Indio City Council
December 17, 2025

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Section 10.3. Unclaimed Moneys. Anything in this Indenture to the contrary notwithstanding, any money held by the Trustee in trust for the payment and discharge of any of the Outstanding Bonds and Parity Bonds that remains unclaimed for two years after the date when such Outstanding Bonds or Parity Bonds have become due and payable, if such money was held by the Trustee at such date, or for two years after the date of deposit of such money if deposited with the Trustee after the date when such Outstanding Bonds or Parity Bonds become due and payable, shall be repaid by the Trustee to the District (without liability for interest), as its absolute property free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look only to the District for the payment of such Outstanding Bonds or Parity Bonds; provided, however, that, before being required to make any such payment to the District, the Trustee, at the expense of the District, shall cause to be mailed by first-class mail, postage prepaid, to the registered Owners of such Outstanding Bonds or Parity Bonds at their addresses as they appear on the registration books of the Trustee a notice that said money remains unclaimed and that, after a date named in said notice, which date shall not be less than 30 days after the date of the mailing of such notice, the balance of such money then unclaimed will be returned to the District. Any money held by the Trustee pursuant to this paragraph shall be held uninvested and without liability for interest.

Section 10.4. Provisions Constitute Contract. The provisions of this Indenture shall constitute a contract between the District and the Bondowners and the provisions hereof shall be construed in accordance with the laws of the State of California.

In case any suit, action or proceeding to enforce any right or exercise any remedy shall be brought or taken and, should said suit, action or proceeding be abandoned, or be determined adversely to the Bondowners or the Trustee, then the District, the Trustee and the Bondowners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken.

After the issuance and delivery of the Bonds, this Indenture shall be irrepealable, but shall be subject to modifications to the extent and in the manner provided in this Indenture, but to no greater extent and in no other manner.

Section 10.5. Future Contracts. Nothing herein contained shall be deemed to restrict or prohibit the District from making contracts or creating bonded or other indebtedness payable from a pledge of the Net Taxes which is subordinate to the pledge hereunder, or which is payable from the general fund of the District or from taxes or any source other than the Net Taxes and other amounts pledged hereunder.

Section 10.6. Further Assurances. The District will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture, and for the better assuring and confirming unto the Owners of the Bonds or any Parity Bonds the rights and benefits provided in this Indenture.

Section 10.7. Severability. If any covenant, agreement or provision, or any portion thereof, contained in this Indenture, or the application thereof to any person or circumstance, is held to be unconstitutional, invalid or unenforceable, the remainder of this Indenture and the application of any such covenant, agreement or provision, or portion thereof, to other persons or circumstances, shall be deemed severable and shall not be affected thereby, and this Indenture, the Bonds and any

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Parity Bonds issued pursuant hereto shall remain valid and the Bondowners shall retain all valid rights and benefits accorded to them under the laws of the State of California.

Section 10.8. Notices. Any notices required to be given to the District with respect to the Bonds or this Indenture shall be mailed, first class, postage prepaid, or personally delivered to the City at 100 Civic Center Mall, Indio, California 92201, Attention: City Manager and all notices to the Trustee in its capacity as Trustee shall be mailed, first class, postage prepaid, or personally delivered to U.S. Bank Trust Company, National Association, 633 West Fifth Street, 24 th Floor, Los Angeles, CA 90071, Attention: Global Corporate Trust.

Section 10.9. Execution in Several Counterparts. This Indenture may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original; and all such counterparts, or as many of them as the District and the Trustee shall preserve undestroyed, shall together constitute but one and the same instrument. Each counterpart of this Indenture may be executed and delivered by electronic means, including by electronic transmission or delivery (including electronic images of handwritten signatures delivered in .pdf file or .jpeg file format, or by any electronic signature complying with the U.S. federal ESIGN Act of 2000, including Orbit, Adobe Sign, DocuSign, or any other similar platform), each of which shall be deemed to be original signatures for all purposes and shall be effective as delivery of a manually executed original counterpart.

Section 10.10. OFAC Compliance. The District covenants and represents that neither it nor any of its affiliates, subsidiaries, directors or officers are the target or subject of any sanctions enforced by the United States Government, (including, the Office of Foreign Assets Control of the US Department of the Treasury, the United Nations Security Council, the European Union, HM Treasury or other relevant sanctions authority (collectively “Sanctions”). The District covenants and represents that neither it nor any of its affiliates, subsidiaries, directors or officers will use any payments made pursuant to this Indenture: (a) to fund or facilitate any activities of or business with any person who, at the time of such funding or facilitation, is the subject or target of Sanctions; (b) to fund or facilitate any activities of or business with any country or territory that is the target or subject of Sanctions; or (c) in any other manner that will result in a violation of Sanctions by any person.

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IN WITNESS WHEREOF, the District has caused this Indenture to be signed by the City Manager of the City, acting as the legislative body of the District, and attested thereto by the City Clerk of the City, and the Trustee, in token of its acceptance of the trust created hereunder, has caused this Indenture to be signed in its corporate name by its officer identified below, all as of the day and year first above written.

CITY OF INDIO COMMUNITY FACILITIES
DISTRICT NO. 2004-3 (TERRA LAGO)
By:

City Manager of the City of Indio, acting as the
legislative body of City of Indio Community
Facilities District No. 2004-3 (Terra Lago)
ATTEST:

City Clerk of the City of Indio,
acting as the legislative body of
City of Indio Community Facilities District
No. 2004-3 (Terra Lago)
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Trustee
By:

Its: Authorized Officer

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EXHIBIT A
FORM OF 2026 SPECIAL TAX REFUNDING BOND
R-1 $__________

UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF

THE DEPOSITORY (AS SUCH TERM IS DEFINED IN THE INDENTURE) TO THE BOND

REGISTRAR FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH

OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER

ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE

DEPOSITORY), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR

OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

UNITED STATES OF AMERICA

STATE OF CALIFORNIA

COUNTY OF RIVERSIDE

CITY OF INDIO
COMMUNITY FACILITIES DISTRICT NO. 2004-3 (TERRA LAGO)
IMPROVEMENT AREA NO. 1 2026

SPECIAL TAX REFUNDING BONDS

INTEREST RATE MATURITY DATE DATED DATE CUSIP
_____% September 1, 20__ ____, 2026 ___
REGISTERED OWNER: CEDE & CO.

PRINCIPAL AMOUNT: _____ MILLION _____ THOUSAND DOLLARS
CITY OF INDIO COMMUNITY FACILITIES DISTRICT NO. 2004-3 (TERRA LAGO) (the “District”) which was formed by the City of Indio (the “City”) and is situated in the County of Riverside, State of California, FOR VALUE RECEIVED, hereby promises to pay, solely from certain amounts held under the Indenture (as such term is defined herein), to the Registered Owner named above, or registered assigns, on the Maturity Date set forth above, unless redeemed prior thereto as hereinafter provided, the Principal Amount set forth above, and to pay interest on such Principal Amount from the Interest Payment Date (as such term is defined herein) next preceding the date of authentication hereof, unless: (i) the date of authentication is an Interest Payment Date, in which event interest shall be payable from such date of authentication; (ii) the date of authentication

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is after a Record Date (as such term is defined herein) but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication; or (iii) the date of authentication is prior to the close of business on the first Record Date in which event interest shall be payable from the Dated Date set forth above. Notwithstanding the foregoing, if at the time of authentication of this Bond interest is in default, interest on this Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment, interest on this Bond shall be payable from the Dated Date set forth above. Interest will be paid semiannually on [September 1, 2026] and each March 1 and September 1 thereafter (each, an “Interest Payment Date”), at the Interest Rate set forth above, until the Principal Amount hereof is paid or made available for payment.

The principal of and premium, if any, on this Bond are payable to the Registered Owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at the Principal Office of the Trustee, initially U.S. Bank Trust Company, National Association, (the “Trustee”). Interest on this Bond shall be paid on each Interest Payment Date by check of the Trustee mailed by first class mail, postage prepaid, or in certain circumstances described in the Indenture by wire transfer to an account within the United States of America, to the Registered Owner hereof appearing on the registration books maintained by the Trustee as of the close of business on the fifteenth day of the month preceding the month in which the Interest Payment Date occurs (the “Record Date”) at such Registered Owner’s address as it appears on the registration books maintained by the Trustee.

Capitalized terms used herein and not defined shall have the meanings given them in the Indenture.

This Bond is one of a duly authorized issue of “City of Indio Community Facilities District No. 2004-3 (Terra Lago) Improvement Area No. 1 2026 Special Tax Refunding Bonds” (the “Bonds”) issued in the aggregate principal amount of $____ pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, being Sections 53311, et seq., of the California Government Code (the “Act”) for the purpose of refunding the District’s outstanding 2015 Special Tax Bonds, funding a reserve account and paying certain costs related to the issuance of the Bonds. The issuance of the Bonds and the terms and conditions thereof are provided for by a resolution adopted by the City Council of the City, acting in its capacity as the legislative body of the District (the “Legislative Body”) on December 17, 2025 and a Bond Indenture dated as of February 1, 2026, by and between the District and the Trustee executed in connection therewith (the “Indenture”), and this reference incorporates the Indenture herein, and by acceptance hereof the Registered Owner of this Bond assents to said terms and conditions. The Indenture is executed under and this Bond is issued under, and both are to be construed in accordance with, the laws of the State of California.

Pursuant to the Act and the Indenture, the principal of, premium, if any, and interest on this Bond are payable solely from the portion of the net annual special taxes authorized under the Act to be levied and collected within Improvement Area No. 1 of the District (the “Net Taxes”) and certain other amounts pledged to the repayment of the Bonds as set forth in the Indenture. Any amounts for the payment hereof shall be limited to the Net Taxes pledged and collected or foreclosure proceeds received following a default in payment of the Net Taxes and other amounts deposited to the Special Tax Fund (exclusive of the Reserve Account, which shall only secure the Bonds, and the Administrative Expenses Account therein) established under the Indenture, except to the extent that other provision for payment has been made by the Legislative Body, as may be permitted by law.

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The District has covenanted for the benefit of the owners of the Bonds that under certain circumstances described in the Indenture it will commence and diligently pursue to completion foreclosure proceedings in the event of delinquencies of Special Tax installments levied for payment of principal and interest on the Bonds.

The Bonds are not subject to optional redemption prior to their respective stated maturities.

The Bonds are subject to extraordinary redemption as a whole, or in part by lot, on any Interest Payment Date, and shall be redeemed by the Trustee, from Prepayments deposited to the Redemption Account pursuant to the Indenture, plus amounts transferred from the Reserve Account pursuant to the Indenture, among maturities as directed in writing by the District, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date:

Redemption Date Redemption Price
Any Interest Payment Date through and including March 1, 20__ 103% September 1, 20__ and March 1, 20__ 102
September 1, 20__ and March 1, 20__ 101
September 1, 20__ and any Interest Payment Date thereafter 100 The District shall notify the Trustee of any extraordinary prepayment at least 45 days prior to the Interest Payment Date on which such prepayment shall occur.

Notice of redemption with respect to the Bonds to be redeemed shall be mailed to the registered owners thereof not less than 30 nor more than 45 days prior to the redemption date by first class mail, postage prepaid, to the addresses set forth in the registration books. Neither a failure of the Registered Owner hereof to receive such notice nor any defect therein will affect the validity of the proceedings for redemption. All Bonds or portions thereof so called for redemption will cease to accrue interest on the specified redemption date, provided that funds for the redemption are on deposit with the Trustee on the redemption date. Thereafter, the registered owners of such Bonds shall have no rights except to receive payment of the redemption price upon the surrender of the Bonds.

This Bond shall be registered in the name of the Registered Owner hereof, as to both principal and interest, and the District and the Trustee may treat the Registered Owner hereof as the absolute owner for all purposes and shall not be affected by any notice to the contrary.

The Bonds are issuable only in fully registered form in the denomination of $5,000 or any integral multiple thereof and may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations of the same issue and maturity, all as more fully set forth in the Indenture. This Bond is transferable by the Registered Owner hereof, in person or by his attorney duly authorized in writing, at the Principal Office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, upon surrender and cancellation of this Bond. Upon such transfer, a new registered Bond of authorized denomination or denominations for the same aggregate principal amount of the same issue and maturity will be issued to the transferee in exchange therefor.

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The Trustee shall not be required to register transfers or make exchanges of: (i) any Bonds for a period of 15 days next preceding any selection of the Bonds to be redeemed; or (ii) any Bonds chosen for redemption.

The rights and obligations of the District and of the registered owners of the Bonds may be amended at any time, and in certain cases without notice to or the consent of the registered owners, to the extent and upon the terms provided in the Indenture.

THE BONDS DO NOT CONSTITUTE OBLIGATIONS OF THE CITY OR OF THE

DISTRICT FOR WHICH THE CITY OR THE DISTRICT IS OBLIGATED TO LEVY OR

PLEDGE, OR HAS LEVIED OR PLEDGED, GENERAL OR SPECIAL TAXES, OTHER THAN THE NET TAXES REFERENCED HEREIN. THE BONDS ARE LIMITED OBLIGATIONS OF

THE DISTRICT PAYABLE FROM THE PORTION OF THE NET TAXES AND OTHER

AMOUNTS PLEDGED UNDER THE INDENTURE BUT ARE NOT A DEBT OF THE CITY,

THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR RESTRICTION.

This Bond shall not become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the Trustee.

IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by law, and that the amount of this Bond, together with all other indebtedness of the District, does not exceed any debt limit prescribed by the laws or Constitution of the State of California.

IN WITNESS WHEREOF, the District has caused this Bond to be dated as of the Dated Date, to be signed by the facsimile signature of the Mayor of the City on behalf of the District, acting as the legislative body of the District, and attested by the facsimile signature of the City Clerk of the City.

By:

Mayor of the City of Indio, acting as the
legislative body of City of Indio Community
Facilities District No. 2004-3 (Terra Lago)
ATTEST:

City Clerk of the City of Indio,
acting as the legislative body of
City of Indio Community Facilities
District No. 2004-3 (Terra Lago)

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[FORM OF TRUSTEE’S CERTIFICATE
OF AUTHENTICATION AND REGISTRATION]
This is one of the Bonds described in the within-defined Indenture.

Dated: ________, 2026 U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee
By:

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

City Clerk of the City of Indio,
acting as the legislative body of
City of Indio Community Facilities
District No. 2004-3 (Terra Lago)

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[FORM OF ASSIGNMENT]
For value received the undersigned hereby sells, assigns and transfers unto (Name, Address, and Tax Identification or Social Security Number of Assignee) the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s) _________________________________________________________________________ attorney, to transfer the same on the Registration Books of the Trustee with full power of substitution in the premises.

Dated:

Signature Guaranteed:

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

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

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Draft of 11/13/25
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ESCROW AGREEMENT (2015 Bonds)
THIS ESCROW AGREEMENT (2015 BONDS), dated as of February 1, 2026 (this “Agreement”), by and between City of Indio Community Facilities District No. 2004-3 (Terra Lago) (the “District”) and U.S. Bank Trust Company, National Association, as escrow agent (the “Escrow Agent”), is entered into in accordance with a resolution of the District adopted on December 17, 2025 and a Bond Indenture, dated as of August 1, 2015, (the “2015 Bond Indenture”) by and between the District and U.S. Bank Trust Company, National Association, as successor trustee (the “2015 Trustee”). This Agreement is entered into to refund all of the District’s outstanding Special Tax Refunding Bonds Series 2015 (Improvement Area) (the “2015 Bonds”).

RECITALS
A. Pursuant to the 2015 Bond Indenture, the District has previously issued the 2015 Bonds in the initial aggregate principal amount of $15,530,000, of which $8,530,000 is currently outstanding.

B. The 2015 Bonds are payable from Net Taxes (as such term is defined in the 2015 Bond Indenture) levied on properties within Improvement Area No. 1 of the District.

C. The District has determined to issue its Improvement Area No. 1 2026 Special Tax Refunding Bonds (the “2026 Bonds”), a portion of the proceeds of which, together with other moneys as described in Section 1, will be applied to pay on ______, 2026 (the “Redemption Date”) the principal of the 2015 Bonds maturing after the Redemption Date, plus interest with respect thereto accrued through the Redemption Date, without premium.

D. The District will irrevocably deposit moneys with the Escrow Agent, which moneys will be used to purchase the securities that are described on Schedule A (the “Federal Securities”) (as permitted by, in the manner prescribed by and all in accordance with the 2015 Bond Indenture Agreement). Such Federal Securities satisfy the criteria set forth in Section 6.2 of the 2015 Bond Indenture, and the principal of and interest on such Federal Securities when paid will provide money which will be fully sufficient to pay and discharge the 2015 Bonds.

AGREEMENT
SECTION 1. Deposit of Moneys. The District will cause U.S. Bank Trust Company, National Association, as trustee for the 2026 Bonds, to transfer a portion of the proceeds of the 2026 Bonds in the amount of $___ on the date of issuance of the 2026 Bonds to the Escrow Agent for deposit in the Escrow Fund established hereunder. In addition, on the date of issuance of the 2026 Bonds, the District will cause the 2015 Trustee to transfer to the Escrow Agent for deposit in the Escrow Fund: (i) $____ held in the Reserve Account established under the 2015 Bond Indenture; and (ii) $____ held in the other accounts established under the 2015 Bond Indenture.

The Escrow Agent will hold such amounts in an irrevocable escrow separate and apart from other moneys of the District and the Escrow Agent in a fund hereby created and established to be known as the “Escrow Fund” and to be applied solely as provided in this Agreement. The District represents that the sum of the amounts set forth above are at least equal to an amount that is sufficient to purchase the Federal Securities listed on Schedule A and hold $_____ uninvested as cash.

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SECTION 2. Investment of Moneys. The Escrow Agent acknowledges receipt of the moneys described in Section 1 and agrees immediately to invest such moneys in the Federal Securities listed on Schedule A and to deposit such Federal Securities in the Escrow Fund. Each of the 2015 Trustee and the Escrow Agent shall be entitled to rely upon the conclusion of the report delivered by Causey Public Finance LLC (the “Verification Agent”) in connection herewith that the Federal Securities listed on Schedule A mature and bear interest payable in such amounts and at such times as, together with cash on deposit in the Escrow Fund, will be sufficient to pay, on the Redemption Date, the principal of the 2015 Bonds maturing after the Redemption Date, plus interest with respect thereto accrued through the Redemption Date, without premium.

SECTION 3. Investment of Any Remaining Moneys. At the written direction of the District, together with an unqualified opinion of Stradling Yocca Carlson & Rauth LLP, to the effect that reinvestment is permitted under the legal documents in effect with respect to the 2015 Bonds and will not have an adverse effect on the federal tax status of the 2015 Bonds, the Escrow Agent shall reinvest any other amount of principal and interest, or any portion thereof, received from the Federal Securities prior to the date on which such payment is required for the purposes set forth herein, in noncallable Federal Securities maturing not later than the date on which such payment or portion thereof is required for the purposes set forth in Section 5, as directed in such written direction of the District as verified in a report prepared by an Independent Financial Consultant (as such term is defined in the 2015 Bond Indenture) to the effect that the reinvestment described in said report will not adversely affect the sufficiency of the amounts of securities, investments and money in the Escrow Fund to pay, on the Redemption Date, the principal of the 2015 Bonds maturing on and after the Redemption Date, plus interest with respect thereto accrued through the Redemption Date, without premium, and accompanied by a certificate of an independent certified public accountant or firm of certified public accountants of favorable national reputation experienced in the refunding of obligations of political subdivisions confirming the accuracy of the calculations establishing the sufficiency of such deposit. Any interest income resulting from investment or reinvestment of moneys pursuant to this Section which is not required for the purposes set forth in Section 5, as verified in the letter of the Verification Agent originally obtained by the District with respect to the refunding of the 2015 Bonds or in any other report prepared by an independent certified public accountant or firm of certified public accountants of favorable national reputation experienced in the refunding of obligations of political subdivisions, shall be paid to the District promptly upon the receipt of such interest income by the Escrow Agent and written direction by the District. The determination of the District as to whether an accountant qualifies under this Agreement shall be conclusive. The Escrow Agent may conclusively rely upon the written instructions of the District as to both the suitability and legality of any investments directed hereunder, and upon any such opinion, letter and report, and shall have no responsibility or liability with respect thereto.

SECTION 4. Substitution of Securities. Upon the written request of the District, and subject to the conditions and limitations that are set forth herein, the Escrow Agent shall sell, redeem or otherwise dispose of all or a portion of the Federal Securities (as so directed by the District), provided that there are substituted therefor from the proceeds of the Federal Securities other Federal Securities, but only after the District has obtained and delivered to the Escrow Agent: (i) an unqualified opinion of Stradling Yocca Carlson & Rauth LLP, to the effect that the substitution of securities is permitted under the legal documents in effect with respect to the 2015 Bonds and will not have an adverse effect on the tax status of the 2015 Bonds; (ii) a report by an Independent Financial Consultant (as such term is defined in the 2015 Bond Indenture) to the effect that the reinvestment described in said report will not adversely affect the sufficiency of the amounts of securities, investments and money in the Escrow Fund to pay, on the Redemption Date, the principal

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of the 2015 Bonds maturing on and after the Redemption Date, plus interest with respect thereto accrued through the Redemption Date, without premium; and (iii) a certificate of an independent certified public accountant or a firm of independent certified public accountants confirming the accuracy of the calculations establishing the sufficiency of such deposit. The Escrow Agent shall not be liable or responsible for any loss resulting from any reinvestment made pursuant to this Agreement and in full compliance with the provisions hereof, and may conclusively rely upon the written instructions of the District as to both the suitability and legality of any substituted investments directed hereunder, and upon any such opinion and report, and shall have no responsibility or liability with respect thereto.

SECTION 5. Payment of 2015 Bonds.
(a) Payment. From the maturing principal of the Federal Securities and the investment income and other earnings thereon and other moneys on deposit in the Escrow Fund, the Escrow Agent shall transfer funds to the 2015 Trustee in an amount sufficient to enable the 2015 Trustee to pay, on the Redemption Date, the principal of the 2015 Bonds maturing on and after the Redemption Date, plus interest with respect thereto accrued through the Redemption Date, without premium, all as indicated on Schedule A.
(b) Irrevocable Instructions to Provide Notice. The notices required to be mailed pursuant to Sections 10.8 of the 2015 Bond Indenture are substantially in the forms attached hereto as Exhibits A and B. The District hereby irrevocably instructs the 2015 Trustee: (i) to mail a notice of redemption of the 2015 Bonds maturing after the Redemption Date substantially in the form attached hereto as Exhibit A at least 30 days prior to the Redemption Date to the parties described in and otherwise in accordance with Section 4.3 of the 2015 Bond Indenture (including The Depository Trust Company and the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System (“EMMA”), maintained on the Internet at http://emma.msrb.org/); and (ii) to mail a notice of defeasance of the 2015 Bonds in the form attached hereto as Exhibit B on the date of issuance of the 2026 Bonds to the parties described in and otherwise in accordance with Section 9.1 of the 2015 Bond Indenture (including EMMA), as required to provide for the payment and redemption of the 2015 Bonds in accordance with this Section. The 2015 Trustee shall not have any liability to any party in connection with any failure to timely post such notices on EMMA and the sole remedy available shall be an action in mandamus by the holders of the 2015 Bonds for specific performance or similar remedy to compel performance.
(c) Unclaimed Moneys. Any moneys in the Escrow Fund which remain unclaimed after the Redemption Date shall be repaid (without liability for interest) by the Escrow Agent to the District.
(d) Priority of Payments. The owners of the 2015 Bonds shall have a first and exclusive lien on all moneys and securities in the Escrow Fund until such moneys and such securities are used and applied as provided in this Agreement.
(e) Termination of Obligation. As provided in the 2015 Bond Indenture , upon the deposit of moneys with the Escrow Agent in the Escrow Fund as set forth in Section 1 and the purchase of the Federal Securities as provided in Section 2, the 2015 Bonds will be legally defeased in accordance with the 2015 Bond Indenture except as set forth therein.

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SECTION 6. Application of Certain Terms of the 2015 Bond Indenture . All of the terms of the 2015 Bond Indenture relating to the making of payments of principal of and interest on the 2015 Bonds and relating to the exchange or transfer of the 2015 Bonds are incorporated in this Agreement as if set forth in full herein. The procedures set forth in Article VII of the 2015 Bond Indenture relating to the resignation and removal of the 2015 Trustee are hereby made applicable to the Escrow Agreement and incorporated in this Agreement as if set forth in full herein naming the Escrow Agent in place of the 2015 Trustee and shall be the procedures to be followed with respect to any resignation or removal of the Escrow Agent hereunder.

SECTION 7. Performance of Duties. The Escrow Agent agrees to perform only the duties that are set forth herein and shall have no responsibility to take any action or omit to take any action that is not set forth herein.

SECTION 8. Escrow Agent’s Authority to Make Investments. Except as provided in Section 2 and 3 hereof, the Escrow Agent shall have no power or duty to invest any funds that are held hereunder or to sell, transfer or otherwise dispose of the moneys or Federal Securities that are held hereunder.

