Agenda packet — Highland City Council, September 8, 2026 (part 2 of 2)

City of Highland
City Council
Effective Date
Approval Date
Artificial Intelligence Policy
Supersedes N/A

1. Purpose
The purpose of this policy is to establish guidelines for the use of artificial intelligence (AI) safely, securely, and ethically within the City of Highland. This policy ensures that AI is used to enhance efficiency, creativity, and analytics while still protecting sensitive information, complying with applicable laws, regulations, and City policies.

2. Background
A popular AI technology being used is generative artificial intelligence (Generative AI or GenAI). GenAI applications include (but not limited to) chatbots such as ChatGPT, Claude, and Copilot, text-to-image models such as Dall-E, Stable Diffusion, and Midjourney, and text-to-audio models just as Veo, LTX, and Sora. These tools can help in drafting documents, reviewing documents, summarizing content, data analysis, translation, and much more.

At the same time, it introduces risks in cybersecurity, law, and privacy. This policy focuses on establishing safeguards, governance, and accountability standards to ensure AI is used correctly and securely while also meeting compliance obligations.

3. Scope
This policy applies to:
 All City employees
 Elected officials when using City systems and data
 Contractors and consultants using City systems and data This policy governs AI use on:
 City-owned devices
 City networks
 City email accounts
 Any system used for City Business
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4. Guiding Principles
The city adopts the following principles for responsible AI use:
 AI must be used in a manner that protects confidential information, critical infrastructure, and public data.
 AI generated content must be reviewed and validated for proper use by a human prior to official use
 AI content may not be used in ways that result in biased outcomes, discrimination, or inequality
 Employees remain fully responsible for any content used by generative AI assistance.

5. Prohibited and Restricted Information
The following information SHALL NOT be entered into AI tools:
 Private and confidential information not for public
 Personally Identifiable Information (PII)
 Personnel records
 Legal/Attorney-Client communications
 Information System/Information Technology (configurations, data, infrastructure)

6. Approved Uses (With human review)
 Summarizing, drafting, and analyzing public/non-sensitive information  Translating material
 Generating or recommending ideas
 Creating Media that does not harm public or city personnel (Images, Audio, Video)  General learning

7. Prohibited Uses
 Decision making affecting the public or city personnel  Using AI in any way that violates the law or government policy  Using AI responses without review
 Using AI that influences outcomes based on biased profiling of protected traits. This includes race, gender, religion, sexual orientation, age, and disability, medical, and future conduct.

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8. Approved and Unapproved AI Tools

8.1 Approved AI Tools
 Microsoft Copilot
 OpenAI ChatGPT
 Anthropic Claude
 Google Gemini
 Perplexity
The IT Department may maintain and update a list of approved AI Tools following the approval of the City Manager

8.2 AI Features Within Approved Software
Software that has been previously installed or approved from the City and contains features or add-ons like AI Plug-ins (e.g. Adobe Acrobat AI Assistant, Zoom, ArcGIS) may be used without separate approval, provided that:
 Features are fully implemented and not in a testing or ‘beta’ phase.  Data restrictions and approved uses contained in this policy are being followed  The IT Department has not disabled add-on

8.3 Unapproved AI Tools and Approval Request
AI tools, services, applications, browser extensions, plug-ins, or integrations that are not currently included on the Approved AI Tools List and are not part of an already-approved City application must be submitted to the IT Department for review and approved by City Manager before being used for City business.

The employee should provide:
 Name of AI Tool or Service
 Provider or Vendor
 Intended business purpose
 Reason or type of information that will be used
 Any current or future integration plans with City systems

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9. Incident Reporting
Staff shall report to their supervisor and the IT department the following:
 Suspected misuse of AI tools
 Security Concerns
 Prohibited data exposure incidents

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Acknowledgement Form

I acknowledge that I have received, read, and understand the City of Highland’s Artificial Intelligence Policy. I agree to comply with the provisions contained in this policy for secure and responsible use of AI.

I understand that failure to comply with this policy may result in AI use privileges and/or disciplinary action in accordance with City Policies.

Employee Name (Print): _________________________

Department: _______________________________

Employee Signature: ___________________________

Date: ___________________________________
7 Staff Report
to the City Council
Agenda
Item
No.19.

Date: September 8, 2026
From: Carlos Zamano, City Manager
Reviewed By: Lawrence Mainez, Community Development Director Prepared By: Kim Stater, Assistant Community Development Director Subject: Municipal Code Amendment (MCA 26-001), Amending Section

16.44.180 (Accessory Dwelling Units and Junior Accessory Dwelling Units) of Title 16 (Land Use and Development) of the Highland Municipal Code to Update Requirements in Accordance with State Law.

The Proposed Amendment Promotes the Development of ADUs As a Means to Increase Affordable Housing Opportunities and Ensures the City's Regulations Remain Compliant with State Laws

Recommendation:

The Planning Commission recommends the City Council:

1. Adopt a Notice of Exemption and instruct staff to file a Notice of Exemption with the County Clerk of the Board of Supervisors; and

2. Introduce an Ordinance to amend Section 16.44.180 (Accessory dwelling units and junior accessory dwelling units) of Title 16 (Land Use and Development Code) to continue the implementation of Program 12 of the Highland Housing Element to ensure consistency with State housing legislation including Senate Bill 543, Assembly Bill 154, and Senate Bill 9.

Fiscal Impact:

The proposed Municipal Code Amendment is a City-initiated project. Costs associated with the amendment include Staff and City Attorney time, public notices, meetings, and other administrative functions.

Public Notice:

The agenda for this item was posted at the three locations per Resolution No. 2011-047 and on the City’s website.

Background:

Public Notice
The notice of the public hearing was also posted on the City's website and a display ad was published in the San Bernardino Sun newspaper on August 7, 2026. All noticing required by the Highland Municipal Code and State Law have been made. 1 Prior Action by the City Council
The City's 6th Cycle Housing Element includes Program No. 12 to "Update the City's ADU ordinance." The purpose of the updates is to remain in compliance with State Law, and promote a variety of affordable housing options. On August 24, 2021, the City Council adopted Ordinance No. 448 amending regulations pertaining to accessory dwelling units and junior accessory dwelling units, and determined that ADUs in areas that have been designated as high fire severity zones could endanger public health and safety and were thus prohibited. On June 10, 2025, the City Council adopted Ordinance No. 471, further amending and updating the City's ADU regulations. These updates included a determination of which applications were subject to "Planning Review" and which were only subject to "Building Permit Only", parking standards and further affirmed that ADUs would be prohibited in high fire severity zones and at sites that were not connected to the public sewer system.

Current ADU Ordinance Revisions
Following adoption of Ordinance No. 471, the State enacted Senate Bill 543, Assembly Bill 1154, and Senate Bill 9 (SB 9 of 2025). To ensure ongoing consistency with these laws, these amendments are recommended.
• Clarify that ADUs will be prohibited in two fire hazard severity zones: "Very High" and "High" Fire Severity Zones.
• Identify the appeal process for incomplete ADU applications. • Clarify that floor area size restrictions are not a measurement of the "gross floor area", but instead of the "livable space". The same clarification is made for the measurement of setbacks and lot coverage.
• Clarify that one parking space will be required for an ADU if it is submitted concurrently with a new single-family or multi-family dwelling on the same lot. • If used as rentals, ADUs may only be rented for terms of 31 days or longer. • JADUs must provide fire sprinklers if sprinklers are required for the primary dwelling. • JADUs will not require owner occupancy of the primary dwelling unless it shares sanitation facilities.

Planning Commission Review & Recommendation
On July 21, 2026, the Planning Commission reviewed the proposed Ordinance and adopted Resolution No. 2026-013, recommending approval by the City Council. One comment letter was received during the Planning Commission's public hearing (Attachment 2). The letter from CAL HDF stated that the Planning Commission should revise the Ordinance and remove the restriction that prohibits ADUs that are built without public sewer access (i.e. on a private septic system) as it is in violation of state law. The Commission deferred this consideration to the City Attorney's office. The City Attorney reviewed the comment and adjusted the ordinance to read that ADUs would be prohibited in "areas without appropriate sewage disposal systems." Thus, the City will not prohibit ADUs on septic systems if those systems are approved by the appropriate water agencies such as East Valley Water District and/or the California Water Board. This amendment is included in the attached Ordinance.

Environmental Review:

The Ordinance is exempt from the requirements of the California Environmental Quality Act ("CEQA") pursuant to CEQA Guidelines Section 15282(h), which creates a statutory exemption for the adoption of an ordinance regarding second units in a single-family or multi- family residential zone by a city to implement the provisions of Article 2 (commencing with 2 Section 66314) or Article 3 (commencing with Section 66333) of Chapter 13 of Division 1 of Title 7 of the Government Code as set forth in Section 21080.17 of the Public Resources Code. In addition, the City Council finds that the Ordinance is exempt from further environmental review pursuant to CEQA Guidelines Section 15061(b)(3) because it can be seen with certainty that there is no possibility that amendments to the City's ADU and JADU regulations in accordance with State Law will have a significant effect on the environment.

Staff will file a Notice of Exemption with the County Clerk of the Board once the City Council has made a determination. No further environmental review is required.

Attachments:

1. Ordinance

2. Public Comment Letter from CAL HDF

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21 Staff Report
to the City Council
Agenda
Item
No.20.

Date: September 8, 2026
From: Carlos Zamano, City Manager
Reviewed By: Octavio Duran, Public Works Director/City Engineer Maricela Marroquin, City Attorney
Prepared By: Chastity Scott , Engineering Technician II Subject: Public Hearing to Consider Calling a Special Election; Declaring the Results of the Election; and Approving Formation and Levy of Special Taxes for City of Highland Community Facilities District No. PS 26-001 Citywide Public Safety Services (Work Program, UP-)

Recommendation:

1. Open the public hearing and take testimony, if any, following the public hearing, staff recommends that the City Council adopt Resolution No. 2026-____, entitled: "A Resolution Of Formation Of The City Council Of The City Of Highland, California, To Establish City Of Highland Community Facilities District No. Ps 26-001 (Citywide Public Safety Services), To Establish An Appropriations Limit Therefor, To Authorize The Levy Of A Special Tax Therein, To Authorize The Submittal Of The Levy Of Special Tax And The Establishment Of An Appropriations Limit To The Qualified Electors Of Such Community Facilities District, To Provide For The Annexation Of Territory To Such Community Facilities District In The Future, To Make Environmental Findings Pursuant To The California Environmental Quality Act, And To Authorize Certain Actions Related Thereto";

2. Adopt Resolution No. 2026-____, entitled: "A Resolution Of The City Council Of The City Of Highland, California, Calling A Special Election And Submitting To The Qualified Electors Of City Of Highland Community Facilities District No. Ps 26-001 (Citywide Public Safety Services) Propositions Regarding The Establishment Of An Appropriations Limit And The Annual Levy Of A Special Tax Within The Community Facilities District";

3. Adopt Resolution No. 2026-____, entitled: "A Resolution Of The City Council Of The City Of Highland, California, Declaring The Results Of A Special Election In The City Of Highland Community Facilities District No. Ps 26-001 (Citywide Public Safety Services) And Directing The Recording Of A Notice Of Special Tax Lien"; and

4. Waive full reading, read by title only, and introduce Ordinance No. 2026-___, entitled:
"An Ordinance Of The City Council Of The City Of Highland, California Acting In Its Capacity As The Legislative Body Of City Of Highland Community Facilities District No.

Ps 26-001 (Citywide Public Safety Services) Authorizing The Levy Of A Special Tax Therein".
1 Fiscal Impact:

The individual property owners are responsible for the annual payments of special taxes. The City will work with the County concerning the filing of the annual special tax with the County Auditor-Controller.

The developer and sole owner of the property initially proposed to be included in the CFD, KB Home Cal Management Service, LLC, (Developer) has posted a deposit with its application to form the CFD in order to cover City costs incurred in connection with the formation. Approval of this resolution does not in any way commit the City to any financial contribution to or liability of the CFD. The City’s cost to administer the CFD annually will be reimbursed through the special taxes levied against taxable property in the CFD.

Public Notice:

The agenda for this item was posted at the three locations per Resolution No. 2011-047 and on the City’s website.

Background:

On August 3, 2026 the City Council took the first step in the process of forming CFD No. PS 26-001 (Citywide Public Safety Services) (“CFD No. PS 26-001”). At that time the City Council adopted a Resolution of Intention, Resolution No. 2026-049, to form CFD No. PS 26-001 and to authorize the levy of a special tax.

The State legislature enacted the Mello-Roos Community Facilities Act of 1982 (the “Act”) to assist public agencies in financing certain public services. On June 22, 2021 the City Council considered and approved goals and policies concerning Community Facility Districts. The formation of a Citywide Public Safety CFD was included in the City's current Work Program by the City Council with an Urgent Priority designation. Accordingly, staff has been working with several projects to facilitate the process.

The developer, KB Home Cal Management Service LLC, requested that the City assist them in forming a community facilities district in the City to cover the costs associated with providing public safety services within their development, including police, fire and paramedic services (the “Services”). The cost of the Services includes building a reserve fund for replacement and maintenance and for actual or anticipated operating cost shortfalls. The development, comprised of Tract 20693, is proposed to include 79 single-family residential parcels. The entire CFD comprises 5.15 net taxable acres (8.31 gross acres) of residentially zoned land. It is proposed that the City Council CFD will also designate a Future Annexation Area composed of the entire area within the city boundaries.

Approval of the attached Resolutions are required under the Act to establish the proposed CFD, levy a special tax and fund the services.

2 The proposed maximum Special Tax is based on land use:

These maximum rates will increase based on the percentage increase in the Consumer Price Index with a maximum annual increase of 6% and a minimum annual increase of 2% of the Maximum Special Tax in effect in the previous fiscal year.

The Act authorizes the initiation of the establishment of community facilities districts upon receipt by the City of a petition requesting institution of proceedings by owners of not less than 10% of the area of land proposed to be included within the district. The City has received the signed petition from KB Home Cal Management Service, LLC, the sole landowner of the property proposed for inclusion in the CFD.

CEQA: Staff has determined that actions related to this item are not a project pursuant to CEQA Guidelines Section 15378(b)(4) and no further environmental review is required.

