds and in order to assist the Participating Underwriter in complying with Rule 15c2-12(b)(5) promulgated under the Securities Exchange Act of 1934, as amended.

Section 2. Definitions. In addition to the definitions of capitalized terms set forth above and in Section 1.03 of the Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 2, the following capitalized terms shall have the meanings ascribed to them below when used in this Disclosure Certificate:
“Annual Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Annual Report Date” means the date that is nine months days after the end of the City’s fiscal year (currently March 31 based on the City’s fiscal year end of June 30). “Business Day” means any day on which the City is not required or authorized to be closed. “Dissemination Agent” means the NBS, or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation. “Listed Events” means any of the events listed in Section 5(a) of this Disclosure Certificate. “MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future. “Official Statement” means the final official statement, dated __________, 2024, executed by the City in connection with the issuance of the 2024 Bonds. “Participating Underwriter” means Stifel, Nicolaus & Company, Incorporated, the original underwriter of the 2024 Bonds required to comply with the Rule in connection with offering of the 2024 Bonds. “Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended.

Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing March 31, 2025, with the report for the 2023-24 fiscal year, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the City) has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the City’s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(b). The City shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the City hereunder. (b) If the City does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the City shall provide (or cause the Dissemination Agent to provide) notice to the MSRB, in a timely manner, in an electronic format as prescribed by the MSRB. (c) With respect to each Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and (ii) if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided.

Section 4. Content of Annual Reports. The City’s Annual Report shall contain or incorporate by reference the following:
(a) The City’s audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board, together with the following statement:

THE CITY’S ANNUAL FINANCIAL STATEMENT IS PROVIDED SOLELY TO COMPLY WITH THE SECURITIES EXCHANGE COMMISSION STAFF’S INTERPRETATION OF RULE 15C2-12 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. NO FUNDS OR ASSETS OF THE CITY ARE REQUIRED TO BE USED TO PAY DEBT SERVICE ON THE 2024 BONDS, AND NEITHER THE CITY NOR THE DISTRICT IS OBLIGATED TO ADVANCE AVAILABLE FUNDS TO COVER ANY DELINQUENCIES. INVESTORS SHOULD NOT RELY ON THE FINANCIAL CONDITION OF THE CITY IN EVALUATING WHETHER TO BUY, HOLD OR SELL THE 2024 BONDS.

If the City’s audited financial statements are not available by the Annual Report Date, the Annual Report shall contain unaudited financial statements, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) Unless otherwise provided in the audited financial statements filed on or before the Annual Report Date, the following financial information and operating data with respect to the District, substantially similar to that provided in the Official Statement:
(i) Updated tables in substantially the form of Table 1 in the Official Statement entitled “Distribution of Land Uses,” and Table 3 entitled “Distribution of Value-to-Lien Ratios,” based upon the most recent information available. (ii) An updated table detailing delinquency information in substantially the form of Table 5 in the Official Statement entitled “Special Tax Collections and Delinquencies” based upon the most recent information available, along with a summary of pending foreclosure actions. (iii) The amount of prepayments of the Special Tax with respect to the District for the prior Fiscal Year. (iv) The principal amount of the 2024 Bonds outstanding and the balance in the Reserve Fund (along with a statement of the Reserve Requirement) as of the September 30 next preceding the Annual Report Date. (v) Any changes to the Rate and Method of Apportionment for the District set forth in Appendix B to the Official Statement. (vi) A copy of the annual information required to be filed by the City with the California Debt and Investment Advisory Commission pursuant to the Act and relating generally to outstanding District bond amounts, fund balances, assessed values, special tax delinquencies and foreclosure information. (c) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the City shall provide such further material information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading. (d) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which are available to the public on the MSRB’s Internet web site or filed with the Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference.