SECTION 9. Indemnity. The District hereby assumes liability for, and hereby agrees (whether or not any of the transactions contemplated hereby are consummated) to indemnify, protect, save and keep harmless the Escrow Agent and its respective successors, assigns, directors, officers, agents, employees and servants, from and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements (including reasonable legal fees and disbursements) of whatsoever kind and nature which may be imposed on, incurred by or asserted against the Escrow Agent at any time (whether or not also indemnified against the same by the District or any other person under any other agreement or instrument, but without double indemnity) in any way relating to or arising out of the execution, delivery and performance of this Agreement, the enforcement of any provision of this Agreement (including without limitation enforcement of the District’s obligations under this Section 9), the establishment hereunder of the Escrow Fund, the acceptance of the funds and securities deposited therein, the retention of the proceeds thereof and any payment, transfer or other application of moneys or securities by the Escrow Agent in accordance with the provisions of this Agreement; provided, however, that the District shall not be required to indemnify the Escrow Agent against the Escrow Agent’s own negligence or willful misconduct or the negligence or willful misconduct of the Escrow Agent’s respective employees. In no event shall the District or the Escrow Agent be liable to any person by reason of the transactions that are contemplated hereby other than to each other as set forth in this Section. The indemnities that are contained in this Section shall survive the termination of this Agreement and the resignation or removal of the Escrow Agent.

SECTION 10. Responsibilities of Escrow Agent. The Escrow Agent and its agents and servants shall not be held to any personal liability whatsoever, in tort, contract or otherwise, in connection with the execution and delivery of this Agreement, the establishment of the Escrow Fund, the acceptance of the moneys or securities deposited therein, the retention of the Federal Securities or the proceeds thereof, the sufficiency of the cash on deposit in the Escrow Fund and the Federal Securities to pay the 2015 Bonds or any payment, transfer or other application of moneys or obligations by the Escrow Agent in accordance with the provisions of this Agreement or by reason of any non-negligent act, non-negligent omission or non-negligent error of the Escrow Agent that is made in good faith in the conduct of its duties. The recitals of fact that are contained herein shall be taken as the statements of the District, and the Escrow Agent assumes no responsibility for the

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correctness thereof. The Escrow Agent makes no representation as to the sufficiency of the proceeds deposited into the Escrow Fund or from the investment thereof to accomplish the refunding of the 2015 Bonds or to the validity of this Agreement as to the District and, except as otherwise provided herein, the Escrow Agent shall incur no liability in respect thereof. The Escrow Agent shall not be liable in connection with the performance of its duties under this Agreement except for its own negligence or willful misconduct, and the duties and obligations of the Escrow Agent shall be determined solely by the express provisions of this Agreement. The Escrow Agent may consult with counsel, who may or may not be counsel to the District, and in reliance upon the written opinion or advice of such counsel shall have full and complete authorization and protection in respect of any action taken, suffered or omitted by it in good faith in accordance therewith. Whenever the Escrow Agent shall deem it necessary or desirable that a matter be proved or established prior to taking, suffering, or omitting any action under this Agreement, such matter may be deemed to be conclusively established by a certificate signed by an officer of the District. The Escrow Agent shall incur no liability for losses arising from any investment made pursuant to this Agreement. The Escrow Agent may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties.

No provision of this Agreement shall require the Escrow Agent to expend or risk its own funds or otherwise incur any financial liability in the performance or exercise of any of its duties hereunder, or in the exercise of its rights or powers.

The Escrow Agent may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, custodians or nominees appointed with due care, and shall not be responsible for any willful misconduct or negligence on the part of any agent, attorney, custodian or nominee so appointed.

The Escrow Agent shall have the right to accept and act upon instructions, including funds transfer instructions (“Instructions”) given pursuant to this Agreement and delivered using Electronic Means (“Electronic Means” shall mean the following communications methods: e-mail, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Escrow Agent, or another method or system specified by the Escrow Agent as available for use in connection with its services hereunder); provided, however, that the District shall provide to the Escrow Agent an incumbency certificate listing officers with the authority to provide such Instructions (“Authorized Officers”) and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended by the District whenever a person is to be added or deleted from the listing. If the District elects to give the Escrow Agent Instructions using Electronic Means and the Escrow Agent in its discretion elects to act upon such Instructions, the Escrow Agent’s understanding of such Instructions shall be deemed controlling. The District understands and agrees that the Escrow Agent cannot determine the identity of the actual sender of such Instructions and that the Escrow Agent shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Escrow Agent have been sent by such Authorized Officer. The District shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Escrow Agent and that the District and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the District. The Escrow Agent shall not be liable for any losses, costs or expenses arising directly or indirectly from the Escrow Agent’s reliance upon and compliance with

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such Instructions notwithstanding the fact that such directions conflict or are inconsistent with a subsequent written instruction. The District agrees: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Escrow Agent, including without limitation the risk of the Escrow Agent acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Escrow Agent and that there may be more secure methods of transmitting Instructions than the method(s) selected by the District; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Escrow Agent immediately upon learning of any compromise or unauthorized use of the security procedures.

The Escrow Agent shall furnish the District with periodic cash transaction statements which include detail for all investment transactions effected by the Escrow Agent or brokers selected by the District, provided that the Escrow Agent is not obligated to provide an accounting for any fund or account that: (a) has a balance of $0.00; and (b) has not had any activity since the last reporting date.

Upon the District’s election, such statements will be delivered via the Escrow Agent’s online service and upon electing such service, paper statements will be provided only upon request. The District waives the right to receive brokerage confirmations of security transactions effected by the Escrow Agent as they occur, to the extent permitted by law. The District further understands that trade confirmations for securities transactions effected by the Escrow Agent will be available upon request and at no additional cost and other trade confirmations may be obtained from the applicable broker.

If the Escrow Agent learns that the Department of the Treasury or the Bureau of Public Debt will not, for any reason, accept a subscription of securities that is to be submitted pursuant to this Agreement, the Escrow Agent shall promptly request alternative written investment instructions from the District with respect to escrowed funds which were to be invested in securities. The Escrow Agent shall follow such instructions and, upon the maturity of any such alternative investment, the Escrow Agent shall hold funds uninvested and without liability for interest until receipt of further written instructions from the District. In the absence of investment instructions from the District, the Escrow Agent shall not be responsible for the investment of such funds or interest thereon. The Escrow Agent may conclusively rely upon the District’s selection of an alternative investment as a determination of the alternative investment’s legality and suitability and shall not be liable for any losses related to the alternative investments or for compliance with any yield restriction applicable thereto.

In no event shall the Escrow Agent be liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including but not limited to lost profits) even if the Escrow Agent has been advised of the likelihood of such damages and regardless of the form of such action.

The Escrow Agent shall not be liable for delays or failures in performance resulting from acts beyond its control. Such acts shall include but not be limited to acts of God, strikes, lockouts, riots, acts of war, epidemics, pandemics, quarantine restrictions, acts of civil or military authority, governmental regulations superimposed after the fact, fire, communication line failures, computer viruses, power failures, earthquakes or other disasters.

SECTION 11. Amendments. This Agreement is made for the benefit of the District and the owners from time to time of the 2015 Bonds and it shall not be repealed, revoked, altered or amended without the written consent of all such owners, the Escrow Agent and the District; provided, however, that the District and the Escrow Agent may, without the consent of, or notice to, such

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owners, amend this Agreement or enter into such agreements supplemental to this Agreement as shall not materially adversely affect the rights of such owners and as shall not be inconsistent with the terms and provisions of this Agreement or the 2015 Bond Indenture , for any one or more of the following purposes: (i) to cure any ambiguity or formal defect or omission in this Agreement; (ii) to grant to, or confer upon, the Escrow Agent for the benefit of the owners of the 2015 Bonds any additional rights, remedies, powers or authority that may lawfully be granted to, or conferred upon, such owners or the Escrow Agent; and (iii) to include under this Agreement additional funds. The Escrow Agent shall be entitled to rely conclusively upon an unqualified opinion of Stradling Yocca Carlson & Rauth LLP, with respect to compliance with this Section, including the extent, if any, to which any change, modification, addition or elimination affects the rights of the owners of the various 2015 Bonds or that any instrument that is executed hereunder complies with the conditions and provisions of this Section.

SECTION 12. Notice to Rating Agencies. In the event that this Agreement or any provision thereof is severed, amended or revoked, the Escrow Agent, upon written instructions from the District, shall provide written notice in the form provided by the District of such severance, amendment or revocation to the rating agencies then rating the 2015 Bonds.

SECTION 13. Term. This Agreement shall commence upon its execution and delivery and shall terminate on the later to occur of either: (i) the date upon which the 2015 Bonds have been paid in accordance with this Agreement; or (ii) the date upon which no unclaimed moneys remain on deposit with the Escrow Agent pursuant to Section 5(c) of this Agreement. Funds remaining in the Escrow Fund after payment in full of the 2015 Bonds shall be transferred to the District.

SECTION 14. Compensation. The District agrees to pay the Escrow Agent its reasonable fees and expenses (including legal fees and expenses) as previously agreed to by the Escrow Agent and the District, and any other reasonable fees and expenses of the Escrow Agent; provided, however, that under no circumstances shall the Escrow Agent be entitled to any lien or assert any lien whatsoever on any moneys or obligations in the Escrow Fund for the payment of fees and expenses for services that are rendered or expenses incurred by the Escrow Agent under this Agreement.

SECTION 15. Severability. If any one or more of the covenants or agreements provided in this Agreement on the part of the District or the Escrow Agent to be performed should be determined by a court of competent jurisdiction to be contrary to law, such covenants or agreements shall be null and void, shall be deemed separate from the remaining covenants and agreements contained herein and shall in no way affect the validity of the remaining provisions of this Agreement.

SECTION 16. Counterparts; Electronic Delivery of Signatures. This Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as an original but all of which shall constitute and be but one and the same instrument. Signatures appearing on any counterpart of this Agreement may be delivered by Electronic Means or by electronic delivery in PDF format, which transmission or delivery shall be deemed delivery of an originally executed document.

SECTION 17. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED UNDER THE LAWS OF THE STATE OF CALIFORNIA.

SECTION 18. Holidays. If the date for making any payment or the last date for performance of any act or the exercising of any right, as provided in this Agreement, shall be a legal holiday or a

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day on which banking institutions in the city in which is located the office of the Escrow Agent are authorized by law to remain closed, such payment may be made or act performed or right exercised on the next succeeding day which is not a legal holiday or a day on which such banking institutions are authorized by law to remain closed, with the same force and effect as if done on the nominal date provided in this Agreement, and no interest shall accrue for the period from and after such nominal date.

SECTION 19. Assignment. This Agreement shall not be assigned by the Escrow Agent or any successor thereto without the prior written consent of the District; provided, however, that no such consent shall be required with respect to an assignment effected pursuant to Section 20.

SECTION 20. Reorganization of Escrow Agent. Notwithstanding anything to the contrary contained in this Agreement, any company into which the Escrow Agent may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which the Escrow Agent is a party, or any company to which the Escrow Agent may sell or transfer all or substantially all of its corporate trust business, shall be the successor to the Escrow Agent without execution or filing of any paper or any paper or further act, if such company is eligible to serve as Escrow Agent.

SECTION 21. Insufficient Funds. If at any time the Escrow Agent has actual knowledge that the moneys and investments in the Escrow Fund will not be sufficient to make all payments required by this Agreement, the Escrow Agent shall notify the District in writing of the amount thereof and the reason therefor to the extent known to it. The Escrow Agent shall have no responsibility regarding any such deficiency.

SECTION 22. Notices. Any notice to or demand upon the Escrow Agent may be served or presented, and such demand may be made, at the principal corporate trust office of the Escrow Agent at 633 West Fifth Street, 24 th Floor, Los Angeles, CA 90071, Attention: Global Corporate Trust.

Any notice to or demand upon the District shall be deemed to have been sufficiently given or served for all purposes by being sent by facsimile or other electronic transmission, overnight mail or courier or mailed by registered or certified mail, and deposited, postage prepaid, in a post office letter box, addressed to the District at 100 Civic Center Mall, Indio, CA 92201, Attention: City Manager (or such other address as may have been filed in writing by the District with the Escrow Agent).

SECTION 23. OFAC Compliance. The District covenants and represents that neither it nor any of its affiliates, subsidiaries, directors or officers are the target or subject of any sanctions enforced by the United States Government (including the Office of Foreign Assets Control of the United States Department of the Treasury, the United Nations Security Council, the European Union, HM Treasury, or other relevant sanctions authority (collectively “Sanctions”). The District further covenants and represents that neither it nor any of its affiliates, subsidiaries, directors or officers will use any payments made pursuant to this Agreement: (i) to fund or facilitate any activities of or business with any person who, at the time of such funding or facilitation, is the subject or target of Sanctions; (ii) to fund or facilitate any activities of or business with any country or territory that is the target or subject of Sanctions; or (iii) in any other manner that will result in a violation of Sanctions by any person.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers as of the date first above written.

CITY OF INDIO COMMUNITY FACILITIES
DISTRICT NO. 2004-3 (TERRA LAGO)
By:

City Manager of the City of Indio,
acting as the legislative body of the
City of Indio Community Facilities
No. 2004-3 (Terra Lago)
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Escrow Agent and 2015 Trustee
By:

Authorized Officer

Resolution No. 10532 of City Council of the City of Indio acting as the ... Page 239 of 354 Schedule A-1
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SCHEDULE A

FEDERAL SECURITIES
Moneys deposited in the Escrow Fund shall be invested as follows:

Security Maturity
Principal
Amount Yield
The escrow requirements for the 2015 Bonds are as follows:

Period Ending Principal Paid
Principal
Redeemed Interest Total

Resolution No. 10532 of City Council of the City of Indio acting as the ... Page 240 of 354 Exhibit A-1
4900-1139-1606v5/200973-0009

EXHIBIT A

NOTICE OF FULL OPTIONAL REDEMPTION
$8,530,000|

CITY OF INDIO
COMMUNITY FACILITIES DISTRICT NO. 2004-3 (TERRA LAGO)

SPECIAL TAX REFUNDING BONDS
SERIES 2015
(IMPROVEMENT AREA NO. 1)
BASE CUSIP 455697
NOTICE IS HEREBY GIVEN to the owners of the above-captioned obligations (the “2015 Bonds”), which were issued pursuant to a Bond Indenture , dated as of August 1, 2015 (the “2015 Bond Indenture ”), by and between City of Indio Community Facilities District No. 2004-3 (Terra Lago) (the “District”) and U.S. Bank Trust Company, National Association as successor trustee, (the “2015 Trustee ”), that the outstanding 2015 Bonds in the aggregate principal amount of $8,530,000 have been called for redemption on ______, 2026 (the “Redemption Date”). The 2015 Bonds were originally issued on August 18, 2015 and are described in the following table.

Principal
Payment Date
(September 1)
CUSIP®†
(455697)
Principal
Amount Interest Rate
Redemption
Price
2026 DE9 $ 690,000 5.00% 100%
2027 DF6 720,000 5.00 100
2028 DG4 755,000 5.00 100
2029 DH2 800,000 4.00 100
2030 DJ8 830,000 4.00 100
2031 DK5 860,000 4.00 100
2035 DL3 3,875,000 5.00 100
The 2015 Bonds will be payable on the Redemption Date at a redemption price of 100% of the principal amount thereof plus accrued interest thereon to such date (the “Redemption Price”).

The Redemption Price of the 2015 Bonds will become due and payable on the Redemption Date.

Interest on the 2015 Bonds will cease to accrue and be payable from and after the Redemption Date, such 2015 Bonds will be surrendered to the 2015 Trustee and will no longer be entitled to any lien, benefit or security under the 2015 Bond Indenture and the owners thereof will have no rights in respect thereof except to receive payment of the Redemption Price on the Redemption Date.

To receive payment on the Redemption Date, owners of the 2015 Bonds are required to present and surrender said 2015 Bonds on or before the Redemption Date at the address of the 2015 Trustee set forth below:
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by FactSet Research Systems Inc. Copyright© CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. Neither the District nor its agents or counsel assume responsibility for the accuracy of such numbers.

Resolution No. 10532 of City Council of the City of Indio acting as the ... Page 241 of 354 Exhibit A-2
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REQUIREMENT INFORMATION
First Class/Registered/Certified/Express/By Hand
U.S. Bank Trust Company, National Association
Global Trust Company
111 Filmore Avenue East
St. Paul, MN 555107
A form W-9 must be submitted with the 2015 Bonds being refunded. Failure to provide a completed form W-9 will result in backup withholding pursuant to law. Under the Tax Cuts and Jobs Act, 24% will be withheld if the tax identification number is not properly certified.

If the owner of any 2015 Bond fails to deliver such 2015 Bond to the 2015 Trustee on the Redemption Date, such 2015 Bond shall nevertheless be deemed redeemed on the Redemption Date and the owner of such 2015 Bond shall have no rights in respect thereof except to receive payment of the Redemption Price from funds held by the 2015 Trustee for such payment.

Note: The District and the 2015 Trustee shall not be responsible for the selection or use of the CUSIP numbers selected or listed, nor is any representation made as to their correctness in this notice or as printed on any 2015 Bond. They are included solely for the convenience of the holders.

U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as 2015 Trustee
_____, 2026

Resolution No. 10532 of City Council of the City of Indio acting as the ... Page 242 of 354 Exhibit B-1
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EXHIBIT B

NOTICE OF DEFEASANCE
$8,530,000|

CITY OF INDIO
COMMUNITY FACILITIES DISTRICT NO. 2004-3 (TERRA LAGO)

SPECIAL TAX REFUNDING BONDS
SERIES 2015
(IMPROVEMENT AREA NO. 1)
BASE CUSIP 455697
NOTICE IS HEREBY GIVEN to the owners of the above-captioned obligations (the “2015 Bonds”) pursuant to a Bond Indenture Agreement, dated as of August 1, 2015 (the “2015 Bond Indenture ”), by and between City of Indio Community Facilities District No. 2004-3 (Terra Lago) (the “District”) and The Bank of MUFG Union Bank, N.A., with U.S. Bank Trust Company, National Association as successor, as trustee (the “2015 Trustee”), that the District has deposited with the 2015 Trustee, acting as escrow agent, federal securities in an amount that is sufficient (as evidenced by the report of an independent accountant or verification agent delivered to the 2015 Trustee) to pay on ____, 2026 the principal of all outstanding 2015 Bonds, plus accrued interest with respect thereto to such date. The 2015 Bonds were originally issued on August 18, 2015 and are described in the following table.

Principal
Payment Date
(September 1)
CUSIP®†
(455697)
Principal
Amount Interest Rate
2026 DE9 $ 690,000 5.00%
2027 DF6 720,000 5.00
2028 DG4 755,000 5.00
2029 DH2 800,000 4.00
2030 DJ8 830,000 4.00
2031 DK5 860,000 4.00
2035 DL3 3,875,000 5.00
In accordance with the 2015 Bond Indenture : (i) the 2015 Bonds have been legally defeased except as set forth therein; and (ii) all obligations of the District under the Continuing Disclosure Agreement, dated as of August 18, 2015, by and between the District and Willdan Financial Services, as dissemination agent, relating to the 2015 Bonds, have been terminated as of the date hereof.

The District and the 2015 Trustee shall not be responsible for, and no representation is made as to the correctness of the CUSIP number either as printed on any 2015 Bond or as contained herein and any error in the CUSIP number shall not affect the validity of the proceedings for redemption of the 2015 Bonds.
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by FactSet Research Systems Inc. Copyright© CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. Neither the District nor its agents or counsel assume responsibility for the accuracy of such numbers.

Resolution No. 10532 of City Council of the City of Indio acting as the ... Page 243 of 354 Exhibit B-2
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U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as 2015 Trustee
_____, 2026

Resolution No. 10532 of City Council of the City of Indio acting as the ... Page 244 of 354 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold, nor may offers to buy them be accepted, prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Stradling Yocca Carlson & Rauth
Draft of 12/4/2025
4922-6752-8569v6/200973-0009
PRELIMINARY OFFICIAL STATEMENT DATED ______, 2026
NEW ISSUE — BOOK-ENTRY ONLY Ratings: Insured Bonds: S&P “__” Underlying/Uninsured Bonds: S&P “_”
See the caption “CONCLUDING INFORMATION—Ratings”
In the opinion of Stradling Yocca Carlson & Rauth LLP, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described in this Official Statement, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State of California personal income tax. See the caption “CONCLUDING INFORMATION—Tax Matters” with respect to tax consequences relating to the Bonds, including with respect to the alternative minimum tax imposed on certain large corporations.

COUNTY OF RIVERSIDE STATE OF CALIFORNIA
$7,400,000

CITY OF INDIO
COMMUNITY FACILITIES DISTRICT NO. 2004-3 (TERRA LAGO)
IMPROVEMENT AREA NO. 1
2026 SPECIAL TAX REFUNDING BONDS
Dated: Date of Delivery Due: September 1, as shown on the inside cover page The City of Indio Community Facilities District No. 2004-3 (Terra Lago) Improvement Area No. 1 2026 Special Tax Refunding Bonds (the “Bonds”) are being issued by City of Indio Community Facilities District No. 2004-3 (Terra Lago) (the “District”) pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the Government Code of the State of California) (the “CFD Act”), and a Bond Indenture, dated as of ____ 1, 2026 (the “Indenture”), by and between the District and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), and will be secured as described herein. See the caption “SECURITY FOR THE BONDS.”
The Bonds are being issued: (i) together with other available funds, to refund the outstanding Community Facilities District No. 2004-3 (Terra Lago) of the City of Indio Special Tax Refunding Bonds Series 2015 (Improvement Area No. 1) (the “2015 Bonds”); [(ii) to pay the premium for a Municipal Bond Debt Service Reserve Insurance Policy for deposit in the Reserve Account to fund 50% of the initial Reserve Requirement and fund a cash deposit for the remaining 50% of the initial Reserve Requirement;] and (iii) to pay costs of issuance of the Bonds, including the premium for an insurance policy insuring the Insured Bonds (defined below).

The Bonds will be secured by special tax liens on taxable property within Improvement Area No. 1 of the District and certain funds held by the Trustee under the Indenture. The City of Indio (the “City”) has determined that it will not obligate itself to advance funds from its treasury to cover any delinquency on the Bonds. See the caption “SECURITY FOR THE BONDS.”
The Bonds will be issued in book-entry form, initially registered in the name of Cede & Co., New York, New York, as nominee of The Depository Trust Company (“DTC”), New York, New York. Interest on the Bonds will be payable on September 1, 2026 and each March 1 and September 1 thereafter.

Purchasers will not receive certificates representing their interest in the Bonds. Individual purchases of Bonds will be in principal amounts of $5,000 or in any integral multiple of $5,000. Payments of principal and interest will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants, which will remit such payments to the beneficial owners of the Bonds.

The Bonds are not subject to optional redemption prior to maturity, but are subject to extraordinary redemption from Special Tax prepayments prior to maturity as set forth herein. See the caption “THE BONDS—Redemption.”

ALL OBLIGATIONS OF THE DISTRICT UNDER THE INDENTURE AND THE BONDS ARE SPECIAL OBLIGATIONS OF THE DISTRICT, PAYABLE SOLELY FROM THE NET TAXES AND THE FUNDS PLEDGED THEREFOR UNDER THE INDENTURE. NEITHER THE FAITH AND

CREDIT NOR THE TAXING POWER OF THE DISTRICT (EXCEPT TO THE LIMITED EXTENT SET FORTH IN THE INDENTURE), THE CITY OR THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. EXCEPT FOR THE NET TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OR SPECIAL

OBLIGATIONS OF THE CITY NOR GENERAL OBLIGATIONS OF THE DISTRICT BUT ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM NET TAXES.
[The scheduled payment of principal of and interest on the Bonds maturing on September 1 of the years 20__ through 20__, inclusive (collectively, the “Insured Bonds”), when due will be guaranteed under a municipal bond insurance policy to be issued concurrently with the delivery of the Insured Bonds by __________ (the “Insurer”). The Insurer will also issue a debt service reserve insurance policy concurrently with the issuance of the Bonds to be credited to the Reserve Account for the Bonds to satisfy _____% of the initial Reserve Requirement. See “BOND INSURANCE” herein.] [INSURER’S LOGO]
See the caption “SPECIAL RISK FACTORS” for a discussion of certain risk factors that should be considered in addition to the other matters set forth herein when evaluating the investment quality of the Bonds. This cover page contains certain information for quick reference only. It is not a complete summary of the Bonds. Investors should read the entire Official Statement to obtain information essential to the making of an informed investment decision.

MATURITY SCHEDULE
(See inside cover)
The Bonds are offered, when, as and if issued and accepted by the Underwriter, subject to approval as to their validity by Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed upon for the City and the District by Burke, Williams & Sorensen, LLP, San Diego, California, as the City Attorney, and by Stradling Yocca Carlson & Rauth LLP , Newport Beach, California, Disclosure Counsel, for the Underwriter by Best Best & Krieger LLP, Los Angeles, California, for the Insurer by its counsel and for the Trustee by its counsel. It is anticipated that the Bonds will be available for delivery in book-entry form through the facilities of DTC on or about ___, 2026. [UNDERWRITER’S LOGO]
Dated: __, 2026
 Preliminary, subject to change.

Resolution No. 10532 of City Council of the City of Indio acting as the ... Page 245 of 354 4922-6752-8569v6/200973-0009
$7,400,000

CITY OF INDIO COMMUNITY FACILITIES
DISTRICT NO. 2004-3 (TERRA LAGO)
IMPROVEMENT AREA NO. 1
2026 SPECIAL TAX REFUNDING BONDS

MATURITY SCHEDULE
Base CUSIP®†:

Maturity Date
(September 1)
Principal
Amount Interest Rate Yield Price CUSIP®†
$ % %
 Preliminary, subject to change.

I Insured Bond.
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by FactSet Research Systems Inc. Copyright© CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. None of the District, the Underwriter or their agents or counsel assume responsibility for the accuracy of such numbers.