Attachments:

1. Resolution Authorizing Formation

2. Resolution Calling a Special Election

3. Resolution Declaring Results

4. CFD Report PS 26-001

5. Ordinance

3 ATTACHMENT 1
Resolution Authorizing Formation

4 RESOLUTION NO. 2026-___

A RESOLUTION OF FORMATION OF THE CITY COUNCIL OF THE CITY OF HIGHLAND,

CALIFORNIA, TO ESTABLISH CITY OF HIGHLAND COMMUNITY FACILITIES DISTRICT NO. PS 26-001 (CITYWIDE PUBLIC SAFETY SERVICES), TO ESTABLISH AN

APPROPRIATIONS LIMIT THEREFOR, TO AUTHORIZE THE LEVY OF A SPECIAL TAX

THEREIN, TO AUTHORIZE THE SUBMITTAL OF THE LEVY OF SPECIAL TAX AND

THE ESTABLISHMENT OF AN APPROPRIATIONS LIMIT TO THE QUALIFIED

ELECTORS OF SUCH COMMUNITY FACILITIES DISTRICT, TO PROVIDE FOR THE

ANNEXATION OF TERRITORY TO SUCH COMMUNITY FACILITIES DISTRICT IN THE

FUTURE, TO MAKE ENVIRONMENTAL FINDINGS PURSUANT TO THE CALIFORNIA

ENVIRONMENTAL QUALITY ACT, AND TO AUTHORIZE CERTAIN ACTIONS

RELATED THERETO

WHEREAS , on August 3, 2026, the City Council (the “City Council”) of the City of Highland (the “City”) adopted a resolution entitled “A Resolution of Intention of the City Council of the City of Highland, California, to Establish City of Highland Community Facilities District No. PS 26-001 (Citywide Public Safety Services), to Authorize the Levy of a Special Tax within Such District to Fund Certain Services, and to Designate a Future Annexation Area, Making a Determination Pursuant to the California Environmental Quality Act, and Taking Related Actions” (the “Resolution of Intention”), stating its intention to form City of Highland Community Facilities District No. PS 26-001 (Citywide Public Safety Services) (the “CFD”) pursuant to Chapter 2.5 of Part 1 of Division 2 of Title 5, commencing with Section 53311, of the California Government Code (the “Act”) to finance certain services to serve the CFD;
WHEREAS , the Resolution of Intention sets forth a description of the proposed boundaries of the CFD and the territory proposed to be annexed into the CFD in the future (the “Future Annexation Area”), the types of services proposed to be provided in the CFD and to be financed by the CFD (the “Services”), the intention of the City Council to levy a special tax within the CFD to pay for the costs of the Services, including incidental expenses (the” Special Tax”), and the proposed rate and method of apportionment of the Special Tax among parcels of real property in the CFD (the “Rate and Method of Apportionment”), which Rate and Method of Apportionment is set forth in Exhibit “C” attached hereto and by this reference incorporated herein;
WHEREAS , the Resolution of Intention set September 8, 2026, at 6:00 p.m., or as soon thereafter as practical, as the date and time for a public hearing on the proposed establishment of the CFD, the extent of the CFD, the designation of the Future Annexation Area, the furnishing of the Services within the CFD, the Special Tax, and the Rate and Method of Apportionment;
WHEREAS , on September 8, 2026, the City Council held a duly noticed public hearing as required by the Act regarding the Resolution of Intention relative to the proposed 5 formation of the CFD and designation of the Future Annexation Area, the extent of the CFD, the furnishing of the Services within the CFD, the Special Tax, and the proposed Rate and Method of Apportionment;
WHEREAS , at the hearing all interested persons desiring to be heard for or against the establishment of the CFD, the extent of the CFD, the designation of the Future Annexation Area, the furnishing of the Services within the CFD, the Special Tax, and the proposed Rate and Method of Apportionment were heard and a full and fair hearing was held;
WHEREAS , at the hearing evidence was presented to the City Council on such matters before it, including a report (the “CFD Report”), prepared pursuant to Section 53321.5 of the Act, containing a description of the Services necessary to meet the needs of the CFD and an estimate of the costs thereof, a copy of which is on file in the office of the City Clerk, and the City Council, at the conclusion of said hearing, is fully advised as to the establishment of the CFD, the levy of the Special Tax, the Future Annexation Area, and all matters related thereto.

WHEREAS , written protests with respect to the formation of the CFD, the extent of the CFD, the Special Tax, or the furnishing of specified types of services within the CFD have not been filed with the City Clerk by fifty percent (50%) or more of the registered voters, or six (6) registered voters, whichever is more, residing within the territory of the CFD or property owners of one-half (1/2) or more of the area of land within the CFD and not exempt from the proposed Special Tax;
WHEREAS , written protests with respect to the designation of the Future Annexation Area have not been filed with the City Clerk by fifty percent (50%) or more of the registered voters, or six (6) registered voters, whichever is more, residing within the territory of the Future Annexation Area or property owners of one-half (1/2) or more of the area of land within the territory of the Future Annexation Area and not exempt from the proposed Special Tax;
WHEREAS , the designation of the Future Annexation Area and Special Tax proposed to be levied in the CFD have not been precluded by a majority protest pursuant to Section 53324 or Section 53339.6 of the Act;
WHEREAS , the City Council has determined, based on a Certificate of the Registrar of Voters on file in the office of the City Clerk, that no registered voters have been residing in the proposed boundaries of the CFD for each of the ninety (90) days prior to September 8, 2026 and that the qualified electors in the CFD are the landowners within the District; WHEREAS , on the basis of the foregoing, the City Council has determined to proceed with the establishment of the CFD to finance the Services, including incidental expenses, and the designation of the Future Annexation Area, and to call a special election 6 to authorize the levy of the Special Tax within the CFD pursuant to the Rate and Method of Apportionment and the establishment of an appropriations limit for the CFD; and WHEREAS , City Staff reviewed the proposed CFD formation and the designation of the Future Annexation Area and determined that forming the CFD and designating the Future Annexation Area and financing the Services, as described in Section 7 of this Resolution, do not constitute a project for purposes of the California Environmental Quality Act, commencing with Section 21000 of the California Public Resources Code and the California Environmental Quality Act Guidelines, Article 5 of Chapter 3 of Division 6 of Title 14 of the California Code of Regulations, (collectively “CEQA”). CEQA Guidelines Section 15378(b)(4) specifically states that the term “project” for CEQA purposes does not include “the creation of government funding mechanisms or other government fiscal activities which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment”.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF HIGHLAND DOES HEREBY FIND, DETERMINE, AND RESOLVE AS FOLLOWS:

Section 1. Recitals Correct. The foregoing recitals are true and correct and are a substantive part of this Resolution.

Section 2. Public Hearing. On September 8, 2026, pursuant to notice thereof duly given as provided by law, the City Council held a public hearing with respect to the establishment of the CFD, the extent of the CFD, the designation of the Future Annexation Area, the furnishing of Services with the CFD, the annual levying of the Special Tax within the CFD to pay for the Services and the proposed Rate and Method of Apportionment.

Section 3. No Majority Protest. The City Council hereby finds and determines that the proposed Special Tax to be levied within the CFD has not been precluded by majority protest pursuant to Section 53324 of the Act and that the designation of the Future Annexation Area has not been precluded by majority protest pursuant to Section 53339.6 of the Act.

Section 4. Prior Proceedings Valid. The City Council has duly considered all prior proceedings taken in connection with the establishment of the CFD, the designation of the Future Annexation Area, and the levy of the Special Tax and the City Council hereby finds and determines pursuant to Section 53325.1(b) of the Act the proceedings to be valid and in conformity with the requirements of law and specifically the provisions of the Act.

Section 5. Establishment of the CFD and Designation of Future Annexation Area. The community facilities district designated “City of Highland Community Facilities District No.

PS 26-001 (Citywide Public Safety Services)” of the City is hereby established pursuant to the Act and the Future Annexation Area is hereby designated.

Section 6. Boundaries of the CFD and the Future Annexation Area. The exterior boundaries of the CFD are established as provided in the Resolution of Intention and as 7 shown on the map of the CFD on file in the office of the City Clerk and as heretofore recorded in the San Bernardino County Recorder’s Office on August 6, 2026, in Book 93 at Page 19 as Instrument No. 2026-0202649 of Maps of Assessment and Community Facilities Districts. Such map is hereby approved and incorporated herein by reference.

The boundaries of the Future Annexation Area, being the territory proposed in the Resolution of Intention for future annexation to the City, are designated as provided in the Resolution of Intention and as set forth in the map of the CFD heretofore recorded in the San Bernardino County Recorder’s Office on August 6, 2026, in Book 93 at Page 18 as Instrument No. 2026-0202649 of Maps of Assessment and Community Facilities Districts.

The exterior boundaries of future annexed areas shall be recorded at the time of annexation for each annexed area.

Section 7. Description of Services and Incidental Expenses. The Services authorized to be provided within the CFD and to be financed by the CFD pursuant to the Act shall consist of those services shown in Exhibit “A” attached hereto and by this reference incorporated herein. The types of incidental expenses authorized to be incurred shall consist of those expenses set forth in Exhibit “B” attached hereto and by this reference incorporated herein.

The City Council hereby finds and determines that (i) the description of the Services herein is sufficiently informative to allow taxpayers within the CFD to understand what the funds of the CFD may be used to finance; (ii) the Services are necessary to meet increased demands placed upon the City as a result of the development occurring in the District and the Future Annexation Area; (iii) the Services are in addition to those provided in the territory of the CFD before the date of creation of the CFD and the additional Services shall not supplant services already available within that territory when the CFD is created; and (iv) the Services shall be in addition to those provided in any territory of the Future Annexation Area before the annexation of such territory and the additional Services shall not supplant services already available within such territory when the annexation occurs.

Section 8. Special Tax.
a. Except to the extent that funds are otherwise available to the CFD to pay for the Services, a Special Tax sufficient to pay the costs thereof, including incidental expenses, secured by the recordation of a continuing lien against all non-exempt real property in the CFD, is hereby authorized, subject to the approval of the eligible voters in the CFD and the limits in the Rate and Method of Apportionment, to be levied annually, in accordance with procedures contained in the Act, within the CFD, commencing in Fiscal Year 2026-27. The Special Tax will be collected in the same manner as ordinary ad valorem property taxes are collected, and shall be subject to the same penalties, procedure, sale and lien priority in case of delinquency as applicable for ad valorem property taxes, or in such other manner as may be prescribed by the City Council. A Special Tax shall be levied in the Future Annexation Area only with the Unanimous Consent and Approval of the owner or owners of each parcel or parcels at the time that parcel or those parcels are annexed, without any 8 requirement for further public hearings or additional proceedings, unless required by law. An amended continuing lien securing the Special Tax levied within territory in the Future Annexation Area shall be recorded at that the time of annexation of each such territory.
b. The Rate and Method of Apportionment, in sufficient detail to allow each resident or landowner within the CFD to estimate the maximum amount such resident or owner will have to pay, is shown in Exhibit “C” attached hereto and by this reference incorporated herein. The City Council hereby finds and determines that the Rate and Method of Apportionment is reasonable.

Section 9. Report. The CFD Report is hereby approved and is made a part of the record of the public hearing regarding the formation of the CFD, and is ordered to be kept on file in the office of the City Clerk as part of the transcript of these proceedings.

Section 10. Responsible Official. The Finance Director of the City of Highland, or his or her designee, located at City Hall, 27215 Base Line, Highland CA, 92346, telephone number (990) 864-6861, is the officer of the City who will be responsible for preparing annually a current roll of the levy of the Special Tax obligations by assessor’s parcel number and who will be responsible for estimating future levies of the Special Tax.

Section 11. Tax Lien. Upon recordation of a notice of special tax lien pursuant to Section 3114.5 of the California Streets and Highways Code, a continuing lien to secure each levy of the Special Tax shall attach to all nonexempt real property in the CFD and this lien shall continue in force and effect until the Special Tax obligation is prepaid and permanently satisfied and the lien canceled in accordance with law or until collection of the Special Tax by the CFD ceases.

Section 12. Description of Voting Procedures. The voting procedures to be followed in conducting the special election (the “Special Election”) on the proposition of the annual levy of the Special Tax and on the proposition to establish an appropriations limit for the CFD shall be as follows:
a. T he proposed voting procedure at the election will be a landowner vote with each landowner who is the owner of record of land within the District at the close of the Hearing, or the authorized representative thereof, having one vote for each acre or portion thereof owned within the CFD not exempt from the Special Tax and the Special Election shall be conducted by the City Clerk pursuant Section 53326 of the Act as follows:
(i) The Special Election shall be held on the earliest date, following the adoption by the City Council of this Resolution and a resolution calling the Special Election, to submit to the qualified electors of the CFD the propositions with respect to: (i) the levy of Special Tax to finance the Services and (ii) the establishment of an appropriations limit for the CFD.
9 (ii) Pursuant to said Section 53326, the Special Election may be held earlier than 90 days following the close of the protest hearing if the qualified electors of the CFD waive the time limits for conducting the elections set forth in said Section 53326 by unanimous written consent and the City Clerk concurs in such earlier election date as shall be consented to by the qualified electors.
(iii) Pursuant to said Section 53326, ballots for the Special Election shall be distributed to the qualified electors by the City Clerk by mail with return postage prepaid, or by personal service.
(iv) Pursuant to applicable sections of the California Elections Code governing the conduct of mail ballot elections of cities, the City Clerk shall mail (or deliver) to each qualified elector an official ballot and shall also mail to all such qualified electors a ballot pamphlet and instructions to voter, including a sample ballot identical in form to the official ballot but identified as a sample ballot, a return identification envelope with prepaid postage thereon addressed to the City Clerk for the return of voted official ballots, and a copy of this Resolution and the exhibits hereto; provided, however, that analysis and arguments regarding the ballot measure may be waived with the unanimous consent of all the landowners, and in such event a finding regarding such waivers shall be made in the resolution adopted by the City Council calling the Special Election.
(v) The official ballot to be mailed (or delivered) by the City Clerk to each landowner shall have printed or typed thereon the name of the landowner and the number of votes to be voted by the landowner and shall have appended to it a certification to be signed by the person voting the official ballot which shall certify that the person signing the certification is the person who voted the official ballot, and if the landowner is other than a natural person, that he or she is an officer of or other person affiliated with the landowner entitled to vote such official ballot, that he or she has been authorized to vote such official ballot on behalf of the landowner, that in voting such official ballot it was his or her intent, as well as the intent of the landowner, to vote all votes to which the landowner is entitled based on its land ownership on the propositions set forth in the official ballot as marked thereon in the voting square opposite each such proposition, and further certifying as to the acreage of the landowner's land ownership within the CFD.
(vi) The return identification envelope mailed (or delivered) by the City Clerk to each landowner shall have printed or typed thereon the following: (i) the name of the landowner, (ii) the address of the landowner, (iii) a declaration under penalty of perjury stating that the voter is the landowner of record or the authorized representative of the landowner entitled to vote the enclosed ballot 10 and is the person whose name appears on the identification envelope, (iv) the printed name and signature of the voter, (v) the address of the voter, (vi) the date of signing and place of execution of said declaration, and (vii) a notice that the envelope contains an official ballot and is to be opened only by the City Clerk.
(vii) The instruction to voter form to be mailed (or delivered) by the City Clerk to the landowners shall inform them that the official ballots shall be returned to the City Clerk properly voted as provided thereon and with the certification appended thereto properly completed and signed in the sealed return identification envelope with the certification thereon completed and signed and all other information to be inserted thereon properly inserted, wilt ballots returned to the office of the City Clerk by mail or personal delivery no later than 4:00 p.m. on the date of the Special Election or ballots returned to the City Clerk in Council Chambers by personal delivery immediately after the Resolution Calling the Special Election is adopted.
(viii) Upon receipt of the return identification envelopes, which are returned prior to the voting deadline on the date of the Special Election, the Clerk shall canvass the votes cast in the Special Election, and shall file a statement with the City Council as to the results of such canvass and the election on each proposition set forth in the official ballot.