Section 5. Reporting of Significant Events.
(a) The City shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the 2024 Bonds:
(1) Principal and interest payment delinquencies.
(2) Nonpayment related defaults, if material.
(3) Unscheduled draws on debt service reserves reflecting financial difficulties. (4) Unscheduled draws on credit enhancements reflecting financial difficulties. (5) Substitution of credit or liquidity providers, or their failure to perform. (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the taxexempt status of the security. (7) Modifications to rights of security holders, if material. (8) Bond calls, if material, and tender offers.
(9) Defeasances.
(10) Release, substitution, or sale of property securing repayment of the securities, if material. (11) Rating changes.
(12) Bankruptcy, insolvency, receivership or similar event of the City. (13) The consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material. (14) Appointment of a successor or additional fiscal agent or the change of name of a fiscal agent, if material. (15) Incurrence of a financial obligation of the obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the obligated person, any of which affect security holders, if material. (16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the obligated person, any of which reflect financial difficulties. (b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the City shall, or shall cause the Dissemination Agent (if not the City) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected 2024 Bonds under the Indenture. (c) The City acknowledges that the events described in subparagraphs (a)(2), (a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13), (a)(14), and (a)(15) of this Section 5 contain the qualifier “if material.” The City shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that the City determines the event’s occurrence is material for purposes of U.S. federal securities law. (d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(12) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City. (e) For purposes of Section 5(a)(15) and (16), “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term financial obligation shall not include municipal securities as to which a final official statement has been provided to the Municipal Securities Rulemaking Board consistent with the Rule.

Section 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB under the Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.

Section 7. Termination of Reporting Obligation. The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption, or payment in full of all of the 2024 Bonds. If such termination occurs prior to the final maturity of the 2024 Bonds, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(b).

Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any Dissemination Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be NBS. Any Dissemination Agent may resign by providing 30 days’ written notice to the City.

Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the 2024 Bonds, or type of business conducted; (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the 2024 Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) the proposed amendment or waiver either (i) is approved by holders of the 2024 Bonds in the manner provided in the Fiscal Agent Agreement for amendments to the Fiscal Agent Agreement with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the 2024 Bonds.

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

If an amendment is made to this Disclosure Certificate modifying the accounting principles to be followed in preparing financial statements, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the City to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative.

A notice of any amendment made pursuant to this Section 9 shall be filed in the same manner as for a Listed Event under Section 5(b).

Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

Section 11. Default. If the City fails to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the 2024 Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Fiscal Agent Agreement, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.

Section 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorney’s fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the City hereunder and shall not be deemed to be acting in any fiduciary capacity for the City, the 2024 Bond holders or any other party. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the 2024 Bonds. (b) The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder.

Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and the holders and beneficial owners from time to time of the 2024 Bonds and shall create no rights in any other person or entity.

Date: _______________, 2024
City of Hesperia, CALIFORNIA,
on behalf of
CITY OF HESPERIA COMMUNITY FACILITIES DISTRICT NO. 2005-1 (BELGATE DEVELOPMENT RESTRUCTURING) By:
[NAME],
[TITLE]
AGREED AND ACCEPTED:

NBS,
as Dissemination Agent
By:

Name:

Title:

APPENDIX F

DTC AND THE BOOK-ENTRY ONLY SYSTEM
The information in this Appendix F has been provided by The Depository Trust Company (“DTC”), New York, NY, for use in securities offering documents, and the City does not take responsibility for the accuracy or completeness thereof. The City cannot and does not give any assurances that DTC, DTC Participants or Indirect Participants will distribute the Beneficial Owners either (a) payments of interest, principal or premium, if any, with respect to the 2024 Bonds or (b) certificates representing ownership interest in or other confirmation of ownership interest in the 2024 Bonds, or that they will so do on a timely basis or that DTC, DTC Direct Participants or DTC Indirect Participants mill act in the manner described in this Official Statement.

The following description of DTC, the procedures and record keeping with respect to beneficial ownership interests in the 2024 Bonds, payment of principal, interest, and other payments on the 2024 Bonds to DTC Participants or Beneficial Owners, confirmation, and transfer of beneficial ownership interest in the 2024 Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters but should instead confirm the same with DTC or the DTC Participants, as the case may be.

Neither the issuer of the 2024 Bonds (the “Issuer”) nor the trustee, fiscal agent or paying agent appointed with respect to the 2024 Bonds (the “Agent”) take any responsibility for the information contained in this Appendix.

No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the 2024 Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the 2024 Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the 2024 Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC.

1. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the 2024 Bonds (the “Securities”). The Securities will be issued as fully registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.

2. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). On August 8, 2011, Standard & Poor’s downgraded its rating of DTC from AAA to AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. The information contained on this Internet site is not incorporated herein by reference.

3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued.

4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

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

6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

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

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

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

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

11. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof.

APPENDIX G

SPECIMEN MUNICIPAL BOND INSURANCE POLICY
50 A-7
B-1
C-1
D-1
E-8
F-3
G-1
G-3
i
v
16 24
* Preliminary; subject to change.
* Preliminary; subject to change.
* Preliminary; subject to change.

PRELIMINARY OFFICIAL STATEMENT DATED _____________, 2024

Hesperia City CouncilOctober 15, 2024

Hesperia City Council
October 15, 2024