Resolution No. 10532 of City Council of the City of Indio acting as the ... Page 246 of 354 4922-6752-8569v6/200973-0009

THE CITY OF INDIO

CITY COUNCIL
Elaine Holmes, Mayor
Waymond Fermon, Mayor Pro Tem
Oscar Ortiz, Council Member
Benjamin Guitron, Council Member
Glenn Miller, Council Member

OFFICIALS
Bryan Montgomery, City Manager
Jonathan Nicks, Assistant City Manager
Rob Rockwell, City Treasurer
Steven Graham, City Attorney
Cynthia Hernandez, City Clerk
City Attorney
Steven Graham
Indio, California
Bond and Disclosure Counsel
Stradling Yocca Carlson & Rauth LLP
Newport Beach, California
Municipal Advisor
Fieldman, Rolapp & Associates, Inc.

Irvine, California
Special Tax Consultant
Willdan Financial Services
Temecula, California
Verification Agent
Causey Public Finance, LLC
Denver, Colorado
Trustee/Escrow Agent
U.S. Bank Trust Company, National Association
Los Angeles, California

Resolution No. 10532 of City Council of the City of Indio acting as the ... Page 247 of 354 4922-6752-8569v6/200973-0009
No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations, other than as contained in this Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by the City or the District.

This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale.

The information set forth herein which has been obtained from parties other than the City and the District is believed to be reliable but is not guaranteed as to accuracy or completeness by the City or the District. The information and expressions of opinion stated herein are subject to change without notice. The delivery of this Official Statement shall not, under any circumstances, create any implication that there has been no change in the affairs of the City or the District since the date hereof.

The Underwriter has provided the following sentence for inclusion in this Official Statement:

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

The information herein relating to the Bonds, the District and the City does not purport to be comprehensive or definitive. All references to the Bonds are qualified in their entirety by reference to the Indenture setting forth the terms and descriptions thereof. The summaries and references to any code, act, resolution or the Indenture, and to other statutes and documents in this Official Statement, do not purport to be comprehensive or definitive, and are qualified in their entirety by reference to each statute and document.

IN CONNECTION WITH THIS BOND UNDERWRITING, THE UNDERWRITER MAY

OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET

PRICE OF THE BONDS DESCRIBED HEREIN AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “project,” “budget,” “intend” or similar words. The achievement of certain results or other expectations contained in such forward-looking statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those that have been projected. No assurance is given that actual results will meet the forecasts set forth herein in any way, regardless of the optimism communicated in the information, and such statements speak only as of the date of this Official Statement. The City and the District disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained in this Official Statement to reflect any changes in the expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,

AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT, AND HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.

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The City maintains a website and certain social media accounts; however, the information presented there is not part of this Official Statement and should not be relied upon in making an investment decision with respect to the Bonds.
[__________ (the “Insurer”) makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, the Insurer has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding the Insurer, supplied by the Insurer and presented under the caption “BOND INSURANCE” and in Appendix G—“SPECIMEN MUNICIPAL BOND INSURANCE POLICY.”]

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TABLE OF CONTENTS
Page Page
i
4922-6752-8569v6/200973-0009
INTRODUCTION.............................................................1 Summary ....................................................................1 Covenant to Foreclose................................................2 No Parity Bonds Except for Refunding Purposes ......2
Bond Insurance...........................................................2 Reserve Account ........................................................2 Risk Factors................................................................3 THE REFUNDING PLAN................................................3 THE BONDS.....................................................................5 Description of the Bonds............................................5 Redemption ................................................................5 Notice of Redemption ................................................6 Effect of Redemption .................................................7 Transfers and Exchanges............................................8 Debt Service Schedule ...............................................8 SECURITY FOR THE BONDS .......................................8 Repayment of the Bonds ............................................8 Levy and Collection of Special Taxes......................12 Rate and Method of Apportionment of Special
Taxes .................................................................12 No Teeter Plan..........................................................14 Covenant to Foreclose..............................................15 No Parity Bonds Except for Refunding Purposes ....16
Priority of Lien .........................................................16 No Obligation of the City Upon Delinquency .........16
Prepayment of Special Taxes ...................................17 BOND INSURANCE......................................................17 IMPROVEMENT AREA NO. 1 .....................................17 General .....................................................................17 Historical Assessed Values ......................................18 Major Property Ownership.......................................18 Special Tax Levy......................................................19 Development Status..................................................20 Delinquency History ................................................21 Direct and Overlapping Debt ...................................22 Estimated Average Effective Tax Rates...................23 Estimated Assessed Value-to-Lien Ratios ...............25 THE CITY OF INDIO.....................................................25 SPECIAL RISK FACTORS............................................26 The Bonds are Limited Obligations of the
District...............................................................26 The Special Taxes are Not Personal Obligations
of the Owners ....................................................26 Potential Early Redemption of Bonds from
Prepayments ......................................................26 Risks of Real Estate Secured Investments
Generally...........................................................27 Concentration of Ownership ....................................27 Insufficiency of Special Taxes .................................27 Billing of Special Taxes ...........................................28 Non-Cash Payments of Special Taxes .....................29 Bankruptcy and Foreclosure Delays ........................29 FDIC/Federal Government Interests in Properties...30
Direct and Overlapping Debt ...................................32 Disclosures to Future Purchasers .............................32 Shapiro Decision ......................................................33 Natural Disasters ......................................................33 Property Insurance....................................................35 Land Values..............................................................35 Hazardous Substances ..............................................35 Cumulative Burden of Parity Taxes and Special
Assessments ......................................................36 California Constitution Article XIIIC and
Article XIIID.....................................................36 No Acceleration........................................................37 Limited Secondary Market.......................................37 Tax Cuts and Jobs Act..............................................38 Ballot Initiatives .......................................................38 Limitations on Remedies..........................................38 Cybersecurity ...........................................................38 Loss of Tax Exemption ............................................39 Climate Change ........................................................39 Risks Associated with Bond Insurance ....................40 CONCLUDING INFORMATION..................................40 Underwriting ............................................................40 Municipal Advisor....................................................41 Legal Opinion; Legal Matters ..................................41 Tax Matters ..............................................................41 No Litigation ............................................................43 Ratings......................................................................43 Continuing Disclosure..............................................44 Miscellaneous...........................................................44 APPENDIX A—SUMMARY OF CERTAIN
PROVISIONS OF THE INDENTURE .................A-1
APPENDIX B—FORM OF BOND COUNSEL
OPINION ...............................................................B-1 APPENDIX C—FORM OF CONTINUING
DISCLOSURE AGREEMENT..............................C-1
APPENDIX D—INFORMATION CONCERNING
DTC........................................................................D-1 APPENDIX E—AMENDED AND RESTATED RATE

AND METHOD OF APPORTIONMENT OF
SPECIAL TAXES ..................................................E-1 APPENDIX F— GENERAL INFORMATION

CONCERNING THE CITY OF INDIO AND THE
COUNTY OF RIVERSIDE....................................F-1 APPENDIX G—SPECIMEN MUNICIPAL BOND
INSURANCE POLICY .........................................G-1

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$7,400,000

CITY OF INDIO COMMUNITY FACILITIES
DISTRICT NO. 2004-3 (TERRA LAGO)
IMPROVEMENT AREA NO. 1
2026 SPECIAL TAX REFUNDING BONDS

INTRODUCTION
Summary
This Official Statement is provided to furnish certain information in connection with the issuance and sale by the City of Indio Community Facilities District No. 2004-3 (Terra Lago) (the “District”) of $7,400,000* aggregate principal amount of Community Facilities District No. 2004-3 (Terra Lago) Improvement Area No. 1 2026 Special Tax Refunding Bonds (the “Bonds”).

The Bonds will be issued pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 et seq. of the Government Code of the State of California (the “CFD Act”), and a Bond Indenture, dated as of February 1, 2026 (the “Indenture”), by and between the District and U.S.

Bank Trust Company, National Association, as trustee (the “Trustee”). Capitalized terms that are used in this Official Statement and not defined have the meanings which are ascribed thereto in Appendix A.

The Bonds are being issued: (i) together with other available funds, to refund the outstanding City of Indio Community Facilities District No. 2004-3 (Terra Lago) Special Tax Refunding Bonds Series 2015 (Improvement Area No. 1) (the “2015 Bonds”); [(ii) to pay the premium for a Municipal Bond Debt Service Reserve Insurance Policy (the “Reserve Policy”) to be issued by __________ (the “Insurer”) for deposit in the Reserve Account to fund _____% of the initial Reserve Requirement and fund a cash deposit for the remaining _____% of the initial Reserve Requirement]; and (iii) to pay costs of issuance of the Bonds, including the premium for a Municipal Bond Insurance Policy (the “Policy”) insuring the Bonds maturing on September 1 of the years 20__ through 20__, inclusive (collectively, the “Insured Bonds”), to be issued by the Insurer concurrently with the issuance of the Bonds. See the caption “THE REFUNDING PLAN.” The Bonds are limited obligations of the District payable from Net Taxes (as such term is defined under the caption “SECURITY FOR THE BONDS—Payment of the Bonds—General”) which are derived from the levy of Special Taxes on certain taxable property within Improvement Area No. 1 of the District (“Improvement Area No. 1”) and from certain funds held by the Trustee under the Indenture. See the caption “IMPROVEMENT AREA NO. 1” for information related to the property within Improvement Area No. 1 subject to the lien of the Special Taxes.

The City Council adopted its resolution of intention to establish the District on May 18, 2005, pursuant to which it also designated the respective territories comprising Improvement Area No. 1 and Improvement Area No. 2 of the District (“Improvement Area No. 2”). Improvement Area No. 2 was dissolved in 2014. In an election held on July 20, 2005, qualified electors of Improvement Area No. 1 of the District voted to (i) approve the Rate and Method, and (ii) authorize Improvement Area No. 1 of the District to incur up to $30,000,000 of bonded indebtedness. Pursuant to a resolution adopted by the City Council on September 20, 2006, the bonded indebtedness authorization for Improvement Area No. 1 was amended and reduced to $26,500,000. See the caption “IMPROVEMENT AREA NO. 1” for more information regarding the District and Improvement Area No. 1. As described under the captions “—No Parity Bonds Except for Refunding Purposes,” the District may issue Additional Bonds for refunding purposes only.  Preliminary, subject to change.

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ALL OBLIGATIONS OF THE DISTRICT UNDER THE INDENTURE AND THE BONDS ARE

SPECIAL OBLIGATIONS OF THE DISTRICT, PAYABLE SOLELY FROM THE NET TAXES AND THE FUNDS PLEDGED THEREFOR UNDER THE INDENTURE. NEITHER THE FAITH AND CREDIT NOR

THE TAXING POWER OF THE DISTRICT (EXCEPT TO THE LIMITED EXTENT SET FORTH IN THE INDENTURE), THE CITY OR THE STATE OF CALIFORNIA (THE “STATE”) OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. EXCEPT FOR THE NET TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE

NOT GENERAL OR SPECIAL OBLIGATIONS OF THE CITY NOR GENERAL OBLIGATIONS OF THE

DISTRICT BUT ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM NET TAXES.

Covenant to Foreclose
The District has covenanted in the Indenture to commence judicial foreclosure proceedings against parcels with delinquent Special Taxes in excess of $3,500 by the December 1 following the close of each Fiscal Year in which such Special Taxes were due and to diligently pursue such foreclosure proceedings until the delinquent Special Taxes are paid; provided, however, that the District is not required to undertake any such foreclosure proceedings if: (i) the amount of Special Taxes collected by the October 1 for the most recent Fiscal Year was equal to 95% or more of the total Special Tax levied in such Fiscal Year; and (ii) the amount on deposit in the Reserve Account and any reserve account established in connection with the issuance of such Parity Bonds as of October 1 was at least equal to the Reserve Requirement. See the caption “SECURITY FOR THE BONDS—Covenant to Foreclose.”
No Parity Bonds Except for Refunding Purposes
The District has covenanted in the Indenture that, except as described below, it will not issue any other obligations payable, as to principal or interest, from the Net Taxes which have, or purport to have, any lien upon the Net Taxes superior to or on a parity with the lien of the Bonds, other than Parity Bonds. Under the Indenture, the District may at any time after the issuance and delivery of the Bonds issue Parity Bonds payable from the Net Taxes and other amounts deposited in the Special Tax Fund (other than in the Administrative Expenses Account therein) and secured by a lien and charge upon such amounts equal to the lien and charge securing the Outstanding Bonds and any other Parity Bonds theretofore issued under the Indenture or under any Supplemental Indenture; provided, however, that Parity Bonds may only be issued for the purpose of refunding all or a portion of the Bonds or any Parity Bonds then Outstanding and the conditions precedent in the Indenture are satisfied, including the requirement that the issuance of such Parity Bonds will result in a reduction of Annual Debt Service on the Bonds and any Parity Bonds to be Outstanding following the issuance of such Parity Bonds.

Bond Insurance
The scheduled payment of principal of and interest on the Insured Bonds (consisting of the Bonds maturing on September 1, 20__ through 20__, inclusive) when due will be guaranteed under the Policy to be issued by the Insurer concurrently with the delivery of the Bonds. See the caption “BOND INSURANCE.” The Bonds maturing on September 1 of the years 20__ through 20__, inclusive, are not insured under the Policy.

Reserve Account
A Reserve Account for the Bonds has been established pursuant to the Indenture. The Reserve Requirement for the Bonds, as of the date of issuance of the Bonds, equals $_______. The Reserve Requirement on the date the Bonds are issued will be satisfied at the time of issuance of the Bonds by the deposit of cash in the amount of _____% of the Reserve Requirement and the deposit of the Reserve Policy in

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the stated amount of _____% of the Reserve Requirement. Subject to the limitations set forth in the Indenture, the Trustee may draw upon the Reserve Policy to pay the principal of, including sinking fund payments, and interest on the Bonds when due in the event that the moneys in the Special Tax Fund are insufficient therefor.

See the caption “SECURITY FOR THE BONDS—Repayment of the Bonds—Reserve Account of the Special Tax Fund.”
In the event of a draw on the Reserve Policy or the failure by the Insurer to honor a draw request, the District has no obligation to replenish the Reserve Account with cash or to provide an alternate reserve policy.

Risk Factors
See the caption “SPECIAL RISK FACTORS” for a discussion of certain risk factors which should be considered, in addition to the other matters set forth herein, in evaluating the investment quality of the Bonds generally.

Brief descriptions of the Bonds, the security for the Bonds, the District, the City and other information are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. The descriptions in this Official Statement of the Bonds, the Indenture and other documents are qualified in their entirety by reference to the forms thereof and the information with respect thereto included in the Bonds, the Indenture and such other documents.

THE REFUNDING PLAN
The Bonds are being issued in order to provide funds to defease and refund in full the 2015 Bonds, which are described in the following table. The 2015 Bonds were issued to refund special tax bonds issued by the District in 2005, which were issued to finance capital improvements within the District.

TABLE 1
2015 BONDS
Principal
Payment Date
(September 1)
CUSIP®†
(____)
Principal
Amount Interest Rate
Redemption
Price Redemption Date
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
TOTAL $
* Term Bonds.
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by FactSet Research Systems Inc. Copyright© CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. None of the District, the Underwriter or their agents or counsel assume responsibility for the accuracy of such numbers.

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Under an Escrow Agreement (2015 Bonds), dated as of February 1, 2026 (the “Escrow Agreement”), by and between the District and U.S. Bank Trust Company, National Association, as escrow agent (the “Escrow Agent”), the District will deliver a portion of the proceeds of the Bonds which, together with moneys held in certain funds related to the 2015 Bonds, will be deposited by the Escrow Agent in the escrow fund established under the Escrow Agreement (the “Escrow Fund”).

The Escrow Agent will invest a portion of the amounts deposited in the Escrow Fund in federal securities as set forth in the Escrow Agreement. From the moneys on deposit in the Escrow Fund and the investment earnings thereon, the Escrow Agent will pay on _____, 2026 (the “Redemption Date”) the principal of the outstanding 2015 Bonds maturing after the Redemption Date, plus interest with respect thereto accrued through the Redemption Date, without premium.

Sufficiency of the deposits in the Escrow Fund for such purposes will be verified by Causey Public Finance, LLC (the “Verification Agent”). Assuming the accuracy of such computations, as a result of the deposit and application of funds as provided in the Escrow Agreement, the 2015 Bonds will be defeased pursuant to the provisions of the indenture under which they were issued as of the date of issuance of the Bonds.

Upon the issuance of the Bonds, the Verification Agent will deliver a report on the mathematical accuracy of certain computations based upon certain information and assertions provided to it by the Underwriter relating to the adequacy of the moneys deposited in the Escrow Fund to pay: (i) the principal of and interest on the outstanding 2015 Bonds maturing on the Redemption Date; and (ii) on the Redemption Date, the principal of the outstanding 2015 Bonds maturing after the Redemption Date, plus interest with respect thereto accrued through the Redemption Date, without premium.

The amounts held by the Escrow Agent in the Escrow Fund are pledged solely to the payment of the outstanding 2015 Bonds. Neither the funds deposited in the Escrow Fund, nor any interest thereon, will be available for the payments of principal of or interest on the Bonds.

TABLE 2

ESTIMATED SOURCES AND USES
The estimated sources and uses of funds with respect to the Bonds and amounts transferred by the District to the Escrow Agent are set forth in the following table:

Sources of Funds(1)
Principal Amount of Bonds
Plus Net Original Premium
Plus Other Available Moneys(2)
Total Sources
Uses of Funds(1)
Transfer to Escrow Agent for Deposit in Escrow Fund
Underwriter’s Discount
Reserve Account(3)
Costs of Issuance(4)
Total Uses
(1) Rounded to nearest dollar.
(2) Includes moneys on deposit in funds and accounts related to the 2015 Bonds. (3) [Equal to _____% of the Reserve Requirement. The remaining _____% will be satisfied by the Reserve Policy.] (4) Includes legal fees, Municipal Advisor fees, printing fees, Trustee fees, Escrow Agent fees, Special Tax Consultant fees, Verification Agent fees, premiums for the Policy and the Reserve Policy and other Costs of Issuance.

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THE BONDS
Description of the Bonds
The Bonds will be issued in fully registered form and, when delivered, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”), New York, New York. DTC will act as securities depository for the Bonds. Ownership interests in the Bonds may be purchased in book-entry form only in denominations of $5,000 or any integral multiple thereof. The Bonds will be dated their date of delivery. The Bonds will bear interest at the rates per annum and will mature, subject to the redemption provisions set forth below, on the dates and in the principal amounts, all as set forth on the inside cover page of this Official Statement.

Interest on the Bonds is payable semiannually on September 1, 2026 and each March 1 and September 1 thereafter (each, an “Interest Payment Date”) to the persons in whose names ownership of the Bonds is registered on the Bond Register at the close of business on the immediately preceding Record Date, except as provided in the Indenture. “Record Date” means, with respect to any Interest Payment Date, the fifteenth calendar day of the month immediately preceding such Interest Payment Date. Interest on any Bond will be payable from the Interest Payment Date next preceding the date of authentication of such Bond, unless:
(a) such date of authentication is an Interest Payment Date, in which event interest will be payable from such date of authentication; (b) the date of authentication is after a Record Date but prior to the immediately succeeding Interest Payment Date, in which event interest will be payable from the Interest Payment Date immediately succeeding the date of authentication; or (c) the date of authentication is prior to the close of business on the first Record Date occurring after the issuance of such Bond, in which event interest will be payable from the dated date of such Bond; provided, however, that if at the time of authentication of such Bond, interest is in default, interest on such Bond will be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment on such Bond, interest on such Bond will be payable from its dated date.

Interest on any Bond will be paid to the person whose name appears in the Bond Register as the Owner of such Bond as of the close of business on the Record Date. Such interest will be paid by check of the Trustee mailed on the applicable Interest Payment Date by first class mail, postage prepaid, to such Bondowner at his or her address as it appears on the Bond Register. In addition, upon a request in writing received by the Trustee on or before the applicable Record Date from an Owner of $1,000,000 or more in principal amount of the Bonds or of any issue of Parity Bonds, payment will be made on the Interest Payment Date by wire transfer in immediately available funds to an account designated in writing by such Owner.

Notwithstanding the foregoing, as long as DTC is the Owner of all or part of the Bonds, said interest payments will be made to DTC in accordance with the procedures of DTC, which as of the date of issuance of the Bonds are by wire transfer in immediately available funds.

The Bonds will mature on September 1 in the principal amounts and years as shown on the inside front cover page hereof and are subject to extraordinary redemption from Special Tax prepayments as described under the caption “—Redemption.”
The Bonds will be issued in book-entry form, initially registered in the name of Cede & Co., as nominee of DTC. Payment of interest with respect to any Bond registered as of each Record Date in the name of Cede & Co. will be made by wire transfer of same-day funds to the account of Cede & Co. See Appendix D.

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

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Extraordinary Redemption of the Bonds from Special Tax Prepayments. The Bonds are subject to extraordinary redemption as a whole, or in part by lot, on any Interest Payment Date, and will be redeemed by the Trustee, from Prepayments deposited to the Redemption Account pursuant to the Indenture, plus amounts transferred from the Reserve Account pursuant to the Indenture, among maturities as directed in writing by the District, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date:

Redemption Date Redemption Price
Any Interest Payment Date from (and including) September 1, 2026 through (and including) March 1, 20__
103%
September 1, 20__ and March 1, 20__ 102
September 1, 20__ and March 1, 20__ 101
September 1, 20__ and any Interest Payment Date thereafter 100 The District will notify the Trustee of any extraordinary redemption at least 45 days prior to the Interest Payment Date on which such redemption shall occur.

See the caption “SPECIAL RISK FACTORS—Potential Early Redemption of Bonds from Prepayments”.

Selection of Bonds for Redemption. If less than all of the Bonds Outstanding are to be redeemed, the portion of any Bond of a denomination of more than $5,000 to be redeemed will be in the principal amount of $5,000 or an integral multiple thereof; provided, however, that Bonds held by the Depository will be subject to the procedures and requirements of the Depository. The Trustee will promptly notify the District in writing of the Bonds, or portions thereof, selected for redemption.

Partial Redemption. Upon surrender by the Owner of a Bond, at the option of such Owner, for mandatory redemption at the Principal Office of the Trustee, payment of such mandatory redemption of the principal amount of a Bond will be paid to such Owner. Upon surrender of any Bond to be redeemed in part only, the District will execute and the Trustee will authenticate and deliver to the Bondowner, at the expense of the District, a new Bond or Bonds or a new Parity Bond or Parity Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bonds surrendered, with the same interest rate and the same maturity or, in the case of surrender of a Parity Bond, a new Parity Bond or Parity Bonds subject to the foregoing limitations. Such mandatory redemption will be valid upon payment of the amount thereby required to be paid to such Owner, and the District and the Trustee will be released and discharged from all liability to the extent of such payment.

Notice of Redemption
When Bonds are due for redemption under the Indenture, the Trustee will give notice, in the name of the District, of the redemption of such Bonds; provided, however, that a notice of a redemption to be made from other than from Sinking Fund Payments will be conditioned on there being on deposit on the redemption date sufficient money to pay the redemption price of the Bonds or Parity Bonds to be redeemed. Such notice of redemption will: (a) specify the CUSIP numbers (if any) and the maturity date or dates of the Bonds selected for redemption; (b) state the date fixed for redemption and surrender of the Bonds to be redeemed; (c) state the redemption price; (d) state the place or places where the Bonds are to be redeemed; (e) in the case of Bonds to be redeemed only in part, state the portion of such Bond that is to be redeemed; (f) state the date of issue of the Bonds as originally issued; (g) state the rate of interest borne by each Bond being redeemed; and (h) state any other descriptive information needed to identify accurately the Bonds being redeemed as specified by the Trustee (the Trustee having no duty to state such additional descriptive information). Such notice will further state that on the date fixed for redemption, there will become due and payable on each Bond or portion thereof called for redemption the principal thereof, together with any premium, and interest accrued to the redemption date, and that from and after such date, interest thereon will cease to accrue and be payable. At

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least 30 days but no more than 45 days prior to the redemption date, the Trustee will mail a copy of such notice, by first class mail, postage prepaid, to the respective Owners thereof at their addresses appearing on the Bond Register. The actual receipt by the Owner of any Bond or the original purchaser of any Bond of notice of such redemption is not a condition precedent to redemption, and neither the failure to receive nor any defect in such notice will affect the validity of the proceedings for the redemption of such Bonds or the cessation of interest on the redemption date. A certificate by the Trustee that notice of such redemption has been given as provided in the Indenture will be conclusive as against all parties, and the Owner is not entitled to show that he or she failed to receive notice of such redemption. Redemption notices may state that no representation is made as to the accuracy or correctness of the CUSIP numbers printed therein or on the Bonds.

In addition to the foregoing notice, further notice will be given by the Trustee as set out below, but no defect in said further notice nor any failure to give all or any portion of such further notice will in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed. In addition to providing any notice of redemption to the Bondowners, if the Bonds are held in book-entry form, each further notice of redemption will be sent not later than the date that notice of redemption is mailed to the Bondowners by registered or certified mail or overnight delivery service to the Depository and by electronic notice to the Municipal Securities Rulemaking Board.

Upon the payment of the redemption price of any Bonds being redeemed, each check or other transfer of funds issued for such purpose will to the extent practicable bear the CUSIP number (if any) identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such check or other transfer.

With respect to any notice of extraordinary redemption of Bonds, such notice may state that such redemption is conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption of moneys sufficient to pay the principal of, premium, if any, and interest on such Bonds to be redeemed and that, if such moneys have not been so received, said notice will be of no force and effect and the Trustee will not be required to redeem such Bonds. In the event that such notice of redemption contains such a condition and such moneys are not so received, the redemption will not be made, and the Trustee will within a reasonable time thereafter give notice, in the manner in which the notice of redemption was given, that such moneys were not so received.