Section 13. Exempt Property. Except as provided in the Rate and Method of Apportionment or by law, properties of entities of the state, federal and local governments or any departments or political subdivisions thereof, shall be exempt from the levy of the Special Tax. Provided, however, any leasehold or possessory interest in such public property that is subject to taxation under applicable law shall not be considered exempt. In addition, a property receiving a welfare exemption under subdivision (g) of Section 214 of the Revenue and Taxation Code shall be exempt from the Special Tax. Reference is hereby made to the Rate and Method of Apportionment for a description of other properties or entities that are expressly exempted from the levy of the Special Tax.

Section 14. Appropriations Limit. An appropriations limit for the CFD is hereby established, subject to the approval of the eligible voters in the CFD, as an amount equal to 300 percent of all the proceeds of the Special Tax collected annually within such CFD and as defined by Article XIIIB of the California Constitution, as adjusted for changes in the cost of living and changes in population.

Section 15. Special Tax Accountability Measures. Pursuant to and in compliance with the provisions of Government Code Section 50075.1, the City Council hereby establishes the following accountability measures pertaining to the levy by the CFD of the Special Tax described in Section 8 above:
11 a. The Special Tax shall be levied for the specific purposes set forth in Section 7 hereof.
b. The proceeds of the levy of the Special Tax shall be applied only to the specific purposes set forth in Section 7 hereof.
c. The CFD shall establish an account or accounts into which the proceeds of such Special Tax shall be deposited.
d. The City Manager, or his or her designee, acting for and on behalf of the CFD, shall annually file a report with the City Council as required pursuant to Government Code Section 50075.3.

Section 16. Agricultural, Timber and Livestock Uses. Consistent with Section 53325.6 of the Act, the City Council finds and determines that the land within the CFD, if any, devoted primarily to agricultural, timber or livestock uses and being used for the commercial production of agricultural, timber or livestock products is contiguous to other land within the CFD and will be benefited by the Services proposed to be provided within the CFD.

Section 17. CEQA. The City Council concurs with Staff’s determination that the actions proposed to be taken pursuant to this Resolution are not a project pursuant to CEQA Guidelines Section 15378(b)(4). Therefore, no further environmental review is required.

Section 18. Effective Date. This resolution shall take effect upon its adoption.

Section 19. Further Action. The City Council, the City Manager, the City Clerk, and all other officers and agents of the City are hereby authorized and directed to take all actions necessary or advisable to give effect to the transactions contemplated by this Resolution and all actions previously taken are hereby ratified.

APPROVED AND ADOPTED this 8th day of September 2026.

__________________________
Jimmy Saldana
Mayor Pro Tem

ATTEST:

___________________________
Alondra Muñoz, CMC
City Clerk

12 Exhibit “A”

Description of Authorized Services

The types of services proposed to be provided in, and financed by, the City of Highland Community Facilities District No. PS 26-001 (Citywide Public Safety Services) (the “District”) include police protection services, fire protection and suppression services, and ambulance and paramedic services (the “Services”). The Services may be provided by the City either with its employees or by contract with third parties or any combination thereof. The Services are in addition to those provided in the territory of the District before the date of creation of the District and the additional Services shall not supplant services already available within that territory when the District is created. In addition, the Services shall be in addition to those provided in any territory of the Future Annexation Area before the annexation of such territory and the additional Services shall not supplant services already available within such territory when the annexation occurs.

The costs associated with providing the Services include but are not limited to:

• The costs of contracting Services;

• The cost of equipment, vehicles, ambulances, fire apparatus, and supplies;

• The salaries and benefits of City staff associated with providing the Services within the District or contracting for the Services;

• City overhead costs associated with providing the Services within the District;

• The cost of building a reserve fund for replacement and maintenance and for the actual or anticipated shortfalls due to Special Tax delinquencies in the current or prior Fiscal Year; and

• Incidental Expenses, which are described in Exhibit “B”. 13 Exhibit “B”

Incidental Expenses

The cost of the Services shall include incidental expenses, defined as the broader category of expenses, authorized by the Act, incurred in connection with the formation of the CFD, determination of the amount of the Special Tax, collection of the Special Tax, payment of the Special Tax and costs incurred in order to carry out the authorized purposes of the CFD.

The following incidental expenses are examples of those that may be incurred in the formation or administration of the District:

• Necessary consultant costs;

• Costs of publishing, mailing and posting of notices;

• Governmental notification and filing costs;

• Administrative costs of the City or designee thereof;

• Election costs;

• Charges and fees of the City:

• Costs of any litigation or appeal involving the District; and

The following incidental expenses are examples of those that may be incurred in connection with each annual Special Tax levy:

• Necessary consultant costs;

• Costs of determining and collecting the Special Taxes; and

• Administrative costs of the City or designee thereof.

14 Exhibit “C”

RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
FOR COMMUNITY FACILITIES DISTRICT NO. PS 26-001
(CITYWIDE PUBLIC SAFETY SERVICES)

15 RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX FOR
CITY OF HIGHLAND COMMUNITY FACILITIES DISTRICT NO. PS 26-001 (CITYWIDE PUBLIC SAFETY SERVICES)

OF THE CITY OF HIGHLAND, COUNTY OF SAN BERNARDINO

STATE OF CALIFORNIA

A Special Tax (all capitalized terms are defined in Section A., “Definitions”, below) shall be applicable to each Parcel of Taxable Property located within the boundaries of City of Highland Community Facilities District No. PS 26-001 (Citywide Public Safety Services).

The amount of Special Tax to be levied on a Parcel in each Fiscal Year, commencing in Fiscal Year 2026-2027, shall be determined by the City Council of the City of Highland, acting in its capacity as the legislative body of the CFD by applying the appropriate Special Tax as set forth in Sections B., C., and D., below. All of the real property within the CFD, unless exempted by law or by the provisions of Section F. below, shall be taxed for the purposes, to the extent and in the manner herein provided.

A. DEFINITIONS

The terms hereinafter set forth have the following meanings:

“ Accessory Dwelling Unit(s) ” or “ADU” means a secondary attached or detached Residential Dwelling Unit with complete independent living facilities for one or more persons. The ADU may be on the same Assessor’s Parcel as the Single Family Residential Property’s primary Residential Dwelling Unit or on a separate Assessor’s Parcel. For purposes of clarification, where an ADU and primary Residential Dwelling Unit are on the same Assessor’s Parcel, the ADU located on such Assessor’s Parcel is considered one additional Residential Dwelling Unit for purposes of calculating the Special Tax. Should an Assessor’s Parcel contain only an ADU, such Assessor’s Parcel will be taxed as a single Residential Dwelling Unit only.

“Acre” or “Acreage” means the land area of a Parcel as indicated on the most recent Assessor’s Parcel Map, or if the land area is not shown on the Assessor’s Parcel Map, the land area shown on the applicable Final Map, condominium plan, or other recorded County map or the land area calculated to the reasonable satisfaction of the Administrator using the boundaries set forth on such map or plan. The square footage of a Parcel is equal to the Acreage of such Parcel multiplied by 43,560.

“Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California.

“Administrative Expenses” means ongoing annual costs of operating and managing the CFD after it has been formed. These include all actual or reasonably estimated costs and expenses incurred by the City that are chargeable or allocable to carry out its duties as the administrator of the CFD as allowed by the Act, which shall include without limitation, all costs and expenses arising out of or resulting from the annual levy and collection of the Special Tax (whether by the City or designee thereof or both), any litigation or appeal involving the CFD, and other administrative expenses of the City or 16 designee thereof, or both, directly related to the CFD. Administrative Expenses shall also include amounts estimated or advanced by the City.

“Administrator” means an official of the City, or designee thereof, responsible for determining the annual amount of the levy and collection of the Special Taxes.

“Approved Property” means all Parcels of Taxable Property: (i) that are included in a Final Map that was recorded prior to the January 1st preceding the Fiscal Year in which the Special Tax is being levied, and (ii) that have not been issued a Building Permit prior to the April 1st preceding the Fiscal Year in which the Special Tax is being levied.

“Assessor” means the Assessor of the County .

“Assessor’s Parcel Map” means an official map of the Assessor of the County designating Parcels by Assessor’s Parcel Number.

“Assessor’s Parcel Number” means the number assigned to a Parcel for purposes of identification as determined from an Assessor Parcel Map or the applicable assessment roll.

“Base Year” means the Fiscal Year ending June 30, 2027. Rates in this Rate and Method of Apportionment for the initial formation are based on FY 2026-27 costs, which will be escalated beginning in FY 2027-28. The Base Year for future annexations shall be the fiscal year the annexation is approved by the City Council.

“Boundary Map” means a recorded map of the CFD which indicates by a boundary line the extent of the territory identified to be subject to the levy of Special Taxes, as may be amended due to future annexations of territory to the CFD.

"Building Permit" means the first legal document issued by a local agency giving official permission for new construction.

"Building Square Footage" or “BSF” means the floor area square footage reflected on the original construction building permit issued for construction of a building on Non - Residential Property and any Building Square Footage subsequently added to a building of such Non - Residential Property after issuance of a building permit for expansion or renovation of such building.

“Business Park Property” means Business Park land use as defined in the City of Highland General Plan, as amended from time to time. If the development is subject to a Specific Plan, Development Agreement, or other overriding legal instrument that deviates from the General Plan, the definitions in that document shall be the authorized definition.

“Calendar Year” means the twelve month period from January 1st through December 31st of the same year.

“CFD” or “CFD PS 26-001” means City of Highland Community Facilities District No. PS 26-001 (Citywide Public Safety Services).
17 “City” means the City of Highland, California.

“City Council” means the City Council of the City acting as the legislative body of the CFD.

“Commercial Property” means Commercial land use as defined in the City of Highland General Plan, as amended from time to time. If the development is subject to a Specific Plan, Development Agreement or other overriding legal instrument that deviates from the General Plan, the definitions in that document shall be the authorized definition.

“Condominium Residential Property” means all Parcels of Developed Property or Approved Property with an approved land use for residential condominiums (two or more attached units which can each be owned individually). Parcels that are open space, recreation, clubhouse, etc., owned by a condominium association, homeowner’s association, or property owner’s association, are Exempt Property.

“Consumer Price Index” means the Consumer Price Index published by the U.S.

“County” means the County of San Bernardino, California.

“Developed Property” means all Parcels of Taxable Property for which a Building Permit for new construction has been issued prior to April 1 st preceding the Fiscal Year in which the Special Tax is being levied.

“Exempt Property” means any Parcel which is exempt from Special Taxes pursuant to Section F., below.

“Final Map” means the survey-based map prepared by a registered civil engineer or licensed land surveyor, approved by the local agency and recorded in the office of the County Recorder, which legally subdivides land and establishes the lots, rights-of-way, easements, and dedications depicted thereon in accordance with the California Subdivision Map Act (California Government Code Section 66410 et seq .) or recordation of a condominium plan pursuant to California Civil Code 1352 that creates individual lots for which Building Permits may be issued without further subdivision

“Fiscal Year” or “FY” means the 12-month period starting on July 1 of any Calendar Year and ending the following June 30.

“Future Annexation Area” means the geographic area that, at the time of CFD formation, was considered potential annexation area for the CFD and which was, therefore, identified as “future annexation area” on the recorded Boundary Map. Such 18 designation does not mean that any or all of the Future Annexation Area will annex into the CFD but should the owner or owners of property designated as Future Annexation Area choose to annex, the annexation may be processed pursuant to the annexation procedures in the Act for territory included in the Future Annexation Area.

“Incidental Expenses” means the broader category of expenses, authorized by the Act, incurred in connection with the formation of the CFD, determination of the amount of the Special Tax, collection of the Special Tax, payment of the Special Tax and costs incurred in order to carry out the authorized purposes of the CFD.

“Industrial Property” means Light Industrial land use as defined in the City of Highland General Plan, as amended from time to time. If the development is subject to a Specific Plan, Development Agreement, or other overriding legal instrument that deviates from the General Plan, the definitions in that document shall be the authorized definition.

“Land Use Class” means any of the classes listed in Table 1 or Table 2 of Section C.

“Maximum Special Tax” means for each Parcel in each Fiscal Year, the greatest amount of Special Tax, determined in accordance with Section C., below, which may be levied on such Parcel in such Fiscal Year.

“Mixed Use Property” means all Parcels of Developed Property and Approved Property with more than one land use including Residential Use, commercial, retail, or other land uses, as defined in the City of Highland General Plan, as amended from time to time. If the development is subject to a Specific Plan, Development Agreement or other overriding legal instrument that deviates from the General Plan, the definitions in that document shall be the authorized definition. If a Parcel contains both Residential and Non-Residential Uses, each use shall be classified separately by the Administrator, and the applicable Maximum Special Tax shall be calculated for each use in accordance with Section C. The total Special Tax levied on the Parcel shall be the sum of the taxes applicable to each use.

“Multifamily Residential Property ” means all Parcels of Developed Property and Approved Property with Multifamily Residential land uses as defined in the City of Highland General Plan, as amended from time to time, and consisting of a building or buildings comprised of attached Dwelling Units available for rent, not for sale to an end user, and under common management. If the development is subject to a Specific Plan, Development Agreement or other overriding legal instrument that deviates from the General Plan, the definitions in that document shall be the authorized definition.

“Non-Residential Use” means a use of property that is not Residential. 19 “Non-Residential Property” means all Parcels of Developed Property that are not Residential Property, including Commercial Property, Office Professional Property, Business Park Property, Industrial Property, Historic Village District Property, and the Non-Residential Use portion of Mixed Use Property, as determined by the Administrator.

“Office Professional Property” means Office Professional land use as defined in the City of Highland General Plan, as amended from time to time. If the development is subject to a Specific Plan, Development Agreement or other overriding legal instrument that deviates from the General Plan, the definitions in that document shall be the authorized definition.

“Parcel(s)” means a lot or parcel within the CFD shown on an Assessor’s Parcel Map with an assigned Assessor’s Parcel Number valid as of July 1 st for the Fiscal Year for which the Special Tax is being levied.

“Property Owner’s Association Property” means all Parcels which have been conveyed, dedicated to, or irrevocably offered for dedication to a property owner association , including any master or sub-association, prior to April 1 st preceding the Fiscal Year in which the Special Tax is being levied. The Special Tax shall not be levied on Property Owner’s Association Property.

“Proportionately” means for Parcels of Taxable Property that are (i) Residential Property, that the ratio of the actual Special Tax to the Maximum Special Tax is the same for all Parcels of Residential Property; (ii) Non-Residential Property, that the ratio of the actual Special Tax to the Maximum Special Tax is the same for all Parcels of Non-Residential Property; and (iii) Approved Property, that the ratio of the actual Special Tax to the Maximum Special Tax is the same for all Parcels of Approved Property.