Effect of Redemption
Notice of redemption having been duly given, as provided in the Indenture, and the amount necessary for the redemption having been made available to the Trustee for that purpose and being available to the Trustee therefor on the date fixed for such redemption:
(a) the Bonds, or portions thereof, designated for redemption will, on the date fixed for redemption, become due and payable at the redemption price thereof as provided in the Indenture, anything in the Indenture or in the Bonds to the contrary notwithstanding; (b) upon presentation and surrender thereof at the Principal Office of the Trustee, the redemption price of such Bonds will be paid to the Owners thereof; (c) as of the redemption date, the Bonds, or portions thereof so designated for redemption will be deemed to be no longer Outstanding and such Bonds, or portions thereof, will cease to bear further interest; and
(d) as of the date fixed for redemption, no Owner of any of the Bonds or portions thereof so designated for redemption will be entitled to any of the benefits of the Indenture, or to any other rights, except with respect to payment of the redemption price and interest accrued to the redemption date from the amounts so made available.

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Transfers and Exchanges
So long as the Bonds remain in book-entry form, transfer and exchange of any of the Bonds will be accomplished in accordance with the provisions of such book-entry system. See Appendix D. In the event of termination of such book-entry system with respect to the Bonds, the Bonds may be transferred and exchanged in accordance with the terms of the Indenture. See Appendix B under the caption “GENERAL AUTHORIZATION AND BOND TERMS—Registration of Exchange or Transfer.” Debt Service Schedule
The following is the debt service schedule for the Bonds, assuming no redemptions prior to maturity.

TABLE 3

DEBT SERVICE SCHEDULE
Year Ending
September 1 Principal Interest
Total Debt
Service
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Total
Source: Underwriter.

SECURITY FOR THE BONDS
Repayment of the Bonds
General. Pursuant to the CFD Act and the Indenture, the Bonds and any Parity Bonds are equally payable from and secured by a pledge and lien upon the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Reserve Account, which will only secure the Bonds, and the Administrative Expenses Account), without priority for number, date of the Bonds or Parity Bonds, date of sale, date of execution or date of delivery, and the payment of the interest on and principal of the Bonds and any Parity Bonds and any premiums upon the redemption thereof will be exclusively paid from the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expenses Account), which have been set aside for the payment of the Bonds and any Parity Bonds. Amounts in the Special Tax Fund (other than the Administrative Expenses Account therein) constitute a trust fund held for the benefit of the Owners to be applied to the payment of the interest on and principal of the Bonds and any Parity Bonds; and, so long as any of the Bonds and any Parity Bonds or interest thereon remains Outstanding, amounts in the Special Tax Fund may not be used for any other purpose, except as permitted by the Indenture. Notwithstanding any provision contained in the Indenture to the contrary, Net Taxes deposited in the Rebate Fund and the Surplus Fund will no longer be considered to be pledged to the Bonds or any Parity Bonds, and none of the Rebate Fund, the Surplus Fund, the Construction Fund, the Cost of Issuance Fund or the Administrative Expenses Account of the Special Tax Fund will be construed as a trust fund held for the benefit of the Owners.

Definitions. The following definitions are applicable to the above-described pledge.

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“Administrative Expenses” means the administrative costs with respect to the calculation and collection of the Special Taxes, including all attorneys’ fees and other costs related thereto, the fees and expenses of the Trustee, any fees and related costs for credit enhancement for the Bonds or any Parity Bonds which are not otherwise paid as costs of issuance, any costs related to the District’s compliance with state and federal laws requiring continuing disclosure of information concerning the Bonds and the District, and any other costs otherwise incurred by the City staff on behalf of the District in order to carry out the purposes of the District as set forth in the Resolution of Formation and any obligation of the District under the Indenture. “Administrative Expenses Cap” means an amount equal to $40,000 for the first Bond Year, increasing by 2% per annum for each subsequent Bond Year, or such lesser amount as may be designated in written instructions from an Authorized Representative of the City. “Net Taxes” means Special Taxes less amounts set aside to pay Administrative Expenses not to exceed the Administrative Expenses Cap.
“Ordinance” means Ordinance No. 1442 adopted by the legislative body of the District on August 3, 2005, providing for the levying of the Special Tax. “Prepayments” means any amounts paid by the District to the Trustee and designated by the District as a prepayment of Special Taxes for one or more parcels in Improvement Area No. 1 made in accordance with the Rate and Method.
“Rate and Method” means the Amended and Restated Rate and Method of Apportionment of Special Tax for the District approved by the qualified electors of the District on July 20, 2005, and set forth in Appendix E.
“Resolution of Formation” means Resolution Nos. 9025 and 9026 adopted by the City Council of the City on July 20, 2005, pursuant to which the City formed the District and designated Improvement Area No. 1. “Special Taxes” means the taxes authorized to be levied by the District on property within Improvement Area No. 1 in accordance with the Ordinance, the Resolution of Formation, the CFD Act, the Rate and Method, and the voter approval obtained at the July 20, 2005 special election in Improvement Area No. 1, including any scheduled payments and any Prepayments thereof, and the net proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and penalties and interest thereon.

Special Tax Fund. There has been established as a separate fund to be held by the Trustee called the “Special Tax Fund.” Except for the portion of any Prepayment to be deposited in the Redemption Account as specified in a Certificate of an Authorized Representative, the Trustee will, on each date on which the Special Taxes are received from the District, deposit the Special Taxes in the Special Tax Fund to be held in trust for the Owners. The Trustee will transfer the Special Taxes on deposit in the Special Tax Fund on the dates and in the amounts set forth below, in the following order of priority, to:
(1) the Administrative Expenses Account of the Special Tax Fund up to the Administrative Expenses Cap;
(2) the Interest Account of the Special Tax Fund;
(3) the Principal Account of the Special Tax Fund;
(4) the Redemption Account of the Special Tax Fund;
(5) the Reserve Account of the Special Tax Fund;
(6) the Administrative Expenses Account of the Special Tax Fund to the extent that Administrative Expenses exceed or are expected to exceed the Administrative Expenses Cap; (7) the Rebate Fund; and
(8) the Surplus Fund.

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Upon the maturity of all of the Bonds and, after all principal and interest then due on the Bonds then Outstanding has been paid or provided for and any amounts owed to the Trustee have been paid in full, moneys in the Special Tax Fund and any accounts therein may be used by the District for any lawful purpose.

Administrative Expenses Account. The Trustee will transfer from the Special Tax Fund and deposit in the Administrative Expenses Account of the Special Tax Fund from time to time amounts necessary to make timely payment of Administrative Expenses as set forth in a Certificate of an Authorized Representative of the City; provided, however, that, except as set forth in the following sentence, the total amount transferred in a Bond Year may not exceed the Administrative Expenses Cap until such time as there has been deposited to the Interest Account and the Principal Account an amount, together with any amounts already on deposit therein, that is sufficient to pay the interest and principal on all Bonds and Parity Bonds due in such Bond Year and to restore the Reserve Account to the Reserve Requirement, all as determined by the City. Notwithstanding the foregoing, amounts in excess of the Administrative Expenses Cap may be transferred to the Administrative Expenses Account to the extent necessary to collect delinquent Special Taxes, as directed in writing by an Authorized Representative of the City. Moneys in the Administrative Expenses Account of the Special Tax Fund may be invested in any Permitted Investments as directed in writing by an Authorized Representative of the City and will be disbursed as directed in a Certificate of an Authorized Representative.

Interest Account and Principal Account. The principal of (including any Sinking Fund Payment) and interest due on the Bonds and any Parity Bonds until maturity, other than principal due upon optional or extraordinary redemption, will be paid by the Trustee from the Principal Account and the Interest Account of the Special Tax Fund, respectively. For the purpose of assuring that the payment of principal of (including any Sinking Fund Payment) and interest on the Bonds and any Parity Bonds will be made when due, after making a transfer to the Administrative Expenses Account as described above, at least one Business Day prior to each March 1 and September 1, the Trustee will make the following transfers from the Special Tax Fund first to the Interest Account and then to the Principal Account; provided, however, that to the extent that deposits have been made in the Interest Account or the Principal Account from the proceeds of the sale of an issue of the Bonds, any Parity Bonds, or otherwise, the transfer from the Special Tax Fund need not be made; and provided, further, that, if amounts in the Special Tax Fund (exclusive of the Reserve Account) are inadequate to make the foregoing transfers, then any deficiency will be made up by an immediate transfer from the Reserve Account:
(a) To the Interest Account, an amount such that the balance in the Interest Account one Business Day prior to each Interest Payment Date is equal to the installment of interest due on the Bonds and any Parity Bonds on said Interest Payment Date and any installment of interest due on a previous Interest Payment Date that remains unpaid. Moneys in the Interest Account will be used for the payment of interest on the Bonds and any Parity Bonds as the same become due.
(b) To the Principal Account, an amount such that the balance in the Principal Account one Business Day prior to September 1 of each year is equal to the principal payment (including any Sinking Fund Payment) due on the Bonds and any Parity Bonds maturing on such September 1 and any principal payment due on a previous September 1 which remains unpaid. Moneys in the Principal Account will be used for the payment of the principal (including any Sinking Fund Payment) of such Bonds and any Parity Bonds as the same become due at maturity.

Redemption Account. After making the deposits to the Administrative Expenses Account, the Interest Account and the Principal Account of the Special Tax Fund as described above, the Trustee will transfer from the Special Tax Fund and deposit in the Redemption Account moneys available for the purpose and sufficient to pay the principal and the premiums, if any, payable on the Bonds called for optional redemption; provided, however, that amounts in the Special Tax Fund (other than the Administrative Expenses Account therein) may be applied to optionally redeem Bonds only if immediately following such redemption the amount in the Reserve Account will equal the Reserve Requirement, as determined by the District.

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Prepayments deposited to the Redemption Account will be applied on the redemption date established pursuant to the Indenture for the use of such Prepayments to the payment of the principal of, premium (if any), and interest on the Bonds and any Parity Bonds to be redeemed with such Prepayments.

Moneys set aside in the Redemption Account will be used solely for the purpose of redeeming Bonds, and Parity Bonds, will be applied on or after the redemption date to the payment of principal of and premium, if any, on the Bonds or Parity Bonds to be redeemed upon presentation and surrender (if required) of such Bonds or Parity Bonds and, in the case of an optional redemption or an extraordinary redemption from Prepayments, to pay the interest thereon; provided, however, that in lieu or partially in lieu of such call and redemption, moneys deposited in the Redemption Account may be used to purchase Outstanding Bonds or Parity Bonds in the manner provided in the Indenture. Purchases of Outstanding Bonds may be made by the District at public or private sale as and when and at such prices as the District may in its discretion determine, but only at prices (including brokerage or other expenses) not more than par plus accrued interest, plus, in the case of moneys set aside for an optional redemption or an extraordinary redemption, the premium applicable at the next following call date according to the premium schedule established pursuant to the Indenture. Any accrued interest payable upon the purchase of Bonds may be paid from the amount reserved in the Interest Account of the Special Tax Fund for the payment of interest on the next following Interest Payment Date.

Reserve Account of the Special Tax Fund. There will be maintained in the Reserve Account of the Special Tax Fund the Reserve Policy in an amount equal to the Reserve Requirement. The Reserve Policy will be drawn upon solely for the purpose of paying the principal of, including Sinking Fund Payments, and interest on the Bonds when due in the event that the moneys in the Interest Account and the Principal Account of the Special Tax Fund are insufficient therefor or moneys in the Redemption Account of the Special Tax Fund are insufficient to make a Sinking Fund Payment when due, and for the purpose of making any required transfer to the Rebate Fund pursuant to the Indenture upon written direction from the District. If the amounts in the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund are insufficient to pay the principal of, including Sinking Fund Payments, or interest on any Bonds when due, or amounts in the Special Tax Fund are insufficient to make transfers to the Rebate Fund when required, the Trustee will draw upon the Reserve Policy for deposit in the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund or the Rebate Fund, as applicable, moneys necessary for such purposes. [The Insurer has made a commitment to issue, simultaneously with the initial issuance of the Bonds, the Reserve Policy in the amount equal to __% of the Reserve Requirement for deposit in the Reserve Account, effective as of the date of issuance of the Bonds. Under the terms of the Reserve Policy, the Insurer will unconditionally and irrevocably guarantee to pay that portion of the scheduled payments of principal of and interest on the Bonds that becomes due for payment but shall be unpaid by reason of nonpayment by the District, to the extent set forth in the Reserve Policy and in the Indenture. The remaining __% of the Reserve Requirement, effective as of the date of issuance of the Bonds, will be funded with cash from proceeds of the Bonds.]
“Reserve Requirement” means, as of the date of calculation: (a) with respect to the Bonds, an amount equal to the least of: (i) Maximum Annual Debt Service with respect to the Bonds; (ii) 125% of average Annual Debt Service on the then Outstanding Bonds; or (iii) ten percent (10%) of the initial outstanding principal amount of the Bonds; provided that the Reserve Requirement shall never exceed the amount established pursuant to the foregoing calculation at the time of issuance of the Bonds; and (b) with respect to such Parity Bonds, an amount equal to the least of: (i) Maximum Annual Debt Service with respect to such Parity Bonds; (ii) 125% of average Annual Debt Service on such Parity Bonds; or (iii) ten percent (10%) of the initial outstanding principal amount of such Parity Bonds; provided that the Reserve Requirement shall never exceed the amount established pursuant to the foregoing calculation at the time of issuance of such Parity Bonds.

In the event of a draw on the Reserve Policy or the failure by the Insurer to honor a draw request, the District has no obligation to replenish the Reserve Account with cash or to provide an alternate reserve policy.

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Levy and Collection of Special Taxes
The Special Taxes are to be levied and collected by the Treasurer-Tax Collector of the County of Riverside in the same manner and at the same time as ad valorem property taxes; provided, however, that the District may directly bill the Special Tax or collect Special Taxes at a different time or in a different manner if necessary to meet its financial obligations.

The District has made certain covenants in the Indenture for the purpose of ensuring that the current maximum Special Tax rates and method of collection of the Special Taxes are not altered in a manner that would impair the District’s ability to collect sufficient Special Taxes to pay debt service on Bonds and Administrative Expenses when due, including the following:
(1) Beginning in Fiscal Year 2025-26 and continuing so long as any Bonds or Parity Bonds are Outstanding, the legislative body of the District covenants to levy the Special Tax in an amount sufficient, together with other amounts on deposit in the Special Tax Fund and available for such purpose, to pay: (i) the principal of and interest on the Bonds when due; (ii) the Administrative Expenses; and (iii) any amounts required to replenish the Reserve Account of the Special Tax Fund and any reserve account established in connection with the issuance of such Parity Bonds to the Reserve Requirement. The District further covenants that it will take no actions that would discontinue or cause the discontinuance of the Special Tax levy or the District’s authority to levy the Special Tax for so long as the Bonds are Outstanding. (2) To the maximum extent that the law permits it to do so, the District will not initiate proceedings to reduce the maximum Special Tax rates for the District. (3) In the event that any initiative is adopted by the qualified electors in Improvement Area No. 1 which purports to reduce the maximum Special Tax below the levels specified in the Indenture or to limit the power of the District to levy the Special Taxes for the purposes set forth in the Indenture, the District will commence and pursue legal action in order to preserve its ability to comply with such covenants.

Although the Special Taxes constitute liens on taxable parcels within Improvement Area No. 1, such taxes do not constitute a personal indebtedness of the owners of such property within Improvement Area No.

1. Moreover, other liens for taxes and assessments already exist on the property located within Improvement Area No. 1 and other such liens could come into existence in the future in certain situations without the consent or knowledge of the City or the landowners therein. See Table 9 under the caption “IMPROVEMENT AREA NO. 1” for a description of the direct and overlapping tax and assessment debt levied within Improvement Area No. 1. See also the captions “SPECIAL RISK FACTORS—Direct and Overlapping Debt” and “SPECIAL RISK FACTORS—Cumulative Burden of Parity Taxes and Special Assessments.” There is no assurance that property owners will be financially able to pay the annual Special Taxes or that they will pay such taxes even if they are financially able to do so, all as more fully described under the caption “SPECIAL RISK FACTORS—The Special Taxes are Not Personal Obligations of the Owners.” Rate and Method of Apportionment of Special Taxes
General. The District is legally authorized and has covenanted to cause the levy of the Special Taxes in an amount determined according to a methodology, i.e., the Rate and Method, which the Board and the electors within Improvement Area No. 1 have approved. The Rate and Method apportions the total amount of Special Taxes to be collected among the taxable parcels in Improvement Area No. 1 as more particularly described below.

The following is a synopsis of the provisions of the Rate and Method for the District, which should be read in conjunction with the complete text of the Rate and Method which is attached as Appendix E. The meaning of the defined terms used in this section are as set forth in Appendix E. This section provides only a

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summary of the Rate and Method, and is qualified by more complete and detailed information contained in the entire Rate and Method attached as Appendix E.

Special Tax Requirement for Improvement Area No. 1. The District is authorized to levy Special Taxes (as defined in the Rate and Method) on taxable property within Improvement Area No. 1 commencing Fiscal Year 2005-06 and for each Fiscal Year thereafter, in an amount necessary to meet the Special Tax Requirement for Improvement Area No. 1, subject to the Maximum Special Tax, pursuant to the Rate and Method.
“Special Tax Requirement for Improvement Area No. 1” means that amount required in any Fiscal Year within Improvement Area No. 1 of the District to pay: (i) annual debt service on all outstanding Bonds due in the calendar year which commences in such Fiscal Year; (ii) periodic costs on the Bonds, including but not limited to, credit enhancement and rebate payments on the Bonds; (iii) Administrative Expenses; (iv) an amount equal to any anticipated shortfall due to Special Tax delinquency in the prior Fiscal Year; and (v) any amounts required to establish or replenish any reserve funds for the outstanding Bonds; less (vi) a credit for funds available to reduce the annual Special Tax levy as determined pursuant to the Indenture.

The Rate and Method apportions the total amount of Special Taxes to be collected each Fiscal Year among the Parcels of Taxable Property in Improvement Area No. 1. Taxable Property is divided into four categories, Developed Property, Undeveloped Property, Public Property and/or Property Owner’s Association Property that is not Exempt Property pursuant to the Rate and Method. Each Fiscal Year, each Assessor’s Parcel within Improvement Area No. 1 is assigned the appropriate classification for purposes of levying the Special Taxes and are subject to the levy of Special Taxes in accordance with the Rate and Method.

Parcels of Developed Property shall further be classified as Residential Property or Non-Residential Property. A Parcel of Residential Property will further be classified as Single Family Property or Multifamily Residential Property. Single Family Property will be further categorized based on the Residential Floor Area for such Parcel, which is determined based on the square footage shown on the building permit for such Single Family Property. There are two zones established within Improvement Area No. 1 and such zones are taxed at different rates (“Zone A” and “Zone B”).

Each Fiscal Year, the City will levy the Special Tax on all Taxable Property within Improvement Area No. 1 until the amount of Special Taxes equals the Special Tax Requirement for Improvement Area No. 1 in accordance with the following steps:

First: The Special Tax will be levied on each Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax rate as needed to satisfy the Special Tax Requirement for Improvement Area 1, Zone A and Zone B;
Second: If additional moneys are needed to satisfy the Special Tax Requirement for Improvement Area No. 1, Zone A and Zone B, after the first step has been completed, the Special Tax shall be levied Proportionately on each Parcel of Undeveloped Property within Improvement Area No. 1, Zone A and Zone B, at up to 100% of the Maximum Special Tax for Undeveloped Property; and Third: If additional moneys are needed to satisfy the Special Tax Requirement for Improvement Area No. 1 after the first two steps have been completed, then for each Assessor’s Parcel of Developed Property whose Assigned Special Tax is the Backup Special Tax will be increased Proportionately from the Assigned Special Tax up to 100% of the Backup Special Tax as needed to satisfy the Special Tax Requirement.

Based on present debt service requirements of the 2015 Bonds and the expected debt service requirements of the Bonds, only the First step above, pertaining to the levy of the Special Tax upon Parcels of Developed Property, is necessary to levy an amount equal to the Special Tax Requirement for Improvement

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Area No. 1. As a result, none of the Parcels classified as “Undeveloped Property” presently are subject to the levy of Special Taxes, even though considered taxable property within Improvement Area No. 1.

Prepayment. The Special Tax obligation applicable to any Parcel of Developed Property, and/or Undeveloped Property for which a building permit has been issued, and Public Property and/or Property Owner’s Association Property that is not Exempt Property pursuant to the Rate and Method may be prepaid in full or in part, as described in the Rate and Method. The Special Tax obligation applicable to an Parcel may be made in full and be permanently satisfied only if there are no delinquent Special Taxes with respect to such Parcel at the time of prepayment. An owner of a Parcel intending to prepay the Special Tax obligation must provide the City with written notice of intent to prepay. Following receipt of such notice and a non-refundable deposit for the costs of the District to calculate the prepayment amount, the City or its designee will notify such owner of the prepayment amount for such Parcel A prepayment of Special Taxes will result in an extraordinary redemption of Bonds. See “THE BONDS — Redemption — Extraordinary Redemption.” Certain Limitations. The Special Taxes to be levied on a Parcel in Improvement Area No. 1 in any Fiscal Year will not exceed the Maximum Special Tax applicable to such Assessor’s Parcel. In addition, notwithstanding the Maximum Special Tax and the various elements included in the Special Tax Requirement for Improvement Area No. 1 (as defined in the Rate and Method), the Mello-Roos Act and the Rate and Method impose certain limitations upon the ability of the District to increase the Special Taxes levied on Parcels in Improvement Area No. 1 used for private residential purposes. Specifically, under no circumstances will the Special Taxes levied against any Parcel of Residential Property in Improvement Area No. 1 be increased, as a consequence of delinquency or default by the owner of any other Parcel within Improvement Area No. 1, by more than ten percent (10%) per Fiscal Year above the amount that would have been levied in that Fiscal Year had there never been any such delinquencies or defaults.

Furthermore, certain property in Improvement Area No. 1, whether or not developed, are excluded from the levy of Special Taxes. As defined in the Rate and Method, “Exempt Property” that is excluded from the levy of Special Taxes in Improvement Area No. 1 includes (i) Public Property, (ii) Property Owner’s Association Property, and (iii) Golf Course Property. The Special Taxes will be levied subject to the Special Tax Requirement for Improvement Area No. 1 for each year that any Bonds are outstanding.

No Teeter Plan
The Board of Supervisors of the County of Riverside has approved the implementation of the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”), as provided for in Section 4701 et seq. of the Revenue and Taxation Code of the State. As a result of the implementation of the Teeter Plan by the County of Riverside, the County of Riverside apportions secured property taxes and assessments on an accrual basis when due (irrespective of actual collections) to participating local political subdivisions for which the County of Riverside acts as the levying or collecting agency. The District does not participate in the Teeter Plan. As a result, the collection of Special Taxes is subject to delinquency risk. As further described under the caption “SPECIAL RISK FACTORS— Insufficiency of Special Taxes” and “SPECIAL RISK FACTORS—Bankruptcy and Foreclosure Delays,” delinquencies in the payment of Special Taxes could have an adverse effect on the District’s ability to make timely debt service payments on the Bonds and any Parity Bonds. Conversely, the District will benefit from Special Taxes generated by penalties and interest charged on delinquent Special Taxes.

See Table 8 under the caption “THE DISTRICT—Delinquency History” for historical delinquency information with respect to the District for the last five Fiscal Years.

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Covenant to Foreclose
The net proceeds received following a judicial foreclosure sale of land within Improvement Area No. 1 resulting from a landowner’s failure to pay the Special Taxes when due are included within the Special Taxes from which principal of and interest on the Bonds and any Parity Bonds are paid under the Indenture.

Pursuant to Section 53356.1 of the CFD Act, in the event of any delinquency in the payment of any Special Tax or receipt by the District of Special Taxes in an amount which is less than the Special Tax levied, the City Council, as the legislative body of the District, may order that Special Taxes be collected by a superior court action to foreclose the lien within specified time limits. In such an action, the real property subject to the unpaid amount may be sold at a judicial foreclosure sale. Under the CFD Act, the commencement of judicial foreclosure following the nonpayment of a Special Tax is not mandatory.

However, the District has covenanted in the Indenture to commence judicial foreclosure proceedings against any parcel with delinquent Special Taxes in excess of $3,500 by the December 1 following the close of each Fiscal Year in which such Special Taxes were due and to diligently pursue such foreclosure proceedings until the delinquent Special Taxes are paid; provided, however, that the District is not required to undertake any such foreclosure proceedings if: (i) the amount of Special Taxes collected by the December 1 for the most recent Fiscal Year was equal to 95% or more of the total Special Tax levied in such Fiscal Year; and (ii) the amount on deposit in the Reserve Account and any reserve account established in connection with the issuance of such Parity Bonds as of December 1 was at least equal to the Reserve Requirement.

The City is authorized to employ counsel to conduct any such foreclosure proceedings. The fees and expenses of any such counsel and costs and expenses of the City (including a charge for City staff time) in conducting foreclosure proceedings will be an Administrative Expense under the Indenture.

Notwithstanding any provision of the CFD Act or other law of the State to the contrary, in connection with any foreclosure related to delinquent Special Taxes:
(a) The District or the Trustee is expressly authorized to credit bid at any foreclosure sale, without any requirement that funds be placed in the Special Tax Fund or otherwise be set aside in the amount so credit bid, in the amount specified in Section 53356.5 of the CFD Act or such lesser amount as determined under clause (b) below or otherwise under Section 53356.6 of the CFD Act. Notwithstanding anything to the contrary in the Indenture, in no event will the Trustee be required to undertake foreclosure proceedings thereunder.
(b) The District may permit, in its sole and absolute discretion, property with delinquent Special Tax payments to be sold for less than the amount specified in Section 53356.5 of the CFD Act, if it determines that such sale is in the interest of the Bond owners. The Bond owners, by their acceptance of the Bonds, consent to such sale for such lesser amounts (as such consent is described in Section 53356.6 of the CFD Act), and release the District, its officers and its agents from any liability in connection therewith. (c) The District is expressly authorized to use amounts in the Special Tax Fund to pay costs of foreclosure of delinquent Special Taxes.
(d) The District may forgive all or any portion of the Special Taxes levied or to be levied on any parcel in Improvement Area No. 1, so long as the District determines that such forgiveness is not expected to adversely affect its obligation to pay principal of and interest on the Bonds under the Indenture.

The District covenants that it will deposit the net proceeds of any foreclosure to the Special Tax Fund and will apply such proceeds remaining after the payment of Administrative Expenses to make current payments of principal of and interest on the Bonds and any Parity Bonds, to bring the amount on deposit in the

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Reserve Account, if any, up to the Reserve Requirement and to pay any delinquent installments of principal or interest due on the Bonds and any Parity Bonds.

If foreclosure is necessary and other funds (including amounts in the Reserve Account) have been exhausted, debt service payments on the Bonds and any Parity Bonds could be delayed until the foreclosure proceedings have ended with the receipt of any foreclosure sale proceeds. Judicial foreclosure actions are subject to the normal delays associated with court cases and may be further slowed by bankruptcy actions, involvement by agencies of the federal government and other factors beyond the control of the City and the District. See the caption “SPECIAL RISK FACTORS—Bankruptcy and Foreclosure Delays.” Moreover, no assurances can be given that the real property subject to foreclosure and sale at a judicial foreclosure sale will be sold or, if sold, that the proceeds of such sale will be sufficient to pay any delinquent Special Tax installment. See the caption “SPECIAL RISK FACTORS—Land Values.” Although the CFD Act authorizes the District to cause such an action to be commenced and diligently pursued to completion, the CFD Act does not impose on the District or the City any obligation to purchase or acquire any lot or parcel of property sold at a foreclosure sale if there is no other purchaser at such sale. However, the District does have the ability to use the foreclosure judgment to purchase property by credit bid at a foreclosure sale, in which case the District would have no obligation to pay such credit bid for 24 months. The CFD Act provides that, in the case of a delinquency, the Special Tax will have the same lien priority as is provided for ad valorem taxes.

No Parity Bonds Except for Refunding Purposes
The District has covenanted in the Indenture that, except as described below, it will not issue any other obligations payable, as to principal or interest, from the Net Taxes which have, or purport to have, any lien upon the Net Taxes superior to or on a parity with the lien of the Bonds, other than Parity Bonds. Under the Indenture, the District may at any time after the issuance and delivery of the Bonds issue Parity Bonds payable from the Net Taxes and other amounts deposited in the Special Tax Fund (other than in the Administrative Expense Account therein) and secured by a lien and charge upon such amounts equal to the lien and charge securing the Outstanding Bonds and any other Parity Bonds theretofore issued under the Indenture or under any Supplemental Indenture; provided, however, that Parity Bonds may only be issued for the purpose of refunding all or a portion of the Bonds or any Parity Bonds then Outstanding and the conditions precedent in the Indenture are satisfied, including the requirement that the issuance of such Parity Bonds will result in a reduction of Annual Debt Service on the Bonds and any Parity Bonds to be Outstanding following the issuance of such Parity Bonds.

See Appendix A under the caption “DEFEASANCE AND PARITY BONDS—Conditions for the Issuance of Parity Bonds and Other Additional Indebtedness” for a description of the conditions under which Parity Bonds may be issued.

Priority of Lien
The Special Taxes levied within Improvement Area No. 1, and each installment thereof and any interest and penalties thereon, constitute a lien against each of the respective parcels within Improvement Area No. 1 until the same are paid. There are other liens for special taxes and the recurring lien for general property taxes on parcels within Improvement Area No. 1. See the captions “IMPROVEMENT AREA NO. 1—Direct and Overlapping Debt” and “SPECIAL RISK FACTORS—Direct and Overlapping Debt.” No Obligation of the City Upon Delinquency
The City is under no obligation to transfer any funds of the City into the Special Tax Fund for the payment of the principal of or interest on the Bonds or any Parity Bonds if a delinquency occurs in the payment of any Special Taxes. See the caption “—Covenant to Foreclose” for a discussion of the District’s obligation to foreclose Special Tax liens upon delinquencies.

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Prepayment of Special Taxes
A property owner may prepay its Special Taxes and thereby cause a partial redemption of the Bonds and any Parity Bonds. See the captions “THE BONDS—Redemption—Extraordinary Redemption of the Bonds from Special Tax Prepayments” and “SPECIAL RISK FACTORS—Potential Early Redemption of Bonds from Prepayments.”

BOND INSURANCE
The information under this caption has been prepared by the Insurer for inclusion in this Official Statement. None of the District, the City or the Underwriter has reviewed this information, nor do the District, the City or the Underwriter make any representation with respect to the accuracy or completeness thereof.

The following information is not a complete summary of the terms of the Policy and reference is made to Appendix G for a specimen of the Policy.
[TO COME]
IMPROVEMENT AREA NO. 1
General
The City Council adopted its resolution of intention to establish the District on May 18, 2005, pursuant to which it also designated the respective territories comprising Improvement Area No. 1 (“Improvement Area No. 1”) and Improvement Area No. 2 (“Improvement Area No. 2”) of the District. In an election held on July 20, 2005, qualified electors of Improvement Area No. 1 of the District voted to (i) approve the Rate and Method, and (ii) authorize Improvement Area No. 1 of the District to incur up to $30,000,000 of bonded indebtedness. On September 15, 2005, the District issued the 2005 Bonds in the original aggregate principal amount of $26,330,000. Pursuant to a resolution adopted by the City Council on September 20, 2006, the bonded indebtedness authorization for Improvement Area No. 1 was amended and reduced to $26,500,000. On August 18, 2015, the District issued the 2015 Bonds in the original aggregate principal amount of $15,530,000 and refunded the 2005 Bonds.

Improvement Area No. 1 is located within the City of Indio and within the Terra Lago Community and adjacent to the 36 Gulf Club at Terra Lago. Improvement Area No. 1 consists of two specific neighborhoods, Lido at Terra Lago and Aguila at Terra Lago. Lido at Terra Lago consists of Tuscan inspired single-family homes and paired homes featuring lake front properties surrounding a 20 acre lake. Aguila at Terra Lago is a gated community of single family homes. The community offers amenities including pools, a fitness center, a clubhouse and a playground. Property in Improvement Area No. 1 is adjacent to the Four Seasons at Terra Lago, which is an active adult community and previously constituted Improvement Area No. 2 of the District, which was dissolved in 2014.

Improvement Area No. 1 contains 628 parcels of Taxable Property. In Fiscal Year 2025-26, Special Taxes are being levied on 624 parcels of Developed Property. The Special Taxes have never been levied on the four parcels classified as Undeveloped Property in Fiscal Year 2025-26. The assessed valuation of the taxable parcels in Improvement Area No. 1 for Fiscal Year 2025-26 is $328,224,309, with the top ten property owners accounting for $23,213,896 of the total.

Eight parcels which were originally located within Improvement Area No. 1 have completely prepaid their respective Special Taxes and are no longer subject to the Special Taxes. The most recent complete prepayment occurring in June 2020. In May 2022, a total of 25 parcels within Improvement Area No. 1 prepaid approximately 61% of the Special Taxes for such parcels. See the caption “—Special Tax Levy” below.

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Historical Assessed Values
The following table sets forth assessed values within Improvement Area No. 1 for the current and prior five Fiscal Years.

TABLE 4

CITY OF INDIO
CFD NO. 2004-3 (TERRA LAGO)
(IMPROVEMENT AREA NO. 1)

ASSESSED VALUE HISTORY
Fiscal Year
Assessed
Land Value
Assessed
Structure Value
Assessed
Total Value % Change
2021-22 $39,795,759 $133,061,323 $172,857,082 7.00%
2022-23 52,244,951 153,992,814 206,237,765 19.31
2023-24 66,675,589 218,638,494 285,314,083 38.34
2024-25 72,530,694 237,252,807 309,783,501 8.58
2025-26 78,069,591 250,154,718 328,224,309 5.95
Source: Riverside County Secured Property Tax Rolls, as compiled by Willdan Financial Services.

Major Property Ownership
The table below sets forth the property owner concentration for Improvement Area No. 1. No single individual owner of residential property owns more than 10 parcels or will be responsible for more than 2.00% of the Special Taxes levied within Improvement Area No. 1, with the largest property owner being responsible for approximately 1.58% of the Special Taxes levied within Improvement Area No. 1 in Fiscal Year 2025-26 and the top ten taxpayers collectively being responsible for approximately 7.00% of the Special Taxes levied in Fiscal Year 2025-26.

TABLE 5

CITY OF INDIO
CFD NO. 2004-3 (TERRA LAGO)
(IMPROVEMENT AREA NO. 1)
TOP 10 OWNERS
Owner Name
No. of
Parcels
Fiscal Year
2025-26 Total
Assessed Value
Fiscal Year
2025-26
Special Tax
Refunding
Bond
Amount(1)*
Percentage of
Total Bonds
Outstanding *
Value To
Debt Ratio*
TERRA LAGO GALLERY 9 $ 4,557,702 $ 16,530 $ 116,735 1.58% 39.04:1 MURRIETA APARTMENT INV 37 7 2,162,185 11,792 83,277 1.13 25.96:1 ADVISORS OLIVENHAIN 5 1,206,895 8,349 58,960 0.80 20.47:1 LEE HOLDINGS LUCY 4 4,737,041 7,024 49,602 0.67 95.50:1 ARMONIA 3 2,003,736 6,450 45,550 0.62 43.99:1
EMPIRE GREEK 3 2,573,714 5,836 41,212 0.56 62.45:1
84LAGO 2 1,834,718 4,349 30,714 0.42 59.74:1

HOLTE KAREN TRUST DTD
08/21/23 2 743,476 4,300 30,367 0.41 24.48:1
MIN JI GAL 2 1,845,067 4,300 30,367 0.41 60.76:1
MICKIE RILEY 2 1,549,362 4,300 30,367 0.41 51.02:1 Subtotal 39 $ 23,213,896 $ 73,229 $ 517,151 6.99% 44.89:1 All Others 589 305,010,413 974,610 6,882,849 93.01% 44.31:1 Total 628 $ 328,224,309 $1,047,839 $ 7,400,000 100.00% 44.35:1 * Preliminary, subject to change.
(1) Allocated proportionately based on the Fiscal Year 2025-26 Special Tax.

Source: Riverside County Secured Property Tax Roll, Willdan Financial Services.

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Special Tax Levy
The table below sets forth the Special Tax levy for Fiscal Year 2025-26 for various residential floor areas within Improvement Area No. 1.

TABLE 6

CITY OF INDIO
CFD NO. 2004-3 (TERRA LAGO)
(IMPROVEMENT AREA NO. 1)

PROPERTIES BY FLOOR AREA
Zone A Residential Floor Area No. of Units
Fiscal Year
2025-26
Maximum
Special Tax
per Unit
Fiscal Year
2025-26
Special Tax
per Unit
Fiscal Year
2025-26 Special
Tax
Percent of
Total
Single Family Residential 1,626 to 1,750 sq. ft. 44 $2,341.88 $1,207.96 $ 53,150.24 6.77% Single Family Residential 1,751 to 1,900 sq. ft. 30 2,593.71 1,337.84 40,135.20 5.11 Single Family Residential 1,901 to 1,950 sq. ft. 36 2,677.65 1,381.14 49,721.04 6.33 Single Family Residential 1,951 to 2,100 sq. ft. 60 2,738.91 1,412.74 84,764.40 10.79 Single Family Residential 2,151 to 2,250 sq. ft. 46 2,977.12 1,535.62 70,638.52 8.99 Single Family Residential 2,251 to 2,300 sq. ft. 3 3,056.53 1,576.58 4,729.74 0.60 Single Family Residential 2,301 to 2,400 sq. ft. 41 3,215.34 1,658.50 67,998.50 8.66 Single Family Residential 2,401 to 2,500 sq. ft. 66 3,260.71 1,681.90 111,005.40 14.13 Single Family Residential 2,551 to 2,600 sq. ft. 22 3,414.99 1,761.48 38,752.56 4.93 Single Family Residential 2,601 to 2,850 sq. ft. 98 3,800.68 1,960.42 192,121.16 24.46 Single Family Residential Over 2,850 sq. ft. 33 4,263.49 2,199.14 72,571.62 9.24 Totals 479 $785,588.38 100.00%
Zone B Residential Floor Area No. of Units
Fiscal Year
2025-26
Maximum
Special Tax
per Unit
Fiscal Year
2025-26
Special Tax
per Unit
Fiscal Year
2025-26 Special
Tax
Percent of
Total
Single Family Residential 1,626 to 1,750 sq. ft. 8 $3,067.87 $1,582.42 $ 12,659.36 4.87% Single Family Residential 1,751 to 1,900 sq. ft. 3 3,319.71 1,712.32 5,136.96 1.97 Single Family Residential 1,901 to 1,950 sq. ft. 5 3,403.65 1,755.62 8,778.10 3.37 Single Family Residential 1,951 to 2,100 sq. ft. 11 3,544.31 1,828.18 20,109.98 7.73 Single Family Residential 2,101 to 2,150 sq. ft. 6 3,646.40 1,880.84 11,285.04 4.34 Single Family Residential 2,151 to 2,250 sq. ft. 12 3,703.11 1,910.08 22,920.96 8.81 Single Family Residential 2,251 to 2,300 sq. ft. 6 3,964.03 2,044.68 12,268.08 4.72 Single Family Residential Over 2,300 sq. ft. 69 4,168.21 2,149.98 148,348.62 56.57 Single Family Residential(1) Over 2,300 sq. ft. 25 1,608.63 829.74 20,743.50 7.98 Totals 145 $ 262,250.60 100.00%
(1) Parcels were partially prepaid. See the caption “—General.” Source: Willdan Financial Services.

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Development Status
The following table sets forth the development status, respective assessed values and respective Special Tax obligations of parcels classified as Developed Property and Undeveloped Property within Improvement Area No. 1 of the District for Fiscal Years 2021-22 through 2025-26.

TABLE 7

CITY OF INDIO
CFD NO. 2004-3 (TERRA LAGO)
(IMPROVEMENT AREA NO. 1)

DEVELOPMENT STATUS
Fiscal
Year
Development
Status
Number
of Parcels
Assessed
Land
Assessed
Structure
Total
Assessed Value Special Tax
Percent of
Special Tax
Remaining
Bonded Debt
Value to Debt
Ratio
2021-22 Developed 533 $ 34,695,551 $ 133,061,323 $ 167,756,874 $ 1,181,365 100% $11,540,000 14.54:1 Undeveloped 95 5,100,208 -- 5,100,208 -- -- N/A N/A
Total 628 39,795,759 133,061,323 172,857,082 1,181,365 100 11,540,000 14.98:1 2022-23 Developed 580 47,120,075 153,992,814 201,112,889 1,127,703 100 10,410,000 19.32:1 Undeveloped 48 5,124,876 -- 5,124,876 -- -- N/A N/A
Total 628 52,244,951 153,992,814 206,237,765 1,127,703 100 10,410,000 19.81:1 2023-24(1) Developed 623 66,247,189 218,638,494 284,885,683 1,128,452 100 9,815,000 29.03:1 Undeveloped 4 428,400 -- 428,400 -- -- N/A N/A
Total 627 66,675,589 218,638,494 285,314,083 1,128,452 100 9,815,000 29.07:1 2024-25 Developed 623 72,102,294 237,252,807 309,355,101 1,132,111 100 9,190,000 33.66:1 Undeveloped 4 428,400 -- 428,400 -- -- N/A N/A
Total 627 72,530,694 237,252,807 309,783,501 1,132,111 100 9,190,000 33.71:1 2025-26(2)(3) Developed 624 76,864,591 250,154,718 327,019,309 1,047,839 100 7,400,000* 44.19:1* Undeveloped 4 1,205,000 -- 1,205,000 -- -- N/A N/A
Total 628 78,069,591 250,154,718 $328,224,309 1,047,839 100 7,400,000* 44.35:1* * Preliminary, subject to change.
(1) In Fiscal Years 2023-24 and 2024-25, one parcel of Developed Property was inadvertently classified as nontaxable property. (2) Decrease in Fiscal Year 2025-26 Special Tax amount is due to $85,000 credit provided in the budget due to surplus funds. (3) Remaining Bonded Debt is after the corresponding fiscal year September debt service and is allocated proportionately based on the Special Tax amount. The Fiscal Year 2025-26 amount is preliminary based on refunding bond amount.

Note: Developed is defined as any parcel of taxable property that was included in a Final Map recorded prior to January 1 and was also issued a building permit prior to April 1 prior to each respective fiscal year.

Source: Riverside County Secured Property Tax Rolls, Willdan Financial Services.

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Delinquency History
The table below summarizes the historical Special Tax levies and delinquencies for the District for the last five Fiscal Years.

TABLE 8

CITY OF INDIO
CFD NO. 2004-3 (TERRA LAGO)
(IMPROVEMENT AREA NO. 1)

DELINQUENCY HISTORY
Fiscal Year
Number of
Parcels Special Taxes As of
Number of
Delinquent
Parcels
Delinquent
Special Tax
Amount
Percent of
Special Tax
Delinquent As of
Number of
Delinquent
Parcels
Delinquent
Special Tax
Amount
Percent of
Special Tax
Delinquent
2020-21 532 $1,199,562 5/11/2021 23 $31,954 2.66% 9/11/2025 0 $ 0 0.00% 2021-22 533 1,181,365 5/5/2022 19 28,641 2.42 9/11/2025 1 1,775 0.15 2022-23 580 1,127,703 5/9/2023 37 47,788 4.24 9/11/2025 3 5,841 0.52 2023-24 623 1,128,452 5/16/2024 34 38,332 3.40 9/11/2025 8 13,373 1.19 2024-25 623 1,132,111 5/17/2025 30 35,595 3.14 9/11/2025 19 25,828 2.28 Source: Riverside County Tax Collector, as compiled by Willdan Financial Services.

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Direct and Overlapping Debt
Set forth below is the statement of direct and overlapping debt (the “Debt Report”) for the District.

The table indicates that the assessed value of the property within Improvement Area No. 1 is $328,224,309 for Fiscal Year 2025-26. The Debt Report has been derived from data assembled and reported to the District by California Municipal Statistics. None of the District, the City or the Underwriter has independently verified the information in the Debt Report, and such parties do not guarantee its completeness or accuracy.

TABLE 9

CITY OF INDIO
CFD NO. 2004-3 (TERRA LAGO)
(IMPROVEMENT AREA NO. 1)

OVERLAPPING DEBT
CITY OF INDIO COMMUNITY FACILITIES DISTRICT NO. 2004-3, I.A. NO. 1 2025-26 Local Secured Assessed Valuation: $328,224,309 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 11/1/25 Desert Community College District General Obligation Bonds 0.262% $ 1,623,069 Desert Sands Unified School District General Obligation Bonds 0.565 2,576,123 City of Indio Community Facilities District No. 2004-3, I.A. No. 1 100.000 7,400,000(1)* TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $ 11,599,192* Ratios to 2025-26 Assessed Valuation:

Direct Debt ($7,400,000) ...........................................................2.25% * Preliminary, subject to change.
(1) Represents the principal amount of the Bonds.

Source: California Municipal Statistics.

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Estimated Average Effective Tax Rates
The following table provides a summary of the Fiscal Year 2025-26 estimated tax obligation for a representative developed residential parcel located within Zone A of Improvement Area No. 1.

TABLE 10

CITY OF INDIO
CFD NO. 2004-3 (TERRA LAGO)
(IMPROVEMENT AREA NO. 1)
FISCAL YEAR 2025-26 TAX OBLIGATION

FOR A SAMPLE DEVELOPED PROPERTY PARCEL, ZONE A
Total Assessed Value $ 375,425.00
General Purpose
Taxing Authority Net Rate Net Tax
01-0000-GP GENERAL PURPOSE 1.00% $ 3,754.25
Fund Type Total 1.00 $ 3,754.25
Debt
Taxing Authority Net Rate Net Tax
03-2001-D DESERT SANDS UNIFIED SCHOOL 0.08% $ 281.57
03-9001-D DESERT COMMUNITY COLLEGE 0.04 148.29
04-4821-D CV WATER DISTRICT STATE WTR PROJ 0.11 412.97
Fund Type Total 0.22 $ 842.83
Special Assessment
Taxing Authority Net Tax
68-2454-FC INDIO SOLID WASTE CHG $ 316.56
68-4556-FC COACHELLA VALLEY MOSQUITO & RIFA 14.38
68-4614-FC AD COACHELLA VL RC/PK 01-1 INDIO 54.00
68-4682-FC VALLEY SANITARY SEWER SERVICE 589.26
68-8458-FC INDIO WASTE RECYCLE SURCHG 2.76
68-8500-FC CFD 2004-1 INDIO 545.62
68-8503-FC CFD 2004-3 TERRA LAGO INDIO 1,960.42
Fund Type Total $ 3,483.00
Total $ 8,080.08
Effective Tax Rate 1.91%(1)
(1) Excludes the Indio Solid Waste Charge, Valley Sanitary Sewer Service charge, and the Indio Waste Recycle Surcharge.

Source: Willdan Financial Services.

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The following table summarizes the Fiscal Year 2025-26 estimated tax obligation for a representative developed residential parcel located within Zone B of Improvement Area No. 1.

TABLE 11

CITY OF INDIO
CFD NO. 2004-3 (TERRA LAGO)
(IMPROVEMENT AREA NO. 1)
FISCAL YEAR 2025-26 TAX OBLIGATION

FOR A SAMPLE DEVELOPED PROPERTY PARCEL, ZONE B
Total Assessed Value $ 821,100.00
General Purpose
Taxing Authority Net Rate Net Tax
01-0000-GP GENERAL PURPOSE 1.00% $ 8,210.99
Fund Type Total 1.00 $ 8,210.99
Debt
Taxing Authority Net Rate Net Tax
03-2001-D DESERT SANDS UNIFIED SCHOOL 0.08% $ 615.83
03-9001-D DESERT COMMUNITY COLLEGE 0.04 324.33
04-4821-D CV WATER DISTRICT STATE WTR PROJ 0.11 903.21
Fund Type Total 0.22 $ 1,843.37
Special Assessment
Taxing Authority Net Tax
68-2454-FC INDIO SOLID WASTE CHG $ 475.44
68-4556-FC COACHELLA VALLEY MOSQUITO & RIFA 14.38
68-4614-FC AD COACHELLA VL RC/PK 01-1 INDIO 54.00
68-4682-FC VALLEY SANITARY SEWER SERVICE 526.34
68-8458-FC INDIO WASTE RECYCLE SURCHG 2.76
68-8500-FC CFD 2004-1 INDIO 545.62
68-8503-FC CFD 2004-3 TERRA LAGO INDIO 2,149.98
Fund Type Total $ 3,768.52
Total $ 13,822.88
Effective Tax Rate 1.56%
(1) Excludes the Indio Solid Waste Charge, Valley Sanitary Sewer Service charge, and the Indio Waste Recycle Surcharge.

Source: Willdan Financial Services.

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Estimated Assessed Value-to-Lien Ratios
The table below sets forth the number of parcels within various ranges of estimated assessed value-to-lien ratios for Improvement Area No. 1 based on the actual Fiscal Year 2025-26 Special Tax Levy, the Fiscal Year 2025-26 assessed valuation and the total outstanding principal amount of the Bonds. As summarized in the table, the estimated assessed value-to-lien ratio for all developed parcels within Improvement Area No. 1 is approximately 44.35:1 *, but the ratios over individual parcels vary widely. The value of the individual parcels is significant because, in the event of a delinquency in payment, the only remedy of the District is to foreclose on the delinquent parcel. A parcel with a lower value-to-lien ratio may be less likely to sell at foreclosure or provide sale proceeds adequate to pay all delinquent Special Tax installments.

TABLE 12

CITY OF INDIO
CFD NO. 2004-3 (TERRA LAGO)
(IMPROVEMENT AREA NO. 1)

VALUE TO LIEN RATIOS
Value to Lien
Category(1)
No. of
Parcels
Fiscal Year
2025-26
Total Assessed
Value
Fiscal Year
2025-26
Max Tax
Fiscal Year
2025-26
Special Tax
Percent of
Special Tax
Refunding
Bond
Amount(5)*
Value to
Bonded
Debt Ratio*
Less than 3.1:1(2) 4 $ 1,205,000 $ 10,537 $ 0 0.00% $ 0 N/A

3.1:1 to 4.99:1(3) 1 55,774 3,261 1,682 0.16 11,878 4.70:1

5.0:1 to 6.99:1(3) 1 55,774 2,739 1,413 0.13 9,977 5.59:1

7.0:1 to 8.99:1 0 0 0 0 0.00 0 N/A

9.0:1 to 11.99:1(4) 2 241,717 6,143 3,168 0.30 22,376 10.80:1 Over 12.0:1 620 326,666,044 2,019,316 1,041,576 99.40 7,355,770 44.41:1 Total 628 $328,224,309 $ 2,041,995 $ 1,047,839 100.00% $ 7,400,000 44.35:1 * Preliminary, subject to change.
(1) Does not include any overlapping bond debt. The principal amount of the Bonds is allocated based on each property’s Fiscal Year 2025-26 special tax as a percentage of the total Fiscal Year 2025-26 special tax. (2) Consists of four parcels classified as Undeveloped Property for Fiscal Year 2025-26 under the Rate and Method. (3) Consists of a parcel with no assessed structure value. The parcel was levied as Developed Property in accordance with the Rate and Method due to the issuance of a building permit. (4) Low assessed value due to Proposition 60 transfer of prior property assessment value to current property. (5) Represents the principal amount of the Bonds. Allocated proportionately based on the Fiscal Year 2025-26 Special Tax.