“Public Property” means all Parcels which, as of April 1 st preceding the Fiscal Year in which the Special Tax is being levied, are (i) used for rights-of-way or any other purpose and are owned by, dedicated to, or irrevocably offered for dedication to the federal government, the State, the County, City or any other public agency, provided, however, that any property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified according to its use; or (ii) encumbered by an unmanned utility easement making impractical its utilization for other than the purpose set forth in the easement.

“Residential Dwelling Unit” or "RDU" means a residential unit that is used or intended to be used as a domicile by one or more persons, as determined by the Administrator, which includes Single Family Residential Property, Multifamily Residential Property, Condominium Residential Property, Mixed Use Property and an Accessory Dwelling Unit.

“Residential Property” means all Parcels of Developed Property that have been issued a Building Permit for one or more Residential Dwelling Units, including Single Family Residential Property, Multifamily Residential Property, Condominium Residential Property, Mixed Use Property containing Residential Dwelling Units, and Accessory Dwelling Units, as determined by the Administrator. If a Parcel contains both Residential and Non- 20 Residential Uses, the residential portion shall be classified and taxed in accordance with this Rate and Method of Apportionment.

“Residential Use” has the same definition as the term is defined in Section 16.06.180 of the Highland Municipal Code, as amended from time to time.

“Single Family Residential Property” means all Single Family land uses as defined in the City of Highland General Plan, as amended from time to time, and excluding Multifamily Residential Property. If the development is subject to a Specific Plan, Development Agreement or other overriding legal instrument that deviates from the General Plan, the definitions in that document shall be the authorized definition.

“Special Tax(es)” means the Special Tax to be levied in each Fiscal Year on each Parcel of Taxable Property in accordance with Sections C. and D.

“Special Tax Requirement” means for each Fiscal Year, that amount required to pay the estimated cost of Special Tax Services for such Fiscal Year as determined by the City, including Administrative Expenses and Incidental Expenses less a credit for funds available to reduce the annual Special Tax levy as determined by the Administrator.

“ Special Tax Services” means police protection, fire protection and suppression, and ambulance and paramedic services.

“State” means the State of California.

“Taxable Property” means all Parcels within the boundary of the CFD pursuant to the Boundary Map which are not exempt from the Special Tax pursuant to Section F., below.

“Taxable Unit” means either a Residential Dwelling Unit, Building Square Footage, or Parcel, as shown in Table 1 and Table 2.

“Undeveloped Property” means all Parcels not classified as Developed Property, Approved Property, Public Property, Property Owner’s Association Property or open space, recreation, clubhouse, etc., owned by a condominium association or homeowner’s association within the CFD.

B. CLASSIFICATION OF PROPERTY

Each Fiscal Year, commencing with Fiscal Year 2026-2027, all Parcels of Property shall be classified as either Taxable Property or Exempt Property. Taxable Property shall be further classified as Developed Property or Approved Property and be subject to the levy of Special Taxes in accordance with this Rate and Method of Apportionment as determined pursuant to Sections C. and D.

Parcels of Developed Property shall further be classified as Residential Property or Non- Residential Property. Non-Residential Property shall be further classified by the Administrator as Commercial Property, Mixed Use Property, Historic Village District 21 Property, Office Professional Property, Business Park Property or Industrial Property. The Administrator shall also determine the number of Residential Dwelling Units and the Building Square Footage applicable to each Parcel.

C. MAXIMUM SPECIAL TAX RATES

For each Fiscal Year commencing Fiscal Year 2026-2027, Maximum Special Tax Rates shall be determined as described below:

For purposes of determining the applicable Maximum Special Tax for Assessor’s Parcels of Developed Property and Approved Property which are classified as Residential Property, all such Assessor’s Parcels shall be assigned the number of RDUs constructed or to be constructed thereon as specified in or shown on the Building Permit(s) issued or Final Map as determined by the Administrator. Once a Residential Property building or buildings have been built on an Assessor's Parcel, the Administrator shall determine the actual number of RDUs contained within the building or buildings, and the Special Tax levied against the Assessor’s Parcel in the next Fiscal Year shall be calculated by multiplying the actual number of RDUs by the Maximum Special Tax per RDU. For purposes of determining the applicable Maximum Special Tax for Assessor’s Parcels of Developed Property and Approved Property which are classified as Non-Residential Property, the Administrator shall determine the Building Square Footage from the applicable Building Permit(s), approved building plans, certificate of occupancy, County Assessor records, or other records deemed reliable by the Administrator. Once the Administrator determines the actual quantity of Building Square Feet for the Assessor’s Parcels, the Special Tax levied against the Assessor’s Parcel in the next Fiscal Year shall be calculated by multiplying the quantity of Building Square Feet by the Maximum Special Tax per Taxable Unit identified in the Tables below.

1. Developed Property

The Maximum Special Tax for each Assessor’s Parcel of Developed Property for Fiscal Year 2026 ‐ 27 is identified in Table 1 below. These Maximum Special Tax Rates are subject to annual escalation, as explained further in Section C. 1. (a) below.
22 TABLE 1
Maximum Special Tax Rates for Developed Property
Fiscal Year 2026-2027

Land
Use
Class

Description

Taxable Unit
Maximum
Special Tax
per Taxable
Unit
1 Residential Property Residential Dwelling Unit $ 310.00 2 Commercial Property Building Square Footage $0.14
3 Mixed Use Property Building Square Footage $0.13
4 Historic Village District
Property Building Square Footage $0.12
5 Office Professional Property Building Square Footage $0.11 6 Business Park Property Building Square Footage $0.10 7 Industrial Property Building Square Footage $0.06

(a) Increase in the Maximum Special Tax

On each July 1 following the Base Year, the Maximum Special Tax, identified in Table 1 above, shall be increased annually, commencing July 1, 2027, based on the percentage increase in the Consumer Price Index with a maximum annual increase of six percent (6%) and a minimum annual increase of two percent (2%) of the Maximum Special Tax in effect in the previous Fiscal Year.

(b) Multiple Land Use Classes

In some instances, a Parcel of Developed Property may contain more than one Land Use Class. The Maximum Special Tax that may be levied on such Parcel shall be the sum of the Maximum Special Tax that can be levied for each Land Use Class located on that Parcel. The Maximum Special Tax Rate for Residential Property shall apply to any Residential Dwelling Units on the parcel. The Maximum Special Tax Rate for Commercial Property, Mixed Use Property, Historic Village District Property, Office Professional Property, Business Park Property, and Industrial Property shall apply to the Building Square Feet of those land uses on the property.

2. Approved Property

The Maximum Special Tax for each Assessor’s Parcel of Approved Property for Fiscal Year 2026 ‐ 27 is identified in Table 2 below. These Maximum Special Tax Rates are subject to annual escalation, as explained further in Section C. 2. (a) below.
23 TABLE 2
Maximum Special Tax Rates for Approved Property
Fiscal Year 2026-2027

Land Use Class

Taxable
Unit
Maximum
Special Tax
per Taxable
Unit
Approved Property Parcel $ 110.00

(a) Increase in the Maximum Special Tax

On each July 1, following the Base Year, the Maximum Special Tax, identified in Table 2, above, shall be increased annually, commencing July 1, 2027, based on the percentage increase in the Consumer Price Index with a maximum annual increase of six percent (6%) and a minimum annual increase of two percent (2%) of the Maximum Special Tax in effect in the previous Fiscal Year.

3. Property Not Subject to the Special Tax

No Special Tax shall be levied on Exempt Property.

D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX

Commencing with Fiscal Year 2026-2027 and for each following Fiscal Year, the Administrator shall levy the Special Tax on all Taxable Property until the amount of Special Tax equals the Special Tax Requirement in accordance with the following steps:

First: The Special Tax shall be levied Proportionately on each Parcel of Developed Property at up to 100% of the applicable Maximum Special Tax as needed to satisfy the Special Tax Requirement; and

Second: If additional moneys are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on each Parcel of Approved Property at up to 100% of the Maximum Special Tax for Approved Property.

E. FUTURE ANNEXATIONS

It is anticipated that properties in the Future Annexation Area will be annexed to the CFD from time to time. The Base Year for each annexation shall be the Fiscal Year in which the annexation is approved by the City Council. The Maximum Special Tax applicable to the 24 annexed territory shall be established based on the rates in effect for that Fiscal Year and shall thereafter be escalated as explained in Section C.1.(a) and Section C.2.(a).

F. EXEMPTIONS

The CFD shall not levy Special Taxes on Undeveloped Property, Public Property, Property Owner’s Association Property, open space, recreation, clubhouse, etc, owned by a condominium association or homeowner’s association within the CFD and property covered under Sections 54317.3 and 53317.5 of the Act. If any Undeveloped Property, Public Property, or Property Owner’s Association Property is converted to Taxable Property as the result of a sale or transfer of an Exempt Parcel to a private owner for Residential Use or Non-Residential use, it shall become subject to the Special Tax in accordance with this Rate and Method of Apportionment as determined pursuant to Sections C. and D. The CFD shall not levy Special Taxes on a Parcel that receives a welfare exemption under subdivision (g) of Section 214 of the Revenue and Taxation Code unless debt is outstanding and the Parcel was subject to the special tax prior to receiving the exemption, in which case the Parcel shall remain subject to the Special Tax and the Special Tax shall be enforceable against the Parcel.

G. MANNER OF COLLECTION

The Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes and shall be subject to the same penalties, the same procedure, sale and lien priority in the case of delinquency; provided, however, that the Administrator may directly bill the Special Tax and may collect Special Taxes at a different time or in a different manner if necessary to meet the financial obligations of the CFD or as otherwise determined appropriate by the Administrator.

H. APPEALS

Any taxpayer who believes that the Special Tax levied on their Parcel(s) is in error may file a written appeal of the Special Tax on his/her Parcel(s) with the Administrator no later than April 10 of the Fiscal Year in which the levy occurred, provided that the appellant is current in his/her payments of Special Taxes. The appeal must clearly specify the grounds upon which the taxpayer believes the Special Tax is erroneous. During the pendency of an appeal, all Special Taxes must be paid on or before the payment due date established when the levy was made. The appeal must specify the reasons why the appellant claims the Special Tax is in error. The Administrator shall review the appeal, meet with the appellant if the Administrator deems necessary, and advise the appellant of its determination. If the Administrator agrees with the appellant, the Administrator shall grant a credit to eliminate or reduce future Special Taxes on the appellant’s Parcel(s). No refunds of previously paid Special Taxes shall be made. The Administrator’s decision is final and binding.
25 Interpretation of this Rate and Method of Apportionment may be made by the Administrator or by resolution of the City Council for purposes of clarifying any vagueness or uncertainty as it relates to the application of the Special Tax rate, the application of the method of apportionment, the classification of Parcels or any definition applicable to the CFD so long as such clarification does not materially affect the levy and collection of the Special Tax.

I. PREPAYMENT

The Special Taxes may not be prepaid.

TERM OF THE SPECIAL TAX

The Special Tax shall be levied annually in perpetuity unless terminated earlier by the City. If the Special Tax ceases to be levied, the CFD Administrator shall direct the County Recorder to record a Notice of Cessation of Special Tax. Such notice will state that the obligation to pay the Special Tax has ceased and that the lien imposed by the Notice of Special Tax Lien is extinguished

26 ATTACHMENT 2
Resolution Calling a Special Election

27 RESOLUTION NO. 2026-___

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HIGHLAND, CALIFORNIA,

CALLING A SPECIAL ELECTION AND SUBMITTING TO THE QUALIFIED ELECTORS OF CITY OF HIGHLAND COMMUNITY FACILITIES DISTRICT NO. PS 26- 001 (CITYWIDE PUBLIC SAFETY SERVICES) PROPOSITIONS REGARDING THE

ESTABLISHMENT OF AN APPROPRIATIONS LIMIT AND THE ANNUAL LEVY OF A

SPECIAL TAX WITHIN THE COMMUNITY FACILITIES DISTRICT

WHEREAS, on September 8, 2026, the City Council (the “City Council”) of the City of Highland (the “City”) held a duly noticed public hearing (the “Public Hearing”) on the establishment of City of Highland Community Facilities District No. PS 26-001 (Citywide Public Safety Services) (the “District”) and designation of a Future Annexation Area; WHEREAS , following the Public Hearing, the City Council adopted a resolution entitled “A Resolution of Formation of the City Council of the City of Highland, California, to Establish City of Highland Community Facilities District No. PS 26-001 (Citywide Public Safety Services), to Establish an Appropriations Limit therefor, to Authorize the Levy of a Special Tax Therein, to Authorize the Submittal of the Levy of the Special Tax and the Establishment of an Appropriations Limit to the Qualified Electors of such Community Facilities District, to Provide for the Annexation of Territory to such Community Facilities District in the Future, to Make Environmental Findings Pursuant to the California Environmental Quality Act, and to Authorize Certain Actions Related Thereto” (the “Resolution of Formation”) ordering the formation of the District, and subject to approval of the qualified electors of the District, authorizing the levy of a special tax (the “Special Tax”) on property within the District and establishing an appropriations limit for the District, pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, commencing with Section 53311 of the California Government Code (the “Act”); WHEREAS, pursuant to the Resolution of Formation, the propositions relating to the levy of the Special Tax and the establishment of an appropriations limit will be submitted to the qualified electors of the District as required by the Act; WHEREAS, pursuant to the Act and California Election Code Sections 307 and 320, the City Clerk is designated as the official to conduct the special election (the “Election Official”);
WHEREAS, no persons are registered to vote in the territory of the District; and WHEREAS, the City Clerk has advised the City Council that she has received a Consent and Waiver from each and every landowner within the District, pursuant to which each landowner has expressly waived certain requirements related to the conduct of the special election, including a shortening of the time for the special election and waiving notice requirements, and any requirement for analysis and arguments in connection therewith;

28 NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF HIGHLAND DOES HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS:

Section 1. Recitals Correct. The foregoing recitals are true and correct and are a substantive part of this Resolution.

Section 2. Call of Election. The City Council hereby calls and schedules a special election to take place on September 8, 2026, immediately following the adoption of this Resolution, in the Council Chambers located at 27215 Base Line, Highland CA, 92346 to consider the proposition described in Section 3 below. It is hereby acknowledged that the City Clerk has on file in the office of the City Clerk a copy of the Resolution of Formation and a map of the boundaries of the District, which are incorporated herein by this reference.