Source: Riverside County Fiscal Year 2025-26 Secured Property Roll, Willdan Financial Services.

THE CITY OF INDIO
The following information relating to the City is included only for the purpose of supplying general information regarding the City. Neither the faith and credit nor taxing power of the City have been pledged to the payment of the Bonds and the Bonds will not be payable from any of City’s revenues or assets.

The City is a general law city incorporated in 1930 and encompasses approximately 33 square miles.

The City is the geographic mid-point of both Riverside County and Coachella Valley. It is located about 125 miles east of the center of the Los Angeles region, 75 miles north of the California-Baja California Mexican border and 30 miles southeast of Palm Springs and its neighboring communities (including Indian Wells, La Quinta and Palm Desert to the west and Coachella and Mecca to the east). The City has a Council- Manager form of municipal government. The City Council appoints the City Manager who is responsible for the day-to-day administration of City business and the coordination of all departments of the City. The City Council is composed of a Mayor and four members elected bi-annually at large to four-year alternating terms.

The City employs a staff of approximately 233 full-time equivalent employees. See “APPENDIX F —

Resolution No. 10532 of City Council of the City of Indio acting as the ... Page 275 of 354 26 4922-6752-8569v6/200973-0009
GENERAL INFORMATION ABOUT THE CITY OF INDIO AND THE COUNTY OF RIVERSIDE” for more general information about the City.

SPECIAL RISK FACTORS
There are certain risks associated with the purchase of the Bonds and the following information should be considered by prospective investors in evaluating the Bonds. However, the following does not purport to be an exhaustive listing of the risks and other considerations which may be relevant to an investment in the Bonds. In addition, the order in which the following information is presented is not intended to reflect the relative importance of any such risks. If any risk factor materializes to a sufficient degree, it alone could delay or preclude payment of principal of or interest on the Bonds.

The Bonds are Limited Obligations of the District
The principal of, premium, if any, and interest on the Bonds are not a debt of the City or a legal or equitable pledge, charge, lien or encumbrance upon any of the City’s or the District’s property or upon any of the City’s or the District’s income, receipts or revenues, except the amounts pledged under the Indenture.

Funds for the payment of the principal of and the interest on the Bonds are derived only from annual payments of Special Taxes. The amount of annual installments of Special Taxes that are collected could be insufficient to pay principal of and interest on the Bonds due to non-payment of such Special Taxes levied or due to insufficient proceeds received from a judicial foreclosure sale of land within Improvement Area No. 1 following delinquency. The District’s legal obligations with respect to any delinquent Special Taxes are limited to: (1) payments from the Reserve Account to the extent of funds and instruments on deposit therein; and (2) the institution of judicial foreclosure proceedings under certain circumstances with respect to any parcels for which Special Taxes are delinquent. See the caption “SECURITY FOR THE BONDS—Covenant to Foreclose.” The Bonds cannot be accelerated in the event of any default.

The obligation to pay Special Taxes does not constitute a personal obligation of the current or subsequent owners of the respective parcels which are subject to such liens. Enforcement of Special Tax payment obligations by the District is limited to judicial foreclosure in the Superior Court of California, County of Riverside. There is no assurance that any current or subsequent owner of a parcel that is subject to a Special Tax lien will be able to pay the amounts due or that such owner will choose to pay such amounts even though financially able to do so.

The Special Taxes are Not Personal Obligations of the Owners An owner of a taxable parcel is not personally obligated to pay the Special Tax. Rather, the Special Tax is an obligation which is secured only by a lien against the taxable parcel. If the value of a taxable parcel is not sufficient, taking into account other liens imposed by public agencies, to secure fully the Special Tax, the District has no recourse against the owner and its only remedy is to pursue judicial foreclosure on the delinquent parcel. See the caption “SECURITY FOR THE BONDS—Covenant to Foreclose.” Potential Early Redemption of Bonds from Prepayments
Property owners within Improvement Area No. 1 are permitted to prepay their Special Taxes at any time, and many owners have previously done so. Any additional prepayments of Special Taxes which are made after the date of issuance of the Bonds will result in a redemption of Bonds on the first March 1 or September 1 which is more than 30 days following the receipt of the prepayment. See the caption “THE BONDS—Redemption—Extraordinary Redemption of the Bonds from Special Tax Prepayments.” The resulting extraordinary redemption of Bonds that were purchased at a price greater than par could reduce the otherwise expected yield on such Bonds.

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Risks of Real Estate Secured Investments Generally
The Bond owners will be subject to the risks generally incident to an investment secured by real estate, including, without limitation: (i) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of Improvement Area No. 1, the supply of or demand for competitive properties in such area, and the market value of comparable residential property in the event of sale or foreclosure; (ii) changes in real estate tax rates and other operating expenses, government rules (including, without limitation, zoning laws and laws relating to threatened and endangered species and hazardous materials) and fiscal policies; and (iii) natural disasters (including, without limitation, earthquakes, fires and floods), which may result in uninsured losses.

No assurance can be given that individual homeowners will pay Special Taxes in the future or that they will be able to pay such Special Taxes on a timely basis. See the caption “—Bankruptcy and Foreclosure Delays” for a discussion of certain limitations on the District’s ability to pursue judicial proceedings with respect to delinquent parcels. Moreover, because assessed values do not necessarily indicate fair market values, decreases in fair market values may be even greater than decreases in assessed valuations, which could reduce the amount that can be raised to cover unpaid Special Taxes from a judicial foreclosure and sale of a delinquent parcel.

Concentration of Ownership
No single individual owner of residential property owns more than 10 parcels or will be responsible for more than 2.00% of the Special Taxes levied within Improvement Area No. 1, with the largest property owner being responsible for approximately 1.58% of the Special Taxes levied within Improvement Area No. 1 in Fiscal Year 2025-26 and the top ten taxpayers being collectively responsible for approximately 7.00% of the Special Taxes levied in Fiscal Year 2025-26. See the caption “IMPROVEMENT AREA NO. 1.” However, there may be subsequent transfers of ownership of the property within Improvement Area No. 1. Failure of the owners of property to pay the annual Special Taxes when due could result in a default in payments of the principal of and interest on the Bonds when due. Such risk may be greater or its consequence more severe when ownership is concentrated and may be expected to decrease as ownership is diversified.

Insufficiency of Special Taxes
Although the maximum amount of Special Taxes that may be levied in Improvement Area No. 1 exceeds debt service due on the Bonds, the Special Taxes that are actually collected could be inadequate to make timely payment of debt service either because of nonpayment or because property becomes exempt from taxation as permitted in the Rate and Method.

As discussed under the caption “SECURITY FOR THE BONDS—No Teeter Plan,” the Teeter Plan is not available for community facilities districts such as the District. The collection of Special Taxes is therefore subject to the risk of delinquency, while the District is also generally entitled to collect penalties and interest on delinquent Special Taxes.

In the event of significant delinquencies in Improvement Area No. 1 causing a default in payment of debt service on the Bonds and depletion of all amounts and instruments on deposit in the Reserve Account, there would not be sufficient Special Tax Revenues to pay the full amount of annual debt service on the Bonds until the delinquent Special Taxes were collected through foreclosure action or otherwise. See the caption “— Bankruptcy and Foreclosure Delays” for a discussion of potential delays in foreclosure actions.

The CFD Act provides that, if any property within Improvement Area No. 1 which is not otherwise exempt from the Special Tax is acquired by a public entity through a negotiated transaction, or by gift or devise, the Special Tax will continue to be levied on and enforceable against the public entity that acquired the property. In addition, the CFD Act provides that, if property which is subject to the Special Tax is acquired by

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a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property is to be treated as if it were a special assessment and be paid from the eminent domain award. The constitutionality and operation of these provisions of the CFD Act have not been tested in the courts.

If for any reason property which is subject to the Special Tax becomes exempt from taxation by reason of ownership by a nontaxable entity such as the federal government, or another public agency that asserts immunity from the Special Tax, subject to the limitation of the maximum Special Tax rates, the Special Taxes will be reallocated to the remaining properties within Improvement Area No. 1. This would result in the owners of such properties paying a greater amount of the Special Tax and could have an adverse effect on the timely payment of the Special Tax. Due to the problems of collecting taxes from public agencies, if a substantial portion of land within Improvement Area No. 1 were to become owned by public agencies, collection of the Special Tax might become more difficult and could result in collections of the Special Tax which might not be sufficient to pay principal of and interest on the Bonds when due, and a default could occur with respect to the payment of such principal and interest. See the captions “—FDIC/Federal Government Interests in Properties” and “—Bankruptcy and Foreclosure” for a discussion of the policy of the Federal Deposit Insurance Corporation (the “FDIC”) regarding the payment of special taxes and assessments and limitations on the District’s ability to foreclose on the lien of the Special Taxes in certain circumstances.

The annual levy of Special Taxes is subject to the maximum tax rates authorized. The levy cannot be made at a higher rate even if the failure to do so means that the estimated proceeds of the levy and collection of the Special Tax, together with other available funds, will not be sufficient to pay debt service on the Bonds.

Other funds that might be available include moneys and reserve fund surety policies or similar instruments deposited in the Reserve Account, funds derived from the payment of penalties on delinquent Special Taxes and funds derived from the tax sale or foreclosure and sale of parcels on which levies of the Special Tax are delinquent.

In addition, the District may not be able to levy the Special Tax up to the maximum authorized rates.

Pursuant to Section 53321(d) of the Government Code of the State, the Special Tax levied against any parcel for which an occupancy permit for private residential use has been issued may not be increased as a consequence of delinquency or default by the owner of any other parcel within Improvement Area No. 1 by more than 10% above the amount that would have been levied in such Fiscal Year had there never been any such delinquencies or defaults. Consequently, although the maximum Special Tax prescribed by the Rate and Method could be materially higher than the expected Special Tax levy in a given year, the Special Tax levy cannot be increased for residential property by more than 10% in such year.

The levy of the Special Tax will rarely, if ever, result in a uniform relationship between the value of particular property and the amount of the levy of the Special Tax against such property. Thus, there will rarely, if ever, be a uniform relationship between the value of such property and the proportionate share of debt service on the Bonds, and certainly not a direct relationship.

Billing of Special Taxes
A special tax formula can result in a substantially heavier property tax burden being imposed upon properties within a community facilities district than elsewhere in a city or county, and this in turn can lead to problems in the collection of the special tax. In some community facilities districts (although not in Improvement Area No. 1), taxpayers have refused to pay the special tax and have commenced litigation challenging the special tax, the community facilities district and bonds issued by the community facilities district.

Under provisions of the CFD Act, the Special Taxes are to be billed to the properties within Improvement Area No. 1 that were entered on the Assessment Roll of the County of Riverside Assessor by January 1 of the previous Fiscal Year. Such Special Tax installments are due and payable, and bear the same penalties and interest for non-payment, as do regular property tax installments. The Special Tax installment

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payments cannot be made separately from property tax payments. Therefore, the unwillingness or inability of a property owner to pay regular property tax bills may also indicate an unwillingness or inability to make regular property tax payments and installment payments of Special Taxes in the future. See the caption “SECURITY FOR THE BONDS—Covenant to Foreclose” for a discussion of the provisions that apply, and the procedures that the District is obligated to follow, in the event of delinquency in the payment of installments of Special Taxes.

Non-Cash Payments of Special Taxes
Under the CFD Act, the City Council of the City, as the legislative body of the District, may reserve to itself the right and authority to allow the owner of any taxable parcel to tender a Bond in full or partial payment of any installment of the Special Taxes or the interest or penalties thereon. A Bond so tendered is to be accepted at par and credit is to be given for any interest accrued thereon to the date of the tender. Thus, if Bonds can be purchased in the secondary market at a discount, it may be to the advantage of an owner of a taxable parcel to pay the Special Taxes applicable thereto by tendering a Bond. Such a practice would decrease the cash flow available to the District to make payments with respect to other Bonds then outstanding; and, unless the practice was limited by the District, the Special Taxes paid in cash could be insufficient to pay the debt service due with respect to such other Bonds.

The District has covenanted in the Indenture that it will not adopt any policy pursuant to Section 53341.1 of the CFD Act permitting the tender of Bonds in full or partial payment of any Special Taxes unless the District has first received a certificate from an Independent Financial Consultant that the acceptance of such a tender will not result in Improvement Area No. 1 having insufficient Special Tax revenues to pay the principal of and interest on the Bonds when due.

Bankruptcy and Foreclosure Delays
Bankruptcy, insolvency and other laws generally affecting creditors’ rights could adversely impact the interests of owners of the Bonds in at least two ways. First, the payment of property owners’ taxes and the ability of the District to foreclose the lien of delinquent unpaid Special Taxes pursuant to its covenant to pursue judicial foreclosure proceedings set forth in the Indenture (see the caption “SECURITY FOR THE BONDS—Covenant to Foreclose”) may be limited by bankruptcy, insolvency or other laws generally affecting creditors’ rights (including the Soldiers and Sailors Civil Relief Act of 1940, which is discussed below) or by the laws of the State relating to judicial foreclosure. In addition, the prosecution of a foreclosure could be delayed for many reasons, including crowded local court calendars or lengthy procedural delays.

Second, the United States Bankruptcy Code might prevent moneys on deposit in the Special Tax Fund from being applied to pay interest on the Bonds and/or to redeem Bonds if bankruptcy proceedings were brought by or against a landowner and if the court found that any of such landowner had an interest in such moneys within the meaning of Section 541(a)(1) of the United States Bankruptcy Code.

Although a bankruptcy proceeding would not cause the lien of the Special Taxes to become extinguished, the amount and priority of any Special Tax lien could be reduced or modified if the value of the property falls below the value of the lien. If the value of the property is less than the lien, such excess amount could be treated as an unsecured claim by a bankruptcy court. In addition, the bankruptcy of a property owner could result in a stay of enforcement or other delay in procuring Superior Court foreclosure proceedings or adversely affect the ability or willingness of a property owner to pay the Special Taxes. If enough parcels were involved in bankruptcy proceedings, court delays would increase the likelihood of a delay or default in payment of the principal of, and interest on, the Bonds and the possibility of delinquent tax installments not being paid in full.

On July 30, 1992, the United States Court of Appeal, Ninth Circuit (the “Ninth Circuit”), issued its opinion in a bankruptcy case entitled In re Glasply Marine Industries (“Glasply”). In that case, the Ninth

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Circuit held that ad valorem property taxes levied by Snohomish County in the State of Washington after the date that the property owner filed a petition for bankruptcy were not entitled to priority over a secured creditor with a prior lien on the property. Although the court upheld the priority of unpaid taxes imposed before the bankruptcy petition, unpaid taxes imposed after the filing of the bankruptcy petition were declared to be “administrative expenses” of the bankruptcy estate, payable after all secured creditors. As a result, the secured creditor was able to foreclose on the property and retain all the proceeds of the sale except the amount of the pre-petition taxes.

The Bankruptcy Reform Act of 1994 included a provision which excepts from the United States Bankruptcy Code’s automatic stay provisions, “the creation of a statutory lien for an ad valorem property tax imposed by . . . a political subdivision of a state if such tax comes due after the filing of the petition [by a debtor in bankruptcy court].” This amendment effectively makes the Glasply holding inoperative as it relates to ad valorem real property taxes. However, it is possible that the original rationale of the Glasply ruling could still result in the treatment of post-petition special taxes as “administrative expenses,” rather than as tax liens secured by real property, at least during the pendency of bankruptcy proceedings.

According to the Ninth Circuit’s ruling, as administrative expenses, post-petition taxes would be paid, assuming that the debtor had sufficient assets to do so. In certain circumstances, payment of such administrative expenses may be allowed to be deferred. Once the property is transferred out of the bankruptcy estate (through foreclosure or otherwise), it would at that time become subject to current ad valorem taxes.

The CFD Act provides that the Special Taxes are secured by a continuing lien which is subject to the same lien priority in the case of delinquency as ad valorem taxes. No case law exists with respect to how a bankruptcy court would treat the lien for Special Taxes (which are not ad valorem taxes) levied after the filing of a petition in bankruptcy. Glasply is controlling precedent on bankruptcy courts in the State. If the Glasply precedent with respect to ad valorem taxes was applied to the levy of the Special Taxes, the amount of Special Taxes received from parcels whose owners declare bankruptcy could be reduced.

The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel’s approving legal opinion) will be qualified as to the enforceability of the various legal instruments, including the Bonds, by moratorium, bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases.

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

FDIC/Federal Government Interests in Properties
General. The ability of the District to foreclose the lien of delinquent unpaid Special Tax installments may be limited with regard to properties in which the FDIC, the Drug Enforcement Administration, the Internal Revenue Service (the “IRS”) or other federal agencies such as the Federal National Mortgage Association (“FNMA”) has or obtains an interest.

The supremacy clause of the United States Constitution reads as follows: “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every

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State shall be bound thereby, any Thing in the Constitution or Laws of any State to the contrary notwithstanding.”
The foregoing is generally interpreted to mean that, unless the United States Congress has otherwise provided, if a federal governmental entity owns a parcel that is subject to Special Taxes within Improvement Area No. 1 but does not pay taxes and assessments levied on the parcel (including Special Taxes), the applicable State and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments.

Moreover, unless the United States Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and the District wishes to foreclose on the parcel as a result of delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold for an amount that is sufficient to pay delinquent taxes and assessments on a parity with the Special Taxes and preserve the federal government’s mortgage interest. In Rust v. Johnson 597 F.2d 174 (9th Cir. 1979), the Ninth Circuit held that FNMA is a federal instrumentality for purposes of this doctrine, and not a private entity, and that, as a result, an exercise of state power over a mortgage interest held by FNMA constitutes an exercise of state power over property of the United States. For a discussion of risks associated with taxable parcels within Improvement Area No. 1 becoming owned by the federal government, federal government entities or federal government sponsored entities, see the caption “—Insufficiency of Special Taxes.” The District has not undertaken to determine whether any federal governmental entity currently has, or is likely to acquire, any interest (including a mortgage interest) in any of the parcels subject to the Special Taxes within Improvement Area No. 1, and therefore expresses no view concerning the likelihood that the risks described above will materialize while the Bonds are outstanding.

FDIC. In the event that any financial institution making any loan which is secured by real property within Improvement Area No. 1 is taken over by the FDIC, and prior thereto or thereafter the loan or loans go into default, resulting in ownership of the property by the FDIC, then the ability of the District to collect interest and penalties specified by State law and to foreclose the lien of delinquent unpaid Special Taxes may be limited. The FDIC’s policy statement regarding the payment of state and local real property taxes (the “Policy Statement”) provides that property owned by the FDIC is subject to state and local real property taxes only if those taxes are assessed according to the property’s value, and that the FDIC is immune from real property taxes assessed on any basis other than property value. According to the Policy Statement, the FDIC will pay its property tax obligations when they become due and payable and will pay claims for delinquent property taxes as promptly as is consistent with sound business practice and the orderly administration of the institution’s affairs, unless abandonment of the FDIC’s interest in the property is appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law, to the extent that the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalties and will neither pay nor recognize liens for such amounts. If any property taxes (including interest) on FDIC-owned property are secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay those claims. The Policy Statement further provides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC’s consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC’s consent.

The Policy Statement states that the FDIC generally will not pay non-ad valorem taxes, including special assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent that it purports to secure the payment of any such amounts. Special taxes imposed under the CFD Act and a special tax formula which determines the special tax due each year are specifically identified in the Policy Statement as being imposed each year and therefore covered by the FDIC’s federal immunity. The Ninth Circuit issued a ruling on August 28, 2001 in which it determined that the FDIC, as a federal agency, is exempt from CFD Act special taxes. With respect to property in the State that is owned by the FDIC on January 9,

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1997 and that was owned by the Resolution Trust Company (the “RTC”) on December 31, 1995, or that became the property of the FDIC through foreclosure of a security interest held by the RTC on that date, the FDIC will continue the RTC’s prior practice of paying special taxes imposed pursuant to the CFD Act if the taxes were imposed prior to the RTC’s acquisition of an interest in the property. All other special taxes may be challenged by the FDIC.

The District is unable to predict what effect the application of the Policy Statement would have in the event of a delinquency in the payment of Special Taxes on a parcel within Improvement Area No. 1 in which the FDIC has or obtains an interest, although prohibiting the lien of the Special Taxes from being foreclosed at a judicial foreclosure sale could reduce or eliminate the number of persons willing to purchase a parcel at a foreclosure sale. Such an outcome could cause a draw on the Reserve Account and perhaps, ultimately, if enough property were to become owned by the FDIC, a default in payment on the Bonds.

Direct and Overlapping Debt
Neither the City nor the District have control over the amount of additional debt payable from taxes or assessments levied on all or a portion of the property within Improvement Area No. 1 which may be incurred in the future by other governmental agencies having jurisdiction over all or a portion of the property within Improvement Area No. 1. Other public agencies may issue additional indebtedness on property within Improvement Area No. 1 at any time. Furthermore, nothing prevents the owners of property within Improvement Area No. 1 from consenting to or petitioning for the issuance of additional debt by other governmental agencies which would be secured by taxes on a parity with the Special Taxes or assessments which would be subordinate to the Special Taxes. Such consent may occur without the knowledge of the City or the District. To the extent that such indebtedness is payable from assessments, other special taxes levied pursuant to the CFD Act or taxes, such assessments, special taxes and taxes will be secured by liens on the property within Improvement Area No. 1.

Accordingly, the debt on the property within Improvement Area No. 1 could increase, without any corresponding increase in the value of the property therein. The imposition of such additional indebtedness could reduce the value-to-lien ratio of property in Improvement Area No. 1 and the willingness and ability of the property owners within Improvement Area No. 1 to pay the Special Taxes when due. See the caption “— Cumulative Burden of Parity Taxes and Special Assessments.” Moreover, in the event of a delinquency in the payment of Special Taxes, no assurance can be given that the proceeds of any foreclosure sale of property with delinquent Special Taxes would be sufficient to pay the delinquent Special Taxes. See the caption “—Land Values.”
Disclosures to Future Purchasers
The willingness or ability of an owner of a parcel to pay the Special Tax even if the value of the parcel is sufficient may be affected by whether or not the owner was given due notice of the Special Tax authorization at the time the owner purchased the parcel, was informed of the amount of the Special Tax on the parcel should the Special Tax be levied at the maximum tax rate and the risk of such a levy, and, at the time of such a levy, has the ability to pay it as well as pay other expenses and obligations. The District has caused a notice of the Special Tax lien to be recorded in the Office of the Recorder of the County of Riverside against each parcel. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such Special Tax obligation in the purchase of a property within Improvement Area No. 1 or lending of money thereon.

The CFD Act requires the subdivider (or its agent or representative) of a subdivision to notify a prospective purchaser or long-term lessor of any lot, parcel, or unit that is subject to a Mello-Roos special tax of the existence and maximum amount of such special tax using a statutorily prescribed form. Section 1102.6b of the Civil Code of the State requires that in the case of transfers other than those covered by the above requirement, the seller must at least make a good faith effort to notify the prospective purchaser of the special

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tax lien in a format prescribed by statute. Failure by an owner of the property to comply with the above requirements, or failure by a purchaser or lessor to consider or understand the nature and existence of the Special Tax, could adversely affect the willingness and ability of the purchaser or lessor to pay the Special Tax when due.

Shapiro Decision
On August 1, 2014, the California Court of Appeal, Fourth Appellate District, Division One (the “Court”), issued its opinion in City of San Diego v. Melvin Shapiro, et al. (D063997). The case involved a Convention Center Facilities District (the “CCFD”) established by the City of San Diego. The CCFD was a financing district established under the City of San Diego’s charter (the “Charter”) and was intended to function much like a community facilities district established under the provisions of the CFD Act. The CCFD was comprised of all of the real property in the entire City of San Diego. However, the special tax to be levied within the CCFD was to be levied only on properties improved with a hotel located within the CCFD.

At the election to authorize such special tax, the Charter proceeding limited the electorate to owners of hotel properties and lessees of real property owned by a governmental entity on which a hotel is located. Thus, the election was limited to owners and lessees of properties on which the special tax would be levied, and not a registered voter election. Such approach to determining who would constitute the qualified electors of the CCFD was based on Section 53326(c) of the CFD Act, which generally provides that, if a special tax will not be apportioned in any tax year on residential property, the legislative body may provide that the vote will be by the landowners of the proposed district whose property would be subject to the special tax. The Court held that the CCFD special tax election did not comply with applicable requirements of Article XIIIA, Section 4, and Article XIIIC, Section 2, of the State Constitution, or with applicable provisions of the Charter, because the electors in such an election were not the registered voters residing within Improvement Area No. 1.

In the case of the CCFD, at the time of the election there were several hundred thousand registered voters within the CCFD (viz., all of the registered voters in the City of San Diego). In the case of the District, there were no registered voters within Improvement Area No. 1 at the time of the elections to authorize the Special Tax levy for the District. In the Shapiro decision, the Court expressly stated that it was not addressing the validity of landowner voting to impose special taxes pursuant to the CFD Act in situations where there are fewer than 12 registered voters. Thus, by its terms, the Court’s holding does not apply to the special tax election in Improvement Area No. 1. Moreover, Section 53341 of the CFD Act provides that any “action or proceeding to attack, review, set aside, void or annul the levy of a special tax … shall be commenced within 30 days after the special tax is approved by the voters.” Similarly, Section 53359 of the CFD Act provides that any action to determine the validity of bonds issued pursuant to the CFD Act or the levy of special taxes authorized pursuant to the CFD Act be brought within 30 days of the voters approving the issuance of such bonds or the special tax. Voters approved the Special Tax and the issuance of bonds for the District in compliance with all applicable requirements of the CFD Act at the time of formation of the District in 2005.

Therefore, under the provisions of Sections 53341 and 53359 of the CFD Act, the statute of limitations period to challenge the validity of the Special Tax for the District has expired.

Natural Disasters
The property within Improvement Area No. 1, like all California communities, may be subject to unpredictable seismic activity, high winds, wildfires and urban fires, landslides and slope failures, or flooding in the event of unseasonable rainfall or other natural disasters. Seismically induced ground shaking has affected Riverside County in the past and is expected to affect Riverside County in the future. Seismic activity represents a potential risk for damage to buildings, roads, bridges and property within Improvement Area No.

1. In addition, land that is susceptible to seismic activity may be subject to liquefaction during the occurrence of such event. No faults transect Improvement Area No. 1; however, according to the Safety Element of the City’s General Plan, there are three major, known faults located in the County: the San Andreas, San Jacinto, and Elsinore faults. The San Andreas and San Jacinto are two of California’s most active faults. Several

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properties within the City and its sphere of influence are directly impacted by the southernmost section of the San Andreas fault and/or secondary faults and fractures. These faults pose geologic and seismic hazards in the form of earthquakes, fault rupture, liquefaction, and landslides. The most recent earthquake along this stretch of the fault occurred more than 300 years ago leading scientists to suggest that it has accumulated a substantial amount of tectonic stress and is likely to produce a large (7 to 8 magnitude) earthquake in the near future.

The occurrence of seismic activity, fires, landslides and slope failures, expansive soils, dam and reservoir failure, act of terrorism or other cause severely damaging property or infrastructure within Improvement Area No. 1, flooding or other natural disasters in or around Improvement Area No. 1 could result in substantial damage to properties in Improvement Area No. 1 which, in turn, could substantially reduce the value of such properties. As a result of the occurrence of such an event, a substantial portion of the property owners may be unable or unwilling to pay the Special Tax installments when due, and the Reserve Account may eventually become depleted. In addition, the value of land in Improvement Area No. 1 could be diminished in the aftermath of such natural events, reducing the resulting proceeds of foreclosure sales in the event of delinquencies in the payment of the Special Tax installments.

In recent years, drought conditions in the State have led to increased risk of wildfire. In particular, certain electrical operators in the State have seen their distribution/transmission lines cause billions of dollars in property damage and the loss of lives. In 2023, as in several prior years, for example, devastating wildfires burned in various communities in the State, causing wide-spread damage. In 2025, communities in Los Angeles County, including Pacific Palisades, Malibu and Altadena (the “Palisades Fire”), experienced widespread devastation from wildfires causing losses of life, thousands of burned homes, and billions of dollars in property damage. Riverside County is also periodically subject to large-scale wildfires and is expected to be subject to wildfires in the future. In recent years, wildfires have burned hundreds of acres at a time and destroyed dozens of homes and structures in Riverside County. The City is situated in a wildland urban interface, an area where development meets undeveloped wildland. Structures in these zones are at a higher risk of a wildfire.

In March 2025, the California Department of Forestry and Fire Protection (“Cal Fire”) released an updated Fire Hazard Severity Zone map for the Southern California region. The Cal Fire Hazard Severity Zone maps evaluate fire hazard, which is defined as the likelihood and expected fire behavior over a 30 to 50- year period without considering mitigation measures such as home hardening, recent wildfire or fuel reduction efforts, as opposed to risk, which is the potential damage a fire can do to the area under existing conditions, accounting for any modifications such as fuel reduction projects, defensible space, and ignition resistant building construction. Pursuant to State law, the State Fire Marshal is mandated to classify the state responsibility areas where the state has financial responsibility for wildfire protection and prevention into Fire Hazard Severity Zones classified as “Moderate,” “High” or “Very High.” In areas designated as local responsibility areas, where local agencies have financial responsibility for wildfire protection and prevention, Cal Fire’s Fire Hazard Severity Zone maps make recommendations for the classification of Moderate, High or Very High Fire Hazard Severity Zones and the local agencies must adopt maps which either adopt Cal Fire’s recommendations or place the relevant areas in a higher classification. For more information on Cal Fire’s Fire Hazard Severity Zone maps, see the Cal Fire website. No portion of Improvement Area No. 1 is located immediately within a High or Very High FHSZ.

On January 16, 2025, Governor Gavin Newsom issued Executive Order N-10-25 (the “Governor’s Order) which canceled penalties, costs and interest on overdue property taxes (including special taxes) within certain zip codes affected by the Palisades Fire during calendar year 2025. This will likely cause a delay in the payment of special taxes by certain property owners in the community facilities districts affected by Governor’s Order. Unless the majority of property owners within any such community facilities districts pay their special taxes voluntarily or have mortgage impound accounts, it is likely that the community facilities districts will need to draw upon a reserve fund to make debt service payments on outstanding special tax revenue bonds issued by such districts prior to the expiration of the Governor’s Order and it is possible that such bonds will experience a payment default. In the event of a major fire or other natural disaster affecting

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the City or the District, a similar order affecting the City or the District could impact the debt service payment for the Bonds.

Property Insurance
In recent years, homeowners in many areas in the State have experienced significant increases in premiums for property and homeowners’ insurance policies as well as difficulty in obtaining such insurance from commercial insurance companies. The increases have been driven by, among other factors, the risk of wildfire damage to property in the State.

In addition, no assurances can be made that adequate homeowners’ insurance coverage will be available in the future from reputable insurance companies, with premiums comparable to historical rates, or at all. The inability to obtain adequate insurance coverage could impact the ability of the homeowners’ in Improvement Area No. 1 to reconstruct their homes in the event of damage.

Land Values
The value of land within Improvement Area No. 1 is an important factor in evaluating the investment quality of the Bonds. In the event that a property owner defaults in the payment of a Special Tax installment, the District’s only remedy is to commence judicial foreclosure proceedings on such property. Prospective purchasers of the Bonds should not assume that the property within Improvement Area No. 1 could be sold for the assessed value described herein at a foreclosure sale for delinquent Special Tax installments or for an amount adequate to pay delinquent Special Tax installments, because market values in a foreclosure sale may be less than assessed values. Reductions in property values within Improvement Area No. 1 due to a downturn in the economy or the real estate market, events such as earthquakes, wildfires, droughts or floods, stricter land use regulations, threatened or endangered species or other events may adversely impact the security underlying the liens.

The assessed values set forth in this Official Statement do not represent market values arrived at through an appraisal process and generally reflect only the sales price of a parcel when acquired by its current owner, adjusted annually by an amount determined by the County of Riverside Assessor, generally not to exceed an increase of more than 2% per Fiscal Year as limited by Proposition 13, as amended by Proposition 8. Several counties in the State, including the County of Riverside, have reassessed certain properties acquired in recent years at the peak of the real estate market. The District cannot predict whether the County of Riverside will reduce assessed values within Improvement Area No. 1 in future years. If the County of Riverside did decide to broadly reassess recent home transactions in the County of Riverside, it is possible that in future years the assessed values which are shown in this Official Statement could be adjusted downward from the values reflected on the current Assessor’s Roll. No assurance can be given that current assessed values reflect market values or that a parcel could actually be sold for its assessed value.

The actual market value of the property is subject to future events such as a downturn in the economy, occurrences of certain acts of nature and the decisions of various governmental agencies as to land use, all of which could adversely impact the value of the land in Improvement Area No. 1, which is the security for the Bonds. As discussed herein, many factors could adversely affect property values within Improvement Area No. 1.

Hazardous Substances
A claim with regard to a hazardous substance on a parcel of land subject to any of the Special Taxes can result in a significant potential reduction in the value of the parcel. In general, the owners and operators of a parcel may be required by law to remedy conditions relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is well known, but State laws with regard to

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hazardous substances are also stringent and similar in effect. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of a parcel whether or not the owner (or operator) had anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the parcels within Improvement Area No. 1 be affected by a hazardous substance, is to reduce the marketability and value by the costs of remedying the condition because the prospective purchaser of such a parcel will, upon becoming the owner of such parcel, become obligated to remedy the condition just as the seller of such a parcel is obligated to remedy the condition.

Hazardous substance liabilities may arise in the future with respect to any of the parcels within Improvement Area No. 1 resulting from the existence, currently, of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Additionally, such liabilities may arise from the method of handling such substance. These possibilities could significantly affect the value of a parcel.

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

Cumulative Burden of Parity Taxes and Special Assessments Property within Improvement Area No. 1 is subject to taxes imposed by public agencies that also have jurisdiction over the land within Improvement Area No. 1. See the caption “IMPROVEMENT AREA NO. 1” The Special Taxes and any penalties thereon constitute a lien against the parcels of land on which they have been levied. Such lien is on a parity with all special taxes or assessments levied by other agencies and is co-equal to and independent of the lien for general property taxes, regardless of when they are imposed upon the same property.

Neither the City nor the District have control over the ability of other entities to issue indebtedness secured by ad valorem taxes, special taxes or assessments levied on all or a portion of the property within Improvement Area No. 1. In addition, the owners of the property within Improvement Area No. 1 may, without the consent or knowledge of the City or the District, petition other public agencies to issue public indebtedness secured by ad valorem taxes, special taxes or assessments. The property within Improvement Area No. 1 is subject to a number of overlapping tax and assessment liens, some of which secure outstanding indebtedness. See the caption “IMPROVEMENT AREA NO. 1—Direct and Overlapping Debt.” California Constitution Article XIIIC and Article XIIID On November 5, 1996, the voters of the State approved Proposition 218, known as the “Right to Vote on Taxes Act.” Proposition 218 added Articles XIIIC and XIIID to the State Constitution, which contain, among other things, a number of provisions affecting the ability of the District to levy and collect both existing and future taxes, assessments, fees and charges.

Among other things, Section 3 of Article XIIIC states that “… the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge.” The CFD Act provides for a procedure which includes notice, hearing, protest and voting requirements to alter the rate and method of apportionment of an existing special tax. However, the CFD Act prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the CFD Act unless such legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt. On July 1, 1997, a bill was signed into law by the Governor of the State enacting Section 5854 of the Government Code of the State, which states that:

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“Section 3 of Article XIIIC of the California Constitution, as adopted at the November 5, 1996, general election, shall not be construed to mean that any owner or beneficial owner of a municipal security, purchased before or after that date, assumes the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of contractual rights protected by Section 10 of Article I of the United States Constitution.”
Accordingly, although the matter is not free from doubt, it is likely that Proposition 218 has not conferred on the voters the power to repeal or reduce Special Taxes if such reduction would interfere with the timely retirement of the Bonds. The provisions of Proposition 218 relating to the exercise of the initiative power have not been interpreted by the courts and no assurance can be given as to the outcome of any such litigation.

It may be possible, however, for voters or the City Council of the City, acting as the legislative body of the District, to reduce the Special Taxes in a manner which does not interfere with the timely repayment of the Bonds, but which does reduce the maximum amount of Special Taxes that may be levied in any year below the existing levels. Furthermore, no assurance can be given with respect to the future levy of the Special Taxes in amounts greater than the amount necessary for the timely retirement of the Bonds. Therefore, no assurance can be given with respect to the levy of Special Taxes for Administrative Expenses. Nevertheless, the District has covenanted that it will not modify, alter or amend the Rate and Method in any manner that reduces the maximum Special Taxes that may be levied in each year on property within Improvement Area No. 1 to an amount which is less than 110% of the principal and interest due in each corresponding future Bond Year with respect to the Bonds and Parity Bonds Outstanding as of the date of such amendment. The District has further covenanted that, in the event that an initiative is adopted which purports to reduce the maximum Special Taxes that may be levied, the District will commence and pursue legal action in order to preserve its ability to comply with the foregoing covenant. See the caption “SECURITY FOR THE BONDS—Levy and Collection of Special Taxes.” However, no assurance can be given as to the enforceability of the foregoing covenants.

The interpretation and application of Proposition 218 will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at the current time to predict with certainty the outcome of such determination or the timeliness of any remedy afforded by the courts. See the caption “—Limitations on Remedies.”
No Acceleration
Under the Indenture, the Bonds are not subject to acceleration in the event of payment default.

Similarly, there is no provision in the CFD Act or the Indenture for the acceleration of the Special Taxes in the event of a payment default by an owner of a parcel within Improvement Area No. 1 or otherwise.

Limited Secondary Market
There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that such Bonds can be sold for any particular price. Although the District has committed to provide certain financial and operating information on an annual basis, there can be no assurance that such information will be available to Bond owners on a timely basis. See the caption “CONCLUDING INFORMATION—Continuing Disclosure.” The failure to provide the required annual financial information does not give rise to monetary damages but merely an action for specific performance. Occasionally, because of general market conditions, lack of current information, or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price.

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Tax Cuts and Jobs Act
H.R. 1 of the 115th U.S. Congress, known as the “Tax Cuts and Jobs Act,” was enacted into law on December 22, 2017 (the “Tax Act”). The Tax Act makes significant changes to many aspects of the Internal Revenue Code of 1986 (the “Code”). For example, the Tax Act reduces the amount of mortgage interest expense and state and local income tax and property tax expense that individuals may deduct from their gross income for federal income tax purposes. These changes could increase the cost of home ownership within Improvement Area No. 1 and could result in reductions in the market value of properties below current levels.

However, the District cannot predict the effect that the Tax Act may have on the cost of home ownership or the ability or willingness of homeowners to pay Special Taxes or property taxes.

Ballot Initiatives
Proposition 218, which is discussed under the caption “—California Constitution Article XIIIC and Article XIIID,” was adopted pursuant to a measure that qualified for the ballot pursuant to the State’s Constitutional initiative process, and the State Legislature has in the past enacted legislation that has altered the spending limitation or established minimum funding provisions for particular activities. On March 6, 1995, in the case of Rossi v. Brown, the State Supreme Court held that an initiative can repeal a tax ordinance and prohibit the imposition of further such taxes and that the exemption from the referendum requirements does not apply to initiative. From time to time, other initiative measures could be adopted by State voters or legislation enacted by the State Legislature. The adoption of any such initiative or enactment of legislation might place limitations on the ability of the State, the County of Riverside or local districts to increase revenues or appropriations or affect the levy or collection of Special Taxes.

Limitations on Remedies
Remedies available to the Owners may be limited by a variety of factors and may be inadequate to assure the timely payment of principal of and interest and premium, if any, on the Bonds.

Bond Counsel has limited its opinion as to the enforceability of the Bonds and the Indenture to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other similar laws affecting generally the enforcement of creditors’ rights, by equitable principles and by the exercise of judicial discretion. Additionally, the Bonds are not subject to acceleration in the event of the breach of any covenant or duty under the Indenture. The lack of availability of certain remedies or the limitation of remedies may entail risks of delay in the exercise of, or limitations on or modifications to, the rights of the Owners.

Enforceability of the rights and remedies of the Owners of the Bonds, and the obligations incurred by the District, may become subject to the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or hereafter in effect, equity principles which may limit the specific enforcement under State law of certain remedies, the exercise by the United States of America of the powers delegated to it by the federal Constitution, the reasonable and necessary exercise, in certain exceptional situations, of the police powers inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose and the limitations on remedies against governmental entities in the State. See the captions “—Bankruptcy and Foreclosure Delays,” and “—FDIC/Federal Government Interests in Properties.”
Cybersecurity
The City, like many other public and private entities, relies on a large and complex technology environment to conduct its operations. As a recipient and provider of personal, private, or sensitive information, the City is subject to multiple cyber threats including, but not limited to, hacking, viruses,

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malware and other attacks on computer and other sensitive digital networks and systems. Entities or individuals may attempt to gain unauthorized access to the City’s digital systems for the purposes of misappropriating assets or information or causing operational disruption and damage. The City has adopted various policies regarding cybersecurity, including policies with respect to appropriate use and of email and technology, as well as the handling of sensitive personally identifiable information. To date, the City has not experienced an attack on its computer operating systems which resulted in a breach of its cybersecurity systems that are in place. However, no assurances can be given that the City’s efforts to manage cyber threats and attacks will be successful or that any such attack will not materially impact the operations or finances of the City..

The City is also reliant on other entities and service providers, such as the County Treasurer, for the levy and collection of Special Taxes securing payment of the Bonds. No assurance can be given that the City may not be affected by cyber threats and attacks against other entities or service providers in a manner which may affect the Bondowners.

While there can be no assurance that a future attack or attempted attack would not result in disruption of City operations, the City expects that these disruptions would be temporary in nature.

Loss of Tax Exemption
General. In order to maintain the exclusion from gross income for federal income tax purposes of the interest on the Bonds, the District must comply with the applicable requirements of the Code, and may not take any action or fail to take any action if such action or failure to take such action would adversely affect the exclusion from gross income of interest on the Bonds thereunder. Interest on the Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date of issuance of such Bonds as a result of acts or omissions of the District in violation of this or other covenants in the Indenture.

The Bonds are not subject to redemption or any increase in interest rates should an event of taxability occur and will remain outstanding until maturity or prior redemption in accordance with the provisions contained in the Indenture.

Federal Tax Law Changes. From time to time, there are legislative proposals in Congress and IRS rulemaking activities that could adversely affect the market value or marketability of the Bonds. It cannot be predicted whether future legislation, rules, regulations or other guidance may be proposed or enacted that would affect the federal tax treatment of interest received on the Bonds. Prospective purchasers of the Bonds should consult with their own tax advisors regarding any pending or proposed legislation or regulations that would change the federal tax treatment of interest on the Bonds. Risks to the status of federal tax exemption affecting interest on the Bonds are also discussed under “CONCLUDING INFORMATION—Tax Matters” below.

Climate Change
Climate change caused by human activities may have adverse effects on the City. Climate change can also result in more variable weather patterns, which can lead to longer and more severe droughts as well as increased risk of flooding. Projections of the impacts of global climate change on the City are complex and depend on many factors that are outside the City’s control. The various scientific studies that forecast the amount and timing of adverse impacts of climate change are based on assumptions contained in such studies, but actual events may vary materially. Also, the scientific understanding of climate change and its effects continues to evolve. Accordingly, the City is unable to forecast with certainty when adverse impacts of climate change will occur or the extent of such impacts. The City expects to continue to consider the effects of climate change in its own planning and to participate in regional planning initiatives. While the impacts of climate change may be mitigated by the City’s past and future investment in adaptation strategies, the City can give no assurance about the net effects of those strategies and whether the City will be required to take

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additional adaptive mitigation measures. Particular potential impacts of climate change on the City include worsening air quality, increased flooding, and heatwaves The future fiscal impact of climate change on the District and the property within Improvement Area No. 1 and the residents of Improvement Area No. 1 is difficult to predict, but it could be significant and it could have a material adverse effect on the receipt of Special Taxes if property values are affected. See the captions “—Natural Disasters” and “—Land Values.”
Risks Associated with Bond Insurance
In the event that the District defaults in the payment of principal of or interest on the Insured Bonds when due, the Owners of the Insured Bonds will have a claim under the Policy for such payments. See the caption “BOND INSURANCE.” In the event that the Insurer becomes obligated to make payments on the Insured Bonds, no assurance can be given that such event will not adversely affect the market for the Bonds.

In the event that the Insurer is unable to make payments of principal of or interest on the Insured Bonds when due under the Policy, the Insured Bonds will be payable solely from Net Taxes and amounts that are held in certain funds and accounts established under the Indenture, as described under the caption “SECURITY FOR THE BONDS.”
The long-term credit rating on the Insured Bonds is dependent in part on the financial strength of the Insurer and its claims-paying ability. The Insurer’s financial strength and claims-paying ability are predicated upon a number of factors which could change over time. If the long-term ratings of the Insurer are lowered, such event could adversely affect the market for the Bonds. See the caption “CONCLUDING INFORMATION—Ratings.”
None of the District, the City or the Underwriter has made an independent investigation of the claims-paying ability of the Insurer, and no assurance or representation regarding the financial strength or projected financial strength of the Insurer is being made by the District, the City or the Underwriter in this Official Statement. Therefore, when making an investment decision with respect to the Insured Bonds, potential investors should carefully consider the ability of the District to pay principal and interest on the Insured Bonds, assuming that the Policy is not available to pay principal and interest on the Insured Bonds, and the claims-paying ability of the Insurer through final maturity of the Insured Bonds.

So long as the Policy remains in effect and the Insurer is not in default of its obligations thereunder, the Insurer has certain notice, consent and other rights under the Indenture and will have the right to control all remedies in the event of a default under the Indenture as to the Insured Bonds. The Insurer is not required to obtain the consent of the Owners of the Insured Bonds with respect to the exercise of remedies. See Appendix A.

CONCLUDING INFORMATION
Underwriting
The Bonds are being purchased by Piper Sandler & Co. (the “Underwriter”) pursuant to a Bond Purchase Agreement, dated the date hereof (the “Purchase Agreement”), by and between the Underwriter and the District. The Underwriter has agreed to purchase the Bonds at a price of $___ (being the aggregate principal amount thereof, plus a net original issue premium of $___ and less an Underwriter’s discount of $___). The Purchase Agreement provides that the Underwriter will purchase all of the Bonds if any are purchased. The obligation to make such purchase is subject to certain terms and conditions set forth in the Purchase Agreement, the approval of certain legal matters by counsel and certain other conditions.

The initial offering prices stated on the inside front cover page of this Official Statement may be changed from time to time by the Underwriter. The Underwriter may offer and sell the Bonds to certain

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dealers (including dealers depositing Bonds into investment trusts), dealer banks, banks acting as agent and others at prices lower than said public offering prices.

The Underwriter and its affiliates comprise a full-service financial institution engaged in activities which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non- financial activities and services. The Underwriter and its affiliates may have provided, and may in the future provide, a variety of these services to the City and/or the District and to persons and entities with relationships with the City and/or the District, for which they received or will receive customary fees and expenses.

In the ordinary course of these business activities, the Underwriter and its affiliates may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the City and/or the District (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the City and/or the District.

The Underwriter and its affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire such assets, securities and instruments. Such investment and securities activities may involve securities and instruments of the City and/or the District.

Municipal Advisor
Fieldman, Rolapp & Associates, Inc., Irvine, California (the “Municipal Advisor”), served as municipal advisor with respect to the sale of the Bonds. The Municipal Advisor is an independent registered municipal advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities. The Municipal Advisor will receive compensation contingent upon the sale and delivery of the Bonds. The Municipal Advisor has not undertaken to make an independent verification or to assume responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement.

Legal Opinion; Legal Matters
The legality of the Bonds and certain other legal matters are subject to the approval of Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, Bond Counsel. Bond Counsel will render an opinion with respect to the validity and enforceability of the Bonds and the Indenture, and a copy of the opinion will accompany each Bond. Such opinion will be subject to the various assumptions, exceptions and limitations stated therein. See Appendix B. Certain legal matters will be passed upon for the City and the District by Burke, Williams & Sorensen, LLP, San Diego, California, as the City Attorney, and by Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, Disclosure Counsel, for the Underwriter by Best Best and Krieger LLP, Los Angeles, California, for the Insurer by its counsel and for the Trustee by its counsel.

Payment of the fees and expenses of Bond Counsel, Disclosure Counsel, Underwriter’s counsel and the Trustee is contingent upon the sale and delivery of the Bonds. Bond Counsel and Disclosure Counsel have from time to time represented the Underwriter in connection with various matters unrelated to the Bonds.

Tax Matters
In the opinion of Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not

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an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. However, it should be noted that, with respect to applicable corporations as defined in Section 59(k) of the Code, generally certain corporations with more than $1,000,000,000 of average annual adjusted financial statement income, interest (and original issue discount) on the Bonds might be taken into account in determining adjusted financial statement income for purposes of computing the alternative minimum tax imposed by Section 55 of the Code on such corporations.

In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State personal income tax.

In the opinion of Bond Counsel, the difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of the same series and maturity is to be sold to the public) and the stated redemption price at maturity with respect to such Bond constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Bond Owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by the Bond Owner will increase the Bond Owner’s basis in the Bond.

The amount by which a Bond Owner’s original basis for determining loss on sale or exchange in the applicable Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable bond premium, which must be amortized under Section 171 of the Code; such amortizable bond premium reduces the Bond Owner’s basis in the applicable Bond (and the amount of tax exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of Bond premium may result in a Bond Owner realizing a taxable gain when a Bond is sold by the Owner for an amount equal to or less (under certain circumstances) than the original cost of the Bond to the Owner. Purchasers of the Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable bond premium.

Bond Counsel’s opinion as to the exclusion from gross income of interest (and original issue discount) on the Bonds is based upon certain representations of fact and certifications made by the District and others and is subject to the condition that the District comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds to assure that interest (and original issue discount) on the Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest (and original issue discount) on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The District has covenanted to comply with all such requirements.