Section 3. Proposition.
a. Pursuant to Sections 53325.7, 53326 and 53353.5 of the Act, the proposition relating to the levy of the Special Tax and the proposition relating to the establishment of the appropriations limit shall be combined into one ballot proposition and shall be submitted to the qualified electors of the District as required by the Act. b. If the combined proposition for the levy of the Special Tax and the establishment of the appropriations limit receives the approval of more than two-thirds of the votes cast on the proposition, the Special Tax may be levied and the appropriations limit may be established as provided for in the Resolution of Formation. c. The rate and method of apportionment of the Special Tax among parcels of real property in the District, method of collection and purpose of the Special Tax are specified in the Resolution of Formation.
d. The proposition to be submitted to the voters of the District at such special election shall be as follows:

“Shall a Special Tax be levied annually on taxable property within the City of Highland Community Facilities District No. PS 26-001 (Citywide Public Safety Services), in accordance with the Rate and Method of Apportionment set forth in Exhibit “C” to the Resolution entitled “A Resolution of Formation of the City Council of the City of Highland, California, to Establish City of Highland Community Facilities District No. PS 26-001 (Citywide Public Safety Services), to Establish an Appropriations Limit Therefor, to Authorize the Levy of a Special Tax Therein, to Authorize the Submittal of the Levy of Special Tax and the Establishment of an Appropriations Limit to the Qualified Electors of Such Community Facilities District, to Provide for the Annexation of Territory to Such Community Facilities District in the Future, to Make Environmental Findings Pursuant to the California Environmental Quality Act, and to Authorize Certain Actions Related Thereto” (the “Resolution of Formation”) to pay for police protection services, fire protection and suppression services, ambulance and paramedic services, reserves for replacement and maintenance, actual or anticipated shortfalls resulting from Special Tax delinquencies, and related incidental expenses, as described in 29 Exhibits “A” and “B” to the Resolution of Formation; and shall an appropriations limit for the CFD be established as provided in Section 14 of the Resolution of Formation?”
Section 4. Electors Determined.

The City Council finds, based on information from the Registrar of Voters of San Bernardino County, that 12 persons have not been registered to vote within the territory of the District for each of the ninety (90) days preceding the close of the Public Hearing and that pursuant to Section 53326 of the Act, the vote in the special election called by this Resolution shall be by the landowners of the District whose property would be subject to the Special Tax if levied at the time of the election, and each landowner at the close of the Public Hearing, or the authorized representative thereof, shall have one vote for each acre, or portion thereof, which he or she owns within the District which would be subject to the proposed Special Tax if levied at the time of the election.

Section 5. Conduct of Election. Except as otherwise provided in Section 6 hereof, the special election shall be conducted by the City Clerk, as the Election Official, in accordance with the provisions of the California Elections Code governing mail ballot elections of cities, and in particular the provisions of Division 4 (commencing with Section 4000), of that Code, insofar as they may be applicable.

Section 6. Election Procedures.
a. The procedures to be followed in conducting the special election on the proposition described in Section 3 shall be as provided in Section 12 of the Resolution of Formation.
b. The City Council finds that the provision of Section 53326 of the Act requiring a minimum of ninety (90) days following the adoption of the resolution calling the election to elapse before said special election is for the protection of the qualified electors of the District, The City Council hereby finds that the qualified electors of the District have waived certain requirements related to the conduct of the special election including the time limits for conducting the special election by unanimous written consent as provided in the Consent & Waiver signed by the land owners within the District. Accordingly, the City Council finds and determines that each qualified elector has been fully apprised of and has agreed to the shortened time for the special election and has thereby been fully protected in these proceedings and the City Council hereby concurs in the waiver.
c. The form of the ballot for the special election is attached hereto as Exhibit “A” and by this reference incorporated herein, and said form of ballot is hereby approved. The Election Official has caused or shall cause to be delivered to each of the qualified electors of the District a ballot in said form. Each ballot shall indicate the number of votes to be voted by the respective qualified elector and shall be accompanied by all supplies and written instructions necessary to the use and return of the ballot d. The Election Official is hereby authorized to take any and all steps necessary for holding the special election. The Election Official has performed or shall perform and 30 render all services and proceedings incidental to and connected with the conduct of the special election.

Section 7. Concurrence of the City Clerk. The City Council hereby finds and determines that the City Clerk has concurred in the shortened time for the election, pursuant to Section 53326 of the Act.

Section 8. Further Action. The City Council, the City Manager, the City Clerk, and all other officers and agents of the City are hereby authorized and directed to take all actions necessary or advisable to give effect to the transactions contemplated by this Resolution and all actions previously taken are hereby ratified.

Section 9. Effective Date. This resolution shall take effect upon its adoption.

APPROVED AND ADOPTED this 8th day of September 2026.

__________________________
Jimmy Saldana
Mayor Pro Tem

ATTEST:

___________________________
Alondra Muñoz, CMC
City Clerk

31 OFFICIAL BALLOT

SPECIAL ELECTION

NUMBER OF VOTES ENTITLED TO BE CAST: 9

CITY OF HIGHLAND
COMMUNITY FACILITIES DISTRICT NO. PS 26-001
(CITYWIDE PUBLIC SAFETY SERVICES)
SEPTEMBER 8, 2026

INSTRUCTIONS TO VOTER

This ballot is for a special landowner election. You must return this ballot in the enclosed postage paid envelope to the office of the City Clerk of the City of Highland no later than 4:00 p.m. on September 8, 2026, by mail or personal delivery; or by personal delivery to the City Clerk at the location of the public hearing on September 8, 2026 immediately after the Highland City Council adopts a resolution calling the special election. The City .Clerk’s office is located at 27215 Base Line, Highland CA, 92346. The public hearing will be held at the City Council Chambers, 27215 Base Line, Highland CA, 92346.

This ballot is provided to KB Home Cal Management Service LLC, (the “Owner”) or authorized representative of such Owner of land within City of Highland Community Facilities District No. PS 26- 001 (Citywide Public Safety Services) and represents nine (9) votes, pursuant Section 53326 of the Act, with the voter having one vote for each acre or portion thereof owned within the CFD, in relation to assessor parcel numbers:
1192-361-45-0-000
1192-361-47-0-000
1192-341-11-0-000

To vote, mark a cross (X) in the voting square after the word “YES” or after the word “NO”. All marks otherwise made are forbidden and make the ballot void.

If you wrongly mark, tear, or deface this ballot, return it to the City Clerk of the City of Highland to obtain a replacement ballot.

EXHIBIT A
32 MEASURE: “Shall a Special Tax be levied annually on taxable property within the City of Highland Community Facilities District No. PS 26-001 (Citywide Public Safety Services), in accordance with the Rate and Method of Apportionment set forth in Exhibit “C” to the Resolution entitled “A

RESOLUTION OF FORMATION OF THE CITY COUNCIL OF THE CITY

OF HIGHLAND, CALIFORNIA, TO ESTABLISH CITY OF HIGHLAND
COMMUNITY FACILITIES DISTRICT NO. PS 26-001 (CITYWIDE

PUBLIC SAFETY SERVICES), TO ESTABLISH AN APPROPRIATIONS

LIMIT THEREFOR, TO AUTHORIZE THE LEVY OF A SPECIAL TAX

THEREIN, TO AUTHORIZE THE SUBMITTAL OF THE LEVY OF

SPECIAL TAX AND THE ESTABLISHMENT OF AN APPROPRIATIONS

LIMIT TO THE QUALIFIED ELECTORS OF SUCH COMMUNITY

FACILITIES DISTRICT, TO PROVIDE FOR THE ANNEXATION OF

TERRITORY TO SUCH COMMUNITY FACILITIES DISTRICT IN THE

FUTURE, TO MAKE ENVIRONMENTAL FINDINGS PURSUANT TO THE

CALIFORNIA ENVIRONMENTAL QUALITY ACT, AND TO
AUTHORIZE CERTAIN ACTIONS RELATED THERETO” (the “Resolution of Formation”) to pay for police protection services, fire protection and suppression services, ambulance and paramedic services, reserves for replacement and maintenance, actual or anticipated shortfalls resulting from Special Tax delinquencies, and related incidental expenses, as described in Exhibits “A” and “B” to the Resolution of Formation; and shall an appropriations limit for the CFD be established as provided in Section 14 of the Resolution of Formation?”

YES

CERTIFICATION

I, _________________________, certify that I am an authorized officer and the authorized representative of KB Home Cal Management Service LLC, the owner of property within the boundaries of City of Highland Community Facilities District PS 26-001 (Citywide Public Safety Services) of the City of Highland, County of San Bernardino, State of California (the “Owner”), and that I am authorized to vote the Official Ballot to which this certification is attached. I further certify that in voting said ballot it was my intent, as well as the intent of the Owner, to vote all votes to which the Owner is entitled on the Measure set forth in said ballot as marked in the voting square opposite such measure. I further certify that the Owner owns approximately 8.31 acres of land within said City of Highland Community Facilities District PS 26-001 (Citywide Public Safety Services) of the City of Highland, County of San Bernardino, State of California, and that in voting said ballot I intended to vote each vote to which such acreage would entitle the Owner in the manner marked on said ballot.

Dated: _________________, 2026

KB Home Cal Management Service LLC

By: __________________________________________
Name:

Title:

Mailing Address:
36310 Inland Valley Drive, Suite 300
Wildomar, CA 92595
33 ATTACHMENT 3
Resolution Declaring Results

34 RESOLUTION NO. 2026-___

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HIGHLAND,

CALIFORNIA, DECLARING THE RESULTS OF A SPECIAL ELECTION IN THE CITY OF HIGHLAND COMMUNITY FACILITIES DISTRICT NO. PS 26-001 (CITYWIDE PUBLIC SAFETY SERVICES) AND DIRECTING THE RECORDING

OF A NOTICE OF SPECIAL TAX LIEN

WHEREAS, in proceedings heretofore conducted by the City Council (the (“City Council”) of the City of Highland (the “City”) pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, commencing with Section 53311, of the California Government Code (the “Act”), the City Council adopted Resolution No. 2026-___ on September 8, 2026 entitled “A Resolution of the City Council of the City of Highland, California, Calling a Special Election and Submitting to the Qualified Electors of City of Highland Community Facilities District No. PS 26-001 (Citywide Public Safety Services) Propositions Regarding the Establishment of an Appropriations Limit and the Annual Levy of a Special Tax within the Community Facilities District” (the “Resolution Calling Election”), calling for a special election (the “Special Election”) of the qualified electors within City of Highland Community Facilities District No. PS 26-001 (Citywide Public Safety Services) (the “District”) as authorized and in accordance with the Act;
WHEREAS , pursuant to the terms of the Resolution Calling Election, which are by this reference incorporated herein, the Special Election was held on September 8, 2026, and the City Clerk has on file a Certificate of the City Clerk as to the Results of the Canvass of the Election Returns (the “Certificate”), a copy of which is attached hereto as Exhibit “A” and by this reference incorporated herein; and WHEREAS , the measure voted upon received the favorable vote of more than two-thirds of the qualified electors in the District and the City Council desires to approve the Certificate and declare the results of the Special Election in accordance with the provisions of the California Elections Code.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF HIGHLAND DOES HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS:

Section 1. Recitals Correct. The foregoing recitals are true and correct and are a substantive part of this Resolution.

Section 2. Ballot Measure. The ballot measure (the “Ballot Measure”) presented to the qualified electors in the Special Election is set forth in Exhibit” B” attached hereto and by this reference incorporated herein.

Section 3. Election Results. The City Council hereby approves the Certificate and hereby finds that the results of the Special Election are as set forth in the Certificate on file with the City Clerk and attached hereto as Exhibit “A”. Pursuant to the Certificate, the Ballot Measure presented at the Special Election was approved by 35 the qualified electors of the District. The Certificate shall be a permanent part of the record of the Council’s proceedings for the District and the City Clerk is hereby directed, pursuant to the provisions of the California Elections Code. to enter in the minutes the results of the Special Election as set forth in the Certificate.

Section 4. Ballot Measure Authorized . This City Council, acting in its capacity as legislative body of the District, is hereby authorized to levy on the taxable land within the District the special tax described in the Ballot Measure for the purposes described therein and to take the necessary steps to levy the special tax authorized by the Ballot Measure. The appropriations limit as specified in the Ballot Measure is hereby established.

Section 5. Findings of Validity. It is hereby found that all prior proceeding and actions taken by this City Council with respect to the District were valid and in conformity with the Act.

Section 6. Notice of Special Tax Lien. The City Clerk is hereby directed to record in the office of the County Recorder of the County of San Bernardino within fifteen days of the date hereof a notice of special tax lien with respect to the District in substantially the form required by the Act and California Streets and Highways Code Section 3114.5.

Section 7 . Further Action. The City Council, the City Manager, the City Clerk, and all other officers and agents of the City are hereby authorized and directed to take all actions necessary or advisable to give effect to the transactions contemplated by this Resolution and all actions previously taken are hereby ratified.

Section 8. Effective Date. This resolution shall take effect upon its adoption.

APPROVED AND ADOPTED this 8th day of September 2026.

__________________________
Jimmy Saldana
Mayor Pro Tem

ATTEST:

___________________________
Alondra Muñoz, CMC
City Clerk

36 A-1
Exhibit “A”

CITY OF HIGHLAND
COMMUNITY FACILITIES DISTRICT NO. PS 26-001
(CITYWIDE PUBLIC SAFETY SERVICES)

CERTIFICATE OF THE CITY CLERK AS TO THE

RESULTS OF THE CANVASS OF THE ELECTION RETURNS

I, Alondra Munoz, MMC, City Clerk of the City of Highland, hereby certify that I canvassed the returns of the Special Election in the City of Highland Community Facilities District No. PS 26-001 (Citywide Public Safety Services), and that the election was held in the Chambers of the City Council at 27215 Base Line, Highland CA, 92346 on September 8, 2026.

I further certify that the total number of ballots cast in said special election and the total number of votes cast for and against the measure are as follows and the totals as shown for and against the measure are full, true and correct:

City of Highland Community Facilities
District No. PS 26-001 (Citywide Public
Safety Services) Special Tax Election,
September 8, 2026
Qualified
Electors
Votes
Cast Yes No
KB Home Cal Management Service, LLC -
Ballot Measure 1

IN WITNESS WHEREOF, I HAVE HEREUNTO SET MY HAND this 8 th day of September 2026.

By:
__________________________
Alondra Muñoz, CMC
City Clerk

37 B-1
EXHIBIT “B”

OFFICIAL BALLOT

SPECIAL ELECTION

NUMBER OF VOTES ENTITLED TO BE CAST: 9

CITY OF HIGHLAND
COMMUNITY FACILITIES DISTRICT NO. PS 26-001
(CITYWIDE PUBLIC SAFETY SERVICES)
SEPTEMBER 8, 2026

INSTRUCTIONS TO VOTER

This ballot is for a special landowner election. You must return this ballot in the enclosed postage paid envelope to the office of the City Clerk of the City of Highland no later than 4:00 p.m. on September 8, 2026, by mail or personal delivery; or by personal delivery to the City Clerk at the location of the public hearing on September 8, 2026 immediately after the Highland City Council adopts a resolution calling the special election. The City Clerk’s office is located at 27215 Base Line, Highland CA, 92346. The public hearing will be held at the City Council Chambers, 27215 Base Line, Highland CA, 92346.

To vote, mark a cross (X) in the voting square after the word “YES” or after the word “NO”. All marks otherwise made are forbidden and make the ballot void.

If you wrongly mark, tear, or deface this ballot, return it to the City Clerk of the City of Highland to obtain a replacement ballot.

38 B-1
MEASURE: “Shall a Special Tax be levied annually on taxable property within the City of Highland Community Facilities District No. PS 26-001 (Citywide Public Safety Services), in accordance with the Rate and Method of Apportionment set forth in Exhibit “C” to the Resolution entitled “A

RESOLUTION OF FORMATION OF THE CITY COUNCIL OF THE CITY

OF HIGHLAND, CALIFORNIA, TO ESTABLISH CITY OF HIGHLAND
COMMUNITY FACILITIES DISTRICT NO. PS 26-001 (CITYWIDE

PUBLIC SAFETY SERVICES), TO ESTABLISH AN APPROPRIATIONS

LIMIT THEREFOR, TO AUTHORIZE THE LEVY OF A SPECIAL TAX

THEREIN, TO AUTHORIZE THE SUBMITTAL OF THE LEVY OF

SPECIAL TAX AND THE ESTABLISHMENT OF AN APPROPRIATIONS

LIMIT TO THE QUALIFIED ELECTORS OF SUCH COMMUNITY

FACILITIES DISTRICT, TO PROVIDE FOR THE ANNEXATION OF

TERRITORY TO SUCH COMMUNITY FACILITIES DISTRICT IN THE

FUTURE, TO MAKE ENVIRONMENTAL FINDINGS PURSUANT TO THE

YES

CERTIFICATION

Dated: _________________, 2026

KB Home Cal Management Service LLC

By: __________________________________________
Name:

Title:

Mailing Address:
36310 Inland Valley Drive, Suite 300 . Wildomar, CA 92595 39 ATTACHMENT 4
CFD Report PS 26-001

40 CFD Report

City of Highland
Community Facilities District No. PS 26-001
(Citywide Public Safety Services)
August 2026
Prepared for:

City of Highland
27215 Base Line
Highland, CA 92346
Prepared by:

41593 Winchester Rd, Suite 200
Temecula, California 92590
(619) 236-1778 ext. 1261
41 1

TABLE OF CONTENTS

COMMUNITY FACILITIES DISTRICT NO. PS 26-001 (CITYWIDE PUBLIC SAFETY

SERVICES)

Section A – Introduction Page 2

Section B – Description of Services Page 2

Section C – Cost Estimate Page 5

Section D – Rate and Method of Apportionment of Special Tax Page 7

Section E – Proposed Boundaries Page 8

APPENDIX

Rate and Method of Apportionment A
Boundary Map B

42 2
Agency: City of Highland

Project: City of Highland
Community Facilities District No. PS 26-001
(Citywide Public Safety Services)
County of San Bernardino, State of California

Community Facilities District Report
“Mello-Roos Community Facilities Act of 1982”

A. Introduction

Whereas, the City Council of the City of Highland, County of San Bernardino, State Of California (Council), did, pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 of Division 2 of Title 5 of the California Government Code (Act), on August 3, 2026, adopt Resolution No. 2026-049 (Resolution) expressly ordering the preparation and filing of a written Report for a proposed Community Facilities District (Report). This Community Facilities District shall be referred to as City of Highland Community Facilities District No. PS 26-001 (Citywide Public Safety Services) (CFD) and (CFD No. PS 26-001 (Citywide Public Safety Services)); and,

Whereas, The Resolution ordering said Report, did direct that the Report generally contain the following:

 A brief description of the services by type proposed to be financed by the CFD which will adequately meet the needs of the CFD; and

 An estimate of the costs of providing such services, including the incidental expenses, to be incurred in connection with the CFD;

Now, Therefore, the undersigned, authorized representative of Harris & Associates, the appointed Special Tax Consultant and responsible officer or person directed to prepare the Report, pursuant to the provisions of the Act, does hereby submit the following data.

B. Description of Services

A Community Facilities District may provide for financing of certain public services which are necessary to meet increased demands placed upon local agencies as a result of development or rehabilitation occurring with the CFD.
43 3
A general description of the proposed services, pursuant to the terms stated in Exhibit “A” of the Resolution, is as follows:

The costs associated with providing the Services include but are not limited to:

 The costs of contracting Services;

 The cost of equipment, vehicles, ambulances, fire apparatus, and supplies;

 The salaries and benefits of City staff associated with providing the Services within the District or contracting for the Services;

 City overhead costs associated with providing the Services within the District;

 The cost of building a reserve fund for replacement and maintenance and for the actual or anticipated shortfalls due to Special Tax delinquencies in the current or prior Fiscal Year; and

The services listed herein are representative of the types of services authorized to be financed by Community Facilities District No. PS 26-001 (Citywide Public Safety Services). Detailed scope and limits of specific projects will be determined as appropriate, consistent with the standards of the City of Highland. Addition, deletion or modification of descriptions of the services may be made consistent with the requirements of the City Council of the City of Highland, the Community Facilities District No. PS 26-001 (Citywide Public Safety Services), and the Act.

Based upon the above, it is my opinion that the services being funded are those that are necessary to meet certain increased demands placed upon the City of Highland, as a result of development occurring within the boundaries of the CFD.

We hereby submit the CFD Report on behalf of the City of Highland, California.

44 4

Dated this 25th of August 2026.

Harris & Associates

___________________________
Special Tax Consultant
CFD NO. PS 26-001 (Citywide Public Safety Services)
City of Highland
County of San Bernardino
State of California

45 5
C. Cost Estimate

1. The annual budget presented below represents the initial estimated maximum costs for providing the District Services for Fiscal Year 2026-27

Commencing July 1, 2027, these rates will increase based on the percentage increase in the Consumer Price Index with a maximum annual increase of 6% and a minimum annual increase of 2% of the Maximum Special Tax in effect in the previous fiscal year.

2. Pursuant to Section 53340 of the Act, the proceeds of any special tax levied and collected by CFD NO. PS 26-001 (Citywide Public Safety Services) may be used only to pay for the cost of providing services and incidental expenses. As defined by the Act, incidental expenses include, but are not limited to, the annual costs associated with determination of the amount of special taxes, collection of special taxes, payment of special taxes, or costs otherwise incurred in order to carry out the authorized purposes of the community facilities district. The incidental expenses associated with the annual administration of CFD NO. PS 26-001 (Citywide Public Safety Services) are initially estimated to be $10,000. This amount shall be increased based upon the percentage change in the Consumer Price Index, with a maximum annual increase of six percent (6%) and a minimum increase of two percent (2%) of the Maximum Special Tax in effect in the previous Fiscal Year.

3. The cost of the services shall include incidental expenses, including costs associated with formation of the CFD, determination of the amount of the special tax, collection of the special tax, payment of the special tax, costs incurred in order to carry out the authorized purposes of the CFD, and the costs of engineering, inspecting, coordinating, completing, planning and designing the services, including the costs of environmental evaluations.

The following incidental expenses are examples of those that may be incurred in the formation of the CFD:

 Engineering services,
 Publishing, mailing and posting of notices,
 Governmental notification and filing costs,
COST DESCRIPTION ESTIMATED FY 2026-27 COSTS
Police Services $5,233,419.49
Paramedic Services 956,381.92
Fire Services 2,835,811.59
Total Cost $9,025,613.00
46 6
 Election costs, and
 Charges and fees of the City of Highland are other than those waived.

The following incidental expenses are examples of those that may be incurred in each annual special tax levy:

 Necessary consultant costs,
 Costs of posting and collecting the special taxes, and  Administrative costs of the City of Highland related to each annual special tax levy.

47 7
D. Rate and Method of Apportionment of Special Tax

1. The Rate and Method of Apportionment of the special tax is attached hereto as Appendix A (Rate and Method). The special tax will be collected in the same manner and at the same time as ad valorem property taxes and subject to the same penalties and provisions; however, the special tax may be collected at a different time or in a different manner if necessary, for CFD NO. PS 26-001 (Citywide Public Safety Services) to meet its financial obligations as permitted by the Act.

2. All the property located within CFD NO. PS 26-001 (Citywide Public Safety Services), unless exempt by law or by the Rate and Method of Apportionment of the special tax proposed for CFD NO. PS 26-001 (Citywide Public Safety Services), shall be taxed for the purpose of providing necessary services to the CFD. Pursuant to Section 53325.3 of the Act, the tax imposed “is a special tax and not a special assessment, and there is no requirement that the tax be apportioned on the basis of benefit to any property”. The special tax may be based on benefit received by property, the cost of maintaining facilities or authorized services available or other reasonable basis as determined by the Council, although the special tax may not be apportioned on an ad valorem basis pursuant to Article XIII A of the California Constitution.

4. In order to establish the special tax for the CFD, Harris & Associates has relied upon information including, but not limited to: “City of Highland Fiscal Impact Analysis: Citywide Public Safety Services Community Facilities District, November 2025”, building square footage, net taxable acreage, land use type, types of services, square footage of service areas, and estimated costs to provide services which were provided to Harris & Associates by the City of Highland, County of San Bernardino, and others. Harris & Associates has not independently verified such data and disclaims responsibility for the impact of inaccurate data provided by others, if any, on the Rate and Method of Apportionment, including the inability to meet the financial obligations of the CFD.

48 8
E. Proposed Boundaries

CFD NO. PS 26-001 (Citywide Public Safety Services) is located in the City of Highland and is generally north of Crest Street, South of Baseline Street, west of Central Avenue and east of Hillview Street. CFD NO. PS 26-001 (Citywide Public Safety Services) is composed of Tract 20693 and is projected to contain 79 single family residential parcels, 1 public park and 5 open space/landscaping parcels at buildout. The CFD will also designate a Future Annexation Area composed of the entire area within the City Boundaries

The initial proposed boundaries of the CFD are those parcels for which special taxes may be levied to pay for the costs and expenses of the services described above. The proposed CFD boundaries as of the date of this Report include the following assessor parcel number(s):

1192-361-45-0-000
1192-361-47-0-000
1192-341-11-0-000

A reduced scale map of the initial proposed boundaries of the CFD is provided as Appendix B. A full-scale map is on file with the City Clerk of the City of Highland and was recorded with San Bernardino County Recorder’s Office in Book 93 of Maps of Assessment and Community Facilities Districts at Page 19 on August 6, 2026, Document No. 2026-0202650.

A reduced scale map of the proposed boundaries of the Future Annexation Area of the CFD is provided as Appendix B. A full-scale map is on file with the City Clerk of the City of Highland and was recorded with San Bernardino County Recorder’s Office in Book 93 of Maps of Assessment and Community Facilities Districts at Page 18 on August 6, 2026, Document No. 2026-0202649.

49 APPENDIX A

RATE AND METHOD OF APPORTIONMENT

OF SPECIAL TAXES FOR
CFD NO. PS 26-001 (CITYWIDE PUBLIC SAFETY SERVICES)

50 RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX FOR
CITY OF HIGHLAND COMMUNITY FACILITIES DISTRICT NO. PS 26-001 (CITYWIDE PUBLIC SAFETY SERVICES)

OF THE CITY OF HIGHLAND, COUNTY OF SAN BERNARDINO

STATE OF CALIFORNIA
A Special Tax (all capitalized terms are defined in Section A., “Definitions”, below) shall be applicable to each Parcel of Taxable Property located within the boundaries of City of Highland Community Facilities District No. PS 26-001 (Citywide Public Safety Services).

A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
“Accessory Dwelling Unit(s) ” or “ADU” means a secondary attached or detached Residential Dwelling Unit with complete independent living facilities for one or more persons. The ADU may be on the same Assessor’s Parcel as the Single Family Residential Property’s primary Residential Dwelling Unit or on a separate Assessor’s Parcel. For purposes of clarification, where an ADU and primary Residential Dwelling Unit are on the same Assessor’s Parcel, the ADU located on such Assessor’s Parcel is considered one additional Residential Dwelling Unit for purposes of calculating the Special Tax. Should an Assessor’s Parcel contain only an ADU, such Assessor’s Parcel will be taxed as a single Residential Dwelling Unit only.
“Acre” or “Acreage” means the land area of a Parcel as indicated on the most recent Assessor’s Parcel Map, or if the land area is not shown on the Assessor’s Parcel Map, the land area shown on the applicable Final Map, condominium plan, or other recorded County map or the land area calculated to the reasonable satisfaction of the Administrator using the boundaries set forth on such map or plan. The square footage of a Parcel is equal to the Acreage of such Parcel multiplied by 43,560. “Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California.
“Administrative Expenses” means ongoing annual costs of operating and managing the CFD after it has been formed. These include all actual or reasonably estimated costs and expenses incurred by the City that are chargeable or allocable to carry out its duties as the administrator of the CFD as allowed by the Act, which shall include without limitation, all costs and expenses arising out of or resulting from the annual levy and collection of the Special Tax (whether by the City or designee thereof or both), any litigation or appeal involving the CFD, and other administrative expenses of the City or 51 designee thereof, or both, directly related to the CFD. Administrative Expenses shall also include amounts estimated or advanced by the City.
“Administrator” means an official of the City, or designee thereof, responsible for determining the annual amount of the levy and collection of the Special Taxes. “Approved Property” means all Parcels of Taxable Property: (i) that are included in a Final Map that was recorded prior to the January 1st preceding the Fiscal Year in which the Special Tax is being levied, and (ii) that have not been issued a Building Permit prior to the April 1st preceding the Fiscal Year in which the Special Tax is being levied. “Assessor” means the Assessor of the County .
“Assessor’s Parcel Map” means an official map of the Assessor of the County designating Parcels by Assessor’s Parcel Number.
“Assessor’s Parcel Number” means the number assigned to a Parcel for purposes of identification as determined from an Assessor Parcel Map or the applicable assessment roll.
“Base Year” means the Fiscal Year ending June 30, 2027. Rates in this Rate and Method of Apportionment for the initial formation are based on FY 2026-27 costs, which will be escalated beginning in FY 2027-28. The Base Year for future annexations shall be the fiscal year the annexation is approved by the City Council. “Boundary Map” means a recorded map of the CFD which indicates by a boundary line the extent of the territory identified to be subject to the levy of Special Taxes, as may be amended due to future annexations of territory to the CFD. "Building Permit" means the first legal document issued by a local agency giving official permission for new construction.
"Building Square Footage" or “BSF” means the floor area square footage reflected on the original construction building permit issued for construction of a building of Non - Residential Use on a Non-Residential Property and any Building Square Footage subsequently added to a building of Non-Residential Use on a Non-Residential Property after issuance of a building permit for expansion or renovation of such building. “Business Park Property” means Business Park land use as defined in the City of Highland General Plan, as amended from time to time. If the development is subject to a Specific Plan, Development Agreement, or other overriding legal instrument that deviates from the General Plan, the definitions in that document shall be the authorized definition. “Calendar Year” means the twelve month period from January 1st through December 31st of the same year.
“CFD” or “CFD PS 26-001” means City of Highland Community Facilities District No. PS 26-001 (Citywide Public Safety Services).
52 “City” means the City of Highland, California.

“City Council” means the City Council of the City acting as the legislative body of the CFD.
“Commercial Property” means Commercial land use as defined in the City of Highland General Plan, as amended from time to time. If the development is subject to a Specific Plan, Development Agreement or other overriding legal instrument that deviates from the General Plan, the definitions in that document shall be the authorized definition. “Condominium Residential Property” means all Parcels of Developed Property or Approved Property with an approved land use for residential condominiums (two or more attached units which can each be owned individually). Parcels that are open space, recreation, clubhouse, etc., owned by a condominium association, homeowner’s association, or property owner’s association, are Exempt Property. “Consumer Price Index” means the Consumer Price Index published by the U.S.

Department of Labor, Bureau of Labor Statistics for “All Urban Consumers in the Riverside- San Bernardino-Ontario Area”, measured as of the month of March in the Calendar Year which ends in the previous Fiscal Year. In the event this index ceases to be published, the Consumer Price Index shall be another index as determined by the Administrator that is reasonably comparable to the Consumer Price Index for the Riverside-San Bernardino- Ontario Area.
“County” means the County of San Bernardino, California. “Developed Property” means all Parcels of Taxable Property for which a Building Permit for new construction has been issued prior to April 1 st preceding the Fiscal Year in which the Special Tax is being levied.
“Exempt Property” means any Parcel which is exempt from Special Taxes pursuant to Section F., below.
“Final Map” means the survey-based map prepared by a registered civil engineer or licensed land surveyor, approved by the local agency and recorded in the office of the County Recorder, which legally subdivides land and establishes the lots, rights-of-way, easements, and dedications depicted thereon in accordance with the California Subdivision Map Act (California Government Code Section 66410 et seq.) or recordation of a condominium plan pursuant to California Civil Code 1352 that creates individual lots for which Building Permits may be issued without further subdivision “Fiscal Year” or “FY” means the 12-month period starting on July 1 of any Calendar Year and ending the following June 30.
“Future Annexation Area” means the geographic area that, at the time of CFD formation, was considered potential annexation area for the CFD and which was, therefore, identified as “future annexation area” on the recorded Boundary Map. Such 53 designation does not mean that any or all of the Future Annexation Area will annex into the CFD but should the owner or owners of property designated as Future Annexation Area choose to annex, the annexation may be processed pursuant to the annexation procedures in the Act for territory included in the Future Annexation Area.

“Historic Village District Property” or “HVD” means Historic Village District land use as defined in the City of Highland General Plan, as amended from time to time. If the development is subject to a Specific Plan, Development Agreement or other overriding legal instrument that deviates from the General Plan, the definitions in that document shall be the authorized definition.
“Incidental Expenses” means the broader category of expenses, authorized by the Act, incurred in connection with the formation of the CFD, determination of the amount of the Special Tax, collection of the Special Tax, payment of the Special Tax and costs incurred in order to carry out the authorized purposes of the CFD. “Industrial Property” means Light Industrial land use as defined in the City of Highland General Plan, as amended from time to time. If the development is subject to a Specific Plan, Development Agreement, or other overriding legal instrument that deviates from the General Plan, the definitions in that document shall be the authorized definition. “Land Use Class” means any of the classes listed in Table 1 or Table 2 of Section C. “Maximum Special Tax” means for each Parcel in each Fiscal Year, the greatest amount of Special Tax, determined in accordance with Section C., below, which may be levied on such Parcel in such Fiscal Year.
“Mixed Use Property” means all Parcels of Developed Property and Approved Property with more than one land use including Residential Use, commercial, retail, or other land uses, as defined in the City of Highland General Plan, as amended from time to time. If the development is subject to a Specific Plan, Development Agreement or other overriding legal instrument that deviates from the General Plan, the definitions in that document shall be the authorized definition. If a Parcel contains both Residential and Non-Residential Uses, each use shall be classified separately by the Administrator, and the applicable Maximum Special Tax shall be calculated for each use in accordance with Section C. The total Special Tax levied on the Parcel shall be the sum of the taxes applicable to each use. “Multifamily Residential Property ” means all Parcels of Developed Property and Approved Property with Multifamily Residential land uses as defined in the City of Highland General Plan, as amended from time to time, and consisting of a building or buildings comprised of attached Dwelling Units available for rent, not for sale to an end user, and under common management. If the development is subject to a Specific Plan, Development Agreement or other overriding legal instrument that deviates from the General Plan, the definitions in that document shall be the authorized definition. “Non-Residential Use” means a use of property that is not Residential. 54 “Non-Residential Property” means all Parcels of Developed Property that are not Residential Property, including Commercial Property, Office Professional Property, Business Park Property, Industrial Property, Historic Village District Property, and the Non-Residential Use portion of Mixed Use Property, as determined by the Administrator. “Office Professional Property” means Office Professional land use as defined in the City of Highland General Plan, as amended from time to time. If the development is subject to a Specific Plan, Development Agreement or other overriding legal instrument that deviates from the General Plan, the definitions in that document shall be the authorized definition.
“Parcel(s)” means a lot or parcel within the CFD shown on an Assessor’s Parcel Map with an assigned Assessor’s Parcel Number valid as of July 1 st for the Fiscal Year for which the Special Tax is being levied.
“Property Owner’s Association Property” means all Parcels which have been conveyed, dedicated to, or irrevocably offered for dedication to a property owner association , including any master or sub-association, prior to April 1 st preceding the Fiscal Year in which the Special Tax is being levied. The Special Tax shall not be levied on Property Owner’s Association Property.
“Proportionately” means for Parcels of Taxable Property that are (i) Residential Property, that the ratio of the actual Special Tax to the Maximum Special Tax is the same for all Parcels of Residential Property; (ii) Non-Residential Property, that the ratio of the actual Special Tax to the Maximum Special Tax is the same for all Parcels of Non-Residential Property; and (iii) Approved Property, that the ratio of the actual Special Tax to the Maximum Special Tax is the same for all Parcels of Approved Property. “Public Property” means all Parcels which, as of April 1 st preceding the Fiscal Year in which the Special Tax is being levied, are (i) used for rights-of-way or any other purpose and are owned by, dedicated to, or irrevocably offered for dedication to the federal government, the State, the County, City or any other public agency, provided, however, that any property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified according to its use; or (ii) encumbered by an unmanned utility easement making impractical its utilization for other than the purpose set forth in the easement.
“Residential Dwelling Unit” or "RDU" means a residential unit that is used or intended to be used as a domicile by one or more persons, as determined by the Administrator, which includes Single Family Residential Property, Multifamily Residential Property, Condominium Residential Property, Mixed Use Property and an Accessory Dwelling Unit. “Residential Property” means all Parcels of Developed Property that have been issued a Building Permit for one or more Residential Dwelling Units, including Single Family Residential Property, Multifamily Residential Property, Condominium Residential Property, Mixed Use Property containing Residential Dwelling Units, and Accessory Dwelling Units, as well as Approved Property, as determined by the Administrator. If a Parcel contains 55 both Residential and Non-Residential Uses, the residential portion shall be classified and taxed in accordance with this Rate and Method of Apportionment.

“Residential Use” has the same definition as the term is defined in Section 16.06.180 of the Highland Municipal Code, as amended from time to time. “Single Family Residential Property” means all Single Family land uses as defined in the City of Highland General Plan, as amended from time to time, and excluding Multifamily Residential Property. If the development is subject to a Specific Plan, Development Agreement or other overriding legal instrument that deviates from the General Plan, the definitions in that document shall be the authorized definition. “Special Tax(es)” means the Special Tax to be levied in each Fiscal Year on each Parcel of Taxable Property in accordance with Sections C. and D. “Special Tax Requirement” means for each Fiscal Year, that amount required to pay the estimated cost of Special Tax Services for such Fiscal Year as determined by the City, including Administrative Expenses and Incidental Expenses less a credit for funds available to reduce the annual Special Tax levy as determined by the Administrator. “Special Tax Services” means police protection, fire protection and suppression, and ambulance and paramedic services.
“State” means the State of California.
“Taxable Property” means all Parcels within the boundary of the CFD pursuant to the Boundary Map which are not exempt from the Special Tax pursuant to Section F., below. “Taxable Unit” means either a Residential Dwelling Unit, Building Square Footage, or Parcel, as shown in Table 1 and Table 2.
“Undeveloped Property” means all Parcels not classified as Developed Property, Public Property, Property Owner’s Association Property or open space, recreation, clubhouse, etc., owned by a condominium association or homeowner’s association within the CFD.

B. CLASSIFICATION OF PROPERTY
Each Fiscal Year, commencing with Fiscal Year 2026-2027, all Parcels of Property shall be classified as either Taxable Property or Exempt Property. Taxable Property shall be further classified as Developed Property or Approved Property and be subject to the levy of Special Taxes in accordance with this Rate and Method of Apportionment as determined pursuant to Sections C. and D.

Parcels of Developed Property shall further be classified as Residential Property or Non- Residential Property. Non-Residential Property shall be further classified by the Administrator as Commercial Property, Mixed Use Property, Historic Village District Property, Office Professional Property, Business Park Property or Industrial Property. The 56 Administrator shall also determine the number of Residential Dwelling Units and the Building Square Footage applicable to each Parcel.

C. MAXIMUM SPECIAL TAX RATES
For each Fiscal Year commencing Fiscal Year 2026-2027, Maximum Special Tax Rates shall be determined as described below:

1. Developed Property
The Maximum Special Tax for each Assessor’s Parcel of Developed Property for Fiscal Year 2026 ‐27 is identified in Table 1 below. These Maximum Special Tax Rates are subject to annual escalation, as explained further in Section C. 1. (a) below.

57 TABLE 1
Maximum Special Tax Rates for Developed Property
Fiscal Year 2026-2027

Land
Use
Class
Description Taxable Unit
Maximum
Special Tax
per Taxable
Unit
1 Residential Property Residential Dwelling Unit $ 310.00 2 Commercial Property Building Square Footage $0.14
3 Mixed Use Property Building Square Footage $0.13
4 Historic Village District
Property Building Square Footage $0.12
5 Office Professional Property Building Square Footage $0.11 6 Business Park Property Building Square Footage $0.10
7 Industrial Property Building Square Footage $0.06
(a) Increase in the Maximum Special Tax
On each July 1 following the Base Year, the Maximum Special Tax, identified in Table 1 above, shall be increased annually, commencing July 1, 2027, based on the percentage increase in the Consumer Price Index with a maximum annual increase of six percent (6%) and a minimum annual increase of two percent (2%) of the Maximum Special Tax in effect in the previous Fiscal Year. (b) Multiple Land Use Classes
In some instances, a Parcel of Developed Property may contain more than one Land Use Class. The Maximum Special Tax that may be levied on such Parcel shall be the sum of the Maximum Special Tax that can be levied for each Land Use Class located on that Parcel. The Maximum Special Tax Rate for Residential Property shall apply to any Residential Dwelling Units on the parcel. The Maximum Special Tax Rate for Commercial Property, Mixed Use Property, Historic Village District Property, Office Professional Property, Business Park Property, and Industrial Property shall apply to the Building Square Feet of those land uses on the property.

2. Approved Property
The Maximum Special Tax for each Assessor’s Parcel of Approved Property for Fiscal Year 2026 ‐27 is identified in Table 2 below. These Maximum Special Tax Rates are subject to annual escalation, as explained further in Section C. 2. (a) below.
58 TABLE 2
Maximum Special Tax Rates for Approved Property
Fiscal Year 2026-2027

Land Use Class Taxable
Unit
Maximum
Special Tax
per Taxable
Unit
Approved Property Parcel $ 110.00
(a) Increase in the Maximum Special Tax
On each July 1, following the Base Year, the Maximum Special Tax, identified in Table 2, above, shall be increased annually, commencing July 1, 2027, based on the percentage increase in the Consumer Price Index with a maximum annual increase of six percent (6%) and a minimum annual increase of two percent (2%) of the Maximum Special Tax in effect in the previous Fiscal Year.

3. Property Not Subject to the Special Tax
No Special Tax shall be levied on Exempt Property.

D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
Commencing with Fiscal Year 2026-2027 and for each following Fiscal Year, the Administrator shall levy the Special Tax on all Taxable Property until the amount of Special Tax equals the Special Tax Requirement in accordance with the following steps:

First: The Special Tax shall be levied Proportionately on each Parcel of Developed Property at up to 100% of the applicable Maximum Special Tax as needed to satisfy the Special Tax Requirement; and
Second: If additional moneys are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on each Parcel of Approved Property at up to 100% of the Maximum Special Tax for Approved Property.

E. FUTURE ANNEXATIONS
It is anticipated that properties in the Future Annexation Area will be annexed to the CFD from time to time. The Base Year for each annexation shall be the Fiscal Year in which the annexation is approved by the City Council. The Maximum Special Tax applicable to the 59 annexed territory shall be established based on the rates in effect for that Fiscal Year and shall thereafter be escalated as explained in Section C.1.(a) and Section C.2.(a).

F. EXEMPTIONS
The CFD shall not levy Special Taxes on Undeveloped Property, Public Property, Property Owner’s Association Property, open space, recreation, clubhouse, etc, owned by a condominium association or homeowner’s association within the CFD and property covered under Sections 54317.3 and 53317.5 of the Act. If any Undeveloped Property, Public Property, or Property Owner’s Association Property or open space, recreation, clubhouse, etc., owned by a condominium association or homeowner’s association is converted to Taxable Property as the result of a sale or transfer of an Exempt Parcel to a private owner for Residential Use on a Residential Property or Non-Residential Use on a Non-Residential Property, it shall become subject to the Special Tax in accordance with this Rate and Method of Apportionment as determined pursuant to Sections C. and D.

The CFD shall not levy Special Taxes on a Parcel that receives a welfare exemption under subdivision (g) of Section 214 of the Revenue and Taxation Code unless debt is outstanding and the Parcel was subject to the Special Tax prior to receiving the exemption, in which case the Parcel shall remain subject to the Special Tax and the Special Tax shall be enforceable against the Parcel.

G. MANNER OF COLLECTION
The Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes and shall be subject to the same penalties, the same procedure, sale and lien priority in the case of delinquency; provided, however, that the Administrator may directly bill the Special Tax and may collect Special Taxes at a different time or in a different manner if necessary to meet the financial obligations of the CFD or as otherwise determined appropriate by the Administrator.

H. APPEALS
Any taxpayer who believes that the Special Tax levied on their Parcel(s) is in error may file a written appeal of the Special Tax on his/her Parcel(s) with the Administrator no later than April 10 of the Fiscal Year in which the levy occurred, provided that the appellant is current in his/her payments of Special Taxes. The appeal must clearly specify the grounds upon which the taxpayer believes the Special Tax is erroneous. During the pendency of an appeal, all Special Taxes must be paid on or before the payment due date established when the levy was made. The appeal must specify the reasons why the appellant claims the Special Tax is in error. The Administrator shall review the appeal, meet with the appellant if the Administrator deems necessary, and advise the appellant of its determination. If the Administrator agrees with the appellant, the Administrator shall grant a credit to eliminate or reduce future Special Taxes on the appellant’s Parcel(s). No 60 refunds of previously paid Special Taxes shall be made. The Administrator’s decision is final and binding.

Interpretation of this Rate and Method of Apportionment may be made by the Administrator or by resolution of the City Council for purposes of clarifying any vagueness or uncertainty as it relates to the application of the Special Tax rate, the application of the method of apportionment, the classification of Parcels or any definition applicable to the CFD so long as such clarification does not materially affect the levy and collection of the Special Tax.

I. PREPAYMENT
The Special Taxes may not be prepaid.

TERM OF THE SPECIAL TAX

61 APPENDIX B

BOUNDARY MAP AND FUTURE ANNEXATION AREA BOUNDARY MAP FOR CFD NO. PS 26-001 (CITYWIDE PUBLIC SAFETY SERVICES)

62 63

64 ATTACHMENT 5
Ordinance

65 ORDINANCE 2026-___

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HIGHLAND, CALIFORNIA

ACTING IN ITS CAPACITY AS THE LEGISLATIVE BODY OF CITY OF HIGHLAND COMMUNITY FACILITIES DISTRICT NO. PS 26-001 (CITYWIDE PUBLIC SAFETY

SERVICES) AUTHORIZING THE LEVY OF A SPECIAL TAX THEREIN

WHEREAS, the City Council has previously adopted Resolution No. 2026-049 entitled “A Resolution of Intention of the City Council of the City of Highland, California, to Establish City of Highland Community Facilities District No. PS 26-001 (Citywide Public Safety Services), to Authorize the Levy of a Special Tax within Such District to Fund Certain Services, and to Designate a Future Annexation Area, Making a Determination Pursuant to the California Environmental Quality Act, and Taking Related Actions (the “Resolution of Intention”), stating its intention to conduct proceedings to form City of Highland Community Facilities District No. PS 26-001 (Citywide Public Safety Services) (the “CFD”) pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, commencing with Section 53311 of the California Government Code (the “Act”) and to levy a special tax within the CFD (the “Special Tax”) to finance certain services (the “Services”) including incidental expenses, to serve the CFD; and
WHEREAS , the Resolution of Intention set September 8, 2026, at 6:00 p.m., or as soon thereafter as practical, as the date and time of a public hearing on all matters pertaining to the formation of the CFD, the extent of the CFD, the designation of the Future Annexation Area, the furnishing of Services to serve the CFD, the Special Tax, and the proposed rate and method of apportionment of the special tax among real property in within the CFD (the “Rate and Method”); and
WHEREAS , a notice of public hearing was published and mailed to all landowners proposed to be included in the CFD in accordance with the Act; and WHEREAS , at the public hearing, evidence was presented to the City Council on such matters before it, including a report (the “Report”) describing the Services necessary to adequately meet the needs of the CFD and the estimated costs of financing such Services as required by Section 53321.5 of the Act; and
WHEREAS , at the public hearing, all persons desiring to be heard on all matters pertaining to the formation of the CFD, the extent of the CFD, the designation of the Future Annexation Area, the furnishing of Services to serve the CFD, the Special Tax, and the Rate and Method were heard and a full and fair hearing was held; and WHEREAS , subsequent to the public hearing, the City Council adopted a resolution entitled “ A Resolution of Formation of the City Council of the City of Highland, California, to Establish City of Highland Community Facilities District No. PS 26-001 (Citywide Public Safety Services), to Establish an Appropriations Limit Therefor, to Authorize the Levy of a Special Tax Therein, to Authorize the Submittal of the Levy of Special Tax and the Establishment of an Appropriations Limit, to the Qualified Electors of such Community 66 Facilities District, to Provide for the Annexation of Territory to Such Community Facilities District in the Future, to Make Environmental Findings Pursuant to the California Environmental Quality Act, and to Authorize Certain Actions Related Thereto” (the “Resolution of Formation”) which established the CFD and authorized the levy of a special tax within the CFD subject to the approval of the eligible voters in the CFD; and WHEREAS , subsequent to the public hearing, the City Council also adopted a resolution entitled “A Resolution of the City Council of the City of Highland, California, Calling a Special Election and Submitting to the Qualified Electors of City of Highland Community Facilities District No. PS 26-001 (Citywide Public Safety Services) Propositions Regarding the Establishment of an Appropriations Limit and the Annual Levy of a Special Tax Within the Community Facilities District” (the “Resolution Calling Election”) which called a special election of the qualified electors within the CFD; and
WHEREAS , pursuant to the terms of the Resolution Calling Election, an election was held in which qualified electors of the CFD approved the establishment of an appropriations limit for the CFD and the levy of the Special Tax within the CFD; and WHEREAS , on September 8, 2026, the City Council adopted a resolution entitled “A Resolution of the City Council of the City of Highland, California, Declaring the Results of a Special Election in the City of Highland Community Facilities District No. PS 26-001 (Citywide Public Safety Services) and Directing the Recording of a Notice of Special Tax Lien” (the “Resolution Declaring Results of Election”) which certified the results of the September 8, 2026 special election conducted by the City Clerk, which results showed that more than two-thirds of the votes cast in the CFD were in favor of the proposition to levy the Special Tax and the proposition to establish an appropriations limit for the CFD;

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF HIGHLAND DOES ORDAIN AS FOLLOWS:

Section 1. Recitals. The above recitals are all true and correct and are a substantive part of this Ordinance.

Section 2. Authorization of the Levy of a Special Tax. By the passage of this Ordinance, the City Council authorizes the levy of the Special Tax in the CFD pursuant to the Act and at the rates and in accordance with the Rate and Method set forth in the Exhibit “C” to the Resolution of Formation, which is on file in the office of the City Clerk and incorporated by reference herein.

Section 3. Annual Rate Determination. The City Council is hereby further authorized to determine on or before August 10 each year, or such other date as is established by law or by the County Auditor-Controller of the County of San Bernardino, the specific Special Tax to be levied on each parcel of land in the CFD, except that Special Tax to be levied shall not exceed the maximum rates set forth in the Rate and Method, but the Special Tax may be levied at a lower rate.

Section 4. Exempt Property. Exemptions from the levy of the Special Tax shall be as provided for in the Resolution of Formation and the Act. Reference is hereby made to the Rate and Method for a description of properties or entities that are expressly exempted 67 from the levy of the Special Tax.

Section 5. Use of Collections. All of the collections of the Special Tax shall be used only as provided by the Act and in the Resolution of Formation. The Special Tax shall be levied only so long as needed for the purposes as described in the Resolution of Formation.

Section 6. Collection. The Special tax shall be collected in the same manner as ordinary ad valorem taxes and shall be subject to the same penalties and the same procedure, sale and lien in any case of delinquency as applicable for ad valorem property taxes; provided, however, that the Special Tax may be collected by direct billing by the City of the property owners in the CFD or in such other manner as may be provided by the City Council. In addition, the provisions of Section 53356.1 of the Act shall apply to any delinquent Special Tax payments.

Section 7. Authorization. The specific authorization for adoption of the Ordinance is Section 53340 of the Act.

Section 8. Severability. If for any reason any portion of the Ordinance is found to be invalid, or if the Special Tax is found inapplicable for any particular parcel within the CFD, by a court of competent jurisdiction, the balance of this Ordinance, and the application of the Special Tax to the remaining parcels within the CFD shall not be affected.

Section 9. Certification. The Mayor shall sign this Ordinance and the City Clerk shall certify to the adoption of this Ordinance and cause it to be published or posted in accordance with law.

Section 10. Effective Date. This Ordinance shall take effect at 12:01 a.m. on the thirty- first (31st) day after the date of its final adoption.

INTRODUCED at the regular meeting of Highland City Council on September 8, 2026.

PASSED, APPROVED AND ADOPTED this ___ day of _____, 2026.

__________________________
Jimmy Saldana
Mayor Pro Tem

ATTEST:

___________________________
Alondra Muñoz, CMC
City Clerk
68 Staff Report
to the City Council
Agenda
Item
No.21.

Date: September 8, 2026
From: Carlos Zamano, City Manager
Reviewed By: Lawrence Mainez, Community Development Director Prepared By: Camille Duarte, Administrative Assistant III Subject: Appoint One (1) Member of the Public to the Historic and Cultural Preservation Board

Recommendation:

Appoint one (1) member of the public to the Historic and Cultural Preservation Board.

Fiscal Impact:

None.

Public Notice:

The agenda for this item was posted at the three locations per Resolution No. 2011-047 and on the City’s website.

Background:

On July 14, 2026, the City Council declared one (1) seat vacant and posted that vacancy in accordance with the Maddy Act. Pursuant to Chapter 2.20.050 of the Highland Municipal Code, the Historic and Cultural Preservation Board shall consist of five members appointed by the City Council and shall serve without compensation. All members of the board shall have a demonstrated interest in or knowledge of historic preservation and the cultural resources of the city. Therefore, it would be appropriate for the City Council to appoint one (1) individual to the Historic and Cultural Preservation Board. One (1) application has been submitted for consideration.

Attachments:

1. Public Service Application

1 2
3 4

Staff Report
to the City Council
Agenda
Item
No.22.

Date: September 8, 2026
From: Carlos Zamano, City Manager
Reviewed By: Maricela Marroquin, City Attorney
Prepared By: Carlos Zamano, City Manager
Subject: Resolution Supporting Measure E

Recommendation:

Adopt Resolution No. 2026-___ in support of Measure E at the November 3, 2026, General Municipal Election.

Fiscal Impact:

None.

Public Notice:

The agenda for this item was posted at the three locations per Resolution No. 2011-047 and on the City’s website.

Background:

On June 9, 2026, the City Council considered and approved three (3) Resolutions as follows:

1. Ordering that a General Tax Measure be submitted to voters of the City of Highland at the November 3, 2026, General Municipal Election to establish a Transaction and Use Tax ("Sales Tax") at a rate of one percent (1%);

2. Calling and providing for a General Municipal Election and requesting the Board of Supervisors of the County of San Bernardino to consolidate the General Municipal Election to be held on November 3, 2026; and

3. Providing and setting the rules for filing arguments regarding a City Measure to be submitted at the November 3, 2026, General Municipal Election.

With City Council's approval to place the sales tax measure on the ballot, the proposed ballot question will read as follows:

1 City of Highland Public Safety and Local Control Measure YES
To maintain local funding for police, fire,
emergency services; and improve
critical infrastructure, including
maintaining roads, bridges, drainage,
5th Street Corridor Interchange, and
other improvement projects; shall the
City of Highland enact a 1¢ sales tax,
providing approximately $6.35 million
annually, remaining in effect until ended
by voters, with funds staying in the City
and generated from purchases paid by
both visitors and City residents?
NO

On August 10, 2026, the San Bernardino County Registrar of Voters assigned the letters to all proposed measures. The City of Highland was assigned Measure E. The City's Financial Outlook website page was then updated to reflect the Measure letter. Residents are encouraged to visit the City's website, Measure E page, to get informed about this sales tax measure.

The attached Resolution expresses the City Council's support for Measure E to secure funding for essential city services and infrastructure. The Resolution describes how Measure E aligns with the City's Mission and Values to provide the quality of public facilities and services that its citizens are willing to fund.

The City Council resolution asks the voters to approve a reliable source of local funding and ensure that local tax revenue is spent solely on City programs and services by voting YES on Measure E at the November 3, 2026 election.

Attachments:

1. Highland City Council Resolution Supporting Measure E (1)

2 RESOLUTION CC 2026-__

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HIGHLAND, CALIFORNIA IN SUPPORT OF MEASURE E AT THE NOVEMBER 3,
2026 ELECTION

WHEREAS, in an environment of rapidly increasing costs for the services Highland residents, businesses, and visitors need, the Highland City Council is asking the voters to approve a reliable source of local funding and ensure that local tax revenue is spent solely on City programs and services by voting YES on Measure E at the November 3, 2026 election; and

WHEREAS, the City Council is committed to improving public safety with funding for police, fire, and 911 emergency response services; and

WHEREAS , the City Council also intends to invest in the repair and upgrade of critical infrastructure such as City roads, bridges, interchanges, drainage and other public improvements; and

WHEREAS, to understand the scope of the City’s public safety and infrastructure pressures, staff presented on the City’s projected cumulative deficit and potential financial impacts at a Study Session meeting on February 10, 2026, and the reports from that meeting are available for public review on the City’s website at www.highlandca.gov; and

WHEREAS, after evaluating the demonstrated need for additional City revenue that politicians in Sacramento cannot take away, the City Council decided to present Measure E, a 1% Transactions and Use Tax or “Sales Tax” ballot measure to voters; and

WHEREAS, Measure E will help the City avoid cuts to vital services and programs, and provide funds to address the needed investment in critical infrastructure; and WHEREAS, Measure E revenue will be spent entirely on local essential services that benefit the Highland community, with all funds staying in the City; and WHEREAS, Measure E revenue expenditures will be accounted for and reported through a public process every fiscal year, so that the voters can know that the new funds are being spent to improve the quality of life in Highland.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF HIGHLAND,

CALIFORNIA, DOES RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS:

SECTION 1. The City Council of the City of Highland endorses and supports voter approval of Measure E at the November 3, 2026 election and believes voters should support Measure E.
3 SECTION 2. A copy of this resolution of support may be provided to interested persons, upon request, as indication of the City Council’s support of Measure E.

SECTION 3. The City Clerk shall certify to the adoption of this resolution.

PASSED, APPROVED, AND ADOPTED by the City Council of the City of Highland this __ day of __ 2026.

City of Highland, California

PENNY LILBURN, Mayor

ATTEST:
_________________________________
ALONDRA MUÑOZ, City Clerk

CERTIFICATION
I, Alondra Muñoz, City Clerk of the City of Highland, do hereby certify that Resolution CC 2026-__ was duly adopted by the City Council of the City of Highland at a regular meeting held on the __ day of __, 2026, by the following vote:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

ABSTAIN: COUNCIL MEMBERS:

DATED:

4 Staff Report
to the City Council
Agenda
Item
No.23.

Date: September 8, 2026
From: Carlos Zamano, City Manager
Reviewed By: Alondra Muñoz, City Clerk
Prepared By: Lissette Nock, Deputy City Clerk
Subject: City Manager Report and Comments (Work Program, Regional/Legislative/ Development Issues, Subcommittees, etc.)

Recommendation:

Discussion and possible action.

Fiscal Impact:

None

Public Notice:

The agenda for this item was posted at the three locations per Resolution No. 2011-047 and on the City’s website.

Background:

Attachments:

None

1 Staff Report
to the City Council
Agenda
Item
No.24.

Date: September 8, 2026
From: Carlos Zamano, City Manager
Reviewed By: Alondra Muñoz, City Clerk
Prepared By: Lissette Nock, Deputy City Clerk
Subject: Councilmember Comments (Agency/Committee/AB 1234 Reports, District Updates, etc.)

Recommendation:

Discussion and possible action.

Fiscal Impact:

None

Public Notice:

The agenda for this item was posted at the three locations per Resolution No. 2011-047 and on the City’s website.

Background:

Attachments:

None

Highland City CouncilSeptember 8, 2026

Highland City Council
September 8, 2026