The Internal Revenue Service (the “IRS”) has initiated an expanded program for the auditing of tax exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for audit by the IRS. It is also possible that the market value of the Bonds might be affected as a result of such an audit of the Bonds (or by an audit of similar municipal obligations). No assurance can be given that in the course of an audit, as a result of an audit, or otherwise, Congress or the IRS might not change the Code (or interpretation thereof) subsequent to the issuance of the Bonds to the extent that it adversely affects the exclusion from gross income of interest on the Bonds or their market value.

SUBSEQUENT TO THE ISSUANCE OF THE BONDS, THERE MIGHT BE FEDERAL, STATE

OR LOCAL STATUTORY CHANGES (OR JUDICIAL OR REGULATORY CHANGES TO OR

INTERPRETATIONS OF FEDERAL, STATE OR LOCAL LAW) THAT AFFECT THE FEDERAL, STATE

OR LOCAL TAX TREATMENT OF THE BONDS, INCLUDING THE IMPOSITION OF ADDITIONAL

FEDERAL INCOME OR STATE TAXES ON OWNERS OF TAX-EXEMPT STATE OR LOCAL OBLIGATIONS, SUCH AS THE BONDS. THESE CHANGES COULD ADVERSELY AFFECT THE MARKET VALUE OR LIQUIDITY OF THE BONDS. NO ASSURANCE CAN BE GIVEN THAT

SUBSEQUENT TO THE ISSUANCE OF THE BONDS STATUTORY CHANGES WILL NOT BE

INTRODUCED OR ENACTED OR JUDICIAL OR REGULATORY INTERPRETATIONS WILL NOT

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OCCUR HAVING THE EFFECTS DESCRIBED ABOVE. BEFORE PURCHASING ANY OF THE

BONDS, ALL POTENTIAL PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING

POSSIBLE STATUTORY CHANGES OR JUDICIAL OR REGULATORY CHANGES OR

INTERPRETATIONS, AND THEIR COLLATERAL TAX CONSEQUENCES RELATING TO THE BONDS.

Bond Counsel’s opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. Bond Counsel has not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. Bond Counsel’s engagement with respect to the Bonds terminates upon their issuance and Bond Counsel disclaims any obligation to update the matters set forth in its opinion. The Indenture and the Tax Certificate relating to the Bonds permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the effect on the exclusion from gross income of interest (and original issue discount) on the Bonds for federal income tax purposes with respect to any Bond if any such action is taken or omitted based upon the advice of counsel other than Stradling Yocca Carlson & Rauth LLP.

Although Bond Counsel has rendered an opinion that interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes provided that the District continue to comply with certain requirements of the Code, the ownership of the Bonds and the accrual or receipt of interest (and original issue discount) on the Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any such tax consequences. Accordingly, before purchasing any of the Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences relating to the Bonds.

Should interest (and original issue discount) on the Bonds become includable in gross income for federal income tax purposes, the Bonds are not subject to early redemption or an increase in interest rates and will remain outstanding until maturity or until redeemed in accordance with the Indenture.

A copy of the proposed form of opinion of Bond Counsel is attached hereto as Appendix B.

No Litigation
There is no action, suit, or proceeding pending or, to the best knowledge of the City or the District, threatened at the present time restraining or enjoining the delivery of the Bonds or in any way contesting or affecting the validity of the Bonds or any proceedings of the City or the District taken with respect to the execution or delivery thereof. A no litigation opinion rendered by the City Attorney will be required to be delivered to the Underwriter simultaneously with the delivery of the Bonds.

Ratings
S&P Global Ratings (“S&P”) is expected to assign the Insured Bonds the rating of “__” based upon the delivery of the Policy by the Insurer at the time of issuance of the Insured Bonds. S&P has assigned the Bonds the underlying rating of “__” without respect to the delivery of the Policy for the Insured Bonds. There is also no assurance that the criteria required to achieve a rating on the Bonds will not change during the period that the Bonds remain outstanding. Any downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Bonds. Such ratings reflect only the current views and current rating criteria of S&P (which views and rating criteria could change at any time), and an explanation of the significance of such ratings may be obtained from S&P. Generally, a rating agency bases its ratings on the information and materials that are furnished to it (which may include information and material from the City or the District that is not included in this Official Statement) and on investigations, studies and assumptions of its own.

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The District has covenanted in the Continuing Disclosure Agreement to file notices of any rating changes on the Bonds on the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System for municipal securities disclosures, maintained on the Internet at http://emma.msrb.org/ (“EMMA”).

See the caption “—Continuing Disclosure” and Appendix C. Notwithstanding such covenant, information relating to rating changes on the Bonds may be publicly available from S&P prior to such information being provided to the City or the District and prior to the date by which the District is obligated to file a notice of rating change. Purchasers of the Bonds are directed to the rating agencies and their respective websites and official media outlets for the most current ratings with respect to the Bonds after the initial issuance of the Bonds.

The City and the District make no representation as to the Insurer’s creditworthiness and no representation that the Insurer’s credit rating will be maintained in the future. S&P has previously taken action to downgrade the ratings of certain municipal bond insurers and has published various releases outlining the processes that S&P intends to follow in evaluating the ratings of financial guarantors. For some financial guarantors, the result of such evaluations could be a rating affirmation, a change in rating outlook, a review for downgrade or a downgrade. Potential investors are directed to S&P for additional information on S&P’s evaluations of the financial guaranty industry and individual financial guarantors, including the Insurer. See the caption “BOND INSURANCE” for further information relating to the Insurer.

Continuing Disclosure
The District has covenanted for the benefit of holders and beneficial owners of the Bonds: (1) to provide certain financial information and operating data (the “Annual Report”) relating to the District and the property in Improvement Area No. 1 not later than each April 1 after the end of the District’s Fiscal Year, commencing on April 1, 2026 with the Annual Report for Fiscal Year 2025-26; and (2) to provide notices of the occurrence of certain enumerated events. The Annual Report and notices of enumerated events will be timely filed by the District or a dissemination agent appointed by the District with EMMA. The specific nature of the information to be contained in the Annual Report or the notices of enumerated events is set forth in the Continuing Disclosure Agreement. See Appendix C for the form of the Continuing Disclosure Agreement. These covenants have been made in order to assist the Underwriter in complying with Rule 15c2-12(b)(5) of the Securities and Exchange Commission (the “Rule”).

It should be noted that the District is required to file certain financial statements with the Annual Report. This requirement has been included in the Continuing Disclosure Agreement solely to satisfy the provisions of the Rule. The inclusion of this information does not mean that the Bonds are secured by any resources or property of the District or the City other than as described in this Official Statement. See the captions “SPECIAL RISK FACTORS—The Bonds are Limited Obligations of the District.” Miscellaneous
All of the preceding summaries of the Indenture, applicable legislation, agreements and other documents are made subject to the provisions of such documents and legislation and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the District for further information in connection therewith.

This Official Statement does not constitute a contract with the purchasers of the Bonds.

Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized.

The execution and delivery of this Official Statement have been authorized by the members of the City Council of the City, as the legislative body of the District.

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COMMUNITY FACILITIES DISTRICT NO. 2004-3
(TERRA LAGO) OF THE CITY OF INDIO
By:

City Manager of the City of Indio

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APPENDIX A

SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE

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APPENDIX B

FORM OF BOND COUNSEL OPINION
Upon issuance of the Bonds, Stradling Yocca Carlson & Rauth LLP, Bond Counsel, proposes to render its final approving opinion in substantially the following form:
_____, 2026
Community Facilities District No. 2004-3 (Terra Lago) of the City of Indio Indio, California
Re: $____ Community Facilities District No. 2004-3 (Terra Lago) of the City of Indio Improvement Area No. 1 2026 Special Tax Refunding Bonds Ladies and Gentlemen:

We have examined the Constitution and the laws of the State of California (the “State”), a certified record of the proceedings of the City of Indio (the “City”) taken in connection with the formation of City of Indio Community Facilities District No. 2004-3 (Terra Lago) (the “District”) and the authorization and issuance of the District’s Improvement Area No. 1 2026 Special Tax Refunding Bonds in the aggregate principal amount of $____ (the “Bonds”) and such other information and documents as we consider necessary to render this opinion. In rendering this opinion, we have relied upon certain representations of fact and certifications made by the City, the District, the initial purchaser of the Bonds and others. We have not undertaken to verify through independent investigation the accuracy of the representations and certifications relied upon by us.

The Bonds have been issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (comprising Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California) (the “Act”), and a Bond Indenture, dated as of February 1, 2026 (the “Indenture”), by and between the District and U.S. Bank Trust Company, National Association, as trustee. All capitalized terms that are not defined herein have the meanings set forth in the Indenture.

Based upon our examination of the foregoing, and in reliance thereon and on all matters of fact as we deem relevant under the circumstances, and upon consideration of applicable laws, we are of the opinion that:

1. The Bonds have been duly and validly authorized by the District and are legal, valid and binding limited obligations of the District, enforceable in accordance with their terms and the terms of the Indenture, and the Bonds are entitled to the benefits of the Indenture. The Bonds are limited obligations of the District, but are not a debt of the City, the State or any other political subdivision thereof within the meaning of any constitutional or statutory limitation, and, except for the Special Taxes, neither the faith and credit nor the taxing power of the City, the State or any of its political subdivisions is pledged to the payment thereof.

2. The execution and delivery of the Indenture has been duly authorized by the District, and the Indenture is valid and binding upon the District and enforceable in accordance with its terms, provided, however, that we express no opinion as to the enforceability of the covenant of the District contained in the Indenture to levy Special Taxes for the payment of Administrative Expenses or as to any indemnification, penalty, choice of law, choice of forum or waiver provisions contained therein.

3. The Indenture creates a valid pledge of that which the Indenture purports to pledge, subject to the provisions of the Indenture.

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4. Under existing statutes, regulations, rulings and judicial decisions, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals; however, with respect to applicable corporations as defined in Section 59(k) of the Internal Revenue Code of 1986, as amended (the “Code”), interest (and original issue discount) with respect to the Bonds might be taken into account in determining adjusted financial statement income for the purposes of computing the alternative minimum tax imposed on such corporations.

5. Interest (and original issue discount) on the Bonds is exempt from State personal income tax.

6. The difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of the same series and maturity is to be sold to the public) and the stated redemption price at maturity with respect to such Bond constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Bond Owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by the Bond Owner will increase the Bond Owner’s basis in the Bond.

7. The amount by which a Bond owner’s original basis for determining loss on sale or exchange in the applicable Bond (generally the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable Bond premium which must be amortized under Section 171 of the Code; such amortizable Bond premium reduces the Bond owner’s basis in the applicable Bond (and the amount of tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of Bond premium may result in a Bond owner realizing a taxable gain when a Bond is sold by the owner for an amount equal to or less (under certain circumstances) than the original cost of the Bond to the owner. Purchasers of the Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable bond premium.

The opinions that are expressed in paragraph (4) above as to the exclusion from gross income for federal income tax purposes of interest (and original issue discount) on the Bonds are based upon certain representations of fact and certifications made by the District and are subject to the condition that the District comply with certain covenants and all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds to assure that such interest (and original issue discount) will not become includable in gross income for federal income tax purposes. Failure to comply with such covenants and requirements of the Code may cause interest (and original issue discount) on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The District has covenanted to comply with all such requirements. Except as set forth in paragraphs (4), (5), (6) and (7) above, we express no opinion as to any tax consequences related to the Bonds.

The opinions that are expressed herein are based upon our analysis and interpretation of existing laws, regulations, rulings and judicial decisions and cover certain matters that are not directly addressed by such authorities. We call attention to the fact that the rights and obligations of the District under the Indenture and the Bonds are subject to and may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights, to the application of equitable principles if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State.

Our opinion is limited to matters that are governed by the laws of the State of California and federal law. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction and express no opinion as to the enforceability of the choice of law provisions contained in the Indenture.

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We express no opinion herein as to the accuracy, completeness or sufficiency of the Official Statement relating to the Bonds or other offering material relating to the Bonds, and we expressly disclaim any duty to advise the owners of the Bonds with respect to matters contained in the Official Statement.

Certain requirements and procedures that are contained or referred to in the Indenture and Tax Certificate may be changed, and certain actions may be taken or omitted, under the circumstances and subject to the terms and conditions set forth in the Indenture and Tax Certificate relating to the Bonds, upon the advice or with the approving opinion of counsel nationally recognized in the area of tax-exempt obligations. We express no opinion as to the effect on the exclusion from gross income for federal income tax purposes of the interest (and original issue discount) on any Bonds if any such change occurs or action is taken or omitted upon the advice or approval of counsel other than Stradling Yocca Carlson & Rauth LLP.

We call attention to the fact that the foregoing opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether such actions or events are taken (or not taken) or do occur (or do not occur). Our engagement as bond counsel to the District terminates upon the issuance of the Bonds.

Respectfully submitted,

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APPENDIX C

FORM OF CONTINUING DISCLOSURE AGREEMENT
Upon issuance of the Bonds, the District proposes to enter into a Continuing Disclosure Agreement in substantially the following form:

This Continuing Disclosure Agreement, dated as of February 1, 2026 (the “Disclosure Agreement”), is entered into by and between City of Indio Community Facilities District No. 2004-3 (Terra Lago) (the “District”), and Willdan Financial Services, as dissemination agent (the “Dissemination Agent”), in connection with the issuance by the District of its $________ Improvement Area No. 1 2026 Special Tax Refunding Bonds (the “Bonds”). The Bonds are being issued pursuant to a Bond Indenture, dated as of February 1, 2026 (the “Indenture”), by and between the District and U.S. Bank Trust Company, National Association., as trustee (the “Trustee”). The District and the Dissemination Agent hereby covenant and agree as follows:

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

Section 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:

Annual Report. The term “Annual Report” means any Annual Report provided by the District pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.

Beneficial Owner. The term “Beneficial Owner” means any person which: (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries); or (b) is treated as the owner of any Bonds for federal income tax purposes.

Disclosure Representative. The term “Disclosure Representative” means the City Manager, Assistant City Manager, or Finance Director of the City, or their designee, or such other officer or employee as the City shall designate in writing to the Dissemination Agent from time to time.

Dissemination Agent. “Dissemination Agent” means, initially, Willdan Financial Services, or any successor Dissemination Agent designated in writing by the District which has filed with the then-current Dissemination Agent a written acceptance of such designation.

EMMA. The term “EMMA” means the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System for municipal securities disclosures, maintained on the Internet at http://emma.msrb.org/.

Financial Obligation. The term “Financial Obligation” means: (a) a debt obligation; (b) a derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (c) guarantee of (a) or (b). The term “Financial Obligation” does not include municipal securities as to which a final official statement has been provided to the Municipal Securities Rulemaking Board consistent with the Rule and the issuer thereof has entered into a continuing disclosure undertaking for such municipal securities.

Fiscal Year. The term “Fiscal Year” means the one-year period ending on the last day of June of each year.

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Insurer. The term “Insurer” means ___________.

Listed Events. The term “Listed Events” means any of the events listed in Sections 5(a) or (b) of this Disclosure Agreement.

Official Statement. The term “Official Statement” means the final Official Statement, dated ______, 2026, relating to the Bonds.

Participating Underwriter. The term “Participating Underwriter” means the original underwriter of the Bonds required to comply with the Rule in connection with the offering of the Bonds.

Rule. The term “Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

Section 3. Provision of Annual Reports.
(a) The District shall, or shall cause the Dissemination Agent by written direction to such Dissemination Agent to, not later than each April 1 after the end of the District and the City’s Fiscal Year (commencing on April 1, 2026 with the Annual Report for Fiscal Year 2024-25), provide to EMMA an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement; provided, however that the initial Annual Report due April 1, 2026 shall consist only of the Official Statement and the audited financial statements of the District, if any have been prepared. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided, however, that the audited financial statements of the District and the City, if any are prepared, may be submitted separately from and later than the balance of the Annual Report if they are not available by the date required above for the filing of the Annual Report.

An Annual Report shall be provided at least annually notwithstanding any Fiscal Year longer than 12 calendar months. The District and the City’s Fiscal Year is currently effective from July 1 to the immediately succeeding June 30 of the following year. The District will promptly notify EMMA, the Dissemination Agent and the Participating Underwriter of a change in City’s or the District’s Fiscal Year dates. (b) So long as the Dissemination Agent is an entity other than the District, then the provisions of this Section 3(b) shall apply. Not later than fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report to EMMA and the Participating Underwriter, the District shall provide the Annual Report to the Dissemination Agent. If by fifteen (15) Business Days prior to such date the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the District to determine if the District will be filing the Annual Report in compliance with subsection (a). The District shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. If the Dissemination Agent is an entity other than the District, it may conclusively rely upon such certification of the District and shall have no duty or obligation to review such Annual Report. (c) If the District is the Dissemination Agent and the District is unable to provide to EMMA an Annual Report by the date required in subsection (a), the District shall, in a timely manner, send a notice to EMMA and the Dissemination Agent in the manner prescribed by the Municipal Securities Rulemaking Board. If the Dissemination Agent is other than the District and if the Dissemination Agent is unable to verify that an Annual Report has been provided to EMMA by the date required in subsection (a), the Dissemination Agent shall, in a timely manner, send a notice to EMMA in the form prescribed by the Municipal Securities Rulemaking Board.

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(d) The Dissemination Agent, if other than the District, shall promptly after receipt of the Annual Report, file a report with the District certifying that the Annual Report has been provided pursuant to this Disclosure Agreement and stating the date it was provided.

Section 4. Content of Annual Reports. The Annual Report shall contain or include by reference the following:
(a) Financial Statements. The audited financial statements of the District, if any have been prepared, for the most recent Fiscal Year of the District then ended. If the audited financial statements are being prepared and are not available by the time that the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain any available unaudited financial statements, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.

Audited financial statements, if any, of the District shall be audited by such auditor as shall then be required or permitted by State law. Audited financial statements, if prepared by the District, shall be prepared in accordance with generally accepted accounting principles as prescribed for governmental units by the Governmental Accounting Standards Board; provided, however, that the District may from time to time, if required by federal or state legal requirements, modify the basis upon which its financial statements are prepared. In the event that the District shall modify the basis upon which its financial statements are prepared, the District shall provide a notice of such modification to EMMA, including a reference to the specific federal or state law or regulation specifically describing the legal requirements for the change in accounting basis.

The financial statements of the City shall be filed to the extent that the District does not prepare audited financial statements, but the financial statements of the City shall not be deemed to be the financial statements of the District unless such audited financial statements contain specific information as to the District, its revenues, expenses and account balances. If the City’s audited financial statements contain specific information as to the District, its revenues, expenses and account balances, the District’s Annual Report shall contain or incorporate by reference the City’s audited financial statements. If the City’s audited financial statements contain specific information as to the District, its revenues, expenses and account balances, but are not available at the time required for filing, unaudited financial statements of the City that contain specific information as to the District, its revenues, expenses and account balances shall be submitted with the Annual Report and the City audited financial statements shall be submitted once available. (b) Financial and Operating Data.
(i) The principal amount of Bonds and any Parity Bonds outstanding as of the last day of the most recent completed Fiscal Year of the District, or a more recent date; (ii) The balance in each fund under the Indenture and the Reserve Requirement as of the last day of the most recent completed Fiscal Year of the District, or a more recent date; (iii) The status of any judicial foreclosure proceedings initiated by the District as a result of the delinquency in the payment of special taxes and a summary of the results of foreclosure sales, if available;
(iv) An update of Tables 4 and 12 in the Official Statement as of the last day of the most recent completed Fiscal Year of the District, or a more recent date but only as to the most recently completed Fiscal Year; and
(v) The principal amount of prepayments of the Special Taxes with respect to the District for the preceding Fiscal Year.

Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the District, the City or related public entities, which have been

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submitted to EMMA or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The District shall clearly identify each such other document so included by reference.

Section 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not more than ten (10) Business Days after the event:

1. principal and interest payment delinquencies;

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

3. unscheduled draws on credit enhancements reflecting financial difficulties;

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

5. adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability or Notices of Proposed Issue (IRS Form 5701 TEB);

6. tender offers;

7. defeasances;

8. ratings changes;

9. a default, event of acceleration, termination event, modification of terms or other similar events under the terms of a Financial Obligation of the District, any of which reflect financial difficulties; and

10. bankruptcy, insolvency, receivership or similar proceedings.

Note: For the purposes of the event identified in subparagraph (10), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the District, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the District.
(b) Pursuant to the provisions of this Section 5, the District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material, in a timely manner not more than ten (10) Business Days after the occurrence of the event:

1. unless described in Section 5(a)(5), other notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other events affecting the tax status of the Bonds;

2. modifications to the rights of Bond holders;

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3. Bond calls;

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

5. non-payment related defaults;

6. the consummation of a merger, consolidation, or acquisition involving the District or the sale of all or substantially all of the assets of the District, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms;

7. appointment of a successor or additional trustee or the change of the name of a trustee; and

8. incurrence of a Financial Obligation of the District or agreement to covenants, events of default, remedies, priority rights or other similar terms of a Financial Obligation of the District, any of which affect security holders.
(c) If the District determines that knowledge of the occurrence of a Listed Event under subsection (b) would be material under applicable federal securities laws, the District shall file, or shall cause the Dissemination Agent to file, a notice of such occurrence with EMMA in a timely manner not more than ten (10) Business Days after the event.
(d) If the District determines that the Listed Event under subsection (b) would not be material under applicable federal securities laws and if the Dissemination Agent is other than the District, the District shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence.
(e) The District hereby agrees that the undertaking set forth in this Disclosure Agreement is the responsibility of the District and, if the Dissemination Agent is other than the District, the Dissemination Agent shall not be responsible for determining whether the District’s instructions to the Dissemination Agent under this Section 5 comply with the requirements of the Rule.

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

Section 7. Dissemination Agent. The District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent appointed by the District may resign by providing thirty (30) days written notice to the District, and upon appointment of a new Dissemination Agent hereunder.

Section 8. Amendment.
(a) This Disclosure Agreement may be amended, by written agreement of the parties, without the consent of the Owners if all of the following conditions are satisfied: (1) such amendment is made in connection with a change in circumstances that arises from a change in legal (including regulatory) requirements, a change in law, or a change in the identity, nature or status of the District or the type of business conducted thereby; (2) this Disclosure Agreement as so amended would have complied with the requirements of the Rule as of the date of this Disclosure Agreement, after taking into account any amendments or

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interpretations of the Rule, as well as any change in circumstances; (3) the District shall have delivered to the Dissemination Agent an opinion of a nationally recognized bond counsel or counsel expert in federal securities laws, addressed to the District, to the same effect as set forth in clause (2) above; (4) the District shall have delivered to the Dissemination Agent an opinion of nationally recognized bond counsel or counsel expert in federal securities laws, addressed to the District, to the effect that the amendment does not materially impair the interests of the Owners or Beneficial Owners; and (5) the District shall have delivered copies of such opinion and amendment to the Participating Underwriter. (b) This Disclosure Agreement also may be amended by written agreement of the parties upon obtaining consent of the Owners in the same manner as provided in the Indenture for amendments to the Indenture with the consent of the Owners of the Bonds; provided that the conditions set forth in clauses (1), (2), (3) and (5) of section 8(a) have been satisfied.
(c) To the extent that any amendment to this Disclosure Agreement results in a change in the type of financial information or operating data provided pursuant to this Disclosure Agreement, the first Annual Report provided thereafter shall include a narrative explanation of the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided. (d) If an amendment is made to the basis on which financial statements are prepared, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Such comparison shall include a quantitative and, to the extent reasonably feasible, qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information.

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

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

Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the District agrees to indemnify and save the Dissemination Agent, and its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of their powers and duties hereunder, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. Any Dissemination Agent other than the District shall be paid: (i) compensation by the District for its services provided hereunder in accordance with a schedule of fees to be mutually agreed to; and (ii) all expenses, legal fees and advances made or incurred by the Dissemination Agent

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in the performance of its duties hereunder. The obligations of the District under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.

Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the District, the Insurer, the Dissemination Agent, the Participating Underwriter and Owners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.

Section 13. Notices. Notices with respect to this Disclosure Agreement should be sent in writing to:

If to the District: City of Indio
Community Facilities District No. 2004-3 (Terra Lago)
100 Civic Center Mall
Indio, California 92201
Attention: City Manager
If to the Dissemination Agent:Willdan Financial Services 27368 Via Industria, Suite 200
Temecula, California 92590
Attention: Federal Compliance Group
Section 14. Severability. In case any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof.

Section 15. State of California Law Governs. The validity, interpretation and performance of this Disclosure Agreement shall be governed by the laws of the State of California.

Section 16. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

Section 17. Merger. Any person succeeding to all or substantially all of the Dissemination Agent’s corporate trust business shall be the successor Dissemination Agent without the filing of any paper or any further act.

IN WITNESS WHEREOF, the parties have caused their duly authorized officer to execute and deliver this Disclosure Agreement on the date first written above.

CITY OF INDIO COMMUNITY FACILITIES DISTRICT
NO. 2004-3 (TERRA LAGO)
By:

Name:

Title:

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WILLDAN FINANCIAL SERVICES, as Dissemination
Agent
By:

Name:

Title:

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APPENDIX D

INFORMATION CONCERNING DTC
The information in this Appendix concerning DTC and DTC’s book-entry only system has been obtained from sources that the District, the City and the Underwriter believe to be reliable, but none of the District, the City or the Underwriter takes any responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, premium, if any, accreted value and interest on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC.

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Bonds.

The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered bond will be issued for each annual maturity of the Bonds, each in the aggregate principal amount of such annual maturity, and will be deposited with DTC.

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

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

To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts