Agenda packet — Lake Elsinore City Council, August 13, 2024 (part 1 of 2)

City of Lake Elsinore
City Council Meeting
Agenda – Final

Steve Manos, Mayor
Brian Tisdale, Mayor Pro Tem
Timothy J. Sheridan, Council Member
Natasha Johnson, Council Member
Robert E. Magee, Council Member
Jason Simpson, City Manager
Meeting Date:

August 13, 2024

Closed Session: 6:00 PM
Public Session: 7:00 PM

Cultural Center
183 N. Main Street
Lake Elsinore, CA 92530

The City of Lake Elsinore appreciates your attendance. Citizens’ comments, input and interests provide the City Council with valuable information regarding issues of the community.

Meeting Information
Meetings are held on the 2 nd and 4 th Tuesday of every month, and the agenda is posted 72 hours prior to each meeting outside of City Hall. The agenda and related reports are also available on the City’s website at www.Lake-Elsinore.org. Meetings are conducted in person, televised live on Spectrum Cable Station Channel 29 and Frontier Cable Channel 31, and streamed online at http://www.lake-elsinore.org/city-government/city-council/webcast-videos. If you are attending the meeting in person, please park in the parking lot across the street from the Cultural Center to assist us in limiting the impact of meetings on the Downtown Business District. Thank you for your cooperation.

Public Comments – Addressing the City Council
Any person wishing to address the City Council on items not included on the Agenda may do so during Public Comments for 1 minute at the beginning of the meeting or during Public Comments for 3 minutes at the end of the meeting. We respectfully ask those interested in addressing the City Council to either submit a request to speak online at http://www.lake-elsinore.org/city- government/agendas-and-minutes or complete and present a “Request to Speak” form to the City Clerk at the meeting. This Form is available on the table located inside the Council Chamber.

Members of the public may also provide comments on Agenda items by noting the item on the “Request to Speak” form and will be called to address the City Council when the item is considered by the City Council during the meeting.

Written Communications
If you would like to submit written public comments, you may do so prior to the meeting either by entering them online at the link above or emailing them to the City Clerk at calvarez@lake- elsinore.org. Any written communications or additional documents distributed to the City Council within 72 hours of the meeting will also be made available to the public in accordance with Government Code Section 54957.5.

Accessibility Accommodations
In compliance with the Americans with Disabilities Act, any person with a disability who requires a modification or accommodation in order to participate in a meeting should contact the City Clerk’s Department at (951) 6743124 Ext. 269, at least 48 hours before the meeting to make reasonable arrangements to ensure accessibility.

City Council Agenda - Final August 13, 2024

City of Lake Elsinore Page 2

Dream Extreme 2040 is the City’s FIRST long-term strategic plan to assist the City in its pursuit of achieving its vision. The plan is a living document that will be updated regularly and serve as the framework to guide all decision-making over the next 20 years by identifying key Anchors, Aspirations, and Strategies.

Our Vision is the City of Lake Elsinore will be the ultimate destination where all can live, work, play, build futures, and fulfill dreams.

The Anchors are the City of Lake Elsinore’s unique community assets and opportunities: The Lake, Downtown, and Action and Adventure.

• The Lake: Lake Elsinore is a vital community asset. Protecting, enhancing, and celebrating the Lake is critical to Lake Elsinore’s City and community health.

• Downtown: Enhancing and creating the highest quality downtown experience will serve to create a strong sense of place that will shape the City’s identity as a place where residents and visitors can live, work, and play.

• Action and Adventure: Lake Elsinore’s programs, facilities, and natural environment will define the City as a destination for action and adventure for both visitors and residents.

Our Aspirations are broad, long-term goals that encapsulate what we hope to achieve in Lake Elsinore’s future. The City has identified 4 key aspirations to work towards.

Items on the agenda that align with Aspirations from the Dream Extreme 2040 Plan are noted by the Aspiration’s icon to highlight City Council actions that help the City pursue its goals.

To read the plan and learn more about its implementation in the City, visit www.Lake-Elsinore.org/DreamExtreme2040.

City Council Agenda - Final August 13, 2024

City of Lake Elsinore Page 3

CALL TO ORDER

The regular meeting of the City Council will be called to order.

ROLL CALL

PUBLIC COMMENTS ON CLOSED SESSION ITEMS

CLOSED SESSION - 6:00 P.M.

A. CONFERENCE WITH LABOR NEGOTIATOR (Gov’t Code Section 54957.6) City negotiator: City Manager Jason Simpson
Employee organization: Lake Elsinore Chapter of Laborer’s International Union of North America, Local 777

RECESS

The City Council will recess to Closed Session.

RECONVENE/CALL TO ORDER - 7:00 P.M.

The Regular Meeting of the City Council will reconvene and the Regular Meeting of the Successor Agency will be called to order.

PLEDGE OF ALLEGIANCE

ROLL CALL

CLOSED SESSION REPORT

PRESENTATION/CEREMONIAL

1) Certificates of Appreciation from Rice Canyon Elementary School PTA

PUBLIC COMMENTS - NON-AGENDIZED ITEMS - 1 MINUTE

(Please read & complete a Request to Address the City Council/Successor Agency form prior to the start of the meeting and turn it in to the City Clerk/Clerk. The Mayor/Chair or City Clerk/Clerk will call on you to speak.)

CITY COUNCIL CONSENT CALENDAR

2) Minutes of the Regular City Council Meeting of July 23, 2024

Approve the Minutes.

3) CC Warrant Report Dated July 15, 2024 to July 21, 2024

Receive and file.

4) CC Warrant Report Dated July 22, 2024 to July 28, 2024

Receive and file.

City Council Agenda - Final August 13, 2024

City of Lake Elsinore Page 4

5) CC Warrant Report Dated July 29, 2024 to August 5, 2024

Receive and File.

6) Withdrawal of Ballot Measure from the November 5, 2024 General Municipal Election

Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE,

CALIFORNIA, RESCINDING THE SUBMISSION TO THE QUALIFIED ELECTORS

OF THE CITY OF A CERTAIN MEASURE RELATING TO WHETHER THE CITY

TREASURER POSITION SHOULD BE APPOINTIVE AT THE GENERAL MUNICIPAL ELECTION TO BE HELD ON TUESDAY, NOVEMBER 5, 2024 AS CALLED BY RESOLUTION NO. 2024-11.

7) Amended and Restated Funding Agreement for Community Facilities District No. 2023-2 of the City of Lake Elsinore (Coastal Mission Trails)

Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE,

CALIFORNIA, APPROVING AMENDMENTS TO FUNDING AGREEMENT AND

JOINT COMMUNITY FACILITIES AGREEMENT RELATING TO COMMUNITY FACILITIES DISTRICT NO. 2023-2 OF THE CITY OF LAKE ELSINORE (COASTAL

MISSION TRAILS)

8) Notice of Completion on Citywide Annual Asphalt Maintenance and Repair, New Installation Program, and On-Call Emergency Construction Services (CIP Project #Z10002)

Accept the improvements and authorize the City Clerk to file the Notice of Completion with the County Recorder for Citywide Annual Asphalt Maintenance and Repair, New Installation Program, and On-Call Emergency Construction Services completed by NPG, Inc.

9) Agreement with Cotter Construction Inc. for Serenity Park Fencing

1. Approve and authorize the City Manager to execute a contractor services agreement with Cotter Construction Inc. for Serenity Park Fencing in a not-to- exceed amount of $62,000.00 as approved by the City Attorney; and

2. Authorize the City Manager to execute change orders not to exceed a 10% contingency amount of $6,200.00 for unanticipated costs.

SUCCESSOR AGENCY CONSENT CALENDAR

10) Minutes of the Regular Successor Agency Meeting of July 23, 2024

Approve the Minutes.

11) SA Warrant Report Dated July 15, 2024 to July 21, 2024

Receive and file.

City Council Agenda - Final August 13, 2024

City of Lake Elsinore Page 5

12) SA Warrant Report Dated July 22, 2024 to July 28, 2024

Receive and File.

13) SA Warrant Report Dated July 29, 2024 to August 5, 2024

Receive and File.

BUSINESS ITEM

14) Community Facilities District No. 2019-2 (Nichols Ranch) Special Tax Bonds, Series 2024

Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE,

CALIFORNIA, ACTING AS THE LEGISLATIVE BODY OF THE CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2019-2 (NICHOLS RANCH) AUTHORIZING THE ISSUANCE OF ITS SPECIAL TAX BONDS, SERIES 2024 IN A

PRINCIPAL AMOUNT NOT TO EXCEED EIGHT MILLION FIVE HUNDRED THOUSAND DOLLARS ($8,500,000) AND APPROVING CERTAIN DOCUMENTS AND TAKING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH.

PUBLIC COMMENTS - NON-AGENDIZED ITEMS - 3 MINUTES

CITY MANAGER COMMENTS

CITY ATTORNEY COMMENTS

CITY COUNCIL COMMENTS/REPORTS ON MEETINGS ATTENDED

ADJOURNMENT

The Lake Elsinore City Council will adjourn to the next Regular meeting of Tuesday, August 27, 2024 in the Cultural Center located at 183 N. Main Street. Closed Session will commence at 5:00 p.m. or such later time as noticed on the Agenda, and the regular Open Session business meeting will commence at 7:00 p.m.

AFFIDAVIT OF POSTING

I, Candice Alvarez, MMC, City Clerk of the City of Lake Elsinore, do hereby affirm that a copy of the forgoing agenda was posted at City Hall at 5:00 p.m. on Thursday, August 8, 2024.

_________________________
Candice Alvarez, MMC
City Clerk

Page 1 of 1 ends

REPORT TO CITY COUNCIL
To:Honorable Mayor and Members of the City Council
From:Jason Simpson, City Manager
Prepared by:Candice Alvarez, MMC, City Clerk
Date:August 13, 2024
Subject: CONFERENCE WITH LABOR NEGOTIATOR (Gov’t Code Section 54957.6)
City negotiator: City Manager Jason Simpson
Employee organization: Lake Elsinore Chapter of Laborer’s International Union of North America, Local 777

Page 1 of 1 ends

Attachments
Attachment 1- Draft Minutes
City Clerk’s Office

City of Lake Elsinore
City Council Meeting
Minutes – Draft

Steve Manos, Mayor
Brian Tisdale, Mayor Pro Tem
Timothy J. Sheridan, Council Member
Natasha Johnson, Council Member
Robert E. Magee, Council Member
Jason Simpson, City Manager
Meeting Date:

July 23, 2024

Closed Session: 5:00 PM
Public Session: 7:00 PM

Cultural Center
183 N. Main Street
Lake Elsinore, CA 92530

CALL TO ORDER

The Regular Meeting of the City Council was called to order at 5:00 p.m.

ROLL CALL

Present: 5 - Council Members Sheridan, Johnson, and Magee; Mayor Pro Tem Tisdale; and Mayor Manos

Absent: 0 - None

PUBLIC COMMENTS FOR CLOSED SESSION ITEMS

There were no speakers.

CLOSED SESSION.

A. CONFERENCE WITH LEGAL COUNSEL--ANTICIPATED LITIGATION

Significant exposure to litigation pursuant to paragraph (2) of subdivision (d) of Gov’t Code Section 54956.9: 2 potential cases

B. CONFERENCE WITH REAL PROPERTY NEGOTIATORS

(Gov’t Code Section 54956.8)
Property: APNs: 371-100-015
Agency negotiator: City Manager Simpson
Negotiating parties: City of Lake Elsinore and Liberty Founders, LLC Under negotiation: Price and terms of payment

C. CONFERENCE WITH REAL PROPERTY NEGOTIATOR

(Gov’t Code Section 54956.8)
Property: APN 374-174-018, 374-263-002, -003, -005 and -006 Agency negotiator: City Manager Simpson
Negotiating parties: City of Lake Elsinore and LiLi
Under negotiation: Price and terms of payment

City Council Minutes - Draft July 23, 2024

City of Lake Elsinore Page 2

D. CONFERENCE WITH REAL PROPERTY NEGOTIATOR

(Gov’t Code Section 54956.8)
Property: APN 374-263-001
Agency negotiator: City Manager Simpson
Negotiating parties: City of Lake Elsinore and David E. Reynolds Under negotiation: Price and terms of payment

E. CONFERENCE WITH REAL PROPERTY NEGOTIATOR

(Gov’t Code Section 54956.8)
Property: APN 374-262-013
Agency negotiator: City Manager Simpson
Negotiating parties: City of Lake Elsinore and Brian V. Lam Under negotiation: Price and terms of payment

F. CONFERENCE WITH REAL PROPERTY NEGOTIATOR

(Gov’t Code Section 54956.8)
Property: APN 373-270-001, -002, and -003
Agency negotiator: City Manager Simpson
Negotiating parties: City of Lake Elsinore and Gregory/Holly Scrimshaw Under negotiation: Price and terms of payment

G. CONFERENCE WITH REAL PROPERTY NEGOTIATOR

(Gov’t Code Section 54956.8)
Property: APN 378-282-014 and -015
Agency negotiator: City Manager Simpson
Negotiating parties: City of Lake Elsinore and Hoang Oanh Trust dated 4/14/2021 Under negotiation: Price and terms of payment

H. CONFERENCE WITH REAL PROPERTY NEGOTIATOR

(Gov’t Code Section 54956.8)
Property: APN 375-240-014, -015, -016, -017, -018 and -019 Agency negotiator: City Manager Simpson
Negotiating parties: City of Lake Elsinore and Mike/Philip Latorre Under negotiation: Price and terms of payment

RECONVENE/CALL TO ORDER

The Regular Meeting of the City Council reconvened and the Regular Meeting of the Successor Agency was called to order at 7:00 p.m.

PLEDGE OF ALLEGIANCE

Mayor Pro Tem Tisdale led the Pledge of Allegiance.

City Council Minutes - Draft July 23, 2024

City of Lake Elsinore Page 3

ROLL CALL

Present: 5 - Council/Agency Members Sheridan, Johnson, and Magee; Mayor Pro Tem/Vice Chair Tisdale; and Mayor/Chair Manos

Absent: 0 - None

CLOSED SESSION REPORT

City Attorney Leibold reported that all items were discussed; however, no reportable action was taken.

PRESENTATIONS/CEREMONIALS

1) Certificates of Appreciation from Rice Canyon Elementary School PTA

This item was rescheduled to the next Regular City Council meeting on August 13, 2024.

2) Calfire 2024 Second Quarter Statistical Update

Chief Olson presented the update.

PUBLIC COMMENTS - NON-AGENDIZED ITEMS - 1 MINUTE

Rita Wilsey was called to speak.

Pam Eriser was called to speak.

Ace Vallejos was called to speak.

CITY COUNCIL CONSENT CALENDAR

A motion was made by Mayor Pro Tem Tisdale, seconded by Council Member Magee to approve the City Council Consent Calendar with Item No. 13 being removed for discussion. The motion carried by the following vote:

Aye: 5 Council Members Sheridan, Johnson, and Magee; Mayor Pro Tem Tisdale; and Mayor Manos
Nay: 0 None

3) Minutes of the Regular City Council Meeting of July 9, 2024

Approve the Minutes.

This item was approved on the City Council Consent Calendar.

4) CC Warrant Report Dated June 24, 2024 to June 30, 2024

Receive and file.

This item was approved on the City Council Consent Calendar.

City Council Minutes - Draft July 23, 2024

City of Lake Elsinore Page 4

5) CC Warrant Report Dated July 01, 2024 to July 07, 2024

Receive and file.

This item was approved on the City Council Consent Calendar.

6) CC Warrant Report Dated July 08, 2024 to July 14, 2024

Receive and file.

This item was approved on the City Council Consent Calendar.

7) CC Investment Report for June 2024

Receive and file the Investment Report for June 2024.

This item was approved on the City Council Consent Calendar.

8) Mary McDonald Riley Street Senior Apartments Project Budget, Loan Agreement (ARPA), expenditure of Low- and Moderate-Income Housing Asset Funds (LMIHAF) and Affordability Covenants for the Project Located at 200 North Riley Street

Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE,

CALIFORNIA, ACTING AS HOUSING SUCCESSOR TO THE FORMER

REDEVELOPMENT AGENCY, APPROVING A CONSTRUCTION BUDGET, AN

ARPA LOAN AGREEMENT WITH RIVERSIDE COUNTY AND THE EXPENDITURE OF UP TO $3,687,500 FROM THE CITY’S LOW AND MODERATE INCOME

HOUSING ASSET FUND (LMIHAF) FOR CONSTRUCTION AND DEVELOPMENT OF THE MARY McDONALD RILEY STREET SENIOR APARTMENTS PROJECT

AND MAKING CERTAIN FINDINGS IN CONNECTION THEREWITH INCLUDING APPROVAL OF LONG-TERM USE AND AFFORDABILITY COVENANTS.

This item was approved on the City Council Consent Calendar.

9) Purchase of Vacant Real Property for Open Space/Habitat Preservation Purposes (APN 371-100-015) for $206,041.76 Plus Closing Costs

Approve the purchase of approximately 8.91 acres of vacant property (APN 371-100- 015) for $206,041.76, plus closing costs, for open space/habitat preservation purposes consistent with the Western Riverside County Multiple Species Habitat Conservation Plan (MSHCP) and authorize the City Manager to execute the Agreement and Escrow Instructions for the Purchase and Sale of Real Property and such other ancillary documents as may be necessary to complete the purchase, in such final form as approved by the City Attorney.

This item was approved on the City Council Consent Calendar.

City Council Minutes - Draft July 23, 2024

City of Lake Elsinore Page 5

10) Agreement With American Lady Vet Services for Annual Lake Maintenance and Liquid Algaecide Treatment

Approve and authorize the City Manager to execute the Contractor Services Agreement with American Lady Vet Services, Inc., in an amount not to exceed $443,125 in such final form as approved by the City Attorney and authorize the City Manager to execute change orders not to exceed a 10% contingency amount of $44,313 for uncertainties and adjustments.

This item was approved on the City Council Consent Calendar.

11) Professional Services Agreement with Kimley-Horn and Associates, Inc. for Environmental Documentation for the Riverside Drive Apartments Project.

Approve and authorize the City Manager to execute an agreement/contract with Kimley-Horn, Inc. in an amount not to exceed $78,600 to prepare California Environmental Quality Act (CEQA) Compliance documents, in such final form as approved by the City Attorney.

This item was approved on the City Council Consent Calendar.

12) Reimbursement Agreement with Pulte Homes for Pavement Improvements

Approve and authorize the City Manager to execute a reimbursement agreement with Pulte Home, Inc. in the amount of $128,915.20 for pavement improvements in such final form as approved by the City Attorney.

This item was approved on the City Council Consent Calendar.

13) Final Map 38116, Lakeside

1. Approve Final Map 38116 subject to the City Engineer’s acceptance as being true and correct;

2. Authorize the City Clerk to sign the map and arrange for recordation of Final Map 38116; and

3. Authorize the City Manager to execute the Construction Agreements for Street Improvements and Monumentation.

This item was removed from the City Council Consent Calendar for discussion.

14) Grant of Easement to Southern California Edison near Lake Street

Approve and authorize City Manager to process the easement documents and instruct staff to forward the documents to Southern California Edison for recordation.

This item was approved on the City Council Consent Calendar.

City Council Minutes - Draft July 23, 2024

City of Lake Elsinore Page 6

15) Professional Services Agreement to Provide Plan Check of Temescal Canyon Road Realignment Segment C Design

Approve and authorize City Manager to execute an Agreement for Professional Services in the amount up to $70,824.05, plus 10% contingency, to provide an engineering plan check of Temescal Canyon Road Segment C design, in such final form as approved by the City Attorney.

This item was approved on the City Council Consent Calendar.

16) Notice of Completion for Serenity Park Fitness Trail

Accept the improvements for the Serenity Park Fitness Trail project completed by Cotter Construction and authorize the City Clerk to file the Notice of Completion with the County Recorder.

This item was approved on the City Council Consent Calendar.

17) Amendment No. 1 to the Agreement for Contractor Services with Prudential Overall Supply for Additional Employee Uniform, Shop Towels, and Logo Mat Services

Approve and authorize the City Manager to execute Amendment No. 1 to the Agreement with Prudential Overall Supply for additional employee uniforms, shop towels, and logo mat services and to increase compensation by an additional $2,784.00 for a total not to exceed $23,784.00 per Fiscal Year in such final form as approved by the City Attorney.

This item was approved on the City Council Consent Calendar.

18) Amendment No. 1 to the Agreement for Contractor Services with Safety-Kleen Systems, Inc. for Additional Environmental Services

Approve and authorize the City Manager to execute Amendment No. 1 to the Agreement with Safety-Kleen Systems, Inc. to increase compensation by an additional $3,031.24 for a total not to exceed $13,031.24 per Fiscal Year for additional environmental services in such final form as approved by the City Attorney.

This item was approved on the City Council Consent Calendar.

ITEM REMOVED FROM THE CITY COUNCIL CONSENT CALENDAR FOR DISCUSSION

13) Final Map 38116, Lakeside

1. Approve Final Map 38116 subject to the City Engineer’s acceptance as being true and correct;

2. Authorize the City Clerk to sign the map and arrange for recordation of Final Map 38116; and

3. Authorize the City Manager to execute the Construction Agreements for Street Improvements and Monumentation.

City Council Minutes - Draft July 23, 2024

City of Lake Elsinore Page 7

Ted Griswold was called to speak.

Joseph Ontiveros was called to speak.

Michele Staples was called to speak.

Brian Ortwein was called to speak.

A motion was made by Mayor Pro Tem Tisdale, seconded by Council Member Magee to continue the item to the Regular City C ouncil meeting on August 27, 2024. The motion carried by the following vote:

Aye: 5 Council Members Sheridan, Johnson, and Magee; Mayor Pro Tem Tisdale; and Mayor Manos
Nay: 0 None

SUCCESSOR AGENCY CONSENT CALENDAR

A motion was made by Agency Member Johnson, seconded by Agency Member Magee to approve the Successor Agency Consent Calendar. The motion carried by the following vote:

Aye: 5 Agency Members Sheridan, Johnson, and Magee; Vice Chair Tisdale; and Chair Manos
Nay: 0 None

19) Minutes of the Regular Successor Agency Meeting of July 9, 2024

Approve the Minutes.

This item was approved on the Successor Agency Consent Calendar.

20) SA Warrant Report Dated June 24, 2024 to June 30, 2024

Receive and file.

This item was approved on the Successor Agency Consent Calendar.

21) SA Warrant Report Dated July 01, 2024 to July 07, 2024

Receive and file.

This item was approved on the Successor Agency Consent Calendar.

22) SA Warrant Report Dated July 08, 2024 to July 14, 2024

Receive and File.

This item was approved on the Successor Agency Consent Calendar.

City Council Minutes - Draft July 23, 2024

City of Lake Elsinore Page 8

23) SA Investment Report for June 2024

Receive and file the Investment Report for June 2024.

This item was approved on the Successor Agency Consent Calendar.

24) On-call and Construction Contractor Services Agreement in Support of Successor Agency of the Redevelopment Agency of the Agency of Lake Elsinore Minor Construction, Maintenance, and Operations

Approve and authorize the Executive Director to execute an agreement with United Carports, LLC for minor construction, maintenance, and operations in an amount not to exceed $150,000.00 in such final form as approved by the Agency Attorney.

This item was approved on the Successor Agency Consent Calendar.

PUBLIC COMMENTS - NON-AGENDIZED ITEMS - THREE MINUTES

Alex Kowalkoski was called to speak.

CITY ATTORNEY COMMENTS

City Attorney Leibold had no comments.

CITY MANAGER'S COMMENTS

City Manager Simpson had no comments.

CITY COUNCIL COMMENTS/REPORTS ON MEETINGS ATTENDED

Council Member Magee advised that the back basin has been sprayed with an aerial drone; and invited the community to attend the Lake Elsinore Car Cruise on Saturday, July 27, 2024 from 4:00-8:00 p.m. on Downtown Main Street.

Council Member Johnson notified residents of pavement projects that will be out for bid in September 2024 and for which construction will begin in Fall 2024; provided an update on Legislative affairs, particularly regarding the Martin v. Boise case; solicited toys for the COPS for kids Christmas in July toy drive; and invited the community to attend National Night Out on Tuesday, August 6, 2024 from 6:00-8:00 p.m. at Canyon Hills Community Park.

Council Member Sheridan noted that the Riverside Transit Agency Board of Directors does not meet in July.

Mayor Pro Tem Tisdale encouraged residents to vote.

Mayor Manos shared that Princess Hair Salon celebrated its grand opening on July 12, 2024; advised the community to save the date for Mariachi Fest, which will be held on September 21, 2024; and invited residents to attend the Christensen Community Outreach meeting, which will take place on Thursday, August 8, 2024 from 6:30-7:30 p.m. in the Cultural Center.

City Council Minutes - Draft July 23, 2024

City of Lake Elsinore Page 9

ADJOURNMENT

The Lake Elsinore City Council adjourned at 7:42 p.m. to the next Regular meeting of Tuesday, August 13, 2024 in the Cultural Center located at 183 N. Main Street. Closed Session will commence at 5:00 p.m. or such later time as noticed on the Agenda, and the regular Open Session business meeting will commence at 7:00 p.m.

Page 1 of 1 ends

Discussion
The Warrant Report lists all general checks issued since the prior Warrant Report.

Attachments
Attachment 1 – City Warrant Summary
Attachment 2 – City Warrant List
JULY 15, 2024 TO JULY 21, 2024 CITY OF LAKE ELSINORECITY WARRANT SUMMARY FUND NO. FUND DESCRIPTION TOTAL
100 GENERAL 732,451.66 $
110 GAS TAX 1,179.02
130 LIGHTING, LANDSCAPE, MAINTENANCE DIST - CITYWIDE 10,956.18 155 NATIONAL POLLUTANT DISCHARGE ELIMINATION SYSTEM 167.39 180 LAUNCH POINTE 86,410.16
300 INSURANCE SERVICE (15,342.64)
305 INFORMATION SYSTEMS SERVICE 42,992.03
315 FLEET SERVICE 109,031.45
320 FACILITIES SERVICE 8,966.14
500 CAPITAL IMPROVEMENT PLAN 1,005,035.48
620 COST RECOVERY TRUST DEPOSITS (1,053.82)
GRAND TOTAL 1,980,793.05 $
Attachment 1 1 of 1
JULY 15, 2024 TO JULY 21, 2024 CITY OF LAKE ELSINORE CITY WARRANT LIST WARRANT NO. VENDOR NAME AMOUNT
7254 AK SECURITY ALARM LLC 6,250.00 $
7255 AMAZON BUSINESS 195.50
7256 AMAZON BUSINESS 170.74
7257 AMAZON BUSINESS 131.91
7258 AMAZON BUSINESS 51.14
7259 AMAZON BUSINESS 51.02
7260 AMAZON BUSINESS 508.73
7261 AMAZON BUSINESS 746.70
7262 AMERICAN MATERIAL COMPANY 104.40
7263 CALIFORNIA JPIA 25.00
7264 CM WASH EQUIPMENT 5,281.41
7265 DELONE, MARIA JAZMINE 3,103.50
7266 DOWNS ENERGY 807.99
7268 ENDRESEN DEVELOPMENT, INC. 27,964.40
7269 ENGINEERING RESOURCES OF SO CA 13,552.97
7270 HDR ENGINEERING, INC. 12,766.46
7271 LAKE ELSINORE TIRE & AUTO, INC. 1,172.56
7272 LAKE ELSINORE VALLEY CHAMBER OF COMMERCE 5,912.50
7273 MICHAEL BAKER INTERNATIONAL, INC. 13,934.00
7274 NTH GENERATION COMPUTING, INC. 10,405.00
7275 SECURITAS SECURITY SERVICES USA, INC. 2,439.42
7276 SERVICE FIRST 760.42
7277 SOUTHWEST ICE MACHINES 836.69
7278 TC SPORTS MANAGEMENT, LLC 33,233.33
7279 WEST COAST ARBORISTS, INC. 18,900.00
7280 WKE, INC. 1,835.06
143603 BURGUENO, EDER 2,352.00
DFT250055 WILMINGTON TRUST, NATIONAL ASSOCIATION 65,037.18 APA25000084 ARDURRA GROUP, INC. 3,340.00
APA25000085 ASCENT ENVIRONMENTAL, INC 25,935.00
APA25000086 ATKINSON, ANDELSON, LOYA, RUUD & ROMO 2,366.90 APA25000087 BANNER BANK 32,166.84
APA25000088 BEGINNERS EDGE SPORTS TRAINING, LLC 1,860.00 APA25000089 BLACK TIE LAUNDRY 221.30
APA25000090 CA BUILDING STANDARDS COMMISSION 3,780.00
APA25000091 CA CHAPTER, AMERICAN PLANNING ASSOCIATION 820.00 APA25000092 CARAHSOFT TECHNOLOGY CORPORATION 5,794.74
APA25000093 CED LAGUNA 2,231.57
APA25000094 CHARTER COMMUNICATIONS 1,257.49
APA25000095 CIRESON LLC 3,555.56
APA25000096 COMMERCIAL TRANSPORTATION SERVICES 18,250.02 APA25000097 CONCENTRA 130.00
APA25000098 COUNTY OF RIVERSIDE, AUDITOR CONTROLLER / GAD-LAFCO 11,100.46 Attachment 2 1 OF 2
JULY 15, 2024 TO JULY 21, 2024 CITY OF LAKE ELSINORE CITY WARRANT LIST WARRANT NO. VENDOR NAME AMOUNT
APA25000099 CR&R, INC. 2,149.87
APA25000100 CR&R, INC. 4,282.95
APA25000101 DEPARTMENT OF CONSERVATION 11,719.61
APA25000102 EGP CONSULTING, INC. 13,101.00
APA25000103 EV CONNECT, INC 1,000.00
APA25000104 EVMWD 43,236.01
APA25000105 EWING 2,792.29
APA25000106 EXCEL LANDSCAPE, INC. 514.96
APA25000107 FERGUSON 354.29
APA25000108 FRONTIER CALIFORNIA - INTERNET 89.47
APA25000109 FRONTIER CALIFORNIA, INC. 61.27
APA25000110 GRIFFITH COMPANY 611,169.97
APA25000111 HEFINGTON MARTIAL ARTS 1,777.50
APA25000112 HEYDAY 22,600.00
APA25000113 HUNSAKER & ASSOCIATES IRVINE, INC. 7,000.00 APA25000114 INTERSTATE STRIPING, INC. 9,822.44
APA25000115 LAND IQ, LLC 660.00
APA25000116 LIUNA LOCAL 777 768.00
APA25000117 NATIONAL JUNIOR BASKETBALL LEAGUE 7,171.87
APA25000118 NPG, INC. 282,695.00
APA25000119 O'REILLY AUTO STORES INC/FIRST CALL 105.23
APA25000120 PRESS-ENTERPRISE, THE 220.22
APA25000121 PYRO SPECTACULARS, INC. 24,000.00
APA25000122 QUINN COMPANY 97,543.78
APA25000123 RIGHTWAY SITE SERVICES, INC. 26,597.48
APA25000124 RIVERSIDE COUNTY HABITAT CONSERVATION AGENCY 70.00 APA25000125 RIVERSIDE COUNTY OFFICE OF ECONOMIC DEVELOPMENT 9,279.26 APA25000126 ROBBINS PEST MANAGEMENT, INC. 720.00
APA25000127 RP LANDSCAPE & IRRIGATION 72,317.21
APA25000128 SAN DIEGO ICE COMPANY, INC. 284.46
APA25000129 SOUTHERN CALIFORNIA EDISON CO. 204.72
APA25000130 UTILITY COST MANAGEMENT LLC 14,005.47
APA25000131 VULCAN MATERIALS COMPANY 1,179.02
PR07182024 NET PAYROLL 369,959.79
GRAND TOTAL 1,980,793.05 $
Attachment 2 2 OF 2

Page 1 of 1 ends

Discussion
The Warrant Report lists all general checks issued since the prior Warrant Report.

Attachments
Attachment 1 – City Warrant Summary
Attachment 2 – City Warrant List
JULY 22, 2024 TO JULY 28, 2024 CITY OF LAKE ELSINORECITY WARRANT SUMMARY FUND NO. FUND DESCRIPTION TOTAL
100 GENERAL 2,563,330.94 $
103 THE ANCHOR 1,560.50
110 GAS TAX 334.95
114 SB1186 CASp EDUCATION PROGRAM 324.40
130 LIGHTING, LANDSCAPE, MAINTENANCE DIST - CITYWIDE 34,724.22 135 LIGHTING, LANDSCAPE, MAINTENANCE DIST - NO. 1 6,416.15 155 NATIONAL POLLUTANT DISCHARGE ELIMINATION SYSTEM 579.15 180 LAUNCH POINTE 17,727.91
300 INSURANCE SERVICES 4,982.00
305 INFORMATION SYSTEMS SERVICE 44,612.23
315 FLEET SERVICE 14,232.23
320 FACILITIES SERVICE 3,939.13
330 CFD 2015-2S MAINTENANCE SERVICES 1,614.82
331 CFD 2006-1 IA-CC SUMMERLY IMPROVEMENT 810.81
332 CFD 2006-1 IA-B SUMMERLY IMPROVEMENT 810.81
333 CFD 2015-4 TERRACINA IMPROVEMENT 810.81
334 CFD 2015-5 TRIESTE IMPROVEMENT 789.65
335 CFD 2003-2 IA-E CANYON HILLS IMPROVEMENT 789.65
336 CFD 2006-1 IA-FF SUMMERLY IMPROVEMENT 789.65
337 CFD 2016-2 CANYON HILLS IMPROVEMENT 766.65
338 CFD 2006-1 IA-JJ SUMMERLY IMPROVEMENT 789.65
339 CFD 2006-1 IA-KK SUMMERLY IMPROVEMENT 810.81
340 CFD 2006-1 IA-EE SUMMERLY IMPROVEMENT 789.65
342 CFD 2007-5S RED KITE SERVICES 579.15
343 CFD 2006-2S VISCAYA SERVICES 579.15
344 CFD 2005-2S ALBERHILL RANCH SERVICES 579.15
345 CFD 2003-2 IA-D CANYON HILLS IMPROVEMENT 1,600.45
347 CFD 2006-1 IA-A SUMMERLY IMPROVEMENT 1,389.96
350 CFD 98-1 SUMMERHILL IMPROVEMENT 810.81
351 CFD 2006-1 IA-II SUMMERLY IMPROVEMENT 810.81
354 CFD 90-2 TUSCANY HILLS IMPROVEMENT 2,213.37
355 RAD 2021-1 CANYON HILLS IMPROVEMENT 2,237.52
357 CFD 2003-2 IA-A CANYON HILLS IMPROVEMENT 1,042.47
358 CFD 2007-4S MAKENNA SERVICES 579.15
359 CFD 2021-1 IA-2 TUSCANY VALLEY & CREST IMPROVEMENT 694.44 361 CFD 2022-2 LAKESHORE IMPROVEMENT 674.22
362 CFD 2006-8S RUNNING DEER ESTATES SERVICES 579.15
363 CFD 2023-1 LAKESIDE IMPROVEMENT 674.22
364 CFD 2023-2 COASTAL MISSION TRAIL IMPROVEMENT 652.33 366 CFD 2005-6 CITY CENTER TOWNHOMES IMPROVEMENT 579.15 367 CFD 2006-1S SUMMERLY SERVICES 579.15
368 CFD 2006-2 VISCAYA IMPROVEMENT 579.15
Attachment 1 1 of 2
JULY 22, 2024 TO JULY 28, 2024 CITY OF LAKE ELSINORECITY WARRANT SUMMARY FUND NO. FUND DESCRIPTION TOTAL
369 CFD 2004-3 IA-1 ROSETTA CANYON IMPROVEMENT 810.81
370 CFD 2006-1 IA-HH SUMMERLY IMPROVEMENT 810.81
371 CFD 2005-1 SERENITY IMPROVEMENT 810.81
372 CFD 2005-2 IA-A ALBERHILL RANCH IMPROVEMENT 810.81
373 CFD 2005-5S WASSON CANYON SERVICES 579.15
374 CFD 2005-4 LAKEVIEW VILLAS IMPROVEMENT 289.57
375 CFD 2006-4 ROSETTA HILLS IMPROVEMENT 289.57
376 CFD 2006-3 LA STRADA IMPROVEMENT 579.15
377 CFD 2006-6 TESSARA IMPROVEMENT 347.49
378 CFD 2006-8 RUNNING DEER ESTATES IMPROVEMENT 766.65
379 CFD 2022-1 ALBERHILL IMPROVEMENT 674.22
380 CFD 2015-4S TERRACINA SERVICES 567.61
384 CFD 2003-2 IA-B CANYON HILLS IMPROVEMENT 2,779.91
385 CFD 2004-3 IA-2 ROSETTA CANYON IMPROVEMENT 810.81
386 CFD 2007-4 MAKENNA IMPROVEMENT 766.66
387 CFD 2007-5 RED KITE IMPROVEMENT 766.65
390 CFD 2003-2 IA-C CANYON HILLS IMPROVEMENT 2,084.93
392 CFD 95-1 CIVIC CENTER IMPROVEMENT 810.81
394 CFD 2005-5 WASSON CANYON IMPROVEMENT 579.15
395 CFD 2018-1 WASSON CANYON II IMPROVEMENT 547.60
396 CFD 2019-2 NICHOLS RANCH IMPROVEMENT 778.78
397 CFD 2019-1 WESTLAKE IMPROVEMENT 778.78
398 CFD 2021-1 IA-1 TUSCANY VALLEY & CREST IMPROVEMENT 694.44 500 CAPITAL IMPROVEMENT PLAN 1,254,616.26
620 COST RECOVERY TRUST DEPOSITS 9,761.25
650 CFD 2003-1S LAW,FIRE, PARAMEDIC SERVICES 810.81
651 CFD 2006-5S PARK, OPEN SPACE, STORM DRAIN SERVICES 579.15 652 CFD 2007-1S LAW,FIRE, PARAMEDIC SERVICES 579.15
653 CFD 2009-1S PARK,OPEN SPACE,STREET LIGHT SERVICES 579.15 655 CFD 2015-1S LAW, FIRE, PARAMEDIC SERVICES 921.31
GRAND TOTAL 4,006,352.82 $
Attachment 1 2 of 2
JULY 22, 2024 TO JULY 28, 2024 CITY OF LAKE ELSINORE CITY WARRANT LIST WARRANT NO. VENDOR NAME AMOUNT
APA25000132 ALLEGRA MARKETING PRINT MAIL 288.19 $
APA25000133 ANEEN CONSTRUCTION, INC. 836,160.55
APA25000134 ANGLER CHRONICLES, LLC 8,000.00
APA25000135 BIO-TOX LABORATORIES 1,156.45
APA25000136 BUSTAMANTE, LUIS 310.00
APA25000137 CALIFORNIA, DIVISION OF THE STATE ARCHITECT 324.40 APA25000138 CDW GOVERNMENT, INC. 858.08
APA25000139 CHARLES ABBOTT ASSOCIATES, INC. 6,481.74
APA25000140 CHARTER COMMUNICATIONS 475.00
APA25000141 CITY CLERKS ASSOCIATION OF CALIFORNIA 400.00 APA25000142 DISCOUNT HAULING & CLEANUP SERVICE 22,800.00 APA25000143 EGP CONSULTING, INC. 12,958.30
APA25000144 EVMWD 27,347.79
APA25000145 EXCEL LANDSCAPE, INC. 21,598.00
APA25000146 FCG CONSULTANTS, INC. 23,069.81
APA25000147 FERGUSON 836.07
APA25000148 FRONTIER CALIFORNIA - INTERNET 841.93
APA25000149 FRONTIER CALIFORNIA, INC. 63.57
APA25000150 GOLDSTAR ASPHALT PRODUCTS 334.95
APA25000151 KELLEN'S BAIT 117.00
APA25000152 LITTLE RASCALS JUMPERS 1,329.00
APA25000153 LSA ASSOCIATES, INC. 9,761.25
APA25000154 MAXXUM SECURITY 6,300.00
APA25000155 O'REILLY AUTO STORES INC/FIRST CALL 307.35
APA25000156 PLACER LABS, INC. 25,000.00
APA25000157 PRESS-ENTERPRISE, THE 515.03
APA25000158 QUINN COMPANY 1,381.28
APA25000159 RIGHTWAY SITE SERVICES, INC. 334.45
APA25000160 RIVERSIDE COUNTY OFFICE OF ECONOMIC DEVELOPMENT 24,164.79 APA25000161 RP LANDSCAPE & IRRIGATION 64,954.08
APA25000162 SAN DIEGO ICE COMPANY, INC. 833.99
APA25000163 SCW CONTRACTING CORPORATION 349,695.00
APA25000165 SOUTHERN CALIFORNIA EDISON CO. 790.97
APA25000166 STAPLES ADVANTAGE 461.20
APA25000167 SUNBELT RENTALS, INC. 16,066.85
APA25000168 THE CENTRE FOR ORGANIZATION EFFECTIVENESS 3,660.00 APA25000169 TRB AND ASSOCIATES, INC. 7,261.75
APA25000170 WILLDAN 4,096.19
APA25000171 WILLSCOT MOBILE MINI 1,319.55
7281 ALLIANT INSURANCE SERVICES, INC. 1,322.00
7282 AMAZON BUSINESS 854.92
7283 AMAZON BUSINESS 454.98
7284 AMAZON BUSINESS 246.88
Attachment 2 1 OF 2
JULY 22, 2024 TO JULY 28, 2024 CITY OF LAKE ELSINORE CITY WARRANT LIST WARRANT NO. VENDOR NAME AMOUNT
7285 AMAZON BUSINESS 133.73
7286 AMAZON BUSINESS 232.40
7287 AMERICAN MATERIAL COMPANY 8,519.17
7288 BMW MOTORCYCLES OF RIVERSIDE 347.99
7289 BMW MOTORCYCLES OF RIVERSIDE 347.99
7290 BRINKS INCORPORATED 128.89
7291 CHEN RYAN ASSOCIATES, INC. 6,466.00
7292 CIVIC PLUS, INC. 15,858.58
7293 CIVICA LAW GROUP, APC 23,626.05
7294 DOWNS ENERGY 11,688.68
7295 ENDRESEN DEVELOPMENT, INC. 576.00
7296 GMS ELEVATOR SERVICES, INC. 362.00
7297 INLAND EMPIRE GENERAL CONTRACTOR 23,000.00
7298 RAIN FOR RENT 16,530.26
7299 RAIN FOR RENT 17,419.17
7300 RAIN FOR RENT 763.80
7301 RIVERSIDE COUNTY SHERIFF'S, ACCOUNTING & FINANCE 9,287.11 7302 RIVERSIDE COUNTY SHERIFF'S, ACCOUNTING & FINANCE 1,549,975.67 7303 SERVICE FIRST 15,122.12
7304 SPICER CONSULTING GROUP 55,648.86
7308 WKE, INC. 13,615.79
DFT250023 FRONTIER CALIFORNIA - INTERNET 691.38
DFT250024 FRONTIER CALIFORNIA - INTERNET 477.84
DFT250056 US BANK NATIONAL ASSOCIATION 750,000.00
GRAND TOTAL 4,006,352.82 $
Attachment 2 2 OF 2

Page 1 of 1 ends

Discussion
The Warrant Report lists all general checks issued since the prior Warrant Report.

Attachments
Attachment 1 – City Warrant Summary
Attachment 2 – City Warrant List
JUL 29, 2024 TO AUG 4, 2024 CITY OF LAKE ELSINORECITY WARRANT SUMMARY FUND NO. FUND DESCRIPTION TOTAL
100 GENERAL 612,164.87 $
103 THE ANCHOR 12,587.60
110 GAS TAX 9,238.76
130 SB1186 CASp EDUCATION PROGRAM 40,037.79
135 LIGHTING, LANDSCAPE, MAINTENANCE DIST - NO. 1 15,441.60 180 LAUNCH POINTE 141,699.92
211 STORM DRAIN C.I.P. 6,746.81
300 INSURANCE SERVICES 4,961.57
305 INFORMATION SYSTEMS SERVICE 34,811.42
315 FLEET SERVICE 17,819.88
320 FACILITIES SERVICE 31,399.41
500 CAPITAL IMPROVEMENT PLAN 1,923,926.01
620 TRUST DEPOSIT - B.A.M. (17.00)
631 DESTRATIFICATION EQUIPMENT REPLACEMENT 10,822.96
GRAND TOTAL 2,861,641.60 $
Attachment 1 1 of 1
JUL 29, 2024 TO AUG 4, 2024 CITY OF LAKE ELSINORE CITY WARRANT LIST WARRANT NO. VENDOR NAME AMOUNT
APA25000172 AAA CONSTRUCTION SERVICES, INC 62,369.30$
APA25000173 AARON CHEVROLET 115.94
APA25000174 ACTION GAS & WELDING SUPPLY 142.47
APA25000175 ALBERT WEBB & ASSOCIATES 50,152.35
APA25000176 ALLIED TRAFFIC EQUIPMENT RENTAL 326.25
APA25000177 AMERICAN ALLIANCE DRUG TESTING 170.00
APA25000178 AMERICAN LADY VETS, INC 8,000.00
APA25000179 AZTECA CLEANING SERVICES LLC 15,132.08
APA25000180 BLANKINSHIP & ASSOCIATES, INC. 1,211.25
APA25000181 CALIFORNIA MUNICIPAL STATISTICS INC 550.00
APA25000182 CAMPGROUND VIEWS, INC 2,430.00
APA25000183 CDW GOVERNMENT, INC. 1,994.56
APA25000184 COSTCO WHOLESALE 120.00
APA25000185 COTTER CONSTRUCTION, INC. 9,350.00
APA25000186 CR&R, INC. 497.00
APA25000187 CR&R, INC. 5,701.47
APA25000188 DIEBOLD NIXDORF, INC. 305.80
APA25000189 DISCOUNT HAULING & CLEANUP SERVICE 26,690.00 APA25000190 DUSTIN THOMPSON PHOTOGRAPHY 2,250.00
APA25000191 EVMWD 43,198.89
APA25000192 FLOCK SAFETY 350.00
APA25000193 FRONTIER CALIFORNIA - INTERNET 135.35
APA25000194 FRONTIER CALIFORNIA, INC. 5,026.84
APA25000195 GOLDEN STATE BAIT, INC. 25,000.00
APA25000196 GOLDSTAR ASPHALT PRODUCTS 257.19
APA25000197 HDL COREN & CONE 695.00
APA25000198 HDL SOFTWARE, LLC 10,917.16
APA25000199 HEYDAY 9,550.00
APA25000200 INCLUDEDUCATION 1,000.00
APA25000201 JIMNI SYSTEMS, INC. 1,015.00
APA25000202 JOLLY JUMPS 7,246.00
APA25000204 LAKE ELSINORE UNIFIED SCHOOL DISTRICT 1,269.00 APA25000205 LIUNA LOCAL 777 756.00
APA25000206 MOLEAER, INC 797,923.50
APA25000207 NPG, INC. 60,396.40
APA25000208 PRUDENTIAL OVERALL SUPPLY 2,282.23
APA25000209 PULTE GROUP 6,746.81
APA25000210 QUINN COMPANY 1,401.60
APA25000211 SAFETY-KLEEN SYSTEMS, INC. 3,031.24
APA25000212 SAN DIEGO ICE COMPANY, INC. 301.70
APA25000213 SCW CONTRACTING CORPORATION 731,059.67
APA25000214 SMER RESEARCH 1, LLC 15,109.44
APA25000215 SOUTHERN CALIFORNIA EDISON CO. 104,475.40
Attachment 2 1 OF 4
JUL 29, 2024 TO AUG 4, 2024 CITY OF LAKE ELSINORE CITY WARRANT LIST WARRANT NO. VENDOR NAME AMOUNT
APA25000216 STAPLES ADVANTAGE 216.90
APA25000217 STAUFFER LAWN EQUIPMENT 466.65
APA25000218 STORYLAND STUDIOS DBA PLAINJOE STUDIOS 2,250.00 APA25000219 THE CENTRE FOR ORGANIZATION EFFECTIVENESS 2,400.00 APA25000220 TRAFFIC LOGIX CORPORATION 16,800.00
APA25000221 URBAN FUTURES, INC. 5,126.25
APA25000222 VISTA PAINT CORPORATION 609.46
APA25000223 VULCAN MATERIALS COMPANY 1,459.57
APA25000224 WALMART COMMUNITY 341.47
APA25000225 WAXIE SANITARY SUPPLY 1,769.97
APA25000226 WEST COAST SERVICES 1,260.00
APA25000227 YESCO SIGNS LLC 244,282.14
7309 BARROZO, ANTHONY 291.15
7310 BASUBAS, EDGARDO 1,438.01
7311 BLOCK, DIANE 739.30
7312 BOBO, LAWRENCE 739.30
7313 BOONE, ROBERT 739.30
7314 BRADY, ROBERT A. 1,033.20
7315 CASTANEDA, FRANCISCO 184.72
7316 CHADD, DANIEL 2,824.84
7317 CHIPMAN, ROBIN 1,438.01
7318 DAVIS, RITA 526.44
7319 DOUGLAS, JOSE A. 1,573.82
7320 ELKINS, MARIAN C. 291.15
7321 ESPINOZA, GUILLERMO PEREZ 492.58
7322 FAZZIO, JON 492.58
7323 FERGUSON, DAVID 2,105.94
7324 FOSTER, MAUREEN 492.58
7325 GIRON, DIANA 708.41
7326 GOMEZ, GUADALUPE 2,093.07
7327 GONZALES, RAMON 526.44
7328 GORDON, CAROL 161.43
7329 GULBRANSEN, ARLINE 184.72
7330 HANSEN, VI M. 184.72
7331 HOFFARTH, GARY 492.58
7332 HOUTZ, WILLIAM 167.79
7333 JECTER, MICHELE 739.30
7334 KILROY, PAT 739.30
7335 LEON, CHARLES KIM 291.15
7336 LEPPER, LUCIUS 291.15
7337 MACHOTT, RICHARD J. 739.30
7338 MAGEE, KIMBERLY 291.15
7339 MCDANIELS, DELORES 291.15
7340 MILLER, CORDIE 575.02
Attachment 2 2 OF 4
JUL 29, 2024 TO AUG 4, 2024 CITY OF LAKE ELSINORE CITY WARRANT LIST WARRANT NO. VENDOR NAME AMOUNT
7341 MOLENDYK, RONALD 739.30
7342 NORTH, EDWARD L. 492.58
7343 ODONNELL, RAYMOND 291.15
7344 OROZCO, JERRY 1,438.01
7345 PAYNE, WILLIAM 654.66
7346 PEREZ, SHAR-MARIE 2,093.07
7347 PORCHE, DANA 492.58
7348 PREISENDANZ, ROLFE 739.30
7349 RAMIREZ, FRANCES 575.02
7350 REDMEIER, MICHAEL D. 739.30
7351 REID, SUSAN 739.30
7352 RUSSELL, LAWRENCE 739.30
7353 SANTA CRUZ, MARY 1,422.62
7354 SAPP, DAVID 656.20
7355 SOLORZANO, LEONEL 1,495.88
7356 STORAASLI, PEGGY 291.15
7357 TAYLOR, GRANT 526.44
7358 TEYLER, KENNETH 167.79
7359 THOMPSON, RITA 1,438.01
7360 TURK, JILL 739.30
7361 UNSWORTH, NOLA 989.86
7362 WAITE, DENNIS 1,438.01
7363 WATENPAUGH, RICHARD 739.30
7364 WILKIE, RAE 167.79
7365 YATES, GRANT 2,105.94
143604 MENDOZA, JOEY 125.90
DFT250042 FRONTIER CALIFORNIA - INTERNET 460.98
DFT250065 MISSION SQUARE RETIREMENT 380.77
DFT250066 MISSION SQUARE RETIREMENT 7,747.05
DFT250067 NATIONWIDE TRUST COMPANY, FSB 1,147.74
DFT250068 INTERNAL REVENUE SERVICE 198.50
DFT250069 STATE DISBURSEMENT UNIT 392.30
DFT250070 LEGAL SHIELD 89.70
DFT250071 COLONIAL LIFE 102.36
DFT250072 TASC 4,212.90
DFT250073 DEPARTMENT OF MOTOR VEHICLES 300.00
DFT250074 DEPARTMENT OF MOTOR VEHICLES 186.00
DFT250075 DEPARTMENT OF MOTOR VEHICLES 304.00
DFT250076 STATE DISBURSEMENT UNIT 134.30
DFT250077 MICHAEL BAKER INTERNATIONAL, INC. (42,731.90) DFT250078 MICHAEL BAKER INTERNATIONAL, INC. (23,174.00) DFT250078 MICHAEL BAKER INTERNATIONAL, INC. (11,149.00) DFT250080 PAYCHEX OF NEW YORK, LLC 1,623.89
DFT250081 FRANCHISE TAX BOARD 25,887.47
DFT250082 INTERNAL REVENUE SERVICE 128,322.77
Attachment 2 3 OF 4
JUL 29, 2024 TO AUG 4, 2024 CITY OF LAKE ELSINORE CITY WARRANT LIST WARRANT NO. VENDOR NAME AMOUNT
DFT250083 CALPERS 79,922.34
PR08012024 NET PAYROLL 347,730.77
GRAND TOTAL 2,861,641.60 $
Attachment 2 4 OF 4

Page 1 of 2 ends

REPORT TO CITY COUNCIL
To:Honorable Mayor and Members of the City Council
From:Jason Simpson, City Manager
Prepared by:Candice Alvarez, MMC, City Clerk
Date:August 13, 2024
Subject:Withdrawal of Ballot Measure from the November 5, 2024 General Municipal Election
Recommendation
Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE,

CALIFORNIA, RESCINDING THE SUBMISSION TO THE QUALIFIED ELECTORS OF THE

CITY OF A CERTAIN MEASURE RELATING TO WHETHER THE CITY TREASURER

POSITION SHOULD BE APPOINTIVE AT THE GENERAL MUNICIPAL ELECTION TO BE HELD ON TUESDAY, NOVEMBER 5, 2024 AS CALLED BY RESOLUTION NO. 2024-11.

Background
On April 23, 2024, the City Council adopted Resolution No. 2024-11 calling for the holding of a General Municipal Election on Tuesday, November 5, 2024 to elect City Council Members for Districts 2, 4, and 5 and the City Treasurer, and placing a Measure on the ballot to consider whether to change the City Treasurer position from elective to appointive.

As outlined in the April 23, 2024 Staff Report, the Mayor’s 2004 Electoral Reform Ad Hoc Committee and former Elected City Treasurer Baldwin favored elimination of the elected position and advocated changing the City Treasurer to an appointed position to ensure that a qualified and experienced municipal finance and municipal accounting professional fills the position. With those considerations in mind, the City Council approved placing the Measure on the November 2024 ballot for consideration by the electorate.
2024 Ballot Measure Withdrawal

Page 2 of 2 ends

Discussion
While the question of whether the City Treasurer should be an appointed position must be presented to the electorate, the timing of the proposed ballot Measure merits reconsideration.

Comprehensive public outreach and education efforts are essential to provide residents with clear and detailed information about the proposed change. Additional time is necessary to meet those objectives and ensure that the electorate fully understands the implications of changing the City Treasurer position from elective to appointive. Moreover, including this Measure on the current ballot alongside the City Treasurer contest may cause confusion among voters. By postponing the ballot measure to a future election, the City Council can minimize voter confusion and engage in town hall meetings, informational sessions, and communication efforts designed to educate the electorate. This approach will help garner informed opinions and support, ultimately leading to a more democratic and transparent decision-making process.

Fiscal Impact
Removing the ballot measure from the upcoming election would result in approximately $38,000 in savings for the City in the current Fiscal Year.

Attachments
Attachment 1 - Resolution
City Clerk's Office
Attachment 1
RESOLUTION NO. 2024-___

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE,

CALIFORNIA, RESCINDING THE SUBMISSION TO THE QUALIFIED

ELECTORS OF THE CITY OF A CERTAIN MEASURE RELATING TO

WHETHER THE CITY TREASURER POSITION SHOULD BE APPOINTIVE AT

THE GENERAL MUNICIPAL ELECTION TO BE HELD ON TUESDAY,
NOVEMBER 5, 2024 AS CALLED BY RESOLUTION NO. 2024-11
Whereas, a General Municipal election on Tuesday, November 5, 2024 has been called by Resolution No. 2024-11, adopted on April 23, 2024; and Whereas, the City Council desires to rescind a question relating to whether the City Treasurer position should be appointive.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS:

Section 1. That the City Council, pursuant to its right and authority, does order repealed Section 2 of Resolution No. 2024-11 to remove the following question from the General Municipal Election ballot on November 5, 2024:

YES
Shall the office of City Treasurer be appointive?
NO
Section 2. That in all particulars not recited in this Resolution, the election shall be held and conducted as provided by law for holding municipal elections and as ordered by Resolution No. 2024-11.

Section 3. The City Clerk shall certify to the adoption of this Resolution and enter it into the book of original Resolutions.

Passed and Adopted at a regular meeting of the City Council of the City of Lake Elsinore, California, this 13th day of August 2024.

Steve Manos
Mayor
Attest:

Candice Alvarez, MMC
City Clerk
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The report should be saved on the F Drive under Agendas and the appropriate meeting date. This template is available at f:/Wsforms/agenda report with descriptions.doc
CC Reso No. 2024-___

Page 2 of 2 ends

3 7
7 6
1 STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.

CITY OF LAKE ELSINORE )
I, Candice Alvarez, MMC, City Clerk of the City of Lake Elsinore, California, do hereby certify that Resolution No. 2024-____ was adopted by the City Council of the City of Lake Elsinore, California, at the Regular meeting of August 13, 2024 and that the same was adopted by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Candice Alvarez, MMC
City Clerk

Page 1 of 2 ends

REPORT TO CITY COUNCIL
To:Honorable Mayor and Members of the City Council
From:Jason Simpson, City Manager
Prepared by:Shannon Buckley, Assistant City Manager
Date:August 13, 2024
Subject:Amended and Restated Funding Agreement for Community Facilities District No. 2023-2 of the City of Lake Elsinore (Coastal Mission Trails) Recommendation
Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE,

CALIFORNIA, APPROVING AMENDMENTS TO FUNDING AGREEMENT AND JOINT

COMMUNITY FACILITIES AGREEMENT RELATING TO COMMUNITY FACILITIES DISTRICT NO. 2023-2 OF THE CITY OF LAKE ELSINORE (COASTAL MISSION TRAILS) Background and Discussion
In November 2023, the City formed Community Facilities District No. 2023-2 of the City of Lake Elsinore (Coastal Mission Trails) (“CFD No. 2023-2” or the “District”), which is located on the northwest corner of Mission Trail Road and Lemon Street. When the district was formed, the City Council approved a funding agreement with Vista Emerald, LLC (the “Property Owner”), which set forth certain facilities eligible to be financed by the district. The Property Owner has requested that the original funding agreement be amended and restated in the form of the Amended and Restated Funding Agreement presented at this meeting. The purpose of the Amended and Restated Funding Agreement is to include additional City and Elsinore Valley Municipal Water District facilities to be constructed by the Developer and financed by the district.

Fiscal Impact
The costs related to the preparation of the Amended and Restated Funding Agreement will be paid from the deposit made by the Property Owner to the City.

CFD No. 2023-2 (Coastal Mission Trails)

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Attachments
Attachment 1 – Resolution
Attachment 2 - Agreement
4857-5551-0484v2/022042-0048
RESOLUTION NO. 2021-___

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE,

CALIFORNIA APPROVING AMENDMENTS TO FUNDING AGREEMENT AND JOINT

COMMUNITY FACILITIES AGREEMENT RELATING TO COMMUNITY FACILITIES DISTRICT NO. 2023-2 OF THE CITY OF LAKE ELSINORE (COASTAL MISSION

TRAILS)
Whereas, the City Council (the “City Council”) of the City of Lake Elsinore (the “City”), has heretofore undertaken proceedings to establish Community Facilities District No. 2023-2 the City of Lake Elsinore (Coastal Mission Trails) (the “District”) and declared the necessity to issue bonds on behalf of the District pursuant to the terms and provisions of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California (the “Act”); and Whereas, the City, acting on behalf of itself and the District, entered into that certain Funding Agreement dated as of November 14, 2023 with Vista Emerald, LLC, a California limited liability company (the “Owner”) (the “Original Funding Agreement”) which provided for the funding of improvements to facilities through the District; and
Whereas, the City and the Owner desire to enter into that certain Amended and Restated Funding Agreement (the “Funding Agreement Amendment”) in substantially the form presented at this meeting, which amends and restates the Original Funding Agreement to include additional improvements and facilities as eligible to be financed through the District; and

NOW, THEREFORE, THE CITY COUNCIL, OF THE CITY OF LAKE ELSINORE, DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOW:

Section 1. Each of the above recitals is true and correct.

Section 2. The form of the Funding Agreement Amendment presented at this meeting is hereby approved and each of the Mayor, the City Manager, the Assistant City Manager is hereby authorized and directed to execute the Funding Agreement Amendment in the form hereby approved, with such additions therein and changes thereto as the office or officers executing the same deem necessary to cure any defect or ambiguity therein, with such approval evidenced by the execution and delivery of the Funding Agreement Amendment.

Section 3.This Resolution shall be effective upon its adoption.

Passed and Adopted on this 13 th day of August, 2024.
_____________________________
Steve Manos, Mayor
Attest:
_____________________________
Candice Alvarez, MMC
City Clerk
2 4857-5551-0484v2/022042-0048

STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.

CITY OF LAKE ELSINORE )
I, Candice Alvarez, MMC, City Clerk of the City of Lake Elsinore, California, do hereby certify that Resolution No. 2024-______ was adopted by the City Council of the City of Lake Elsinore, California, at the Regular meeting of August 13, 2024 and that the same was adopted by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
________________________________
Candice Alvarez, MMC
City Clerk

CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. 2023-2
(COASTAL MISSION TRAILS)

AMENDED AND RESTATED FUNDING AGREEMENT
THIS AGREEMENT is made and entered into by and between CITY OF LAKE ELSINORE (the “City”), acting for and on behalf of itself and COMMUNITY FACILITIES DISTRICT NO. 2023- 2 OF THE CITY OF LAKE ELSINORE (COASTAL MISSION TRAILS) (the “Community Facilities District” or “CFD”) and VISTA EMERALD, LLC, a California limited liability company (the “Developer”) (each individually a “Party” and collectively the “Parties”) and amends and restates in full that Funding Agreement, dated November 14, 2023 (the “Original Funding Agreement”) by and between the City and the Developer.

WHEREAS, the City has previously established the CFD, which encompasses the property described in the attached Exhibit “A” (the “Developer Property”), pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended (the “Act”), and has undertaken proceedings for the authorization of special taxes and issuance of bonded indebtedness for the payment of the construction and/or acquisition of certain public improvements to be owned, operated or maintained by the City and the Elsinore Valley Municipal Water District (the “Water District”), Lake Elsinore Unified School District (“School District”), and incidental expenses in accordance with the Act; and
WHEREAS, the City, acting for and on behalf of itself and the CFD, have previously entered into the Original Funding Agreement, providing for the funding, through the CFD, of certain City and Water District improvements; and
WHEREAS, Section 12(a) of the Original Funding Agreement provides that such agreement may be amended at any time in writing signed by each party thereto; and WHEREAS, the City, acting for and on behalf of itself and the CFD, and the Developer desire to amend and restate the Original Funding Agreement, in its entirety, to provide for the funding by the CFD of certain improvements to be constructed by the Developer, to include additional facilities of the Water District to be funded by the CFD and to amend certain other provisions of the Original Funding Agreement as set forth herein; and WHEREAS, the costs of the acquisition and construction of improvements to be funded by the CFD: (i) with respect to the improvements that are to be owned, operated and maintained by the City (“City Improvements”), are as more particularly set forth and described in the Description of Cost Estimates attached hereto as Exhibit “B,” (ii) with respect to improvements included in the City’s fee programs (the “City Fee Facility Improvements”), are as more particularly set forth and described in Exhibit “B” and (iii) with respect to the improvements of the Water District and School District, are described in Exhibit “D” hereto (the “Miscellaneous Improvements”) (collectively the “Improvements”); and
WHEREAS, the City is authorized by the Act to form the CFD and to issue bonds to fund the Improvements; and
WHEREAS, the City Council has adopted the City’s policies and procedures concerning the use of special district financing programs to finance City facilities (the “Policy”); and 2 WHEREAS, the purpose of this Agreement is to amend and restate the Original Funding Agreement and to constitute a formal understanding between Developer and the City (pursuant to the requirements of Government Code Section 53313.51 and other provisions of the Act and the Policy) concerning financial and other obligations and responsibilities related to the Improvements to be financed by the Community Facilities District to the extent funds are available, and to set forth the conditions upon which (1) the Community Facilities District will reimburse Developer or its designee for the cost of the City Improvements constructed by or on behalf of the Developer and (2) the Community Facilities District will fund the City Fee Facility Improvements and the City will grant credit against applicable City fees; and (3) the Community Facilities District will also fund Miscellaneous Improvements, if any, which will be described in Exhibit “D,” if applicable.

NOW, THEREFORE, it is mutually agreed between the respective Parties as follows:

SECTION 1. DEVELOPER ADVANCES
At Developer’s request, the City undertook the formation of the Community Facilities District and certain change proceedings with respect thereto. The Developer has advanced to the City a sum of money related to the costs of such formation and change proceedings, all of which shall be eligible for reimbursement from the CFD. The City will provide to Developer on request a summary of how the advances have been spent and the unexpended balance remaining. The amounts advanced by the Developer and, to the extent determined reasonable and appropriate by the City, expenses incurred by the Developer for engineering consultant costs in connection with the formation of the Community Facilities District, certain change proceedings with respect thereto, and the issuance of bonds, will be reimbursable to the Developer, without interest, from the proceeds of bonds (the “Bonds”) issued by the Community Facilities District. In the event that Bonds are not issued to provide a source of reimbursement to Developer, the City shall not have any liability to Developer to reimburse it for any of the amounts previously advanced by Developer and expended by the City.

Prior to the issuance of the Bonds, the City will request a final advance for any unpaid expenses incurred during preparatory technical, financial and legal work; and following payment of such expenses, the City shall promptly release the balance, if any, of the advance to the Developer. Should the City’s expenses exceed the remaining balance, the City will bill the Developer for the difference, which the Developer agrees to pay within 10 days following receipt of such billing, subject to the conditions of paragraph one of this section.

SECTION 2. SALE OF BONDS

2.1 City Policies and Requirements for the Issuance of Bonds. The City Council has adopted the Policy, setting forth the City’s policies and procedures concerning the use of special district financing programs to finance the Improvements. Pursuant to the Policy, the total annual amount of the special taxes to be collected with respect to a parcel within the CFD and all other taxes and assessments which will be collected with respect to such parcel must not exceed two percent (2%) of the expected assessed value of such parcel within the Community Facilities District upon the completion of all expected structural improvements to such parcel and the sale of such parcel to the initial homeowner.

The Parties hereby agree that, unless waived by the City, at the time of issuance of the Bonds, the following requirements shall be met: (1) the ratio of the value of all parcels of property for which the Bonds are being issued to the amount of outstanding community facilities district or 3 assessment district bonds attributable to such parcels (the “Value-to-Lien Ratio”) may not be less than four-to-one (4:1) and (2) at least 50% of the proposed residential units within the Community Facilities District shall have been completed and conveyed to individual homeowners. The fair market value of the property within the Community Facilities District for purposes of determining the foregoing ratio will be determined based on the assessed value of the property or the appraised value of the property based on the appraisal made by an appraiser selected by the City with a valuation date within ninety (90) days of the issuance of the Bonds. Subject to satisfaction of the Policy and the requirements of this Agreement, the City shall use its best efforts to issue and sell the Bonds in one or more series in an amount sufficient to fund the Improvements in accordance with the schedule for development of the Developer Property.

2.2 Security for Payment of Special Taxes.
(a) Concurrently with the issuance and sale of each series of the Bonds, the owner of any land within the Community Facilities District, together with land owned by any affiliate (collectively, an “Account Party”), for which the Maximum Special Tax (as defined in the Rate and Method of Apportionment of Special Tax for the Community Facilities District (the “Rate and Method”), such Special Tax referred to herein as the “Special Tax” or “Special Taxes”) in the fiscal year following the fiscal year in which the Bonds are issued are equal to or exceed 20% of the total Maximum Special Tax for such fiscal year, shall deliver to the City either (i) a renewable, irrevocable instrument of credit from a financial institution (rated “A” or better) or (ii) cash in-lieu thereof (a “Security”). The Security shall be in an amount equal to 100% of the expected Special Tax levy on the property owned by such Account Party in the two fiscal years following the fiscal year in which the Bonds are issued, based on ownership status as of a date that is within 60 days prior to the date of issuance of the Bonds (the “Stated Amount”). The Security shall be maintained by the Account Party in each fiscal year until terminated in accordance with Section 2.2(c) below. While the Security is still required, the Stated Amount of such Security shall be reduced as set forth in a “Certificate of Reduction or Termination” (as defined in Section 2.2(c) below).

The Security shall name the City, or its designee, as a beneficiary and shall provide that the City, or its designee, may draw an amount equal to any delinquencies in payment of semiannual installments of the Special Taxes levied on property owned by the Account Party in the Community Facilities District. The total amount to be drawn under the Security shall not exceed an amount equal to the Special Taxes owed by the Account Party with respect to property within the Community Facilities District that is delinquent at the time the draw is made. The amount drawn on the Security shall be applied in the same manner and for the same purposes as the delinquent Special Taxes would have been applied; provided, however the payment of a draw under the Security will not be deemed to cure the delinquency in payment of the Special Taxes.

If, subsequent to a draw on the Security and prior to the satisfaction of any reimbursements due to the institution providing the Security (the “Security Provider”) pursuant to this Agreement, the City receives payment of all or a portion of the delinquent Special Taxes or the proceeds of a sale of delinquent real property pursuant to foreclosure proceedings (“Delinquency Proceeds”) for a parcel for which the Security has been drawn, the Security Provider shall be reimbursed for such draws to the extent of Delinquency Proceeds net of the City’s costs of collection, provided that the Security is or has been concurrently reinstated to, or a Substitute Security (as defined below) provided for, the then applicable Stated Amount. The Security Provider is intended by the Parties to be a third party beneficiary of this Section 2.2. 4 (b) The Security shall be renewed, or a substitute Security reasonably satisfactory to the City (a “Substitute Security”) provided, not less than thirty (30) calendar days prior to the expiration of the Security or Substitute Security then in effect. If the Account Party provides a Substitute Security to the City, then the City or its designee, shall return any existing Security on the effective date of the Substitute Security to the Security Provider.

If the Security is not renewed within thirty (30) days prior to its expiration date and the requirements for release or termination of the Security as set forth in Section 2.2(c) below have not then been met, the full amount of the Security may be drawn by the City and deposited in an account established under the Indenture (as hereinafter defined) or in such account established with a financial institution selected by the City. Thereafter, amounts in such account shall be held as security, and if Special Taxes owed by the Account Party with respect to property within the Community Facilities District are not paid prior to delinquency, then such amounts in such account may be applied by the City to pay the delinquent Special Taxes owed by the Account Party with respect to such property on the same terms and conditions applicable hereunder to draws on the Security.

At such time as the Security is renewed, or a Substitute Security is accepted by the City, or the requirement for the Security has been terminated pursuant to this section, the City or its designee, shall release all amounts in the Security account to the Security Provider within ten (10) calendar days from the date of renewal or acceptance.
(c) Following the sale or transfer by the Account Party of any property to a person other than the Account Party, or upon the prepayment of the Special Tax obligation for a parcel owned by the Account Party, the Account Party shall notify the Community Facilities District of such event, in writing, and, if requested by the Account Party, the Stated Amount of the Security shall be reduced and be recalculated in accordance with this Section 2.2; provided, however, that City shall be required to recalculate such amount and reduce the Security a maximum of two times each calendar year and any costs associated with the recalculation and reduction shall be borne by the Account Party. The Security shall be terminated when (i) the Maximum Special Tax levy on the land owned by the Account Party in the Community Facilities District is responsible for less than 20% of the Maximum Special Tax levy in the current fiscal year and the Account Party is not delinquent in the payment of any Special Taxes, (ii) the Account Party has paid all Special Taxes in the current fiscal year and the property owned by the Account Party in the Community Facilities District is expected to be responsible for less than 20% of the Maximum Special Tax levy in the next fiscal year, or (iii) the Account Party has paid all Special Taxes in the current fiscal year and in the following fiscal year, the Community Facilities District will not levy the Special Tax on property within the Community Facilities District owned by the Account Party.

Reduction or termination of a Security shall occur automatically upon submission to the Security Provider by the City of a “Certificate of Reduction or Termination.” The City shall deliver to the Security Provider, such Certificate of Reduction or Termination promptly upon receiving from the Account Party a certification which shall be made under penalty of perjury and which shall indicate (i) the legal description of all land owned by the Account Party, and either (ii) a recalculation of the new Stated Amount that the Account Party proposes be applicable to the Security or (iii) if termination of the Security is requested, a statement that one of the requirements set forth in (i) through (iii) of the preceding paragraph has been satisfied.

The Account Party shall notify the City of any events that will result in a reduction of the Stated Amount of the Security and shall provide the City with verification of said events. The 5 Account Party may provide the City with a Substitute Security in the reduced amount, and the City shall release and return to the Security Provider the Security then in effect. The Parties expressly acknowledge that the Account Party’s failure to so notify the City or to reduce the Security at the times prescribed herein shall in no way effect or invalidate sale or transfer of property, or recordation of maps on property.
(d) If property is sold or transferred by an Account Party with the result that the land owned by the transferee or any of its affiliates (“Transferee”) is responsible for twenty percent (20%) or more of the Maximum Special Tax in the current fiscal year, a Security on the same terms specified herein will be furnished by Transferee with respect to all land owned by such Transferee in the Community Facilities District. Any applicable purchase and sale agreement and/or escrow instructions shall notify the Transferee of this Security requirement and obligate the Transferee to provide such Security, if applicable. The Security of the Account Party will not be reduced to reflect the sale or transfer of land until a Security is furnished by the Transferee and accepted by the City. The issuing financial institution and the form and terms of said Security will be subject to reasonable prior approval by the City. All terms provided in this Section 2.2 are applicable to the Transferee by replacing the term “Account Party” at each place where it occurs in each section with the term “Transferee.” Each provider of a Security for a Transferee shall be an express third party beneficiary of the provisions of this Section 2.2.

Any costs related to the holding or maintaining the Security, including any fees of a fiscal agent, trustee or other depository shall be borne by the Account Party.

2.3 Major Landowner Initial and Continuing Disclosure. An owner of land which is responsible for twenty percent (20%) or more of the Special Tax in the fiscal year in which the Bonds are issued or in the fiscal year following the fiscal year in which the Bonds are issued (a “Major Landowner”) will be required to provide all information regarding the development of its property, including the financing plan for such development, which is necessary to ensure that the official statement for such Bonds complies with the requirements of Rule 15c2-12 of the Securities and Exchange Commission (the “Rule”) and all other applicable federal and state securities laws. Additionally, Developer acknowledges that, if it is a Major Landowner at the time of issuance of the Bonds, it will be necessary that Developer enter into a continuing disclosure agreement to provide such continuing disclosure pertaining to the development of the land owned by Developer within the CFD as necessary to assist the underwriter in complying with the continuing disclosure requirements of the Rule and/or to assist in the marketing of the Bonds.

2.4 Bond Issuance Parameters. The terms and conditions upon which each series of the Bonds shall be issued and sold, the method of sale of the Bonds and the pricing of the Bonds shall be determined solely by the City in its reasonable discretion in conformance with the requirements of Government Code Section 53313.5, the Act, the Policy, and this Agreement. The Bonds shall be issued with a term not to exceed 35 years and annual debt service on the Bonds shall be permitted to escalate by two percent (2%) per year consistent with the annual escalation of the Special Tax. The proceeds of the Bonds shall be used in the following priority to (1) fund a reserve fund for the payment of principal and interest with respect to the Bonds in an amount equal to the least of (i) ten percent (10%) of the total bond issue, (ii) maximum annual debt service on Bonds, or (iii) 125% of average annual debt service; (2) fund up to eighteen (18) months of capitalized interest; (3) reimburse the Developer or its designee pursuant to Section 1 and hereof for the costs described therein which have not already been reimbursed to the Developer from collected Special Tax; (4) pay for costs of issuance of the Bonds including, without limitation, underwriter’s discount, bond counsel and disclosure counsel fees, appraisal and special tax consultant fees, printing, and fiscal agent fees; and (5) pay for the actual costs of the 6 Improvements. The Community Facilities District shall maintain records relating to the disbursements of proceeds of the sale of the Bonds. The Indenture or Resolution (hereinafter “Indenture”) for the Bonds shall establish an acquisition and construction fund or improvement fund (herein, the “Improvement Fund”) into which shall be deposited initially the proceeds of the Bonds net of the amount of proceeds required to fund items (1) through (5) in the second preceding sentence. The Indenture shall also establish separate accounts of the Improvement Fund designated the “City Improvements Account,” “City Fee Facility Improvements Account,” and any Miscellaneous Improvement Account(s) for the Miscellaneous Improvements described in Exhibit “D” if applicable, into which shall be deposited such portions of the Improvement Fund as directed by the City and in writing at or subsequent to the closing of the sale of the Bonds consistent with the following priorities:
(a) An amount sufficient to fund the reasonable, current estimated costs of the City Improvements for which the Developer has or expects to submit a Disbursement Request shall be deposited to the City Improvements Account;
(b) An amount sufficient to fund the reasonable, current estimated cost of the City Fee Facility Improvements anticipated to be funded out of the Bonds being issued shall be deposited in the City Fee Facility Improvements Account (any Special Taxes levied in the CFD and collected by the CFD remaining after the payment of administrative expenses of the CFD and the reimbursement of the Developer for costs pursuant to Section 1 hereof shall be deposited into the City Fee Facility Improvements Account at the time of Bond issuance, unless otherwise directed in writing by the Developer); and
(c) If applicable, an amount to be agreed upon between Developer and the CFD prior to the issuance of Bonds sufficient to fund the reasonable, current estimated cost of any Miscellaneous Improvements, if any, described in Exhibit “D” hereto, anticipated to be funded out of the Bonds being issued shall be deposited in the applicable Miscellaneous Improvement Account(s).

Interest earned on moneys deposited in each of the City Fee Facility Improvements Account, the City Improvements Account and the Miscellaneous Improvement Account(s) shall remain in such accounts until such time as all of the Improvements have been funded.

Additionally, the Developer may direct the CFD to transfer excess moneys in any of the City Fee Facility Improvements Account, the City Improvements Account or the Miscellaneous Improvement Account(s) to another Account. The Indenture shall provide that amounts remaining in the Improvement Fund after funding all proposed Improvements or sooner, as agreed by the City and the Developer, shall be deposited in the special tax fund or bond service fund and be applied to pay debt service on the Bonds and/or to call Bonds in advance of maturity.

SECTION 3. ALLOCATION OF SPECIAL TAXES
Prior to the issuance of Bonds, the City Council of the City, acting as the legislative body of the Community Facilities District, may levy Special Taxes at the assigned special tax rate on all parcels classified as Developed Property pursuant to the Rate and Method. Such Special Taxes collected by the City shall first be applied to fund annual administrative expenses of the Community Facilities District and then to fund Improvements in the same manner as the proceeds of Bonds as set forth herein. Upon sale and delivery of the Bonds, the City shall annually levy the Special Tax as provided for in documents pursuant to which the Bonds were issued. Following the issuance of the Bonds, the City shall have no obligation to levy Special Taxes to reimburse the Developer for the costs of any Improvements not paid for from Bond proceeds. The entire 7 amount of any Special Tax levied by the Community Facilities District to repay the Bonds and recover costs and expenses allowable pursuant to Government Code Section 53313.5, shall be allocated to the Community Facilities District.

SECTION 4. DESIGN PLANS AND SPECIFICATIONS
The requirements of this Section shall not apply to any City Improvement that was complete (as determined by the City Council) prior to the adoption by the City Council of the resolution forming the CFD, but they shall apply to all other City Improvements for which the Developer submits a Disbursement Request. All plans, specifications and bid documents for the City Improvements (“Plans”) constructed or to be constructed by the Developer shall be prepared by the Developer at the Developer’s initial expense, subject to approval by the applicable public agency. Costs for preparation of the Plans will be eligible for reimbursement, conditioned upon the final approval of the applicable public agency and the availability of funds. Reimbursement of costs for plan revisions will be considered on a case by case basis. All facilities shall be bid in accordance with “public works” requirements of Section 6.4 to be eligible for reimbursement. The Developer shall not award bids for construction, or commence or cause commencement of construction, of a City Improvement until the Plans and bidding documents have been approved by the City. The bid opening for City Improvements shall be coordinated with and take place at the City’s facilities, with City personnel in attendance.

SECTION 5. CONSTRUCTION OF IMPROVEMENTS
The requirements of this Section shall not apply to any City Improvement that was complete (as determined by the City Council) prior to the adoption by the City Council of the resolution forming the CFD, but they shall apply to all other City Improvements for which the Developer submits a Disbursement Request.

5.1 Construction or Acquisition Election. Upon the approval of Plans for a City Improvement, the Developer and the City shall determine whether the Developer will provide for construction of such City Improvement in accordance with Sections 6.2, 6.4 and 7 of this Agreement (the “Acquisition Election”) or whether the City will provide for construction of such City Improvement in accordance with Section 6.3 of this Agreement (the “Construction Election”).

Sections 6.2, 6.4 and 7 specify the requirements for construction of the City Improvements pursuant to the Acquisition Election that the City believes are necessary to ensure that such City Improvements are constructed as if they had been constructed under the direction and supervision, or under the authority of the City.

5.2 Acquisition Election. If the Acquisition Election is selected with respect to City Improvements in accordance with the provisions of Section 7 hereof, a qualified engineering firm (the “Field Engineer”) shall be employed by the Developer to provide all field engineering surveys determined to be necessary by the City’s inspection personnel. Field Engineer shall promptly furnish to City a complete set of grade sheets listing all locations, offsets, etc., in accordance with good engineering practices, and attendant data and reports resulting from Field Engineer’s engineering surveys and/or proposed facility design changes. City shall have the right, but not the obligation, to review, evaluate and analyze whether such results comply with applicable specifications.

A full-time soil-testing firm, approved by City, shall be employed by the Developer to conduct soil compaction testing and certification. The Developer shall promptly furnish results of all such compaction testing to the City for its review, evaluation and decision as to compliance 8 with applicable specifications. In the event the compaction is not in compliance with applicable specifications, the Developer shall be fully liable and responsible for the costs of achieving compliance. A final report certifying all required compaction in accordance with the specifications shall be a condition of final acceptance of facilities.

The costs of all surveying, testing and reports associated with the City Improvements furnished and constructed by the Developer’s contractor(s) shall be eligible to be paid from funds in the City Improvements Account.

The City shall not be responsible for conducting any environmental, archaeological, biological, or cultural studies or any mitigation requirements that may be requested by appropriate Federal, State, and/or local agencies. Any such work shall be paid for and conducted by the Developer and reimbursed out of the City Improvements Account.

Notwithstanding the selection of the Acquisition Election with respect to a City Improvement, should the Developer notify the City that the Developer is unable to complete such City Improvement, the City shall have the right but not the obligation to require the Developer to make an irrevocable offer of dedication to the City of the land owned by the Developer for the City Improvement identified in the notice and to assume responsibility for the work to be performed thereunder. In the event the City elects to assume the responsibility for any work on a previously awarded contract as described in the preceding sentence, the following will occur: (i) the Developer will make an irrevocable offer of dedication to the City of the land owned by the Developer for such City Improvement identified in the notice; (ii) to the extent permitted by law and the applicable contract, the Developer will assign all of the contracts for the work performed to date on the City Improvement identified in the notice to the City, if requested to do so by the City Manager; the City will use its best efforts to complete the City Improvement within a reasonable time frame; and upon completion of the City Improvement, to the extent there are Special Taxes or proceeds of the Bonds available following payment to the City for the costs of completing such City Improvement, the Developer will be reimbursed for the lesser of the cost or value of the previously unreimbursed satisfactory work performed or paid for by the Developer.

The cost of such work will be determined by taking the unreimbursed amounts expended by the Developer under the contract(s) taken over by the City and deducting any incremental cost incurred by the City to complete the work under the contracts in question. Incremental cost shall be costs in excess of the sum of the original contract cost plus change orders approved by the City.

5.3 Construction Election. The Developer and the City shall agree on which Improvements shall be constructed by the Developer and which shall be constructed by the City.

If the Construction Election is selected, upon the award of a construction contract for a City Improvement to be constructed by the City, funds in the City Improvements Account in an amount equal to the costs of the City Improvement, shall be reserved for payments under such contract and shall not be available for the funding of other City Improvements until all payments required by such contract have been made. At the time of either or both (i) the execution of a contract for the construction of a City Improvement as to which the Construction Election has been made, and (ii) completion of construction of the City Improvement, the Developer shall be entitled to reimbursement from funds in the City Improvements Account of any actual costs of the City Improvements incurred by the Developer at that time.

If Bonds have not been issued or insufficient funds are reserved in the Improvement Fund, the City agrees to accept advances of funds from the Developer (if the Developer agrees to make such advances in its sole discretion) upon the City’s award of a construction contract for a City 9 Improvement to be constructed by the City in an amount equal to the difference between the amount of reserved funds and the contract amount. The amount of such advances shall be reimbursed to the Developer to the extent of funds in the City Improvements Account.

PUBLIC WORKS REQUIREMENTS

5.4 City Requirements. In order that the City Improvements as to which the Acquisition Election is made and for which a Disbursement Request is submitted may be properly and readily acquired by the City, the Developer shall comply with all of the following requirements with respect to any such City Improvements to be acquired with funds in the City Improvements Account, and the Developer shall provide such proof to the City as the City may reasonably require and at such intervals and in such form as the City may reasonably require, that the following requirements have been satisfied as to all such City Improvements:
(a) The Developer shall prepare a bid package for review, comment and approval by the City Manager of the City or his designee (the “City Representative”). (b) The Developer shall, after obtaining at least three sealed bids for the construction of the City Improvements in conformance with the procedures and requirements of the City, submit to the City written evidence of such competitive bidding procedure, including evidence of the means by which bids were solicited, a listing of all responsive bids and their amounts, and the name or names of the contractor or contractors to whom the Developer proposes to award the contracts for such construction, which shall be the lowest responsible bidder.
(c) The City Representative shall attend the bid opening. If unable to attend the bid opening, the City Representative shall approve or disapprove of a contractor or contractors, in writing, within five (5) business days after receipt from the Developer of the name or names of such contractor or contractors recommended by the Developer. If the City Representative disapproves of any such contractor; the Developer shall select the next lowest responsible bidder from the competitive bids received who is acceptable to the City Representative.
(d) The specifications and bid and contract documents shall require all such contractors to pay prevailing wages and to otherwise comply with applicable provisions of the Labor Code, the Government Code and the Public Contract Code relating to public works projects and as required by the procedures and standards of the City with respect to the construction of its public works projects.
(e) The Developer shall submit faithful performance and payment bonds with respect to the City Improvements for which the Acquisition Election is made and the following documents shall be submitted to the City along with the performance and payment bonds:
(i)The original, or a certified copy, of the unrevoked appointment, power of attorney, bylaws, or other instrument entitling or authorizing the person who executed the bond to do so;
(ii)A certified copy of the certificate of authority of the insurer issued by the State of California’s Insurance Commissioner; and 10 (iii)Copies of the insurer’s most recent annual and quarterly statements filed with the Department of Insurance.
(f) The Developer and its contractor and subcontractors shall be required to provide proof of insurance coverage throughout the term of the construction of the City Improvements, which they will construct in conformance with the City’s standard procedures and requirements. The City’s insurance requirements are set out in Section 20 herein. (g) The Developer and all such contractors shall comply with such other requirements relating to the construction of the City Improvements which the City may impose by written notification delivered to the Developer and each such contractor at the time either prior to the receipt of bids by the Developer for the construction of such City Improvements or, to the extent required as a result of changes in applicable laws, during the progress of construction thereof; provided that such other requirements shall only be imposed to the extent the City reasonably determines they are required in order to comply with applicable law. In accordance with Section 7, the Developer shall be deemed the awarding body and shall be solely responsible for compliance and enforcement of the provisions of the Labor Code, Government Code, and Public Contract Code.
(h) A “Change Order” is an order from the Developer to a contractor authorizing a change in the work to be performed. The Developer shall receive comments from the City Representative prior to the Developer’s approval of any Change Order. The City Representative shall comment on or deny the Change Order request within five (5) business days of receipt of all necessary information. The City’s comments to a Change Order shall not be unreasonably delayed, conditioned or withheld. The Developer shall not be entitled to be compensated for costs associated with a “Change Order” that has not been approved by the City Representative.

Developer shall provide proof to the City, at such intervals and in such form as the City may reasonably require, that the foregoing requirements have been satisfied as to all of the City Improvements as to which the Acquisition Election has been made which are funded through Bond proceeds.

SECTION 6. INSPECTION; COMPLETION OF CONSTRUCTION
The requirements of this Section shall not apply to any City Improvement that was complete (as determined by the City Council) prior to the adoption by the City Council of the resolution forming the CFD, but they shall apply to all other City Improvements for which a Disbursement Request is submitted.

The City shall have primary responsibility for inspecting the City Improvements to assure that the work is being accomplished in accordance with the Plans. Such inspection does not include inspection for compliance with safety requirements by the Developer’s contractor(s). The City’s personnel shall be granted access to each construction site at all reasonable times for the purpose of accomplishing such inspection. Upon satisfaction of the City’s inspectors, the Developer shall notify the City in writing that a City Improvement has been completed in accordance with the Plans. Any actual costs reasonably incurred by the City for inspection not previously paid by the Developer shall be reimbursed from funds in the City Improvements Account.
11 Within three (3) business days of receipt of written notification from City inspectors that a City Improvement has been completed in accordance with the Plans, the City Representative shall notify the Developer in writing that such City Improvement has been satisfactorily completed.

Upon receiving such notification, the Developer shall file a Notice of Completion with the County of Riverside Recorders Office, pursuant to the provisions of Section 3093 of the Civil Code. The Developer shall furnish to the City a duplicate copy of each such Notice of Completion showing thereon the date of filing with the County of Riverside (the “County”). City will in turn file a notice with the County for acceptance.

SECTION 7. LIENS
With respect to any City Improvement that was complete (as determined by the City Council) prior to the adoption by the City Council of the resolution forming the CFD, prior to any payment by the CFD to the Developer for such City Improvement, the Developer shall provide to the City such evidence or proof as the City shall require that all persons, firms and corporations supplying work, labor, materials, supplies and equipment for the construction of the City Improvements have been paid, and that no claims of liens have been recorded by or on behalf of any such person, firm or corporation. With respect to City Improvements, upon the earlier of (i) receipt of all applicable lien releases, or (ii) expiration of the time for the recording of claim of liens as prescribed by Sections 3115 and 3116 of the Civil Code, the Developer shall provide to the City such evidence or proof as the City shall require that all persons, firms and corporations supplying work, labor, materials, supplies and equipment for the construction of the City Improvements have been paid, and that no claims of liens have been recorded by or on behalf of any such person, firm or corporation.

SECTION 8. ACQUISITION; ACQUISITION PRICE; SOURCE OF FUNDS The acquisition price of a City Improvement that was complete (as determined by the City Council) prior to the adoption by the City Council of the resolution forming the CFD shall be its fair market value, as determined by the City’s Assistant City Manager or his or her designee, as of the date of acquisition. The City shall consider input and data provided by the Developer prior to determining the final fair market value.

The costs eligible to be included in the acquisition price of a City Improvement that is not described in the preceding paragraph (the “Actual Costs”) shall include:
(i) The actual hard costs for the construction of such City Improvement as established by the City-approved construction contracts and approved Change Orders, including costs of payment, performance and maintenance bonds and insurance costs, pursuant to this Agreement; (ii) The design and engineering costs of such City Improvement including, without limitation, the costs incurred in preparing the Plans. Costs for plan revisions will be considered on a case by case basis;
(iii) The costs of environmental evaluations and public agency permits and approvals attributable to the City Improvement;
(iv) Costs incurred by the Developer for construction management and supervision of such City Improvement, in an amount equal to five percent (5%) of the actual hard construction costs described in clause (i) above; 12 (v) Professional costs associated with the City Improvement such as engineering, inspection, construction staking, materials, testing and similar professional services; and
(vi) Costs approved by the City in accordance with the Act of acquiring any real property or interests therein required for the City Improvement including, without limitation, any water tank sites, temporary construction easements, temporary by-pass road and maintenance easements.

Provided the Developer has complied with the requirements of this Agreement, the City agrees to pay the acquisition price of a completed City Improvement to the Developer or its designee within thirty (30) days after the Developer’s satisfaction of the preconditions to such payment stated herein, but only to the extent there are sufficient funds available in the City Improvements Account. Except in the case of a City Improvement described in the first paragraph of this Section, the acquisition price to be paid from Bond proceeds for the acquisition of a City Improvement by the City shall be the least of (1) the value of the City Improvement; or (2) the total of the Actual Costs of the City Improvement.

As a condition to the payment of the acquisition price, the ownership of the completed City Improvement shall be transferred to the City by grant deed, bill of sale or such other documentation as such public agency may require free and clear of all taxes, liens, encumbrances, and assessments, but subject to any exceptions determined by the City to not interfere with the actual or intended use of the land or interest therein (including the lien of a community facilities district so long as the subject property is exempt from taxation or is otherwise not taxable by such community facilities district). Upon the transfer of ownership of City Improvements or any portion thereof to the City, the City shall be responsible for the maintenance of such City Improvements or the portion transferred. Notwithstanding the foregoing, the acquisition price of a City Improvement may be paid prior to transfer of ownership and acceptance of the City Improvement if it is substantially completed at the time of payment. The City Improvement shall be considered “substantially complete” when it has been reasonably determined by the City to be usable, subject to final completion of such items as the final lift or any other items not essential to the primary use or operation of the City Improvement. If the acquisition price of a City Improvement is paid prior to transfer of ownership and acceptance based on it being “substantially complete”, Developer may, upon transfer of ownership of such City Improvement to the City, submit a second reimbursement request for any unpaid portion of the Actual Costs associated with completing such improvement. If the acquisition price of a City Improvement is paid prior to transfer of ownership and acceptance based on it being “substantially complete”, Developer may, upon transfer of ownership of such City Improvement to the City, submit a second reimbursement request for the additional Actual Costs associated with completing such improvement.

For purposes of determining the acquisition price to be paid by the Community Facilities District for the acquisition of the City Improvements by the City (other than City Improvements described in the first paragraph of this Section), the value of such City Improvements shall include the construction costs specified in the City-approved contracts and City-approved Change Orders conforming to Section 6, as hereinbefore specified. City approval is a condition prior to initiation of contract work. However, if the City reasonably determines that the additional Actual Costs are excessive and that the value of the City Improvements is less than the total amount of such Actual Costs and such construction costs, the price to be paid for the acquisition of the City Improvements shall be the value thereof as determined by the Engineer, subject, however, to the Developer’s right to appeal to the City’s City Council. 13 Upon completion of the construction of a City Improvement that the Developer intends to fund from the City Improvement Account, the Developer shall deliver or cause to be delivered to the City a Disbursement Request Form in substantially the form of Exhibit “C,” attached hereto, copies of the contract(s) with the contractor(s) who have constructed the City Improvement and other relevant documentation with regard to the payments made to such contractor(s) and each of them for the construction of the City Improvement, documentation evidencing payment of prevailing wages, and shall also provide to the City invoices and purchase orders with respect to all equipment, materials and labor purchased for the construction of the City Improvements. The City shall require the Engineer to complete its determination of the acquisition price of the City Improvements as promptly as is reasonably possible.

Notwithstanding the preceding provisions of this Section, the source of funds for the acquisition of the City Improvements or any portion thereof shall be funds in the City Improvements Account. If for any reason beyond the City’s control the Bonds are not sold, the City shall not be required to acquire the City Improvements from the Developer, except to the extent of funds from the collection of Special Taxes. In such event, the Developer shall complete the design and construction and offer to the City ownership of such portions of the City Improvements as are required to be constructed by the Developer as a condition to recordation of subdivision maps for the Developer Property (but only at such times as required by such condition), but need not construct any portion of the City Improvements which it is not so required to construct. Reimbursement for these facilities would be made from the collection of Special Taxes.

In addition to the foregoing, the City shall have the right to withhold payment for acquisition of a City Improvement, if:
(a) the Developer or any of its affiliates is delinquent in the payment of any Special Taxes levied by the Community Facilities District on properties then owned by the Developer or any of its affiliates within the CFD, or
(b) the Developer is not then in substantial compliance with a condition or obligation imposed upon the Developer Property by the City, including but not limited to, payment of all applicable fees, dedication of all applicable rights-of-way or other property and construction requirements.

The City shall immediately provide written notice to the Developer of the decision to withhold any such payment and shall specify the reason for such decision. If the payment is withheld as a result of the delinquency in the payment of Special Taxes, the notice shall identify the delinquent parcels and the amount of such delinquency. If the payment is withheld as a result of substantial non-compliance with a condition or obligation, the notice shall specify such condition or obligation and what action will be necessary by the Developer to substantially comply with such condition or obligation. Upon receipt of evidence reasonably satisfactory to the City that the Developer has paid the delinquent Special Taxes or complied with the subject condition or obligation, the City shall forthwith make all payments which have been withheld pursuant to the provisions of this Section.

SECTION 9. EASEMENTS AND/OR FEE TITLE OWNERSHIP DEEDS
Without limiting the Developer’s rights to reimbursement for such grants pursuant to Section 9 above, the Developer shall, at the time the City acquires the City Improvements as provided in Section 9 hereof, grant or cause to be granted to the City, by appropriate instruments 14 prescribed by the City, all easements across private property and/or fee title ownership deeds which may be reasonably necessary for the proper operation and maintenance of such City Improvements, or any part thereof, but only to the extent located within the Developer Property.

SECTION 10. PERMITS
The Developer shall be responsible for obtaining all necessary construction permits from the City and/or the County (as appropriate) covering construction and installation of the City Improvement as to which the Acquisition Election has been made. If applicable, the City will request the County to issue an “operate and maintain permit” to the City, which will become effective upon the completion of the City Improvements and acceptance of ownership therewith by the City.

SECTION 11. MAINTENANCE
Prior to the transfer of ownership of a City Improvement by the Developer to the City, as provided in Section 9 hereof, the Developer shall be responsible for the maintenance thereof and shall require its contractor(s) to repair all facilities damaged by any party other than the City, prior to acceptance by the City and/or make corrections determined to be necessary by the City’s inspection personnel. The City shall not be permitted to place any City Improvement in service prior to acceptance of the same, unless the Developer otherwise consents in writing.

SECTION 12. INSPECTION OF RECORDS
The City shall have the right to review all books and records of the Developer pertaining to the costs and expenses incurred by the Developer for the design and construction of the City Improvements during normal business hours by making arrangements with the Developer. The Developer shall have the right to review all books and records of the City pertaining to costs and expenses incurred by the City for services of the Engineer by making arrangements with the City.

SECTION 13. OWNERSHIP OF IMPROVEMENTS
Notwithstanding the fact that some or all of the City Improvements may be constructed in dedicated street rights-of-way or on property which has been or will be dedicated to the City, each City Improvement shall be and remain the property of the Developer until acquired by the City as provided in this Agreement.

SECTION 14. MATERIALS AND WORKMANSHIP WARRANTY
The requirements of this Section shall not apply to any City Improvement that was complete (as determined by the City Council) prior to the adoption by the City Council of the resolution forming the CFD, but they shall apply to all other City Improvements.

Upon the completion of the acquisition of a City Improvement by the City, the performance bond related to such individual City Improvement provided by the Developer pursuant to Section

6.4(e) hereof, shall be reduced by 90%, and the remaining 10% shall serve as a maintenance bond to guarantee that such City Improvement will be free from defects due to faulty workmanship or materials for a period of one year.
15 SECTION 15. CITY FEE FACILITY IMPROVEMENTS
The Developer may be required pursuant to the conditions of development or the City’s development impact fee ordinance to pay certain City fees (the “City Fees”) relating to the City Fee Facility Improvements prior to the availability of proceeds of the Bonds to pay for such City Fee Facility Improvements. In the event such City Fees are paid prior to the availability of Bond proceeds, the amounts paid to the City shall be deemed to be deposits (each a “Deposit”) that are subject to refund by the City to the Developer in accordance with this Agreement. The City shall place each Deposit in a capital facilities account(s). If the Developer has made any Deposits to the City, then following deposit of Bond proceeds in the City Fee Facility Improvements Account, the City shall return to the Developer, from the capital account in which the Deposits were deposited an equal amount of the Deposits not previously returned, without interest or other earnings thereon. The City shall be so obligated to return such Deposits only to the extent that an equivalent amount of the Deposits to be returned is deposited in the City Fee Facility Improvements Account from Bond proceeds or Special Tax collections prior to the issuance of Bonds.

Bond proceeds used to finance City Improvements which relate to the City Fees shall be allocated first for return of all Deposits prior to being allocated to the payment of City Fees not previously deposited by the Developer. Any Deposits that have not been returned to the Developer at the time it is determined that there will be no further Bond proceeds available (i.e. the final series of Bonds to finance the Improvements have been issued) shall be retained by the City and may be used for the purposes for which the City Fee was required, and the unrefunded Deposits shall constitute full and final payment for such City Fees, without any increase of any kind.

SECTION 16. MISCELLANEOUS IMPROVEMENTS.

Improvements unrelated to the City Improvements and the City Fee Facility Improvements, if applicable, will be supplemented by the terms contained in an addendum which will appear as Exhibit “D” hereto. The amounts deposited in the applicable Miscellaneous Improvement Account(s), if any, will be disbursed for the acquisition or construction of Miscellaneous Improvements in accordance with the provisions in the applicable Joint Community Facilities Agreement, if any. Any amounts in the applicable Miscellaneous Improvement Account(s) shall be disbursed at the written direction of the City upon Developer’s submittal of a request for disbursement acceptable to the City. Upon receipt of the disbursement request, the City shall submit a written requisition for payment of the requested amount to the trustee for the Bonds, who shall directly pay the amount requested to the applicable entity.

SECTION 17. INDEPENDENT CONTRACTOR
In performing this Agreement, Developer is an independent contractor and not the agent of the City. The City shall not have any responsibility for payment to any contractor or supplier of Developer. It is not intended by the Parties that this Agreement create a partnership or joint venture among them and this Agreement shall not otherwise be construed.

SECTION 18. INDEMNIFICATION
Developer shall assume the defense of, indemnify and save harmless, the City, its officers, employees and agents, and the Community Facilities District, its officers, employees and agents, from and against all actions, damages, claims, losses or expenses of every type and description 16 to which they may be subject or put, by reason of, or resulting from such person’s or entity’s performance of its obligations under this Agreement, the issuance of the Bonds and the construction of the City Improvements and the Miscellaneous Improvements (provided, however, that such indemnification shall not apply to any City Improvement that the City constructs itself pursuant to Section 6.3 of this Agreement), the failure of the Developer to provide notice of the Special Tax to be levied by the Community Facilities District pursuant to Section 53341.5 of the Act (but only if the Developer is required by law to provide such notice), or arising out of any alleged misstatements of fact or alleged omission of a material fact made by the Developer, its officers, directors, employees or agents to the City, the Community Facilities District, the underwriter of the Bonds and its counsel, the appraiser, the special tax consultant, the market absorption consultant or bond counsel regarding the Developer, its proposed developments, its property ownership, and any contractual arrangement it may enter into in a disclosure document describing the Community Facilities District and the risks relating to the Bonds. No provision of this Agreement shall in any way limit the extent of Developer’s responsibility for payment of damages resulting from the operations of Developer and its contractors; provided, however that Developer shall not be required to assume the defense or indemnify and save harmless any person or entity as to actions, damages, claims, losses or expenses resulting from the breach of this Agreement, the negligence or willful misconduct of such person or entity or their officers, agents, consultants or employees.

SECTION 19. INSURANCE REQUIREMENTS
Neither the Developer nor its contractor shall commence work on a City Improvement under this Agreement prior to obtaining insurance with a company or companies acceptable to the City, nor shall the Developer’s contractor allow any subcontractor to commence work on its subcontract until all insurance required of the subcontractor has been obtained.

The Developer shall, during the life of this Agreement, notify the City in writing of any incident giving rise to any potential bodily injury or property damage claim and any resultant settlements, whether in conjunction with this or any other project which may affect the limits of the required coverage, as soon as is reasonable and practical.

SECTION 20. CONFLICT WITH OTHER AGREEMENTS
Except as specifically provided herein, nothing contained herein shall be construed as releasing Developer from any condition of development or requirement imposed by any other agreement with City. In the event of a conflicting provision, such other agreement shall prevail unless such conflicting provision is specifically waived or modified in writing by City.

SECTION 21. TERMINATION
The provisions of this Agreement related to the financing of the Improvements shall terminate and be of no further force or effect upon the earlier of (i) ten (10) years following the issuance of building permits for all dwelling units expected to be built within the Community Facilities District, (ii) the funding of all Improvements pursuant to this Agreement, or (iii) December 31, 2040. Notwithstanding the foregoing, this Agreement shall not terminate pursuant to (iii) of the previous sentence if, on December 31, 2040, all of the building permits within the Community Facilities District have been pulled, construction within the Community Facilities District, as contemplated by the parties hereto, is ongoing, and the Developer has not yet received a full return of all Deposits or full reimbursement for the Miscellaneous Improvements from Special Taxes.
17 SECTION 22. NOTICES
Any notice, payment or instrument required or permitted by this Agreement to be given or delivered to either Party shall be deemed to have been received when personally delivered or seventy-two (72) hours following deposit of the same in any United States Post Office in California, registered or certified, postage prepaid. Any notice to the Community Facilities District or the City shall be addressed to City of Lake Elsinore, 130 South Main Street, Lake Elsinore, CA 92530, Attention: City Manager. Any notice to Developer shall be addressed to Vista Emerald LLC, 1020 Second Street, Encinitas, CA 92024, Attention: Brett Crowder.

Each Party may change its address for delivery of notice by delivering written notice of such change of address to the other Party hereto.

SECTION 23. NO GIFT OR WAIVER.

23.1 No Gift or Waiver for City Improvements. The Developer and the City acknowledge that:
(a) The Developer or its predecessor may have constructed or may be constructing City Improvements before funds that will be used to acquire them are available with the expectation that the Developer will be reimbursed for such City Improvements to the extent and in the manner set forth in this Agreement.
(b) The City may inspect City Improvements and process Disbursement Request Forms even if funds from the proceeds of Bonds available at the time of such inspection and processing do not exist or are not then sufficient to satisfy the Disbursement Request in full.
(c) The Developer may convey City Improvements to the City and the City may accept such City Improvements even if funds from the proceeds of Bonds available at the time of such conveyance and acceptance do not exist or are not then sufficient to satisfy the Disbursement Request in full.
(d) If the City accepts City Improvements before a Disbursement Request is paid in full, the unpaid balance of the Disbursement Request will be paid from time to time, in any number of installments and irrespective of the length of time payment is deferred, as funds from the proceeds of Bonds become available.
(e) The Developer’s conveyance or dedication of City Improvements to the City before the availability of funds from the proceeds of Bonds to acquire the City Improvements is not, and shall not be deemed, a gift or a waiver of the Developer’s right to payment of the purchase price of such City Improvements pursuant to this Agreement.

23.2 No Gift or Waiver for City Fees. The Developer and the City acknowledge that:
(a) Prior to the availability of funds from the proceeds of Bonds, the Developer or its predecessor may have been or may be required to deposit funds to assure payment of applicable fees of the City.
18 (b) The Developer or its predecessor has deposited or will be depositing such funds with the expectation that the Developer will be reimbursed for these deposits to the extent and in the manner set forth in this Agreement.
(c) The reimbursement of such deposits pursuant to Section 16 of this Agreement may occur from time to time, in any number of installments and irrespective of the length of time payment is deferred, as funds become available. (d) The Developer’s deposit of such funds to the City before the availability of funds to reimburse the Developer is not, and shall not be deemed, a gift or a waiver of the Developer’s right to reimbursement of such deposits pursuant to this Agreement.

SECTION 24. GENERAL PROVISIONS
(a) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the City and the Developer and their respective heirs, executors, legal representatives, successors, and authorized assigns.
(b) Amendment. This Agreement may be amended at any time but only in writing signed by each Party hereto.
(c) Entire Agreement. This Agreement, and the agreements referenced herein, contains the entire understanding and agreement between the Parties with respect to the matters provided for herein and supersedes all prior agreements and negotiations between the Parties with respect to the subject matter of this Agreement. There are no oral or written representations, understanding, undertakings or agreements which are not contained or expressly referred to herein, and any such representations, understandings or agreements are superseded by this Agreement. This Agreement shall be binding upon, and enforceable by and against the Community Facilities District upon the establishment of the Community Facilities District.
(d) Exhibits. All exhibits attached hereto are incorporated into this Agreement by reference.
(e) Severability. If any part of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible. (f) Waiver. Failure by a Party to insist upon the strict performance of any of the provisions of this Agreement by the other parties hereto, or the failure by a Party to exercise its rights upon the default of another Party, shall not constitute a waiver of such party’s right to insist and demand strict compliance by such other Parties with the terms of this Agreement thereafter.
(g) No Third Party Beneficiaries. Except as provided explicitly in this Agreement, no person or entity shall be deemed to be a third party beneficiary hereof, and nothing in this Agreement (either express or implied) is intended to confer upon any person or entity, other than the City, the Community Facilities District, and Developer (and their respective successors and assigns), any rights, remedies, obligations or liabilities under or by reason of this Agreement.
19 (h) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute but one instrument. (i) Assignment. Developer may assign all or any of its rights pursuant to this Agreement to a purchaser of all or any portion of the Developer Property. Such a purchaser and assignee shall, as a condition to taking an assignment of such rights, enter into an assignment and assumption agreement with the City and Developer, in a form reasonably acceptable to Developer and the City, whereby such rights assigned are specified and such purchaser agrees, except as may be otherwise specifically provided therein, to assume the obligations of Developer pursuant to this Agreement and to be bound thereby. A company that acquires all of the assets of the Developer, including ownership of the Developer itself, shall be deemed a successor and shall not require an assignment or assumption agreement to be bound by, and enjoy the benefits of, this Agreement.
(j) Governing Law. This Agreement and any dispute arising hereunder shall be governed by and interpreted in accordance with the laws of the State of California. (k) Construction of Agreement. This Agreement has been reviewed by legal counsel for both the City and Developer and shall be deemed for all purposes to have been jointly drafted by the City and Developer. No presumption or rule that ambiguities shall be construed against the drafting Party shall apply to the interpretation or enforcement of this Agreement.
(l) Attorneys’ Fees. In the event of any action or proceeding, including an arbitration or a reference pursuant to Section 638, et seq., of the Code of Civil Procedure brought by any Party against any other under this Agreement, the prevailing Party shall be entitled to recover its actual attorneys’ fees and all fees, costs and expenses incurred for prosecution, defense, consultation, or advice in such action or proceeding. In addition to the foregoing, the prevailing Party shall be entitled to its actual attorneys’ fees and all fees, costs and expenses incurred in any post-judgment proceedings to collect or enforce the judgment.

This provision is separate and several and shall survive the merger of this Agreement into any judgment on this Agreement.
(m) Venue and Forum. Any action at law or in equity arising under this Agreement brought by any Party hereto for the purpose of enforcing, construing or determining the validity of any provision of this Agreement shall be filed and tried in the Superior Court of the County of Riverside, State of California, and the Parties waive all provisions of law providing for the filing, removal or change of venue to any other Court. (n) Entire Agreement. Except as provided in an addendum, which if applicable, will appear as Exhibit “E” hereto, this Agreement sets forth and contains the entire understanding and agreement of the Parties. There are no oral or written representations, understandings, undertaking or agreements, which are not contained or expressly referred to herein, and any such representations, understandings or agreements are superseded by this Agreement. No evidence of any such representations, understandings or agreements shall be admissible in any proceeding of any kind or nature relating to the terms or conditions of this Agreement, its interpretation or breach.

S-1
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and year written below.

Dated: , 2024 CITY OF LAKE ELSINORE, a political subdivision of the State of California
By:

City Manager
ATTEST:

By:

Candice Alvarez, MMC, City Clerk
APPROVED AS TO FORM:

CITY ATTORNEY OF THE CITY OF LAKE ELSINORE
By:

Barbara Z. Leibold, City Attorney
[SIGNATURES CONTINUED ON NEXT PAGE.]
S-2
[SIGNATURE PAGE CONTINUED]

VISTA EMERALD, LLC,
a California limited liability company
By:

Erin Crowder, Managing Member

LIST OF EXHIBITS

EXHIBIT A - DESCRIPTION OF DEVELOPER PROPERTY

EXHIBIT B - DESCRIPTION OF COST ESTIMATES

EXHIBIT C - DISBURSEMENT REQUEST FORM

EXHIBIT D - DESCRIPTION OF MISCELLANOUS IMPROVEMENTS

EXHIBIT E - ADDENDUM (IF APPLICABLE)
A-1

EXHIBIT A

DESCRIPTION OF DEVELOPER PROPERTY

LEGAL DESCRIPTION
Real property in the City of Lake Elsinore, County of Riverside, State of California, described as follows:

Riverside County Assessor Parcel Nos.:
370-050-019
370-050-020
370-050-032
B-1

EXHIBIT B

DESCRIPTION OF COST ESTIMATES
The Improvements consist of the City Improvements, as described below. Any other types of Improvements will be described in an addendum to this Agreement appearing as Exhibit “D.” I. CITY FEE FACILITY IMPROVEMENTS.

City facilities included in the City’s development fee programs used to finance expansion projects, exclusive of in-tract facilities constructed by a property owner, but including and not limited to the following.

Estimated Cost of the City Fee Facility Improvements
Description Estimated Cost
Park Facilities $ 305,600
Traffic Facilities 183,169
Library Facilities 28,650
City Hall & Public Works Facilities 77,164
Community Center Facilities 51,952
Lakeside/Marina Facilities 74,299
Animal Shelter Facilities 33,234
Fire Facilities 116,892
Storm Drainage Facilities 107,666
Other City Facilities 195,725
In-lieu Traffic Fees (Per COAs) 87,028
Total Fees $ 1,261,380
II. CITY IMPROVEMENTS.

Those facilities constructed by or on behalf of the Developer and needed by City in order to provide services to the Developer Property and also includes any of the following:

Estimated Cost of the City Improvements
Description Estimated Cost
Street Improvements (Mission Trail & Lemon) $ 684,297
Offsite Storm Drain Improvements (Mission Trails & Lemon) 646,838 Design, Planning, & Engineering (15%) 199,670
Total Improvements $ 1,530,805
C-1

EXHIBIT C
CFD NO. 2023-2 (COASTAL MISSION TRAILS)

OF THE CITY OF LAKE ELSINORE

DISBURSEMENT REQUEST FORM

1. Community Facilities District No. 2023-2 of the City of Lake Elsinore (Coastal Mission Trails) (the “CFD”) is hereby requested to pay from the ________________________ Account, or any applicable account or sub-account thereof, established by the CFD in connection with its 20__ Special Tax Bonds (the “Bonds”) to City of Lake Elsinore (the “City”) as payee, the sum set forth below:
$_____________________ (the Requested Amount”)

2. The Requested Amount represents the payment of City Fees for ___ lot(s) within the boundaries of the CFD (the “Property”).
(Tract No. __________, Lot Nos. ________________).

Or, City Improvements as supported by attached documentation.

3. The Requested Amount is due and payable, has not formed the basis of any prior request or disbursement.

4. The City, as payee, is hereby directing payment of the Requested Amount be payable to [INSERT COMPANY] (the “Developer”), pursuant to the wiring instructions attached hereto.

5. The Requested Amount is authorized and payable pursuant to the terms of the certain Acquisition, Construction and Funding Agreement (the “Agreement”) between the City of Lake Elsinore, acting for and on behalf of itself and the CFD and Developer.

6. Capitalized undefined terms used herein shall have the meaning ascribed to them in the Agreement.

D-2
Dated: [ DEVELOPER: ]
By:

Name:

Title:

Dated: CITY OF LAKE ELSINORE
By:

Its:
[ATTACH WIRING INSTRUCTIONS]
E-1

EXHIBIT D

DESCRIPTION AND COST ESTIMATES OF THE MISCELLANEOUS IMPROVEMENTS I. ELSINORE VALLEY MUNICIPAL WATER DISTRICT IMPROVEMENTS.

The construction, purchase, modification, expansion, rehabilitation and/or improvement of water and sewer facilities including the acquisition of capacity in the sewer system and/or water system of the Elsinore Valley Municipal Water District which are included in Elsinore Valley Municipal Water District’s water and sewer capacity and connection fee programs (the “Water Facilities”), and all appurtenances and appurtenant work in connection with the foregoing Water Facilities.

Estimated Cost of the Water District Improvements
Description Estimated Cost
Water Meter Fees (3/4” Meter) $3,143,096
Regional Sewer Fee 1,067,499
Landscape Meter Fee 109,324
Total Fees $ 4,319,919
Water Improvements $341,692
Design, Planning, & Engineering (15%) 51,254 Total Facilities $ 392,945
II. LAKE ELSINORE UNIFIED SCHOOL DISTRICT IMPROVEMENTS.

School facilities of the Lake Elsinore Unified School District (the “School District”) which are included in the School District’s school fee programs, including all costs of site acquisition, planning, design, engineering, legal services, materials testing, coordination, surveying, construction staking, construction inspection and any and all appurtenant facilities and appurtenant work relating to the foregoing.

Estimated Cost of the School District Improvements
Description Estimated Cost
School Facility Fees $ 2,211,532
Total Fees $ 2,211,532

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REPORT TO CITY COUNCIL
To:Honorable Mayor and Members of the City Council
From:Jason Simpson, City Manager
Prepared by:Rick De Santiago, Public Works Manager
Date:August 13, 2024
Subject:Notice of Completion on Citywide Annual Asphalt Maintenance and Repair, New Installation Program, and On-Call Emergency Construction Services (CIP Project #Z10002)
Recommendation
Accept the improvements and authorize the City Clerk to file the Notice of Completion with the County Recorder for Citywide Annual Asphalt Maintenance and Repair, New Installation Program, and On-Call Emergency Construction Services completed by NPG, Inc.

Background
The City Council approved a contract with NPG, Inc. for the work specified in the above reference.

All of the work has been completed per the plans for this project. The City has received final billing and invoicing, and the contractor has been paid in full.

Discussion
This contractor has completed the corresponding scope of work for the subject project.

Fiscal Impact
There is no fiscal impact.

Attachments
Attachment 1 - Notice of Completion
M S U PAGE SIZE DA PCOR NOCOR SMF MISC.

A R L COPY LONG REFUND NCHG EXAM

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

Name City of Lake Elsinore
Street 130 S. Main Street
Address
City & State Lake Elsinore CA 92530
SPACE ABOVE THIS LINE FOR RECORDER’S USE ONLY

NOTICE OF COMPLETION
Notice is hereby given that:

1. The undersigned is owner or corporate officer of the owner of the interest or estate stated below in the property hereinafter described:

2. The full name of the owner is City of Lake Elsinore

3. The full address of the owner is130 S. Main Street, Lake Elsinore, CA 92530

4. The nature of the interest or estate of the owner is in fee.

Citywide Annual Asphalt Maintenance and Repair, New Installation Program, and On-Call Emergency Construction (If other than fee, strike “in Fee” and insert, for example, “purchaser under contract of purchase,” or “lessee”)

5. The full names and full addresses of all persons, if any, who hold title with the undersigned as joint tenants or as tenants in common are:

NAMES ADDRESSES
None

6. A work of improvement on the property hereinafter described was completed on June 30, 2024 . The work done was:

Citywide The name of the contractor, if any, for such work of improvement was:

NPG, Inc. 1354 Jet Way Perris, Ca 92571 January 24, 2023 (If no contractor for work of improvement, insert “none”) (Date of Contract)

8. The property on which said work of improvement was completed is in the City of Lake Elsinore County of Riverside , State of California, and is described as follows: Serenity Park Fitness Trail ______________

9. The street address of said property is 130 S. Main Street Lake Elsinore, CA 92530 (If no street address has been officially assigned, insert “none”) Dated:

City Clerk: Candice Alvarez, MMC

VERIFICATION
I, the undersigned, say: I am the the declarant of the foregoing. (“President of,” “Manager of,” “A partner of,” “Owner of,” etc.) notice of completion; I have read said notice of completion and know the contents thereof; the same is true of my own knowledge. I declare under penalty of perjury that the foregoing is true and correct.

Executed on August 13 , 2024, at City of Lake Elsinore, California. (Date of signature) (City where signed)
(Personal s i gnature o f t h e i n d i v i d u a l w h o i s s w e a r i n g t h a t t h e c o n t e n t s o f t h e n o t i c e o f c o m p l e t i o n a r e t r u e)

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1. Approve and authorize the City Manager to execute a contractor services agreement with Cotter Construction Inc. for Serenity Park Fencing in a not-to-exceed amount of $62,000.00 as approved by the City Attorney; and

2. Authorize the City Manager to execute change orders not to exceed a 10% contingency amount of $6,200.00 for unanticipated costs.

Background
Staff have determined the need for fencing around Serenity Park to limit the access to only foot traffic and pedestrian use. Motorcycles are driven through the park, causing damage to equipment, landscape, and irrigation infrastructure. Also, this unfortunate situation creates an unsafe park condition for the citizens enjoying the park.

Discussion
The City has purchased all the fencing needed for this project, and the contractor shall install 2625 linear feet of fencing at the Serenity Park location. The general Scope of work includes the following elements:

Site preparation clear and grub Fence line only Minor Excavation Concrete fence pole concrete set Fence rails on Top and bottom Installation of 4 gates. The contractor is to remove any conflicting irrigation system if it is in the way.

On July 23, 2024, the request for proposal was posted in PlanetBids for installing the Serenity Park fencing. Five submittals were received for the fencing installation on or before the deadline of August 2, 2024. The amounts of each proposal are listed below:

Cotter Construction Serenity Park Fencing Agreement

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Name of Company Amount
Cotter Construction Inc. $ 62,000.00
Hemet Fence Corp $168,000.00
Harris Steel Fence Co. $278,588.25
J&A Fence $309,800.00
Aster Construction Services $338,658.00
Cotter Construction Inc. has provided the lowest, most responsible bid at $62,000.00 and is prepared to start work on the fencing installation immediately following the award of the contract.

Fiscal Impact
Funds are available in the Fiscal Year 2024-2025 operating budget.

Attachments
Attachment 1 - Agreement
Exhibit A - Proposal
Public Works
Attachment 1- Agreement .pdfPage 1

AGREEMENT FOR CONTRACTOR SERVICES
Cotter Construction Inc.

Serenity Park Fencing
This Agreement for Contractor Services (the “Agreement”) is made and entered into as of August 13, 2024, by and between the City of Lake Elsinore, a municipal corporation (‘‘City") and Cotter Construction Inc., a corporation ("Contractoor").

RECITALS
A. The City has determined that it requires the following contractor services:

Serenity Park Fencing Installation
B. Contractor has submitted to City a proposal, dated August 2, 2024, attached hereto as Exhibit A (“Contractor’s Proposal”) and incorporated herein, to provide contractor services to City pursuant to the terms of this Agreement.

C. Contractor possesses the skill, experience, ability, background, certification and knowledge to perform the services described in this Agreement on the terms and conditions described herein.

D. City desires to retain Contractor to perform the services as provided herein and Contractor desires to provide such contractor services as set forth in this Agreement.

AGREEMENT

1. Scope of Services. Contractor shall perform the services described in Contractor’s Proposal (Exhibit A). Contractor shall provide such services at the time, place, and in the manner specified in Contractor’s Proposal, subject to the direction of the City through its staff that it may provide from time to time.

2. Time of Performance.
a. Time of Essence. Time is of the essence in the performance of this Agreement. The time for completion of the professional services to be performed by Contractor is an essential condition of this Agreement. Contractor shall prosecute regularly and diligently the professional services contemplated pursuant to this Agreement according to the agreed upon performance schedule in Contractor’s Proposal (Exhibit A). b. Performance Schedule. Contractor shall commence the services pursuant to this Agreement upon receipt of a written notice to proceed and shall perform all services within the time period(s) established in the Contractor’s Proposal (Exhibit A). When requested by Contractor, extensions to the time period(s) specified may be approved in writing by the City Manager.

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7 c. Term. The term of this Agreement shall commence upon execution of this Agreement and shall continue until the services and related work are completed in accordance with the Contractor’s Proposal (Exhibit A).

3. Compensation. Compensation to be paid to Contractor shall be in accordance with the fees set forth in Contractors’ Proposal (Exhibit A), which is attached hereto and incorporated herein by reference. In no event shall Contractor’s compensation exceed sixty-two thousand dollars ($62,000.00) without additional written authorization from the City.

Notwithstanding any provision of Contractor’s Proposal to the contrary, out of pocket expenses set forth in Exhibit A shall be reimbursed at cost without an inflator or administrative charge.

Payment by City under this Agreement shall not be deemed a waiver of defects, even if such defects were known to the City at the time of payment.

4. Method of Payment. Contractor shall promptly submit billings to the City describing the services and related work performed during the preceding month to the extent that such services and related work were performed. Contractor’s bills shall be segregated by project task, if applicable, such that the City receives a separate accounting for work done on each individual task for which Contractor provides services. Contractor’s bills shall include a brief description of the services performed, the date the services were performed, the number of hours spent and by whom, and a description of any reimbursable expenditures. City shall pay Contractor no later than forty-five (45) days after receipt of the monthly invoice by City staff.

5. Background Checks. At any time during the term of this Agreement, the City reserves the right to make an independent investigation into the background of Contractor’s personnel who perform work required by this Agreement, including but not limited to their references, character, address history, past employment, education, social security number validation, and criminal or police records, for the purpose of confirming that such personnel are lawfully employed, qualified to provide the subject service or pose a risk to the safety of persons or property in and around the vicinity of where the services will be rendered or City Hall. If the City makes a reasonable determination that any of Contractor’s prospective or then current personnel is deemed objectionable, then the City may notify Contractor of the same. Contractor shall not use that personnel to perform work required by this Agreement, and if necessary, shall replace him or her with a suitable worker.

6. Suspension or Termination.
a. The City may at any time, for any reason, with or without cause, suspend or terminate this Agreement, or any portion hereof, by serving upon the Contractor at least ten (10) days prior written notice. Upon receipt of such notice, the Contractor shall immediately cease all work under this Agreement, unless the notice provides otherwise. If the City suspends or terminates a portion of this Agreement such suspension or termination shall not make void or invalidate the remainder of this Agreement.
b. In the event this Agreement is terminated pursuant to this Section, the City shall pay to Contractor the actual value of the work performed up to the time of termination, provided that the work performed is of value to the City. Upon termination of the Agreement pursuant to this Section, the Contractor will submit an invoice to the City, pursuant to Section entitled “Method of Payment” herein.

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7 7. Plans, Studies, Documents.
a. Ownership of Documents. All plans, studies, documents and other writings prepared by and for Contractor, its officers, employees and agents and subcontractors in the course of implementing this Agreement, except working notepad internal documents, shall become the property of the City upon payment to Contractor for such work, and the City shall have the sole right to use such materials in its discretion without further compensation to Contractor or to any other party. Contractor shall, at Contractor’s expense, provide such reports, plans, studies, documents and other writings to City upon written request. City shall have sole determination of the public’s rights to documents under the Public Records Act, and any third- party requests of Contractor shall be immediately referred to City, without any other actions by Contractor.
b. Licensing of Intellectual Property. This Agreement creates a nonexclusive and perpetual license for City to copy, use, modify, reuse, or sublicense any and all copyrights, designs, and other intellectual property embodied in plans, specifications, studies, drawings, estimates, and other documents or works of authorship fixed in any tangible medium of expression, including but not limited to, physical drawings or data magnetically or otherwise recorded on computer diskettes, which are prepared or caused to be prepared by Contractor under this Agreement ("Documents & Data"). Contractor shall require that all subcontractors agree in writing that City is granted a nonexclusive and perpetual license for any Documents & Data the subcontractor prepares under this Agreement. Contractor represents and warrants that Contractor has the legal right to license any and all Documents & Data. Contractor makes no such representation and warranty in regard to Documents & Data which were prepared by design professionals other than Contractor or provided to Contractor by the City. City shall not be limited in any way in its use of the Documents & Data at any time, provided that any such use not within the purposes intended by this Agreement shall be at City’s sole risk. c. Confidentiality. All ideas, memoranda, specifications, plans, procedures, drawings, descriptions, computer program data, input record data, written information, and other Documents & Data either created by or provided to Contractor in connection with the performance of this Agreement shall be held confidential by Contractor. Such materials shall not, without the prior written consent of City, be used by Contractor for any purposes other than the performance of the services under this Agreement. Nor shall such materials be disclosed to any person or entity not connected with the performance of the services under this Agreement. Nothing furnished to Contractor which is otherwise known to Contractor or is generally known, or has become known, to the related industry shall be deemed confidential. Contractor shall not use City’s name or insignia, photographs relating to project for which Contractor’s services are rendered, or any publicity pertaining to the Contractor’s services under this Agreement in any magazine, trade paper, newspaper, television or radio production or other similar medium without the prior written consent of City.

8. Contractor’s Books and Records.
a. Contractor shall maintain any and all ledgers, books of account, invoices, vouchers, canceled checks, and other records or documents evidencing or relating to charges for services, or expenditures and disbursements charged to City for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Contractor to this Agreement.

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7 b. Contractor shall maintain all documents and records which demonstrate performance under this Agreement for a minimum period of three (3) years, or for any longer period required by law, from the date of termination or completion of this Agreement. c. Any records or documents required to be maintained pursuant to this Agreement shall be made available for inspection or audit, at any time during regular business hours, upon written request by the City Manager, City Attorney, City Auditor or a designated representative of these officers. Copies of such documents shall be provided to the City for inspection at City Hall when it is practical to do so. Otherwise, unless an alternative is mutually agreed upon, the records shall be available at Contractor’s address indicated for receipt of notices in this Agreement.
d. Where City has reason to believe that such records or documents may be lost or discarded due to dissolution, disbandment or termination of Contractor’s business, City may, by written request by any of the above-named officers, require that custody of the records be given to the City and that the records and documents be maintained in City Hall. Access to such records and documents shall be granted to any party authorized by Contractor, Contractor’s representatives, or Contractor’s successor-in-interest.

9. Independent Contractor.
a. Contractor is and shall at all times remain as to the City a wholly independent contractor pursuant to California Labor Code Section 3353. The personnel performing the services under this Agreement on behalf of Contractor shall at all times be under Contractor’s exclusive direction and control. Neither City nor any of its officers, employees, or agents shall have control over the conduct of Contractor or any of Contractor’s officers, employees, or agents, except as set forth in this Agreement. Contractor shall not at any time or in any manner represent that it or any of its officers, employees, or agents are in any manner officers, employees, or agents of the City. Contractor shall not incur or have the power to incur any debt, obligation, or liability whatsoever against City, or bind City in any manner. b. Notwithstanding any other federal, state and local laws, codes, ordinances and regulations to the contrary and except for the fees paid to Contractor as provided in the Agreement, Contractor and any of its employees, agents, and subcontractors providing service under this Agreement shall not qualify for or become entitled to, and hereby agree to waive any claims to, any compensation, benefit, or any incident of employment by City, including but not limited to eligibility to enroll in PERS as an employee of City and entitlement to any contribution to be paid by City for employer contribution and/or employee contributions for PERS benefits.

10. PERS Eligibility Indemnification. In the event that Contractor or any employee, agent, or subcontractor of Contractor providing services under this Agreement claims or is determined by a court of competent jurisdiction or the California Public Employees Retirement System (PERS) to be eligible for enrollment in PERS as an employee of the City, Contractor shall indemnify, defend, and hold harmless City for the payment of any employee and/or employer contributions for PERS benefits on behalf of Contractor or its employees, agents, or subcontractors, as well as for the payment of any penalties and interest on such contributions, which would otherwise be the responsibility of City.

11. Interests of Contractor. Contractor (including principals, associates and professional employees) covenants and represents that it does not now have any investment or interest in real property and shall not acquire any interest, direct or indirect, in the area covered

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7 by this Agreement or any other source of income, interest in real property or investment which would be affected in any manner or degree by the performance of Contractor’s services hereunder. Contractor further covenants and represents that in the performance of its duties hereunder no person having any such interest shall perform any services under this Agreement.

Contractor is not a designated employee within the meaning of the Political Reform Act because Contractor:
a. will conduct research and arrive at conclusions with respect to his/her rendition of information, advice, recommendation or counsel independent of the control and direction of the City or of any City official, other than normal agreement monitoring; and b. possesses no authority with respect to any City decision beyond rendition of information, advice, recommendation or counsel. (FPPC Reg. 18700(a)(2).)

12. Professional Ability of Contractor. City has relied upon the professional training and ability of Contractor to perform the services hereunder as a material inducement to enter into this Agreement. Contractor shall therefore provide properly skilled professional and technical personnel to perform all services under this Agreement. All work performed by Contractor under this Agreement shall be in accordance with applicable legal requirements and shall meet the standard of quality ordinarily to be expected of competent professionals in Contractor’s field of expertise.

13. Compliance with Laws.
a. Contractor shall comply with all local, state and federal laws and regulations applicable to the services required hereunder, including any rule, regulation or bylaw governing the conduct or performance of Contractor and/or its employees, officers, or board members.
b. Contractor represents that it has obtained and will maintain at all times during the term of this Agreement all professional and/or business licenses, certifications and/or permits necessary for performing the services described in this Agreement, including a City business license.

14. Licenses. Contractor represents and warrants to City that it has the licenses, permits, qualifications, insurance and approvals of whatsoever nature which are legally required of Contractor to practice its profession. Contractor represents and warrants to City that Contractor shall, at its sole cost and expense, keep in effect or obtain at all times during the term of this Agreement, any licenses, permits, insurance and approvals which are legally required of Contractor to practice its profession. Contractor shall maintain a City of Lake Elsinore business license.

15. Indemnity. Contractor shall indemnify, defend, and hold harmless the City and its officials, officers, employees, agents, and volunteers from and against any and all losses, liability, claims, suits, actions, damages, and causes of action arising out of any personal injury, bodily injury, loss of life, or damage to property, or any violation of any federal, state, or municipal law or ordinance, to the extent caused, in whole or in part, by the willful misconduct or negligent acts or omissions of Contractor or its employees, subcontractors, or agents, by acts for which they could be held strictly liable, or by the quality or character of their work. The foregoing obligation of Contractor shall not apply when (1) the injury, loss of life, damage to property, or violation of

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7 law arises from the sole negligence or willful misconduct of the City or its officers, employees, agents, or volunteers and (2) the actions of Contractor or its employees, subcontractor, or agents have contributed in no part to the injury, loss of life, damage to property, or violation of law. It is understood that the duty of Contractor to indemnify and hold harmless includes the duty to defend as set forth in Section 2778 of the California Civil Code. Acceptance by City of insurance certificates and endorsements required under this Agreement does not relieve Contractor from liability under this indemnification and hold harmless clause. This indemnification and hold harmless clause shall apply to any damages or claims for damages whether or not such insurance policies shall have been determined to apply. By execution of this Agreement, Contractor acknowledges and agrees to the provisions of this Section and that it is a material element of consideration.

16. Insurance Requirements.
a. Insurance. Contractor, at Contractor’s own cost and expense, shall procure and maintain, for the duration of the contract, unless modified by the City’s Risk Manager, the following insurance policies.
i. Workers’ Compensation Coverage. Contractor shall maintain Workers’ Compensation Insurance and Employer’s Liability Insurance for his/her employees in accordance with the laws of the State of California. In addition, Contractor shall require each subcontractor to similarly maintain Workers’ Compensation Insurance and Employer’s Liability Insurance in accordance with the laws of the State of California for all of the subcontractor’s employees. Any notice of cancellation or non-renewal of all Workers’ Compensation policies must be received by the City at least thirty (30) days prior to such change. The insurer shall agree to waive all rights of subrogation against City, its officers, agents, employees and volunteers for losses arising from work performed by Contractor for City. In the event that Contractor is exempt from Worker’s Compensation Insurance and Employer’s Liability Insurance for his/her employees in accordance with the laws of the State of California, Contractor shall submit to the City a Certificate of Exemption from Workers Compensation Insurance in a form approved by the City Attorney.
ii. General Liability Coverage. Contractor shall maintain commercial general liability insurance in an amount not less than one million dollars ($1,000,000) per occurrence for bodily injury, personal injury and property damage. If a commercial general liability insurance form or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the work to be performed under this Agreement or the general aggregate limit shall be at least twice the required occurrence limit. Required commercial general liability coverage shall be at least as broad as Insurance Services Office Commercial General Liability occurrence form CG 0001 (ed. 11/88) or Insurance Services Office form number GL 0002 (ed. 1/73) covering comprehensive General Liability and Insurance Services Office form number GL 0404 covering Broad Form Comprehensive General Liability. No endorsement may be attached limiting the coverage.

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7 iii. Automobile Liability Coverage. Contractor shall maintain automobile liability insurance covering bodily injury and property damage for all activities of the Contractor arising out of or in connection with the work to be performed under this Agreement, including coverage for owned, hired and non-owned vehicles, in an amount of not less than one million dollars ($1,000,000) combined single limit for each occurrence.

Automobile liability coverage must be at least as broad as Insurance Services Office Automobile Liability form CA 0001 (ed. 12/90) Code 1 (“any auto”). No endorsement may be attached limiting the coverage.
iv. Professional Liability Coverage. Contractor shall maintain professional errors and omissions liability insurance appropriate for Contractor’s profession for protection against claims alleging negligent acts, errors or omissions which may arise from Contractor’s services under this Agreement, whether such services are provided by the Contractor or by its employees, subcontractors, or sub consultants. The amount of this insurance shall not be less than one million dollars ($1,000,000) on a claims-made annual aggregate basis, or a combined single limit per occurrence basis. b. Endorsements. Each general liability and automobile liability insurance policy shall be with insurers possessing a Best’s rating of no less than A:VII and shall be endorsed with the following specific language:
i. Notwithstanding any inconsistent statement in any required insurance policies or any subsequent endorsements attached thereto, the protection offered by all policies, except for Workers’ Compensation, shall bear an endorsement whereby it is provided that, the City and its officers, employees, servants, volunteers and agents and independent contractors, including without limitation, the City Manager and City Attorney, are named as additional insureds. Additional insureds shall be entitled to the full benefit of all insurance policies in the same manner and to the same extent as any other insureds and there shall be no limitation to the benefits conferred upon them other than policy limits to coverages.
ii. This policy shall be considered primary insurance as respects the City, its elected or appointed officers, officials, employees, agents and volunteers.

Any insurance maintained by the City, including any self-insured retention the City may have, shall be considered excess insurance only and shall not contribute with it. iii. This insurance shall act for each insured and additional insured as though a separate policy had been written for each, except with respect to the limits of liability of the insuring company.
iv. The insurer waives all rights of subrogation against the City, its elected or appointed officers, officials, employees or agents. v. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to the City, its elected or appointed officers, officials, employees, agents or volunteers.
vi. The insurance provided by this Policy shall not be suspended, voided, canceled, or reduced in coverage or in limits except after thirty (30) days written notice has been received by the City.

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7 c. Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions must be declared to and approved by the City. At the City’s option, Contractor shall demonstrate financial capability for payment of such deductibles or self-insured retentions. d. Certificates of Insurance. Contractor shall provide certificates of insurance with original endorsements to City as evidence of the insurance coverage required herein.

Certificates of such insurance shall be filed with the City on or before commencement of performance of this Agreement. Current certification of insurance shall be kept on file with the City at all times during the term of this Agreement.

17. Notices. Any notice required to be given under this Agreement shall be in writing and either served personally or sent prepaid, first class mail. Any such notice shall be addressed to the other party at the address set forth below. Notice shall be deemed communicated within 48 hours from the time of mailing if mailed as provided in this section.

If to City: City of Lake Elsinore
Attn: City Manager
130 South Main Street
Lake Elsinore, CA 92530
With a copy to: City of Lake Elsinore
Attn: City Clerk
130 South Main Street
Lake Elsinore, CA 92530
If to Contractor: Cotter Construction Company
Attn: Andrew Cotter
29903 Gulf Stream Dr
Canyon Lake, CA 92587-7468

18. Assignment and Subcontracting. The parties recognize that a substantial inducement to City for entering into this Agreement is the professional reputation, experience and competence of Contractor and the subcontractors listed in Exhibit B. Contractor shall be fully responsible to City for all acts or omissions of any subcontractors. Assignments of any or all rights, duties or obligations of the Contractor under this Agreement will be permitted only with the express consent of the City. Contractor shall not subcontract any portion of the work to be performed under this Agreement except as provided in Exhibit B without the written authorization of the City. If City consents to such subcontract, Contractor shall be fully responsible to City for all acts or omissions of those subcontractors. Nothing in this Agreement shall create any contractual relationship between City and any subcontractor nor shall it create any obligation on the part of the City to pay or to see to the payment of any monies due to any such subcontractor other than as otherwise is required by law.

19. Waiver. Waiver of a breach or default under this Agreement shall not constitute a continuing waiver of a subsequent breach of the same or any other provision under this Agreement.

20. Litigation Expenses and Attorneys’ Fees. If either party to this Agreement commences any legal action against the other party arising out of this Agreement, the prevailing party shall be entitled to recover its reasonable litigation expenses, including court costs, expert witness fees, discovery expenses, and attorneys’ fees.

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7 21. Mediation. The parties agree to make a good faith attempt to resolve any disputes arising out of this Agreement through mediation prior to commencing litigation. The parties shall mutually agree upon the mediator and share the costs of mediation equally. If the parties are unable to agree upon a mediator, the dispute shall be submitted to JAMS or its successor in interest. JAMS shall provide the parties with the names of five qualified mediators. Each party shall have the option to strike two of the five mediators selected by JAMS and thereafter the mediator remaining shall hear the dispute. If the dispute remains unresolved after mediation, either party may commence litigation.

22. Prohibited Interests. Contractor maintains and warrants that it has not employed nor retained any company or person, other than a bona fide employee working solely for Contractor, to solicit or secure this Agreement. Further, Contractor warrants that it has not paid nor has it agreed to pay any company or person, other than a bona fide employee working solely for Contractor, any fee, commission, percentage, brokerage fee, gift or other consideration contingent upon or resulting from the award or making of this Agreement. For breach or violation of this warranty, City shall have the right to rescind this Agreement without liability. For the term of this Agreement, no member, officer or employee of City, during the term of his or her service with City, shall have any direct interest in this Agreement, or obtain any present or anticipated material benefit arising therefrom.

23. Equal Opportunity Employment. Contractor represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. Such non-discrimination shall include, but not be limited to, all activities related to initial employment, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff or termination.

24. Prevailing Wages. Contractor is aware of the requirements of California Labor Code Section 1720, et seq., and 1770, et seq., as well as California Code of Regulations, Title 8, Section 16000, et seq., ("Prevailing Wage Laws"), which require the payment of prevailing wage rates and the performance of other requirements on "public works" and "maintenance" projects.

Contractor agrees to fully comply with all applicable federal and state labor laws (including, without limitation, if applicable, the Prevailing Wage Laws). It is agreed by the parties that, in connection with the Work or Services provided pursuant to this Agreement, Contractor shall bear all risks of payment or non-payment of prevailing wages under California law, and Contractor hereby agrees to defend, indemnify, and hold the City, and its officials, officers, employees, agents, and volunteers, free and harmless from any claim or liability arising out of any failure or alleged failure to comply with the Prevailing Wage Laws. The foregoing indemnity shall survive termination of this Agreement.

25. Severability. If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect.

26. Controlling Law Venue. This Agreement and all matters relating to it shall be governed by the laws of the State of California and any action brought relating to this Agreement shall be held exclusively in a state court in the County of Riverside.

27. Authority to Enter Agreement. Contractor has all requisite power and authority to conduct its business and to execute, deliver, and perform the Agreement. Each party warrants that the individuals who have signed this Agreement have the legal power, right, and authority to

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7 make this Agreement and to bind each respective party. The City Manager is authorized to enter into an amendment or otherwise take action on behalf of the City to make the following modifications to the Agreement: (a) a name change; (b) grant extensions of time; (c) non- monetary changes in the scope of services; and/or (d) suspend or terminate the Agreement.

28. Counterparts. This Agreement may be executed in several counterparts, each of which shall constitute one and the same instrument and shall become binding upon the parties when at least one copy hereof shall have been signed by both parties hereto. In approving this Agreement, it shall not be necessary to produce or account for more than one such counterpart.

29. Entire Agreement; Incorporation; Conflict. This Agreement contains the entire understanding between the parties relating to the obligations described herein. All prior or contemporaneous understandings, agreements, representations and statements, oral or written, are superseded in total by this Agreement and shall be of no further force or effect. Contractor’s Proposal is incorporated only for the description of the scope of services and/or the schedule of performance and no other terms and conditions from such proposal shall apply to this Agreement unless specifically agreed to in writing. In the event of conflict, this Agreement shall take precedence over those contained in the Contractor’s Proposal.

30. Amendments. This Agreement may be modified or amended only by a written document executed by both Contractor and City and approved as to form by the City Attorney. [Signatures on next page]

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7 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the date first written above.
“CITY”
CITY OF LAKE ELSINORE, a municipal
corporation
City Manager
ATTEST:

City Clerk
APPROVED AS TO FORM:

City Attorney
Assistant City Manager
“CONTRACTOR”
Cotter Construction Inc., a corporation
By: Andrew Cotter
Its: Owner
Attachments: Exhibit A – Contractor’s Proposal
Exhibit B – List of Subcontractors

EXHIBIT A

EXHIBIT A
CONTRACTOR’S PROPOSAL
[ATTACHED]

EXHIBIT B

LIST OF SUBCONTRACTORS
[ATTACHED]
City of Lake Elsinore
Fence Installation at Serenity Park, bidding on 08/02/2024 2:00 PM (PDT)

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Printed 08/05/2024
PlanetBids
City of Lake Elsinore
Fence Installation at Serenity Park, bidding on 08/02/2024 2:00 PM (PDT)

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Printed 08/05/2024
PlanetBids
City of Lake Elsinore
Fence Installation at Serenity Park, bidding on 08/02/2024 2:00 PM (PDT)

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Printed 08/05/2024
PlanetBids
City of Lake Elsinore
Fence Installation at Serenity Park, bidding on 08/02/2024 2:00 PM (PDT)

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Printed 08/05/2024
PlanetBids

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REPORT TO SUCCESSOR AGENCY
To:Honorable Chair and Members of the Successor Agency
From:Jason Simpson, Executive Director
Prepared by:Candice Alvarez, MMC, Secretary
Date:August 13, 2024
Subject:Minutes of the Regular Successor Agency Meeting of July 23, 2024 Recommendation
Approve the Minutes.

Attachments
Attachment 1- Draft Minutes
City Clerk’s Office

City of Lake Elsinore
City Council Meeting
Minutes – Draft

Steve Manos, Mayor
Brian Tisdale, Mayor Pro Tem
Timothy J. Sheridan, Council Member
Natasha Johnson, Council Member
Robert E. Magee, Council Member
Jason Simpson, City Manager
Meeting Date:

July 23, 2024

Closed Session: 5:00 PM
Public Session: 7:00 PM

Cultural Center
183 N. Main Street
Lake Elsinore, CA 92530

CALL TO ORDER

The Regular Meeting of the City Council was called to order at 5:00 p.m.

ROLL CALL

Present: 5 - Council Members Sheridan, Johnson, and Magee; Mayor Pro Tem Tisdale; and Mayor Manos

Absent: 0 - None

PUBLIC COMMENTS FOR CLOSED SESSION ITEMS

There were no speakers.

CLOSED SESSION.

A. CONFERENCE WITH LEGAL COUNSEL--ANTICIPATED LITIGATION

Significant exposure to litigation pursuant to paragraph (2) of subdivision (d) of Gov’t Code Section 54956.9: 2 potential cases

B. CONFERENCE WITH REAL PROPERTY NEGOTIATORS

C. CONFERENCE WITH REAL PROPERTY NEGOTIATOR

City Council Minutes - Draft July 23, 2024

City of Lake Elsinore Page 2

D. CONFERENCE WITH REAL PROPERTY NEGOTIATOR

E. CONFERENCE WITH REAL PROPERTY NEGOTIATOR

F. CONFERENCE WITH REAL PROPERTY NEGOTIATOR

G. CONFERENCE WITH REAL PROPERTY NEGOTIATOR

H. CONFERENCE WITH REAL PROPERTY NEGOTIATOR

RECONVENE/CALL TO ORDER

The Regular Meeting of the City Council reconvened and the Regular Meeting of the Successor Agency was called to order at 7:00 p.m.

PLEDGE OF ALLEGIANCE

Mayor Pro Tem Tisdale led the Pledge of Allegiance.

City Council Minutes - Draft July 23, 2024

City of Lake Elsinore Page 3

ROLL CALL

Present: 5 - Council/Agency Members Sheridan, Johnson, and Magee; Mayor Pro Tem/Vice Chair Tisdale; and Mayor/Chair Manos

Absent: 0 - None

CLOSED SESSION REPORT

City Attorney Leibold reported that all items were discussed; however, no reportable action was taken.

PRESENTATIONS/CEREMONIALS

1) Certificates of Appreciation from Rice Canyon Elementary School PTA

This item was rescheduled to the next Regular City Council meeting on August 13, 2024.

2) Calfire 2024 Second Quarter Statistical Update

Chief Olson presented the update.

PUBLIC COMMENTS - NON-AGENDIZED ITEMS - 1 MINUTE

Rita Wilsey was called to speak.

Pam Eriser was called to speak.

Ace Vallejos was called to speak.

CITY COUNCIL CONSENT CALENDAR

Aye: 5 Council Members Sheridan, Johnson, and Magee; Mayor Pro Tem Tisdale; and Mayor Manos
Nay: 0 None

3) Minutes of the Regular City Council Meeting of July 9, 2024

Approve the Minutes.

This item was approved on the City Council Consent Calendar.

4) CC Warrant Report Dated June 24, 2024 to June 30, 2024

Receive and file.

This item was approved on the City Council Consent Calendar.

City Council Minutes - Draft July 23, 2024

City of Lake Elsinore Page 4

5) CC Warrant Report Dated July 01, 2024 to July 07, 2024

Receive and file.

This item was approved on the City Council Consent Calendar.

6) CC Warrant Report Dated July 08, 2024 to July 14, 2024

Receive and file.

This item was approved on the City Council Consent Calendar.

7) CC Investment Report for June 2024

Receive and file the Investment Report for June 2024.

This item was approved on the City Council Consent Calendar.

Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE,

CALIFORNIA, ACTING AS HOUSING SUCCESSOR TO THE FORMER

REDEVELOPMENT AGENCY, APPROVING A CONSTRUCTION BUDGET, AN

ARPA LOAN AGREEMENT WITH RIVERSIDE COUNTY AND THE EXPENDITURE OF UP TO $3,687,500 FROM THE CITY’S LOW AND MODERATE INCOME

HOUSING ASSET FUND (LMIHAF) FOR CONSTRUCTION AND DEVELOPMENT OF THE MARY McDONALD RILEY STREET SENIOR APARTMENTS PROJECT

AND MAKING CERTAIN FINDINGS IN CONNECTION THEREWITH INCLUDING APPROVAL OF LONG-TERM USE AND AFFORDABILITY COVENANTS.

This item was approved on the City Council Consent Calendar.

9) Purchase of Vacant Real Property for Open Space/Habitat Preservation Purposes (APN 371-100-015) for $206,041.76 Plus Closing Costs

This item was approved on the City Council Consent Calendar.

City Council Minutes - Draft July 23, 2024

City of Lake Elsinore Page 5

10) Agreement With American Lady Vet Services for Annual Lake Maintenance and Liquid Algaecide Treatment

This item was approved on the City Council Consent Calendar.

11) Professional Services Agreement with Kimley-Horn and Associates, Inc. for Environmental Documentation for the Riverside Drive Apartments Project.

This item was approved on the City Council Consent Calendar.

12) Reimbursement Agreement with Pulte Homes for Pavement Improvements

This item was approved on the City Council Consent Calendar.

13) Final Map 38116, Lakeside

1. Approve Final Map 38116 subject to the City Engineer’s acceptance as being true and correct;

2. Authorize the City Clerk to sign the map and arrange for recordation of Final Map 38116; and

3. Authorize the City Manager to execute the Construction Agreements for Street Improvements and Monumentation.

This item was removed from the City Council Consent Calendar for discussion.

14) Grant of Easement to Southern California Edison near Lake Street

Approve and authorize City Manager to process the easement documents and instruct staff to forward the documents to Southern California Edison for recordation.

This item was approved on the City Council Consent Calendar.

City Council Minutes - Draft July 23, 2024

City of Lake Elsinore Page 6

15) Professional Services Agreement to Provide Plan Check of Temescal Canyon Road Realignment Segment C Design

This item was approved on the City Council Consent Calendar.

16) Notice of Completion for Serenity Park Fitness Trail

Accept the improvements for the Serenity Park Fitness Trail project completed by Cotter Construction and authorize the City Clerk to file the Notice of Completion with the County Recorder.

This item was approved on the City Council Consent Calendar.

17) Amendment No. 1 to the Agreement for Contractor Services with Prudential Overall Supply for Additional Employee Uniform, Shop Towels, and Logo Mat Services

This item was approved on the City Council Consent Calendar.

18) Amendment No. 1 to the Agreement for Contractor Services with Safety-Kleen Systems, Inc. for Additional Environmental Services

This item was approved on the City Council Consent Calendar.

ITEM REMOVED FROM THE CITY COUNCIL CONSENT CALENDAR FOR DISCUSSION

13) Final Map 38116, Lakeside

1. Approve Final Map 38116 subject to the City Engineer’s acceptance as being true and correct;

2. Authorize the City Clerk to sign the map and arrange for recordation of Final Map 38116; and

3. Authorize the City Manager to execute the Construction Agreements for Street Improvements and Monumentation.

City Council Minutes - Draft July 23, 2024

City of Lake Elsinore Page 7

Ted Griswold was called to speak.

Joseph Ontiveros was called to speak.

Michele Staples was called to speak.

Brian Ortwein was called to speak.

A motion was made by Mayor Pro Tem Tisdale, seconded by Council Member Magee to continue the item to the Regular City C ouncil meeting on August 27, 2024. The motion carried by the following vote:

Aye: 5 Council Members Sheridan, Johnson, and Magee; Mayor Pro Tem Tisdale; and Mayor Manos
Nay: 0 None

SUCCESSOR AGENCY CONSENT CALENDAR

A motion was made by Agency Member Johnson, seconded by Agency Member Magee to approve the Successor Agency Consent Calendar. The motion carried by the following vote:

Aye: 5 Agency Members Sheridan, Johnson, and Magee; Vice Chair Tisdale; and Chair Manos
Nay: 0 None

19) Minutes of the Regular Successor Agency Meeting of July 9, 2024

Approve the Minutes.

This item was approved on the Successor Agency Consent Calendar.

20) SA Warrant Report Dated June 24, 2024 to June 30, 2024

Receive and file.

This item was approved on the Successor Agency Consent Calendar.

21) SA Warrant Report Dated July 01, 2024 to July 07, 2024

Receive and file.

This item was approved on the Successor Agency Consent Calendar.

22) SA Warrant Report Dated July 08, 2024 to July 14, 2024

Receive and File.

This item was approved on the Successor Agency Consent Calendar.

City Council Minutes - Draft July 23, 2024

City of Lake Elsinore Page 8

23) SA Investment Report for June 2024

Receive and file the Investment Report for June 2024.

This item was approved on the Successor Agency Consent Calendar.

24) On-call and Construction Contractor Services Agreement in Support of Successor Agency of the Redevelopment Agency of the Agency of Lake Elsinore Minor Construction, Maintenance, and Operations

This item was approved on the Successor Agency Consent Calendar.

PUBLIC COMMENTS - NON-AGENDIZED ITEMS - THREE MINUTES

Alex Kowalkoski was called to speak.

CITY ATTORNEY COMMENTS

City Attorney Leibold had no comments.

CITY MANAGER'S COMMENTS

City Manager Simpson had no comments.

CITY COUNCIL COMMENTS/REPORTS ON MEETINGS ATTENDED

Council Member Sheridan noted that the Riverside Transit Agency Board of Directors does not meet in July.

Mayor Pro Tem Tisdale encouraged residents to vote.

City Council Minutes - Draft July 23, 2024

City of Lake Elsinore Page 9

ADJOURNMENT

Page 1 of 1 ends

REPORT TO SUCCESSOR AGENCY OF THE

REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE
To:Honorable Agency Chair and Members of the Successor Agency From:Jason Simpson, Executive Director
Prepared by:Shannon Buckley, Assistant Executive Director Date:August 13, 2024
Subject:SA Warrant Report Dated July 15, 2024 to July 21, 2024 Recommendation
Receive and file.

Discussion
The Warrant Report lists all general checks issued for the Successors Agency of the Redevelopment Agency of the City of Lake Elsinore for the abovementioned period.

Attachments
Attachment 1 – SA Warrant Summary
Attachment 2 – SA Warrant Listing
JULY 15, 2024 TO JULY 21, 2024 CITY OF LAKE ELSINORE SA WARRANT SUMMARY FUND NO. FUND DESCRIPTION TOTAL
540 SARDA DIAMOND STADIUM 13,634.28 $
GRAND TOTAL 13,634.28 $
Attachment 1 1 OF 1
JULY 15, 2024 TO JULY 21, 2024 CITY OF LAKE ELSINORE SA WARRANT LIST WARRANT NO. VENDOR NAME AMOUNT
7254 AK SECURITY ALARM LLC 150.00 $
7267 ENDRESEN DEVELOPMENT, INC. 13,706.51
APA25000093 CED LAGUNA (222.23)
GRAND TOTAL 13,634.28 $
Attachment 2 1 OF 1

Page 1 of 1 ends

REPORT TO SUCCESSOR AGENCY OF THE

REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE
To:Honorable Agency Chair and Members of the Successor Agency From:Jason Simpson, Executive Director
Prepared by:Shannon Buckley, Assistant Executive Director Date:August 13, 2024
Subject:SA Warrant Report Dated July 22, 2024 to July 28, 2024 Recommendation
Receive and File.

Discussion
The Warrant Report lists all general checks issued for the Successors Agency of the Redevelopment Agency of the City of Lake Elsinore for the abovementioned period.

Attachments
Attachment 1 – SA Warrant Summary
Attachment 2 – SA Warrant Listing
JULY 22, 2024 TO JULY 28, 2024 CITY OF LAKE ELSINORE SA WARRANT SUMMARY FUND NO. FUND DESCRIPTION TOTAL
540 SARDA DIAMOND STADIUM 11,310.00 $
GRAND TOTAL 11,310.00 $
Attachment 1 1 OF 1
JULY 22, 2024 TO JULY 28, 2024 CITY OF LAKE ELSINORE SA WARRANT LIST WARRANT NO. VENDOR NAME AMOUNT
APA25000164 SOUTH COAST LIGHTING & DESIGN, INC. 11,310.00$ GRAND TOTAL 11,310.00 $
Attachment 2 1 OF 1

Page 1 of 1 ends

REPORT TO SUCCESSOR AGENCY OF THE

REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE
To:Honorable Agency Chair and Members of the Successor Agency From:Jason Simpson, Executive Director
Prepared by:Shannon Buckley, Assistant Executive Director Date:August 13, 2024
Subject:SA Warrant Report Dated July 29, 2024 to August 5, 2024 Recommendation
Receive and File.

Discussion
The Warrant Report lists all general checks issued for the Successors Agency of the Redevelopment Agency of the City of Lake Elsinore for the above mentioned period.

Attachments
Attachment 1 – SA Warrant Summary
Attachment 2 – SA Warrant Listing
JUL 29, 2024 TO AUG 4, 2024 CITY OF LAKE ELSINORE SA WARRANT SUMMARY FUND NO. FUND DESCRIPTION TOTAL
510 SARDA AREA I, II, & III 96,784.25 $
540 SARDA DIAMOND STADIUM 168.91
GRAND TOTAL 96,953.16 $
Attachment 1 1 OF 1
JUL 29, 2024 TO AUG 4, 2024 CITY OF LAKE ELSINORE SA WARRANT LIST WARRANT NO. VENDOR NAME AMOUNT
APA25000203 LAKE ELSINORE STORM, LP 96,784.25 $
APA25000215 SOUTHERN CALIFORNIA EDISON CO. 168.91
GRAND TOTAL 96,953.16 $
Attachment 2 1 OF 1

Page 1 of 4 ends

REPORT TO CITY COUNCIL
To:Honorable Mayor and Members of the City Council
From:Jason Simpson, City Manager
Prepared by:Shannon Buckley, Assistant City Manager
Date:August 13, 2024
Subject:Community Facilities District No. 2019-2 (Nichols Ranch) Special Tax Bonds, Series 2024
Recommendation
Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE,

CALIFORNIA, ACTING AS THE LEGISLATIVE BODY OF THE CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2019-2 (NICHOLS RANCH) AUTHORIZING THE ISSUANCE OF ITS SPECIAL TAX BONDS, SERIES 2024 IN A PRINCIPAL AMOUNT NOT TO EXCEED EIGHT MILLION FIVE HUNDRED THOUSAND DOLLARS ($8,500,000) AND

APPROVING CERTAIN DOCUMENTS AND TAKING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH.

Background
The City of Lake Elsinore (the “City”) formed the City of Lake Elsinore Community Facilities District No. 2019-2 (Nichols Ranch) (the “District”) in 2019 according to the Mello-Roos Community Facilities District Act of 1982, as amended.

The District contains approximately 58.19 gross acres and is in the City on the southeast quadrant of Interstate 15 and Nichols Road, adjacent to the Temescal Valley High School. The property Developer within the District is Meritage Homes of California (“Meritage”). Meritage is marketing the project as “Nichols Ranch.”
CFD No. 2019-2 (Nichols Ranch)

Page 2 of 4 ends

The property within the District is planned for 168 single-family detached homes. As of July 1, 2024, Meritage had completed and conveyed 83 homes within the District to individual homeowners, and as of such date, Meritage owned four model homes, 49 homes in various stages of construction, and 32 finished lots. Meritage expects to complete and convey all homes planned within the District to individual homeowners by the end of 2025. The development and ownership status of the planned homes within the District as of July 1, 2024, is shown in the table below.

Ownership and Development Summary (July 1, 2024)
Parcels In Escrow
Individually Owned
Completed 83 --
Developer Owned
Model Homes 4 --
Under Construction 49 16
Finished Lots
Subtotal
32 85
--
16 TOTAL 168 16
The Resolution before the City Council authorizes the issuance of special tax bonds (the “2024 Special Tax Bonds”) to finance the costs of construction of City facilities, including but not limited to public improvements to be owned by the city and water and sewer facilities to be owned and operated by the Elsinore Valley Municipal Water District. The Resolution also authorizes the approval and execution of certain documents described on the following pages.

Discussion
The proposed 2024 Special Tax Bonds are estimated to be issued in the principal amount of approximately $7.815 million with a final maturity of September 1, 2054. The final structure and payment schedule will be determined when the 2024 Special Tax Bonds are priced and sold, which is expected to be in late August 2024. The bond closing is expected to occur approximately two weeks after pricing the 2024 Special Tax Bonds. The table below highlights preliminary financing statistics of the 2024 Special Tax Bonds based on current market conditions.

Summary of Financing Statistics¹
2024 Special Tax Bonds
Par Amount $7,815,000
True Interest Rate 5.01%
Estimated Cost to Homeowners
FY 2024-25 Assessment² $2,596 - $3,118
The Fiscal Year 2024-25 estimated Special Tax levy on homes within the District ranges between $2,596 to $3,118, depending on the size of the home. Such rates will increase by 2.0% per year.

CFD No. 2019-2 (Nichols Ranch)

Page 3 of 4 ends

Given the level of development noted above and under the City policy, Meritage will provide a Letter of Credit that the District may draw upon to cover payment of special taxes levied on property owned by Meritage. The initial term of the Letter of Credit is one year and will be renewed each year until specific development and conveyance thresholds are met.

As required under Section 5852.1 of the California Government Code, the good faith estimates provided by the Municipal Advisor and Underwriter are outlined in Exhibit A to this staff report.

Approval of the Resolution for the issuance of the 2024 Special Tax Bonds approves the form of and/or authorizes the execution and delivery of the following documents:

Preliminary Official Statement: The Preliminary Official Statement (the “POS”) is the “offering document” for the 2024 Special Tax Bonds. It describes the District, the 2024 Special Tax Bonds, the proposed development within the District, and any other information that would be material to a prospective investor’s decision on whether to purchase the 2024 Special Tax Bonds. While the City’s counsel, consultants, and underwriter have participated in preparing the POS, the City Council and staff are ultimately responsible for ensuring that the POS is accurate, contains no misleading information, and does not omit any information necessary to make the POS not misleading to investors.

Bond Indenture: The Bond Indenture is a contract entered into between the District and Wilmington Trust, National Association, as the appointed Trustee for the 2024 Special Tax Bonds.

This document contains terms of the 2024 Special Tax Bonds including, but not limited to, the payment and redemption provisions, the pledge of revenues to pay the 2024 Special Tax Bonds, rights and duties of the Trustee, remedies upon a default in the payment of the 2024 Special Tax Bonds, and other related matters.

Continuing Disclosure Certificate: Executed for the benefit of bondholders, the Continuing Disclosure Certificate obligates the District to file an annual report each Fiscal Year, which includes, among other things, the most recent audited financial statements of the City and financial data relating to the District. The District must also report significant events to bondholders if and when they occur.

Bond Purchase Agreement: According to the Bond Purchase Agreement, the District agrees to sell the 2024 Special Tax Bonds to the underwriter, and the underwriter agrees to purchase the 2024 Special Tax Bonds, subject to typical closing conditions. City staff, the City’s municipal advisor, and bond counsel will sign off on the final pricing of the 2024 Special Tax Bonds before executing the Bond Purchase Agreement.

Bond Counsel and the City Attorney have reviewed the attached financing documents on behalf of the City. If this Resolution is approved, City staff will continue working with the financing team to finalize all the documents mentioned above. As previously mentioned, the pricing date would target late August 2024.

CFD No. 2019-2 (Nichols Ranch)

Page 4 of 4 ends

Fiscal Impact
The 2024 Special Tax Bonds are paid from special taxes levied in the District. There is no fiscal impact on the City’s General Fund. The City will, however, be required to provide administration for the District, which will be funded as part of the annual special tax levy.

As previously mentioned, the Fiscal Year 2024-25 estimated Special Tax levy on homes within the district range between $2,596 and $3,118. Such special taxes will increase by 2.0% per year under an agreement with the Developer.

Attachments
Attachment 1 - Good Faith Estimates
Attachment 2 - Resolution
Attachment 3 - Preliminary Official Statement
Attachment 4 - Bond Indenture
Attachment 5 - Continuing Disclosure Certificate
Attachment 6 - Bond Purchase Agreement
Attachment 7 - Appraisal Report

ATTACHMENT A

GOOD FAITH ESTIMATES
The good faith estimates set forth herein are provided with respect to the 2024 Special Tax Bonds in accordance with California Government Code Section 5852.1. Such good faith estimates have been provided to the District by Urban Futures, Inc., the District’s Municipal Advisor (the “Municipal Advisor”) in consultation with Stifel, Nicolaus & Company, Incorporated, the Underwriter for the 2024 Special Tax Bonds.

Principal Amount. The Municipal Advisor has informed the District that, based on the District’s financing plan and current market conditions, its good faith estimate of the aggregate principal amount of the 2024 Special Tax Bonds to be sold is $7,815,000 (the “Estimated Principal Amount”).

True Interest Cost of the 2024 Special Tax Bonds. The Municipal Advisor has informed the District that, assuming that the Estimated Principal Amount of the 2024 Special Tax Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the true interest cost of the 2024 Special Tax Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the 2024 Special Tax Bonds, is 5.01%.

Finance Charge of the 2024 Special Tax Bonds. The Municipal Advisor has informed the District that assuming that the Estimated Principal Amount of the 2024 Special Tax Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the finance charge for the 2024 Special Tax Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the 2024 Special Tax Bonds), is $361,763. Additionally, there will be an annual Trustee fee of approximately $2,000 for as long as the 2024 Special Tax Bonds are outstanding.

Amount of Proceeds to be Received. The Municipal Advisor has informed the District that, assuming the Estimated Principal Amount of the 2024 Special Tax Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the amount of proceeds expected to be received by the District for sale of the 2024 Special Tax Bonds, less the finance charge of the 2024 Special Tax Bonds, as estimated above, and any reserves or capitalized interest paid or funded with proceeds of the 2024 Special Tax Bonds, is $6,799,861.

Total Payment Amount. The Municipal Advisor has informed the District that, assuming that the Estimated Principal Amount of the 2024 Special Tax Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the total payment amount, which means the sum total of all payments the District will make to pay debt service on the 2024 Special Tax Bonds, plus the finance charge for the 2024 Special Tax Bonds, as described above, not paid with the proceeds of the 2024 Special Tax Bonds, calculated to the final maturity of the Bonds, is $16,391,731. Additionally, there will be an annual Trustee fee of $2,000 for as long as the 2024 Special Tax Bonds are outstanding.

The foregoing estimates constitute good faith estimates only. The actual principal amount of the 2024 Special Tax Bonds issued and sold, the true interest cost thereof, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to (a) the actual date of the sale of the 2024 Special Tax Bonds being different than the date assumed for purposes of such estimates, (b) the actual principal amount of the 2024 Special Tax Bonds sold being different from the Estimated Principal Amount, (c) the actual amortization of the 2024 Special Tax Bonds being different than the amortization assumed for purposes of such estimates, (d) the actual market interest rates at the time of sale of the 2024 Special Tax Bonds being different than those estimated for purposes of such estimates, (e) other market conditions, or (f) alterations in the District’s financing plan, or a combination of such factors. The actual date of sale of the 2024 Special Tax Bonds and the actual principal amount of 2024 Special Tax Bonds sold will be determined by the District based on the timing of the need for proceeds of the 2024 Special Tax Bonds and other factors. The actual interest rates borne by the 2024 Special Tax Bonds will depend on market interest rates at the time of sale thereof. The actual amortization of the 2024 Special Tax Bonds will also depend, in part, on market interest rates at the time of sale thereof. Market interest rates are affected by economic and other factors beyond the control of the District.
4881-6154-1842v3/022042-0026

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE

ELSINORE, CALIFORNIA, ACTING AS THE LEGISLATIVE

BODY OF COMMUNITY FACILITIES DISTRICT OF THE CITY OF
LAKE ELSINORE NO. 2019-2 (NICHOLS RANCH)

AUTHORIZING THE ISSUANCE OF ITS SPECIAL TAX BONDS,
SERIES 2024 IN A PRINCIPAL AMOUNT NOT TO EXCEED

EIGHT MILLION FIVE HUNDRED THOUSAND DOLLARS
($8,500,000) AND APPROVING CERTAIN DOCUMENTS AND

TAKING CERTAIN OTHER ACTIONS IN CONNECTION

THEREWITH
Whereas, on October 22, 2019, the City Council of the City of Lake Elsinore (the “City Council”) adopted Resolution No. 2019-083 stating its intention to form Community Facilities District No. 2019-2 of the City of Lake Elsinore (Nichols Ranch) (the “CFD” or the “District”) pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (the “Act”); and Whereas, on October 22, 2019, the Council also adopted Resolution No. 2019-084 stating its intention to incur bonded indebtedness within the District in the amount not to exceed $10,000,000 to finance the facilities and improvements identified in Resolution No. 2019-083 and the incidental expenses to be incurred in financing such facilities and improvements and forming and administering the District; and
Whereas, after a noticed public hearing, on December 10, 2019, the Council adopted Resolution Nos. 2019-095 and 2019-096 which formed the District and called a special election on December 10, 2019, within the District on three propositions relating to the levying of the special taxes, the incurring of bonded indebtedness and the establishment of an appropriations limit for the District, which were approved by more than two-thirds vote by the qualified electors on December 10, 2019; and
Whereas, subsequent to the formation of the District, the District received a petition signed by the property owner within the District, requesting that the District (i) approve a new rate and method of apportionment for the District and (ii) increase the amount of bonded indebtedness authorized to be incurred by the District from $10,000,000 to $11,000,000, to finance the Improvements and the Incidental Expenses (collectively, the “Change Proceedings”); and Whereas, on January 12, 2021, following the close of a noticed public hearing, the Council adopted Resolution No. 2021-16, which called a special election on January 12, 2021 within the District on the approval of the Change Proceedings; and Whereas, on January 12, 2021, a special election was held within the District at which the qualified electors approved by more than a two-thirds vote, the Change Proceedings; and Whereas, the legislative body of the District desires to issue a first series of bonds for the District at this time under the Act to finance certain public facilities which the District is authorized to finance; and
Whereas, the District desires to accomplish the financing of certain public facilities through the issuance of bonds in an aggregate principal amount not to exceed $8,500,000 designated as the “Community Facilities District No. 2019-2 of the City of Lake Elsinore (Nichols Ranch) Special Tax Bonds, Series 2024” (the “Bonds”); and
2 4881-6154-1842v3/022042-0026
Whereas, in order to effect the issuance of the Bonds, the District desires to enter into various agreements and approve certain documents in substantially the forms presented herein; and Whereas, based on the appraisal of real property prepared by Kitty Siino & Associates, Inc. (the “Appraisal”) of property within the District, the value of the real property in the District subject to the special tax to pay debt service on the Bonds is more than three times the sum of the principal amount of the Bonds and the principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to the Act or a special assessment levied on property within the District as calculated in the manner set forth in Section 53345.8(a) of the Act; and Whereas, the City Council has determined in accordance with Section 53360.4 of the Act that a negotiated sale of the Bonds to Stifel, Nicolaus & Company, Incorporated (the “Underwriter”) in accordance with the terms of the Bond Purchase Agreement for the Bonds to be entered into by the District and the Underwriter (the “Bond Purchase Agreement”) approved as to form by this City Council herein will result in a lower overall cost to the District than a public sale; and Whereas, pursuant to Government Code Section 8855, the District is required to adopt a debt management policy; and
Whereas, the District has determined to adopt the City’s Debt Management Policy adopted by the City Council of the City on July 11, 2017 as the debt management policy of the District;

NOW, THEREFORE, THE CITY COUNCIL, ACTING AS THE LEGISLATIVE BODY OF CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2019-2 (NICHOLS RANCH), DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOW:

Section 1. Each of the above recitals is true and correct.

Section 2. The issuance of the Bonds is hereby authorized in an aggregate principal amount not to exceed $8,500,000, with the exact principal amount to be determined by the official signing the Bond Purchase Agreement in accordance with Section 5 below. The City Council hereby determines that it is prudent in the management of the District’s fiscal affairs to issue the Bonds. The Bonds shall mature on the dates and pay interest at the rates set forth in the Bond Purchase Agreement to be executed on behalf of the District in accordance with Section 5 hereof. All other provisions of the Bonds shall be governed by the terms and conditions of the Bond Indenture (the “Indenture”), which Indenture shall be substantially in the form on file with the City Clerk, with such additions thereto and changes therein as the officer or officers executing the same deem necessary to enhance the security for the Bonds, to cure any ambiguity or defect therein, to insert the offering price(s), interest rate(s), selling compensation, principal amount per maturity, redemption dates and prices and such other related terms and provisions as limited by Section 5 hereof or to conform any provisions therein to the Bond Purchase Agreement or the Official Statement delivered to the Underwriter of the Bonds.

Approval of such changes shall be conclusively evidenced by the execution and delivery of the Indenture by one of the following: the Mayor, the City Manager, the Assistant City Manager, or their written designees (each, an “Authorized Officer” and collectively, the “Authorized Officers”), each of whom is authorized to execute the Indenture. Capitalized terms used in this Resolution which are not defined herein have the meanings ascribed to them in the Indenture.

Section 3. The Bonds shall be executed on behalf of the District by the manual or facsimile signature of the Mayor of the City or his or her written designee and be attested by the manual 3 4881-6154-1842v3/022042-0026
or facsimile signature of the City Clerk. Wilmington Trust, National Association is hereby appointed to act as trustee, registrar and transfer agent for the Bonds.

Section 4. The covenants set forth in the Indenture to be executed in accordance with Section 2 above are hereby approved, shall be deemed to be covenants of the City Council and shall be complied with by the District and its officers. The Indenture shall constitute a contract between the District and the Owners of the Bonds.

Section 5. The form of the Bond Purchase Agreement presented at this meeting is hereby approved and each of the Authorized Officers is hereby authorized to execute the Bond Purchase Agreement, with such additions thereto and changes therein relating to dates and numbers as are necessary to conform the Bond Purchase Agreement to the dates, amounts and interest rates applicable to the Bonds as of the sale date. Approval of such additions and changes shall be conclusively evidenced by the execution and delivery of the Bond Purchase Agreement by one or more of such Authorized Officers; provided, however, that the Bond Purchase Agreement shall be signed only if the Underwriter’s discount does not exceed 1.30% of the principal amount of the Bonds and only if the true interest cost on the Bonds does not exceed 5.50%. Each of the Authorized Officers is authorized to determine the day on which the Bonds are to be priced in order to attempt to produce the lowest borrowing cost for the District and may reject any terms presented by the Underwriter if determined not to be in the best interest of the District.

Section 6. The form of the Continuing Disclosure Certificate presented at this meeting is hereby approved and each of the Authorized Officers is hereby authorized and directed to execute the Continuing Disclosure Certificate in the form hereby approved, with such additions therein and changes thereto as the officer or officers executing the same deem necessary to cure any defect or ambiguity therein, with such approval to be conclusively evidenced by the execution and delivery of such certificate.

Section 7. The form of the Preliminary Official Statement presented at this meeting is hereby approved and the Underwriter is hereby authorized to distribute the Preliminary Official Statement to prospective purchasers of the Bonds in the form hereby approved, together with such additions thereto and changes therein as are determined necessary by the Authorized Officers to make such Preliminary Official Statement final as of its date for purposes of Rule 15c2-12 of the Securities and Exchange Commission. Each of the Authorized Officers is hereby authorized to execute a final Official Statement in the form of the Preliminary Official Statement, together with such changes as are determined necessary by the Authorized Officers, to make such Official Statement complete and accurate as of its date. The Underwriter is further authorized to distribute the final Official Statement for the Bonds and any supplement thereto to the purchasers of the Bonds upon the execution of the final Official Statement as described above.

Section 8. In accordance with the requirements of Section 53345.8 of the Act, based on the Appraisal, the legislative body of the District hereby determines that the value of the real property in the District subject to the special tax to pay debt service on the Bonds is more than three times the principal amount of the Bonds and the principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to the Act or a special assessment levied on property within the District, all as calculated in the manner provided in Section 53345.8(a) of the Act.

Section 9. Each Authorized Officer is authorized to provide for all services necessary to effect 4 4881-6154-1842v3/022042-0026
the issuance of the Bonds. Such services shall include, but not be limited to, printing the Bonds, obtaining legal services, trustee and paying agent services and any other services deemed appropriate as set forth in a certificate of such Authorized Officer. Each Authorized Officer is authorized to pay for the cost of such services, together with other costs of issuance, from Bond proceeds deposited pursuant to the Indenture.

Section 10. The Authorized Officers, the City Clerk and the other officers and staff of the City and the District responsible for the fiscal affairs of the District are hereby authorized and directed to take any actions and execute and deliver any and all documents as are necessary to accomplish the issuance, sale and delivery of the Bonds in accordance with the provisions of this Resolution and the fulfillment of the purposes of the Bonds as described in the Indenture, including, in the discretion of any of the Authorized Officers, the execution of a letter of credit or cash depository agreement with the developer within the District and Wilmington Trust, National Association relating to any security provided by the developer with respect to the special taxes to be levied within the District, and providing certificates to the Underwriter as to the accuracy of any information relating to the District which is included within the Official Statement. Any document authorized herein to be signed by the City Clerk may be signed by a duly appointed deputy clerk.

Section 11. The District hereby adopts the City’s Debt Management Policy, as amended, supplemented and restated from time to time, as the debt management policy of the District pursuant to California Government Code Section 8855.

Section 12. The City Council acknowledges that the good faith estimates required by Section 5852.1 of the California Government Code are disclosed in the staff report and are available to the public at the meeting at which this Resolution is approved.

Section 13. This Resolution shall be effective upon its adoption.

STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.

AYES:

NOES:

ABSENT:

ABSTAIN:
________________________________
Candice Alvarez, MMC
City Clerk
Stradling Yocca Carlson & Rauth
Draft of 8/5/24
4876-9387-7202v5/022042-0026
PRELIMINARY OFFICIAL STATEMENT DATED AUGUST __, 2024
NEW ISSUE—BOOK-ENTRY ONLY NO RATING
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 herein, interest (and original issue discount) on the Bonds described herein 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 “TAX EXEMPTION” with respect to tax consequences relating to the Bonds, including with respect to the alternative minimum tax imposed on certain large corporations. $7,995,000*
COMMUNITY FACILITIES DISTRICT NO. 2019-2

OF THE CITY OF LAKE ELSINORE (NICHOLS RANCH)
SPECIAL TAX BONDS, SERIES 2024
Dated: Delivery Date Due: September 1, as shown on inside cover page The Community Facilities District No. 2019-2 of the City of Lake Elsinore (Nichols Ranch) Special Tax Bonds, Series 2024 (the “Bonds”) are being issued by Community Facilities District No. 2019-2 of the City of Lake Elsinore (Nichols Ranch) (the “District”) to: (i) finance certain public improvements needed with respect to the development of property located within the District, including public improvements to be owned by the City and water and sewer facilities to be owned and operated by the Elsinore Valley Municipal Water District; (ii) fund a reserve account for the Bonds; (iii) fund capitalized interest on a portion of the Bonds through March 1, 2025; and (iv) pay costs of issuance for the Bonds. The Bonds are authorized to be issued 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 “Act”), and pursuant to that certain Bond Indenture, dated as of September 1, 2024 (the “Indenture”), by and between the District and Wilmington Trust, National Association, as trustee (the “Trustee”).

The Bonds are payable from Net Taxes (as defined herein) derived from a certain annual Special Tax (as defined herein) to be levied on taxable parcels within the District and from certain other funds pledged under the Indenture, all as further described herein. The Special Tax is to be levied according to the rate and method of apportionment approved by the City Council of the City and the qualified electors within the District. See the caption “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes” and Appendix A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” The Bonds will be issued in fully registered form and when issued will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). Individual purchases of the Bonds may be made in principal amounts of $5,000 and integral multiples thereof and will be in book-entry form only. Purchasers of the Bonds will not receive certificates representing their beneficial ownership of the Bonds but will receive credit balances on the books of their respective nominees. The Bonds will not be transferable or exchangeable except for transfer to another nominee of DTC or as otherwise described herein. Interest on the Bonds will be payable on each March 1 and September 1, commencing March 1, 2025. Principal of and interest on the Bonds will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants, who will remit such payments to the Beneficial Owners of the Bonds.

NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE COUNTY OF RIVERSIDE, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. EXCEPT FOR THE NET TAXES, NO OTHER REVENUES OR TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OR SPECIAL

OBLIGATIONS OF THE CITY OR GENERAL OBLIGATIONS OF THE DISTRICT BUT ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM NET TAXES AND OTHER AMOUNTS HELD UNDER THE INDENTURE AS MORE FULLY DESCRIBED HEREIN.

The Bonds are subject to optional redemption, special mandatory redemption and mandatory sinking fund redemption prior to maturity as set forth herein. See the caption “THE BONDS — Redemption.”
Investment in the Bonds involves risks that are not appropriate for certain investors. Certain events could affect the ability of the District to pay the principal of and interest on the Bonds when due. 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, in evaluating the investment quality of the Bonds.

THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR GENERAL REFERENCE ONLY. IT IS NOT INTENDED TO BE A SUMMARY OF THE SECURITY OR TERMS OF THIS ISSUE. INVESTORS ARE ADVISED TO READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION.

MATURITY SCHEDULE
(See Inside Cover Page)
The Bonds are offered when, as and if issued and accepted by the Underwriter, subject to approval as to their legality by Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed on for the City and the District by Leibold, McClendon, & Mann, Irvine, California, City Attorney, and for the District by Stradling Yocca Carlson & Rauth LLP, Disclosure Counsel, for the Underwriter by Kutak Rock LLP, Irvine, California, and for the Trustee by its counsel. It is anticipated that the Bonds in book-entry form will be available for delivery on or about September __, 2024.
[STIFEL LOGO]
Dated ________, 2024
* Preliminary, subject to change.

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. 4876-9387-7202v5/022042-0026
$7,995,000*

CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. 2019-2 (NICHOLS RANCH) SPECIAL TAX BONDS, SERIES 2024

MATURITY SCHEDULE
BASE CUSIP®† _________
$_______ Serial Bonds
Maturity Date
(September 1)
Principal
Amount Interest Rate Yield Price CUSIP No.†
$_____ ____% Term Bonds due September 1, 20__ Yield: ____% Price: _______ CUSIP No.† ____ $_____ ____% Term Bonds due September 1, 20__ Yield: ____% Price: _______ CUSIP No.† ____ * Preliminary, subject to change.
†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© 2024 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 City, the Underwriter or their agents or counsel assume responsibility for the accuracy of such numbers.
4876-9387-7202v5/022042-0026

CITY OF LAKE ELSINORE

COUNTY OF RIVERSIDE, CALIFORNIA

CITY COUNCIL
Steve Manos, Mayor
Brian Tisdale, Mayor Pro Tem
Natasha Johnson, Councilmember
Robert E. Magee, Councilmember
Timothy J. Sheridan, Councilmember

CITY ADMINISTRATORS
Jason Simpson, City Manager
Shannon Buckley, Assistant City Manager

CITY ATTORNEY
Leibold, McClendon, & Mann
Irvine, California

BOND AND DISCLOSURE COUNSEL
Stradling Yocca Carlson & Rauth LLP
Newport Beach, California

MUNICIPAL ADVISOR
Urban Futures, Inc.

Walnut Creek, California

SPECIAL TAX CONSULTANT
Spicer Consulting Group, LLC
Murrieta, California

APPRAISER
Kitty Siino & Associates, Inc.

Tustin, California

TRUSTEE
Wilmington Trust, National Association
Costa Mesa, California
4876-9387-7202v5/022042-0026
Except where otherwise indicated, all information contained in this Official Statement has been provided by the City and the District. No dealer, broker, salesperson or other person has been authorized by the City, the District, the Trustee or the Underwriter to give any information or to make any representations in connection with the offer or sale of the Bonds other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by the City, the District, the Trustee or the Underwriter. 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 a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

This Official Statement is not to be construed as a contract with the purchasers or Owners of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact.

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 as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City, the District or any other parties described herein since the date hereof. All summaries of the Indenture or other documents are made subject to the provisions of such documents respectively 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 City for further information in connection therewith.

THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.

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 a “plan,” “expect,” “estimate,” “project,” “budget,” or similar words. Such forward-looking statements include, but are not limited to certain statements contained in the information under the captions “THE DISTRICT” and “PROPERTY OWNERSHIP AND THE DEVELOPMENT.”

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH

FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND

OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS

DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE

DISTRICT DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT. IN EVALUATING SUCH STATEMENTS,

POTENTIAL INVESTORS SHOULD SPECIFICALLY CONSIDER THE VARIOUS FACTORS WHICH COULD

CAUSE ACTUAL EVENTS OR RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS.

The City maintains a website. However, the information presented on such website is not part of this Official Statement and should not be relied upon in making an investment decision with respect to the Bonds. i
4876-9387-7202v5/022042-0026

TABLE OF CONTENTS
Page
INTRODUCTION .................................................................................................................................................1 The District ........................................................................................................................................................1 Sources of Payment for the Bonds.....................................................................................................................3 Appraisal Report ................................................................................................................................................3 Description of the Bonds ...................................................................................................................................4 Tax Exemption...................................................................................................................................................4 Professionals Involved in the Offering ..............................................................................................................4 Continuing Disclosure .......................................................................................................................................5 Parity Bonds for Refunding Purposes Only.......................................................................................................5 Bond Owners’ Risks ..........................................................................................................................................5 Other Information ..............................................................................................................................................5 FINANCING PLAN ..............................................................................................................................................6 Estimated Sources and Uses of Funds ...............................................................................................................6 THE BONDS .........................................................................................................................................................6 General Provisions.............................................................................................................................................6 Debt Service Schedule .......................................................................................................................................8 Redemption........................................................................................................................................................8 Registration, Transfer and Exchange...............................................................................................................12 SOURCES OF PAYMENT FOR THE BONDS .................................................................................................12 Limited Obligations .........................................................................................................................................12 Special Taxes ...................................................................................................................................................13 Reserve Account of the Special Tax Fund.........................................................................................................4 No Teeter Plan ...................................................................................................................................................5 Parity Bonds for Refunding Purposes Only.......................................................................................................5 Meritage Letter of Credit ...................................................................................................................................5 THE DISTRICT.....................................................................................................................................................5 General Description of the District....................................................................................................................5 Authorized Uses of Bond Proceeds ...................................................................................................................6 Appraisal Report ................................................................................................................................................6 Estimated Appraised Value-to-Lien Ratios .......................................................................................................7 Direct and Overlapping Debt...........................................................................................................................10 Delinquency History ........................................................................................................................................11 PROPERTY OWNERSHIP AND THE DEVELOPMENT................................................................................12 General.............................................................................................................................................................12 Planned Development Within the District .......................................................................................................12 Meritage ...........................................................................................................................................................13 SPECIAL RISK FACTORS ................................................................................................................................14 Risks of Real Estate Secured Investments Generally ......................................................................................15 Insufficiency of Special Tax Revenues............................................................................................................15 Impact of Economic Conditions on the Development in the District..............................................................16 Increasing Mortgage Interest Rates .................................................................................................................17 Concentration of Ownership............................................................................................................................17 Property Values................................................................................................................................................17 Natural Disasters..............................................................................................................................................18 Hazardous Substances......................................................................................................................................19 Enforcement Delays – Bankruptcy ..................................................................................................................19 Special Tax Delinquencies...............................................................................................................................19 ii
4876-9387-7202v5/022042-0026
FDIC/Federal Government Interests in Parcels ...............................................................................................20 Direct and Overlapping Indebtedness..............................................................................................................21 Payment of Special Taxes is not a Personal Obligation of the Property Owners............................................21 No Acceleration Provision...............................................................................................................................21 Limited Obligations .........................................................................................................................................21 Ballot Initiatives...............................................................................................................................................22 Proposition 218 ................................................................................................................................................22 Litigation with Respect to Community Facilities Districts .............................................................................23 Loss of Tax Exemption....................................................................................................................................24 No Ratings – Limited Secondary Market ........................................................................................................24 Limitations on Remedies .................................................................................................................................24 Potential Early Redemption of Bonds from Prepayments or Community Facilities District Bond Proceeds ....................................................................................................................................................24 Cybersecurity ...................................................................................................................................................25 CONTINUING DISCLOSURE...........................................................................................................................25 District Continuing Disclosure ........................................................................................................................25 Developer Continuing Disclosure....................................................................................................................26 TAX EXEMPTION .............................................................................................................................................26 LEGAL OPINION ...............................................................................................................................................28 ABSENCE OF LITIGATION .............................................................................................................................28 NO RATING........................................................................................................................................................28 UNDERWRITING ..............................................................................................................................................28 FINANCIAL INTERESTS..................................................................................................................................29 MUNICIPAL ADVISOR.....................................................................................................................................29 MISCELLANEOUS ............................................................................................................................................29 APPENDIX A RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX .............................A-1 APPENDIX B CERTAIN ECONOMIC AND DEMOGRAPHIC INFORMATION ................................B-1 APPENDIX C FORM OF OPINION OF BOND COUNSEL ....................................................................C-1 APPENDIX D APPRAISAL REPORT.......................................................................................................D-1 APPENDIX E SUMMARY OF THE INDENTURE..................................................................................E-1 APPENDIX F FORM OF DISTRICT CONTINUING DISCLOSURE CERTIFICATE...........................F-1 APPENDIX G FORM OF DEVELOPER CONTINUING DISCLOSURE CERTIFICATE.....................G-1 APPENDIX H BOOK-ENTRY ONLY SYSTEM......................................................................................H-1 4876-9387-7202v5/022042-0026
[INSERT VICINITY MAP]
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[INSERT AERIAL PHOTOGRAPH]
1 4876-9387-7202v5/022042-0026
$7,995,000*

CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. 2019-2 (NICHOLS RANCH) SPECIAL TAX BONDS, SERIES 2024

INTRODUCTION
The purpose of this Official Statement, which includes the cover page, the table of contents and the attached appendices (collectively, the “Official Statement”), is to provide certain information concerning the issuance by Community Facilities District No. 2019-2 of the City of Lake Elsinore (Nichols Ranch) (the “District”) of its Special Tax Bonds, Series 2024 in the aggregate principal amount of $7,995,000* (the “Bonds”).

The proceeds of the Bonds will be used to: (i) finance certain public improvements needed with respect to the development of property located within the District, including public improvements to be owned by the City of Lake Elsinore (the “City”), and water and sewer facilities to be owned and operated by the Elsinore Valley Municipal Water District; (ii) fund a reserve account for the Bonds; (iii) fund capitalized interest on a portion of the Bonds through March 1, 2025; and (iv) pay costs of issuance for the Bonds.

The Bonds are authorized to be issued 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 “Act”), a resolution adopted on August 13, 2024, by the City Council of the City of Lake Elsinore (the “City”), acting as the legislative body of the District, and a Bond Indenture, dated as of September 1, 2024 (the “Indenture”), by and between the District and Wilmington Trust, National Association, as trustee (the “Trustee”). The Bonds are secured under the Indenture by a pledge of and lien upon Net Taxes (as such term is defined herein) and all moneys in the Special Tax Fund (other than the Administrative Expense Account therein) as described in the Indenture.

This Introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement and the documents summarized or described herein. A full review should be made of the entire Official Statement.

The sale and delivery of Bonds to potential investors is made only by means of the entire Official Statement.

All capitalized terms used in this Official Statement and not defined have the meanings set forth in Appendix E.

The District
General. The City is located in the western portion of the County of Riverside (the “County”), California (the “State”). The District contains approximately 58.19 gross acres and approximately and is located in the City on the southeast quadrant of the Interstate 15 and Nichols Road, adjacent to the Temescal Valley High School.

The property within the District is being developed by Meritage Homes of California, Inc., a California corporation (“Meritage”) into 168 single-family detached homes in a project being marketed as “Nichols Ranch.” As of July 1, 2024, Meritage had completed and conveyed 83 homes within the District to individual homeowners. As of such date Meritage owned four model homes (none of which were in escrow), 49 homes under construction (16 of which were in escrow) and 32 finished lots (none of which were in escrow).

Development has progressed since July 1, 2024. As of July 30, 2024, Meritage had completed and conveyed 93 homes in the District to individual homeowners. Meritage expects to complete and convey all remaining homes to be constructed in the District to individual homeowners by the end of 2025.

The major infrastructure (sewer, water, storm drains, utilities, and arterial roads) necessary to develop the property within the District is substantially complete. Meritage is required to complete a public park prior * Preliminary, subject to change.
2 4876-9387-7202v5/022042-0026
to the issuance of the 125 th certificate of occupancy within the District. The park is nearing completion and Meritage does not expect the timing of the completion of the park to adversely affected the projected schedule of home construction and sales in the District. The in-tract infrastructure within the District is also substantially complete with finishing of certain streets and landscaping remaining. See the captions “THE DISTRICT” and “PROPERTY OWNERSHIP AND THE DEVELOPMENT” for further information with respect to the District, Meritage and development within the District.

Formation Proceedings. The District was formed on December 10, 2019 pursuant to the Act. The Act was enacted to provide an alternative method of financing certain public capital facilities and services, especially in developing areas of the State. Any local agency (as defined in the Act) may establish a community facilities district to provide for and finance the cost of eligible public facilities and services. Generally, the legislative body of the local agency which forms a community facilities district acts on behalf of such district as its legislative body. Subject to approval by two-thirds of the votes cast at an election and compliance with the other provisions of the Act, a legislative body of a local agency may issue bonds for a community facilities district and may levy and collect a special tax within such district to repay such indebtedness.

Pursuant to the Act, on October 22, 2019, the City Council adopted Resolution No. 2019-083 (the “Resolution of Intention”), stating its intention to form the District and to authorize the levy of a special tax on the taxable property within the District, and Resolution No. 2019-084, stating its intention to incur bonded indebtedness in an aggregate principal amount not to exceed $10,000,000 for the purpose of financing the purchase, construction, expansion or rehabilitation of certain public facilities to serve the area within the District.

Subsequent to a noticed public hearing on December 10, 2019, the City Council adopted Resolution Nos. 2019-095 and 2019-096 on December 10, 2019 (collectively the “Resolution of Formation”). The Resolution of Formation: (i) established the District; (ii) authorized the levy of a special tax (the “Special Tax”) within the District; (iii) determined the necessity to incur bonded indebtedness in an amount not to exceed $10,000,000 within the District; and (iv) called an election within the District on the proposition of incurring bonded indebtedness, levying the Special Tax and setting an appropriations limit.

On December 10, 2019, an election was held within the District in which the property owner within the District approved the proposition authorizing the issuance of bonds in an amount not to exceed $10,000,000. A Notice of Special Tax Lien for the District was recorded in the office of the County Recorder on December 20, 2019, as Document No. 2019-0528619.

Subsequent to the formation of the District as described above, pursuant to a petition signed by the property owner in the District, on December 8, 2020, the City Council, acting as the legislative body of the District, adopted Resolution No. 2020-101 declaring its intention to consider (i) amending the rate and method of apportionment of special tax for the District approved at the December 10, 2019 special election and (ii) increasing the maximum amount of bonded indebtedness to be incurred by the District from $10,000,000 to $11,000,000 (collectively, the “Change Proceedings”).

Subsequent to a noticed public hearing on January 12, 2021, the City Council, acting as the legislative body of the District, adopted Resolution No. 2021-16 approving an amended rate and method of apportionment of special tax for the District (the “Rate and Method”) and called an election within the District on the proposition of levying the special taxes in accordance with the Rate and Method and the other matters included within the Change Proceedings, which was approved by the property owner within the District. A copy of the Rate and Method is attached hereto as Appendix A. An Amended Notice of Special Tax Lien for the District was recorded in the office of the County Recorder on January 13, 2021, as Document No. 2021-0022112.

On January 26, 2021, the City Council adopted Ordinance No. 2021-1446 (the “Ordinance”) which authorizes the levy of a special tax pursuant to the Rate and Method approved at the January 12, 2021 election. 3 4876-9387-7202v5/022042-0026
Sources of Payment for the Bonds
Special Taxes. As used in this Official Statement, the term “Special Tax” means the annual Special Tax which has been authorized pursuant to the Act and the Rate and Method to be levied upon taxable property within the District. See the caption “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes” and Appendix A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” See the caption “THE DISTRICT.”
Under the Indenture, the District has pledged to repay the Bonds and any Parity Bonds (as defined herein) from the Special Tax revenues remaining after the payment of certain annual Administrative Expenses of the District (the “Net Taxes”) and from other amounts in the Special Tax Fund (other than the Administrative Expense Account therein) established under the Indenture. The Special Taxes are the primary source of security for the repayment of the Bonds and any Parity Bonds. In the event that the Special Taxes are not paid when due, the only sources of funds available to pay the debt service on the Bonds and any Parity Bonds are amounts held by the Trustee in the Special Tax Fund, including amounts held in the Reserve Account therein, to the limited extent described in the Indenture. See the caption “SOURCES OF PAYMENT FOR THE BONDS — Reserve Account of the Special Tax Fund.”
Foreclosure Proceeds. The District will covenant in the Indenture for the benefit of the owners of the Bonds and Parity Bonds that it will: (i) commence judicial foreclosure proceedings against parcels with delinquent Special Taxes in excess of $5,000 by the October 1 following the close of each Fiscal Year in which such Special Taxes were due; and (ii) commence judicial foreclosure proceedings against all parcels with delinquent Special Taxes by the October 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than 95% of the total Special Tax levied; and (iii) diligently pursue such foreclosure proceedings until the delinquent Special Taxes are paid; provided that, notwithstanding the foregoing, the District may elect to defer foreclosure proceedings on any parcel so long as the amount in the Reserve Account is at least equal to the Reserve Requirement. See the caption “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales.” There is no assurance that the property within the District can be sold for the appraised or assessed values described herein, or for a price sufficient to pay the principal of and interest on the Bonds in the event of a default in payment of Special Taxes by the current or future landowners within the District. See the caption “SPECIAL RISK FACTORS — Property Values.”

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

OR GENERAL OBLIGATIONS OF THE DISTRICT, BUT ARE LIMITED OBLIGATIONS OF THE

DISTRICT PAYABLE SOLELY FROM NET TAXES AND AMOUNTS HELD UNDER THE INDENTURE, AS MORE FULLY DESCRIBED HEREIN.

Appraisal Report
Kitty Siino & Associates, Inc. (the “Appraiser”) has conducted an Appraisal (the “Appraisal Report”) with a date of value of July 1, 2024 (the “Date of Value”) of certain land and existing improvements within the District to provide an estimate of the market value of the fee simple interest of such land and improvements.

The Appraisal Report provides an estimate of the approximate market value of the “as-is” condition of the property in the District subject to the levy of Special Taxes, assuming that development of the property as currently planned will consist of 168 residential units. Based on the contingencies, assumptions and limiting conditions in the Appraisal Report, the Appraiser concluded that the market value of all of the parcels within the District subject to the Special Tax was $72,777,857 as of the Date of Value.

The Appraisal Report is based upon a variety of assumptions and limiting conditions that are described in APPENDIX D. The District makes no representation as to the accuracy of the Appraisal Report. See “THE DISTRICT — Appraisal Report” and “— Estimated Appraised Value-to-Lien Ratios.” There is no assurance that property within the District can be sold for the prices set forth in the Appraisal Report or that any parcel can 4 4876-9387-7202v5/022042-0026
be sold for a price sufficient to pay the Special Tax for that parcel in the event of a default in payment of Special Taxes by a property owner. See “THE DISTRICT,” “SPECIAL RISK FACTORS — Property Values” herein and APPENDIX D.

Description of the Bonds
The Bonds will be issued and delivered as fully registered Bonds, registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”), and will be available to actual purchasers of the Bonds (the “Beneficial Owners”) in the denominations of $5,000 or any integral multiple thereof, under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants as described herein. Beneficial Owners will not be entitled to receive physical delivery of the Bonds. In the event that the book-entry only system described herein is no longer used with respect to the Bonds, the Bonds will be registered and transferred in accordance with the Indenture. See Appendix H — “BOOK-ENTRY ONLY SYSTEM.”
Principal of, premium, if any, and interest on the Bonds is payable by the Trustee to DTC. Disbursement of such payments to DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of DTC Participants. See Appendix H — “BOOK-ENTRY ONLY SYSTEM.”
The Bonds are subject to optional redemption, special mandatory redemption and mandatory sinking fund redemption prior to maturity as described herein. See the caption “THE BONDS — Redemption.” For a more complete description of the Bonds and the basic documentation pursuant to which they are being sold and delivered, see the caption “THE BONDS” and Appendix E — “SUMMARY OF THE INDENTURE.” Tax Exemption
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 herein, interest (and original issue discount) on the Bonds described herein 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 “TAX EXEMPTION” with respect to tax consequences relating to the Bonds, including with respect to the alternative minimum tax imposed on certain large corporations.

Set forth in Appendix C is the form of opinion of Bond Counsel expected to be delivered in connection with the issuance of the Bonds. For a more complete discussion of such opinion and certain tax consequences incident to the ownership of the Bonds, see the caption “TAX EXEMPTION.” Professionals Involved in the Offering
Wilmington Trust, National Association, Costa Mesa, California, will act as Trustee under the Indenture. Stifel, Nicolaus & Company, Incorporated (the “Underwriter”) is the Underwriter of the Bonds.

Certain proceedings in connection with the issuance and delivery of the Bonds are subject to the approval of Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, Bond Counsel and Disclosure Counsel to the District in connection with the issuance of the Bonds. Certain legal matters will be passed on for the City and the District by Leibold, McClendon, & Mann, Irvine, California, City Attorney, for the Underwriter by Kutak Rock LLP, Irvine, California, and for the Trustee by its counsel. Other professional services have been performed by Spicer Consulting Group, LLC, Murrieta, California, as Special Tax Consultant (the “Special Tax Consultant”), Urban Futures, Inc., Walnut Creek, California, as Municipal Advisor, and by Kitty Siino & Associates, Tustin, California, as Appraiser.
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For information concerning circumstances in which certain of the above-mentioned professionals, advisors, counsel and consultants may have a financial or other interest in the offering of the Bonds, see the caption “FINANCIAL INTERESTS.”
Continuing Disclosure
Pursuant to a Continuing Disclosure Certificate to be executed by the District (the “District Continuing Disclosure Certificate”), the District will agree to provide, or cause to be provided, to the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access system (“EMMA”), maintained on the Internet at http://emma.msrb.org, certain annual financial information and operating data and notices of certain enumerated events. These covenants are being made in order to assist the Underwriter in complying with subsection (b)(5) of Rule 15c2-12 adopted by the Securities and Exchange Commission (“Rule 15c2-12”).

The Underwriter does not consider Meritage to be an “obligated person” with respect to the Bonds for purposes of the Rule. Notwithstanding the foregoing, to assist in the marketing of the Bonds, Meritage will agree to provide, or cause to be provided to EMMA, certain updates with respect to the development within the District and notices of certain enumerated events. See Appendix G for a description of the specific nature of the semiannual reports and enumerated event notices to be filed by Meritage.

See “CONTINUING DISCLOSURE,” Appendix F — “FORM OF DISTRICT CONTINUING DISCLOSURE CERTIFICATE” and Appendix G — “FORM OF DEVELOPER CONTINUING DISCLOSURE CERTIFICATE.”
Parity Bonds for Refunding Purposes Only
The District will covenant in the Indenture not to issue additional indebtedness secured by the Net Taxes on a parity with the Bonds (“Parity Bonds”) other than for refunding all or a portion of the Bonds or Parity Bonds. See the caption “SOURCES OF PAYMENT FOR THE BONDS — Parity Bonds for Refunding Purposes Only.” Other taxes and/or special assessments with liens equal in priority to the continuing lien of the Special Taxes may also be levied in the future on the property within the District, which could adversely affect the willingness of the landowners to pay the Special Taxes when due. See the captions “THE DISTRICT — Direct and Overlapping Debt” and “SPECIAL RISK FACTORS — Direct and Overlapping Indebtedness.” Bond Owners’ Risks
Certain events could affect the ability of the District to pay the principal of and interest on the Bonds when due. See the caption “SPECIAL RISK FACTORS” for a discussion of certain factors which should be considered, in addition to other matters set forth herein, in evaluating an investment in the Bonds. The purchase of the Bonds involves risks, and the Bonds may not be appropriate investments for some types of investors.

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

Brief descriptions of the Bonds and the Indenture are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. All references herein to the Indenture, the Bonds and the Constitution and laws of the State, as well as the proceedings of the City Council, acting as the legislative body of the District, are qualified in their entirety by references to such documents, laws and proceedings, and with respect to the Bonds, by reference to the Indenture. Capitalized terms not otherwise defined in this Official Statement have the meanings set forth in Appendix E. 6 4876-9387-7202v5/022042-0026
Copies of the Indenture and other documents and information are available for inspection and copies may be obtained from the City, 130 S. Main Street, Lake Elsinore, California, 92530, Attention: City Clerk.

FINANCING PLAN
Estimated Sources and Uses of Funds
The following table sets forth the expected sources and uses of Bond proceeds and certain other funds on hand.

Sources of Funds
Principal Amount of Bonds
Less Net Original Issue Discount
Total Sources
Uses of Funds:

Acquisition and Construction Fund
Reserve Account
Interest Account(1)
Cost of Issuance(2)
Total Uses
(1) Reflects capitalized interest on a portion of the Bonds through March 1, 2025. (2) To pay costs of issuance of the Bonds, including legal fees, underwriter’s discount, printing costs, Appraiser, Special Tax Consultant and Trustee fees.

THE BONDS
General Provisions
The Bonds will be dated their date of delivery and will bear interest at the rates per annum set forth on the inside cover page hereof, payable semiannually on each March 1 and September 1, commencing March 1, 2025 (each, an “Interest Payment Date”), and will mature in the amounts and on the dates set forth on the inside cover page of this Official Statement. Interest will be calculated on the basis of a 360-day year comprised of twelve 30-day months. The Bonds will be issued in fully registered form in denominations of $5,000 or any integral multiple thereof.

Interest on any Bond will be payable from the Interest Payment Date next preceding the date of authentication of such Bond, unless: (i) such date of authentication is an Interest Payment Date, in which event interest will be payable from such date of authentication; (ii) the date of authentication is after the fifteenth day of the month preceding an Interest Payment Date, regardless of whether such day is a Business Day (each, 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 (iii) 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, as applicable; 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 as its owner in the registration books held by the Trustee on the close of business on the Record Date. Principal of, premium, if any, due upon redemption is payable upon presentation and surrender of the Bonds at the principal corporate trust office of the Trustee in Costa Mesa, California.
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The Bonds will be issued as fully registered bonds and will be registered in the name of Cede & Co., as nominee of DTC. DTC will act as securities depository of the Bonds. Ownership interests in the Bonds may be purchased in book-entry form only in denominations of $5,000 and any integral multiple thereof. So long as DTC is the securities depository all payments of principal and interest on the Bonds will be made to DTC and will be paid to the Beneficial Owners in accordance with DTC’s procedures and the procedures of DTC’s Participants. See APPENDIX H — “BOOK-ENTRY-ONLY SYSTEM.” In the event the Bonds are not held in book-entry form, interest will be paid by check of the Trustee mailed by first class mail, postage prepaid, to the Bondowner at its address on the registration books kept by the Trustee. Pursuant to a written request prior to the Record Date of a Bondowner of at least $1,000,000 in aggregate principal amount of Bonds or of any issue of Parity Bonds, payment will be made by wire transfer in immediately available funds to a designated account in the United States. [Remainder of Page Intentionally Left Blank]
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Debt Service Schedule
The following table presents the annual debt service on the Bonds (including sinking fund redemptions), assuming that there are no optional or special mandatory redemptions. See the caption “—Redemption” below.

Year Ending
September 1 Principal Interest Total Debt Service
Total
Redemption
Optional Redemption. The Bonds may be redeemed at the option of the District from any source of funds on any Interest Payment Date on or after September 1, 20__, in whole or in part, from such maturities as are selected by the District and by lot within a maturity, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the date of redemption:

Redemption Date Redemption Price
103%
102
101
100
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In the event that the District elects to redeem Bonds as provided above, the District will give written notice to the Trustee of its election to so redeem, the redemption date and the principal amount of the Bonds of each maturity to be redeemed. The notice to the Trustee will be given at least 45 but no more than 60 calendar days prior to the redemption date, or by such later date as is acceptable to the Trustee.

Mandatory Sinking Fund Redemption. The Bonds maturing on September 1, 20__ (the “20__ Term Bonds”) will be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account established under the Indenture, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20__ Term Bonds so called for redemption will be selected by the Trustee by lot and will be redeemed at a redemption price for each redeemed 20__ Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:

Term Bonds Maturing September 1, 20__
Sinking Fund Redemption Date
(September 1) Sinking Fund Payments
$
*
* Maturity.

The Bonds maturing on September 1, 20__ (the “20__ Term Bonds”) will be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account established under the Indenture, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20__ Term Bonds so called for redemption will be selected by the Trustee by lot and will be redeemed at a redemption price for each redeemed 20__ Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:

Term Bonds Maturing September 1, 20__
Sinking Fund Redemption Date
(September 1) Sinking Fund Payments
$
*
* Maturity.

If the District purchases Term Bonds during the Fiscal Year immediately preceding one of the sinking fund redemption dates specified above, the District will notify the Trustee at least 45 days prior to the redemption date as to the principal amount purchased, and the amount purchased will be credited at the time of purchase to the next Sinking Fund Payment for the Term Bond so purchased, to the extent of the full principal amount of the purchase. All Term Bonds purchased will be cancelled pursuant to the Indenture. 10 4876-9387-7202v5/022042-0026
In the event of a partial optional redemption or special mandatory redemption of the Term Bonds, each of the remaining Sinking Fund Payments for such Term Bonds will be reduced, as nearly as practicable, on a pro rata basis.

Special Mandatory Redemption from Special Tax Prepayments. The Bonds are subject to special mandatory redemption as a whole or in part on a pro rata basis among maturities and by lot within a maturity, on any Interest Payment Date on or after March 1, 2025, and will be redeemed by the Trustee, from 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 the District made in accordance with the Rate and Method (the “Prepayments”) deposited to the Redemption Account pursuant to the Indenture, plus amounts transferred from the Reserve Account pursuant to the Indenture, 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
103%
102
101
100
Prepayments and amounts released from the Reserve Account in connection with Prepayments will be allocated to the payment at maturity and redemption of Bonds and any Parity Bonds as nearly as practicable on a proportionate basis based on the outstanding principal amount of the Bonds and any Parity Bonds and such amounts shall be applied to redeem Bonds and Parity Bonds as nearly as practicable on a pro rata basis among maturities in increments of $5,000; provided, however, that, for Prepayments of less than $50,000, the District may specify in a Certificate of an Authorized Representative that Prepayments be applied to one or more maturities of the Bonds or Parity Bonds so long as there is delivered to the Trustee a Certificate of the Independent Financial Consultant that, following such application of the Prepayments, the maximum Special Taxes that may be levied in each Fiscal Year on Taxable Property is not less than 110% of Annual Debt Service in the Bond Year that begins in such Fiscal Yer.

See the caption “SPECIAL RISK FACTORS — Potential Early Redemption of Bonds from Prepayments or Community Facilities District Bond Proceeds” for a discussion of the potential for a lower than expected yield on the Bonds as a result of a special mandatory redemption from prepayment of Special Taxes or proceeds of bonds of other community facilities districts.

Notice of Redemption. So long as the Bonds are held in book-entry form, notice of redemption will be sent by the Trustee to DTC and not to the Beneficial Owners of the Bonds under the DTC book-entry only system. Neither the District nor the Trustee is responsible for notifying the Beneficial Owners, who are to be notified in accordance with the procedures in effect for the DTC book-entry system. See Appendix H — “BOOK-ENTRY ONLY SYSTEM.”
The Trustee will give notice, in the name of the District, of the redemption of Bonds. Such notice of redemption will: (i) specify the CUSIP numbers (if any), the bond numbers and the maturity date or dates of the Bonds selected for redemption, except that where all of the Bonds are subject to redemption, or all of the Bonds of one maturity are to be redeemed, the bond numbers of such issue need not be specified; (ii) state the date fixed for redemption and surrender of the Bonds to be redeemed; (iii) state the redemption price; (iv) state the place or places where the Bonds are to be redeemed; (v) in the case of Bonds to be redeemed only in part, state the portion of such Bond which is to be redeemed; (vi) state the date of issue of the Bonds as originally issued; (vii) state the rate of interest borne by each Bond being redeemed; and (viii) state any other descriptive information needed to identify accurately the Bonds being redeemed as specified by the Trustee. 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 11 4876-9387-7202v5/022042-0026
least 30 days but no more than 45 days prior to the redemption date, the Trustee will mail a copy of such notice of redemption, by first class mail, postage prepaid, to the respective Owners thereof at their addresses appearing on the Bond Register, and to the original purchaser of any Bonds; provided, however, so long as the Bonds are registered in the name of the Nominee, such notice shall be given in such manner as complies with the requirements of the Depository. The actual receipt by the Owner 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.

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.

Each further notice of redemption will be sent not later than the date that notice of redemption is given to the Owners pursuant to the Indenture by first class mail or facsimile to the Depository and to any other registered securities depositories then in the business of holding substantial amounts of obligations of types comprising the Bonds as determined by the Trustee and to one or more of the national information services that the Trustee determines are in the business of disseminating notice of redemption of obligations such as the Bonds.

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 identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such check or other transfer.

With respect to any notice of optional 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 the District determines that such moneys will not be received on the redemption date, 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 the District determines that 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.

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. In selecting portions of such Bonds for redemption, the Trustee will treat such Bonds, as applicable, as representing that number of Bonds of $5,000 denominations which is obtained by dividing the principal amount of such Bonds to be redeemed in part by $5,000. The procedure for the selection of Parity Bonds for redemption may be modified as set forth in the Supplemental Indenture for such Parity Bonds. The Trustee will promptly notify the District in writing of the Bonds, or portions thereof, selected for redemption.

Partial Redemption of Bonds. Upon surrender of any Bond to be redeemed in part only, the District will execute and the Trustee will authenticate and deliver to the Owner, at the expense of the District, a new Bond or 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.

Effect of Notice and Availability of Redemption Money. Notice of redemption having been duly given, as provided in the Indenture, and the amount necessary for the redemption having been made available for that purpose and being available therefor on the date fixed for such redemption: (i) the Bonds, or portions thereof, designated for redemption will, on the date fixed for redemption, become due and payable at the redemption 12 4876-9387-7202v5/022042-0026
price thereof as provided in the Indenture, anything in the Indenture or in the Bonds to the contrary notwithstanding; (ii) upon presentation and surrender thereof at the office of the Trustee, the redemption price of such Bonds will be paid to the Owners thereof; (iii) 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 (iv) 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.

Registration, Transfer and Exchange
Registration. The Trustee will keep sufficient books for the registration and transfer of the Bonds. The ownership of the Bonds will be established by the Bond registration books held by the Trustee.

Transfer or Exchange. Subject to the limitations set forth in the following paragraph, the registration of any Bond may, in accordance with its terms, be transferred upon the Bond Register by the person in whose name it is registered, in person or by his or her duly authorized attorney, upon surrender of such Bond for cancellation at the office of the Trustee, accompanied by delivery of written instrument of transfer in a form acceptable to the Trustee and duly executed by the Owner or his or her duly authorized attorney.

Bonds may be exchanged at the office of the Trustee for a like aggregate principal amount of Bonds for other authorized denominations of the same maturity and issue. The Trustee may not collect from the Owner any charge for any new Bond issued upon any exchange or transfer, but will require the Owner requesting such exchange or transfer to pay any tax or other governmental charge required to be paid with respect to such exchange or transfer. Whenever any Bonds are surrendered for registration of transfer or exchange, the District will execute and the Trustee will authenticate and deliver a new Bond or Bonds, as applicable, of the same issue and maturity, for a like aggregate principal amount; provided that the Trustee is not required to register transfers or make exchanges of: (i) Bonds for a period of 15 days next preceding any selection of the Bonds to be redeemed; or (ii) any Bonds chosen for redemption.

SOURCES OF PAYMENT FOR THE BONDS
Limited Obligations
The Bonds are special, limited obligations of the District payable only from amounts pledged under the Indenture and from no other sources.

The Special Taxes are the primary source of security for the repayment of the Bonds. Under the Indenture, the District has pledged to repay the Bonds from the Net Taxes (which are Special Tax revenues remaining after the payment of the annual Administrative Expenses in an amount not to exceed the Administrative Expenses Cap (as defined in the Indenture)) and from amounts held in the Special Tax Fund (other than amounts held in the Administrative Expense Account therein). Special Tax revenues include the proceeds of the annual Special Tax levy received by the District, including any scheduled payments and Prepayments thereof, and the net proceeds of the redemption of delinquent Special Taxes or sale of property sold as a result of foreclosure of the lien of delinquent Special Taxes to the amount of said lien, and penalties and interest thereon; provided that any delinquent Special Tax sold to an independent third-party or to the City for 100% of the delinquent amount will no longer be pledged under the Indenture to the payment of the Bonds or Parity Bonds.

In the event that the Special Tax revenues are not received when due, the only sources of funds available to pay the debt service on the Bonds are amounts held by the Trustee in the Special Tax Fund (other than the Administrative Expense Account therein), including amounts held in the Reserve Account therein, for the exclusive benefit of the Owners of the Bonds.
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NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE COUNTY,

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 BUT ARE

LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM THE NET TAXES AND OTHER AMOUNTS PLEDGED UNDER THE INDENTURE AS MORE FULLY DESCRIBED HEREIN.

Special Taxes
Authorization and Pledge. In accordance with the provisions of the Act, the City established the District on December 10, 2019 for the purpose of financing of various public improvements required in connection with the proposed development within the District. At a special election held on January 12, 2021 in connection with the Change Proceedings conducted with respect to the District in accordance with the Act, the qualified elector within the District voted to approve the Rate and Method which authorized the Special Tax to be levied to repay indebtedness of the District, including the Bonds.

The Bonds will be repaid only from annual Net Taxes derived from the levy and collection of Special Taxes pursuant to the Rate and Method. The Rate and Method permits the prepayment of Special Taxes for an Assessor’s Parcel (as defined in the Rate and Method), and any such Prepayments will be applied to redeem Bonds and Parity Bonds, if any. The Net Taxes collected from the annual Special Tax levy and the proceeds of any Prepayment have been pledged under the Indenture to the repayment of the Bonds and Parity Bonds.

The Special Taxes levied in any Fiscal Year may not exceed the maximum rates authorized pursuant to the Rate and Method. See “— Rate and Method of Apportionment of Special Tax” and Appendix A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” There is no assurance that the Net Taxes will, in all circumstances, be adequate to pay the principal of and interest on the Bonds when due. See the caption “SPECIAL RISK FACTORS — Insufficiency of Special Tax Revenues.” Rate and Method of Apportionment of Special Tax. The Rate and Method applicable to the District is contained in Appendix A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” The meaning of the defined terms used in this section are as set forth in Appendix A.

In general, the Rate and Method imposes a different Maximum Special Tax on Taxable Property within the District depending upon whether such Taxable Property is classified as: (i) ”Developed Property” (in general, all Assessor’s Parcels which is included in a Final Map recorded prior to the January 1 preceding the Fiscal Year in which the Special Tax is being levied and a building permit for new construction has been issued before May 1 preceding such Fiscal Year), (ii) ”Approved Property” (in general, parcels of Taxable Property included in a Final Map recorded prior to the January 1 preceding the Fiscal Year in which the Special Tax is being levied but for which no building permit was issued before May 1 preceding such Fiscal Year), (iii) ”Undeveloped Property” (in general, Taxable Property that is not “Developed Property,” “Approved Property” or “Provisional Undeveloped Property”) or (iv) ”Provisional Undeveloped Property” (in general, Taxable Property that would otherwise be classified as Exempt Property but cannot be classified as Exempt Property because to do so would reduce the Acreage of all Taxable Property below the required minimum Acreage set forth in the Rate and Method). Different Maximum Special Taxes are also applicable to Developed Property depending upon: (a) its status as either “Residential Property” or “Non-Residential Property,” (b) in the case of Residential Property, its status as “Single Family Residential Property” or “Multifamily Property” or (c) in the case of Single Family Residential Property, the Building Square Footage of the structure.

Pursuant to the Rate and Method the District is required to determine the “Special Tax Requirement” for each Fiscal Year. The Special Tax Requirement for the District is the amount required in any Fiscal Year to pay: (i) the debt service or the periodic costs on all outstanding Bonds and Parity Bonds due in the calendar year that commences in such Fiscal Year, (ii) Administrative Expenses, (iii) the costs associated with the release of funds from an escrow account, (iv) any amount equal to establish or replenish any reserve funds established in 14 4876-9387-7202v5/022042-0026
association with the Bonds and Parity Bonds, (v) an amount equal to any anticipated shortfall due to Special Tax delinquencies, and (vi) the collection or accumulation of funds for the acquisition or construction of facilities authorized by the District, provided that the inclusion of such amount does not cause an increase in the levy of Special Tax on Approved Property or Undeveloped Property as set forth in the Rate and Method, less (vii) any amounts available to pay debt service or other periodic costs on the Bonds pursuant to the Indenture.

The Special Tax Requirement for the District is to be satisfied first by levying the Special Tax Proportionately on each Assessor’s Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax. If additional moneys are needed to satisfy the Special Tax Requirement, the Special Tax will be levied Proportionately on each Assessor’s Parcel of Approved Property at up to 100% of the Maximum Special Tax applicable to each such Assessor’s Parcel. If additional moneys are still needed to satisfy the Special Tax Requirement, the Special Tax will be levied Proportionately on each Assessor’s Parcel of Undeveloped Property up to 100% of the Maximum Special Tax applicable to each such Assessor’s Parcel. If additional moneys are needed to satisfy the Special Tax Requirement, the Special Tax on each Assessor’s Parcel of Developed Property whose Maximum Special Tax is the Backup Special Tax will be increased Proportionately from the Assigned Special Tax up to 100% of the Backup Special Tax. Finally, if additional moneys are needed to satisfy the Special Tax Requirement, the Special Tax will be levied Proportionately on each Assessor’s Parcel of Provisional Undeveloped Property at up to 100% of the Maximum Special Tax applicable to each such Assessor’s Parcel. Notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor’s Parcel of Residential Property as a result of a delinquency in the payment of the Special Tax applicable to any other Assessor’s Parcel be increased by more than 10% above the amount that would have been levied in that Fiscal Year had there never been any such delinquency or default Within the District, 123 of the 168 taxable parcels are classified as Developed Property for the Fiscal Year 2024-25 Special Tax levy.

For Fiscal Year 2024-25, the Assigned Special Tax for Developed Property within the District that is classified as Single Family Residential Property range from $2,442.90 per taxable unit with a Building Square Footage of less than 1,700 square feet to $3,117.83 per taxable unit with a Building Square Footage of greater than 2,900 square feet. For Fiscal Year 2024-25 the Maximum Special Tax Rate for Approved Property within the District ranges from $3,051.16 to $3,056.23 per taxable unit. For Fiscal Year 2024-25, the Assigned Special Tax for Non Residential Property which is Developed Property is $22,638.75 per acre.

On each July 1 the Assigned Special Tax rates for Developed Property and the Maximum Special Tax rate for Approved Property shall be increased by two percent (2.00%) of the amount in effect in the prior Fiscal Year.

Annual Debt Service for the Bonds has been structured so that Developed Property at buildout levied at the Assigned Special Tax rate, assuming no delinquencies, will generate in each Fiscal Year not less than the Administrative Expenses Cap plus 110% of debt service payable with respect to the Bonds in the calendar year that begins in that Fiscal Year, assuming that Special Taxes are levied and collected on such Developed Property pursuant to the Rate and Method.

Table 1 below sets forth the Assigned Special Tax for Developed Property, the Maximum Special Tax rates for Approved Property and Non-Residential Property, the Fiscal Year 2024-25 Special Tax levy and the percent of such levy based on land use type.
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TABLE 1

CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. 2019-2 (NICHOLS RANCH) ASSIGNED SPECIAL TAX RATES FOR FISCAL YEAR 2024-25
Land Use Type
Residential
Floor Area
(sq. ft.)
Maximum/
Assigned
Special Tax
Rates Fiscal
Year 2024-25(1)
Special Tax
Levy Rates
Fiscal Year
2024-25
Percent of
Maximum/
Assigned Rate
No. of
Acres
No. of
Units
Aggregate
Estimated
Special Taxes
Fiscal Year
2024-25 (2)
Percent of
Total
Residential Property < 1,700 $2,442.90 $ 0.00 0.0% N/A 0 $ 0.00 0.0% Residential Property 1,700 - 1,900 2,524.61 0.00 0.0 N/A 0 0.00 0.0 Residential Property 1,901 - 2,100 2,595.71 2,595.71 100.0 N/A 15 38,935.72 11.2 Residential Property 2,101 - 2,300 2,677.43 2,677.43 100.0 N/A 28 74,967.98 21.5 Residential Property 2,301 - 2,500 2,851.47 2,851.47 100.0 N/A 42 119,761.57 34.4 Residential Property 2,501 - 2,700 2,903.47 2,903.47 100.0 N/A 7 20,324.26 5.8 Residential Property 2,701 - 2,900 3,015.95 3,015.95 100.0 N/A 23 69,366.92 19.9 Residential Property > 2,900 3,117.83 3,117.83 100.0 N/A 8 29,942.63 7.2 Approved Property N/A 3,064.30 0.00 0.0 N/A 45 0.00 0.0 Non-Residential Property N/A 22,638.75 0.00 0.0 0.00 0 0.00 0.0 Total N/A 168 $348,751.15 100.0%
(1) Maximum Rate for Land Use Type Approved Property and Non-Residential Property. (2) Includes estimated Administrative Expenses of $30,600. 1 4876-9387-7202v5/022042-0026
Backup Special Tax Rates. The Backup Special Tax for an Assessor’s Parcel within a Final Map classified or to be classified as Single Family Property is calculated by multiplying the Maximum Special Tax per acre of Undeveloped Property by the acreage of Single Family Residential Property expected to exist in such Final Map at the time of calculation and dividing such product by the number of residential units expected to exist in such Final Map at the time of calculation.

In the event any portion of the Final Map is changed or modified, the Backup Special Tax for all Assessor’s Parcels within such changed or modified area shall be $22,638.75 per acre for Fiscal Year 2024-25.

In the event any superseding Final Map is recorded as a Final Map within the boundaries of the District, the Backup Special Tax for all Assessor’s Parcels within such Final Map shall be $22,638.75 per acre for Fiscal Year 2024-25. The Backup Special Tax shall not apply to Multifamily Residential Property, or Non-Residential Property. On each July 1 the Backup Special Tax rate will increase by two percent (2.00%) of the amount in effect in the prior Fiscal Year.

Prepayment of Special Taxes. The Maximum Special Tax obligation may be prepaid and permanently satisfied for (i) Assessor’s Parcels of Developed Property, (ii) Assessor’s Parcels of Approved Property or Undeveloped Property for which a building permit has been issued, (iii) Approved Property or Undeveloped Property for which a building permit has not been issued, and (iv) Assessor’s Parcels of Public Property or Property Owner’s Association Property, or Provisional Undeveloped Property that are not Exempt Property. In addition, the Maximum Special Tax obligation for an Assessor’s Parcel of Developed Property, Approved Property or Undeveloped Property may be partially prepaid. The Prepayment amount is calculated based on the sum of the Bond Redemption Amount, the Redemption Premium, the Future Facilities Amount, the Defeasance Amount, Administrative Fees and Expenses and less a credit for the resulting reduction in the Reserve Requirement for the Bonds (if any), all as specified in Section G of the Rate and Method attached as Appendix A.

Prepayments of Special Taxes will be applied to effect an extraordinary redemption of Bonds and Parity Bonds.

See “THE BONDS — Redemption — Special Mandatory Redemption from Special Tax Prepayments.” Estimated Debt Service Coverage. Based on the number of building permits issued within the District as of May 1, 2024 (the date pursuant to the Rate and Method for determining the number of parcels of Developed Property within the District for the following Fiscal Year), 123 parcels within the District are classified as Developed Property and the remaining 45 taxable parcels within the District are classified as Approved Property for the Fiscal Year 2024-25 Special Tax levy. Annual Debt Service for the Bonds in each future Fiscal Year has been structured so that Special Taxes levied on Developed Property at buildout (168 parcels) at the Assigned Special Tax for Facilities rates, assuming no delinquencies, will generate in each Fiscal Year not less than 110% of debt service payable with respect to the Bonds in the calendar year that begins in that Fiscal Year, plus the Administrative Expenses Cap. Actual collections of the Special Tax will depend on the amount of Special Tax delinquencies. The Assigned Special Tax for Facilities rates for Developed Property and for Approved Property shall be increased by two percent (2.00%) of the amount in effect in the prior Fiscal Year.

In connection with the issuance of the Bonds, the Special Tax Consultant will certify that the Maximum Special Tax that may be levied in each Fiscal Year on Assessor’s Parcels within the District classified as Taxable Property will be at least equal to the sum of: (i) 110% of Maximum Annual Debt Service on the Bonds; plus (ii) the Administrative Expenses Cap. Actual collections of the Special Tax will depend on the amount of Special Tax delinquencies.

Limitation on Special Tax Levy and Potential Impact on Coverage. Pursuant to Section 53321(d) of the Government Code, the special tax levied against any Assessor’s Parcel for which an occupancy permit for private residential use has been issued will not be increased as a consequence of delinquency or default by the owner of any other Assessor’s parcel within the District by more than 10% above the amount that would have been levied in that fiscal year had there never been any such delinquencies or defaults. As a result, in the event the Special Tax is levied at less than the Assigned Special Tax rate, it is possible that the District may not be able to increase the tax levy to the Assigned Special Tax in all years. 2 4876-9387-7202v5/022042-0026
Levy, Collection and Application of Special Taxes. The Special Taxes are levied and collected by the Treasurer-Tax Collector of the County in the same manner and at the same time as ad valorem property taxes, although it is possible that the District could elect to provide handbills to property owners within the District.

The District will covenant in the Indenture that each year it will levy Special Taxes up to the maximum rates permitted under the Rate and Method in an amount sufficient, together with other amounts on deposit in the Special Tax Fund, to pay the principal of and interest on any Outstanding Bonds and Parity Bonds, to replenish the Reserve Account to the Reserve Requirement and to pay Administrative Expenses.

The District will make certain covenants in the Indenture which are intended to ensure 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 the Bonds, Parity Bonds and Administrative Expenses when due.

First, the District will covenant in the Indenture 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 and any Parity Bonds are Outstanding.

Second, the District will covenant in the Indenture, to the maximum extent that the law permits it to do so, not to initiate proceedings to reduce the maximum Special Tax rates for the District, unless, in connection therewith, the District receives a certificate from one or more Independent Financial Consultants which, when taken together, certify that: (i) such changes do not reduce the maximum Special Taxes that may be levied in each year on property within the District to an amount which is less than the Administrative Expenses Cap plus 110% of the Annual Debt Service due in each corresponding future Bond Year with respect to the Bonds and Parity Bonds Outstanding as of the date of such proposed reduction; and (ii) the District is not delinquent in the payment of the principal of or interest on the Bonds or any Parity Bonds.

Third, the District will covenant in the Indenture that, in the event that any initiative is adopted by the qualified electors within the District which purports to reduce the maximum Special Tax below the levels specified in the preceding paragraph or to limit the power of the District to levy the Special Taxes for the purposes set forth in the Indenture, it will commence and pursue legal action in order to preserve its ability to comply with such covenants. The District can provide no assurance that any such legal action will be successful. See the caption “SPECIAL RISK FACTORS — Proposition 218.”
Fourth, the District will covenant in the Indenture that it will not adopt any policy pursuant to the Act permitting the tender of Bonds or Parity Bonds in full payment 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 the District having insufficient Net Taxes to pay the principal of and interest on the Bonds and Parity Bonds when due.

See Appendix E under the caption “COVENANTS AND WARRANTY.” Although the Special Taxes constitute liens on taxed parcels within the District, they do not constitute a personal indebtedness of the owners of property within the District. Moreover, other liens for taxes and assessments already exist on the property located within the District and others could come into existence in the future in certain situations without the consent or knowledge of the City or the landowners in the District. See the captions “THE DISTRICT — Direct and Overlapping Debt” and “SPECIAL RISK FACTORS — Direct and Overlapping Indebtedness.” 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 financially able to do so, all as more fully described under the caption “SPECIAL RISK FACTORS.”
Proceeds of Foreclosure Sales. The net proceeds received following a judicial foreclosure sale of property within the District resulting from a property owner’s failure to pay the Special Taxes when due are 3 4876-9387-7202v5/022042-0026
included within the Net Taxes pledged to the payment of principal of and interest on the Bonds and any Parity Bonds under the Indenture.

Pursuant to Section 53356.1 of the 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 Taxes 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 Act, the commencement of judicial foreclosure following the nonpayment of a Special Tax is not mandatory. However, the District will covenant in the Indenture for the benefit of the owners of the Bonds and any Parity Bonds that it will: (i) commence judicial foreclosure proceedings against parcels with delinquent Special Taxes in excess of $5,000 by the October 1 following the close of each Fiscal Year in which such Special Taxes were due; and (ii) commence judicial foreclosure proceedings against all parcels with delinquent Special Taxes by the October 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than 95% of the total Special Tax levied; and (iii) diligently pursue such foreclosure proceedings until the delinquent Special Taxes are paid; provided that, notwithstanding the foregoing, the District may elect to defer foreclosure proceedings on any parcel so long as the amount in the Reserve Account is at least equal to the Reserve Requirement.

The District will covenant in the Indenture that it will deposit the net proceeds of any foreclosure in the Special Tax Fund and will apply such proceeds remaining after the payment of Administrative Expenses to make current payments of principal and interest on the Bonds and any Parity Bonds, to bring the amount on deposit in the Reserve Account up to the Reserve Requirement and to pay any delinquent installments of principal or interest due on the Bonds and any Parity Bonds. See APPENDIX E — “SUMMARY OF THE INDENTURE — COVENANTS AND WARRANTY — Covenants” herein.

If foreclosure is necessary and other funds (including amounts in the Reserve Account) have been exhausted, debt service payments on the Bonds could be delayed unless the foreclosure proceedings produce sufficient net 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 — Enforcement Delays – Bankruptcy.” 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 net proceeds of such sale will be sufficient to pay any delinquent Special Tax installment. See the caption “SPECIAL RISK FACTORS — Property Values.” Although the Act authorizes the District to cause such an action to be commenced and diligently pursued to completion, the 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. The 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.

Collection of Special Taxes and Flow of Funds. The Special Taxes will be levied and collected by the Treasurer-Tax Collector of the County in the same manner and at the same time as ad valorem property taxes, although it is possible that the District could elect to provide handbills to property owners within the District.

When the County apportions Special Taxes to the District, the District will transmit the Special Taxes to the Trustee for deposit in the Special Tax Fund established by the Indenture.

Except for Prepayments, which will be deposited to the Redemption Account of the Special Tax Fund, 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, in the amounts and in the following order of priority, to:

First: To the Administrative Expense Account in an amount up to the Administrative Expenses Cap.
4 4876-9387-7202v5/022042-0026
Second: 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 which 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.

Third: To the Principal Account, an amount such that the balance in the Principal Account one Business Day prior to September 1 of each year, commencing September 1, 2026, is equal the principal 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 shall be used for the payment of the principal of such Bonds and any Parity Bonds as the same become due at maturity.

Fourth: To the Redemption Account, the amount needed to make the balance in the Redemption Account one Business Day prior to each September 1 on which a Sinking Fund Payment is due equal to the Sinking Fund Payment due on any Outstanding Bonds and Parity Bonds on such September 1; provided, however, that, if amounts in the Special Tax Fund are inadequate to make the foregoing transfers, then any deficiency will be made up by an immediate transfer from the Reserve Account, if funded, pursuant to the Indenture; and thereafter, to pay the principal and premium, if any, due in connection with an optional redemption of Bonds or Parity Bonds.

Fifth: To the Reserve Account of the Special Tax Fund to the extent necessary to replenish the Reserve Account to the Reserve Requirement.

Sixth: To the Administrative Expense Account of the Special Tax Fund the amount of any Administrative Expenses for the current Bond Year in excess of the Administrative Expenses Cap as directed by the City.

Seventh: To the Rebate Fund established by the Indenture to the extent directed by the City pursuant to the Indenture.

Eighth: To the Surplus Fund established by the Indenture such remaining amounts in the Special Tax Fund after making the foregoing transfers on September 1.

Reserve Account of the Special Tax Fund
In order to secure further the payment of principal of and interest on the Bonds, the District is required, upon delivery of the Bonds, to deposit in the Reserve Account and thereafter to maintain in the Reserve Account an amount equal to the Reserve Requirement. The term “Reserve Requirement” is defined in the Indenture to mean, that amount as of any date of calculation, equal to the lesser of: (i) 10% of the initial principal amount of the Bonds and Parity Bonds, if any; (ii) Maximum Annual Debt Service on the then Outstanding Bonds and Parity Bonds, if any; (iii) 125% of average Annual Debt Service on the then Outstanding Bonds and Parity Bonds, if any; provided, however, that the Reserve Requirement shall not exceed $________ except in connection with the issuance of Parity Bonds. The Reserve Requirement may be satisfied in whole or in part by cash, a Reserve Policy (as defined in the Indenture), or a combination thereof. On the date of issuance of the Bonds, the Reserve Requirement will be satisfied from a deposit of $__________ into the Reserve Account from proceeds of the Bonds.

Subject to the limits on the maximum annual Special Tax levy set forth in the Rate and Method and in the Indenture, the District will covenant in the Indenture to levy Special Taxes in an amount sufficient, in light of the other intended uses of the Special Tax proceeds, to maintain the balance in the Reserve Account at the 5 4876-9387-7202v5/022042-0026
Reserve Requirement. Amounts in the Reserve Account are to be applied: (i) to pay debt service on the Bonds, or any Parity Bonds, including Sinking Fund Payments, to the extent that other monies are not available therefor; (ii) to redeem Bonds or Parity Bonds in the event of prepayment of Special Taxes, to optionally redeem Bonds or Parity Bonds or in connection with a partial defeasance of Bonds or Parity Bonds, in accordance with the Indenture; and (iii) to pay any rebate requirements. See Appendix E under the caption “CREATION OF FUNDS AND APPLICATION OF PROCEEDS — Reserve Account of the Special Tax Fund.” No Teeter Plan
Although the Riverside County Board of Supervisors has adopted the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”) which allows each entity levying secured property taxes in the County to draw on the amount of property taxes levied rather than the amount actually collected, as provided for in Section 4701 et seq. of the California Revenue and Taxation Code, the District is not included in the County Teeter Plan. Consequently, the District may not draw on the County Tax Loss Reserve Fund in the event of delinquencies in Special Tax payments within the District.

Parity Bonds for Refunding Purposes Only
The District will covenant in the Indenture not to issue Parity Bonds except as provided in the Indenture and only for the purposes of refunding all or a portion of the Bonds and any Parity Bonds. See Appendix E under the caption “DEFEASANCE AND PARITY BONDS.”
Meritage Letter of Credit
Meritage has provided an irrevocable letter of credit (the “Letter of Credit”) to secure payment of Special Taxes levied on the property in the District owned by it, which identifies the Trustee as beneficiary. The amount available to be drawn under the Letter of Credit (the “Stated Amount”) is equal to the estimated Special Tax levy attributable to the parcels owned by Meritage as of July 30, 2024 in the two fiscal years following the issuance of the Bonds. The initial Stated Amount of the Letter of Credit shall be $354,273.77. The initial term of the Letter of Credit is one year from its date of issuance, and Meritage will maintain and cause the issuing bank to annually renew the Letter of Credit each year prior to the expiration date until the property then owned by Meritage is responsible for less than twenty percent (20%) of the Maximum Special Tax levy in the District in the then current and succeeding Fiscal Year. Notwithstanding the foregoing, the District may elect to waive the requirement for Meritage to maintain the Letter of Credit or may release the Letter of Credit at any time without the consent of the Owners or Beneficial Owners of the Bonds. The Letter of Credit is not pledged to the repayment of debt service on the Bonds.

THE DISTRICT
General Description of the District
The City is located in the western portion of the County. The District contains approximately 58.19 gross acres and approximately and is located in the City on the southeast quadrant of the Interstate 15 and Nichols Road, adjacent to the Temescal Valley High School.

The property within the District is being developed by Meritage into 168 single-family detached homes in a project being marketed as “Nichols Ranch.” As of July 1, 2024, Meritage had completed and conveyed 83 homes within the District to individual homeowners. As of such date Meritage owned four model homes (none of which were in escrow), 49 homes under construction (16 of which were in escrow) and 32 finished lots (none of which were in escrow). Meritage expects to complete and convey all remaining homes to be constructed in the District to individual homeowners by the end of 2025. 6 4876-9387-7202v5/022042-0026
The major infrastructure (sewer, water, storm drains, utilities, and arterial roads) necessary to develop the property within the District is substantially complete. Meritage is required to complete a public park prior to the issuance of the 125 th certificate of occupancy within the District. The park is nearing completion and Meritage does not expect the timing of the completion of the park to adversely affected the projected schedule of home construction and sales in the District. The in-tract infrastructure within the District is also substantially complete with finishing of certain streets and landscaping remaining.

Water and sewer service to the property within the District is currently supplied by the Elsinore Valley Municipal Water District. Electricity is currently supplied by Southern California Edison and gas by Southern California Gas Company. Public education instruction is provided by the Lake Elsinore Unified School District.

The property within the District is not located in an Alquist-Priolo Earthquake Study Zone and is not located within one-half mile of an active earthquake fault. The District is located in an area which the Department of Forestry and Fire Protection of the State of California has designated as a very high fire hazard severity zone. The area in the District was previously mapped within a flood zone. A letter of map revision was filed and accepted by the Federal Emergency Management Agency and the property in the District is no longer mapped within a flood zone. Flood insurance is not required for the homes in the District.

Notwithstanding the foregoing, property in the District may be subject to unpredictable seismic activity, fires, flood, or other natural disasters. See “SPECIAL RISK FACTORS — Natural Disasters.” A map showing the location of the District and an aerial photograph thereof appear following the Table of Contents.

Authorized Uses of Bond Proceeds
Proceeds of the Bonds are authorized to be used to pay for the costs of construction of City facilities, including certain storm drain and street improvements and the costs of certain water and sewer system improvements to be owned and operated by the Elsinore Valley Municipal Water District. See the caption “FINANCING PLAN.”
Appraisal Report
The estimated assessed value of the property within the District, as shown on the County’s assessment roll for Fiscal Year 2023-24 is approximately $4,987,187, which as a result of timing of the County’s determination of the assessed values for Fiscal Year 2023-24, does not reflect the substantial development activity that has taken place since such value was determined.

A property’s assessed value is not necessarily indicative of its market value. In order to provide information with respect to the value of the taxable property within the District, the City engaged the Appraiser to prepare the Appraisal Report. The Appraiser has an “MAI” designation from the Appraisal Institute and has prepared numerous appraisals for the sale of land-secured municipal bonds. The Appraiser was selected by the City and has no material relationships with the City or the owners of the land within the District other than the relationship represented by the engagement to prepare the Appraisal Report. The City instructed the Appraiser to prepare its analysis and report in conformity with City-approved guidelines and the Appraisal Standards for Land Secured Financings published in 1994 and revised in 2004 by the California Debt and Investment Advisory Commission. A copy of the Appraisal Report is included as APPENDIX D — “APPRAISAL REPORT” to this Official Statement.

The purpose of the Appraisal Report was to estimate the market value of the property within the District subject to the lien of the Special Taxes. The estimate of market value takes into consideration and assumes the improvements to be funded with the proceeds of the Bonds have been installed and that the remaining costs to develop each of the projects within the District provided to the Appraiser by Meritage are correct. As a result, 7 4876-9387-7202v5/022042-0026
the value conclusions are based upon a hypothetical condition that all improvements and benefits to the District, which are to be funded with the proceeds of the Bonds, are completed and in place.

Subject to the assumptions and limiting conditions set forth in the Appraisal Report, the Appraiser concluded that, as of July 1, 2024, the market value of the Taxable Property within the District was $72,777,857.

In valuing the property within the District, the Appraiser used a sales comparison approach for the property to be developed and, with respect to the Meritage-owned models and homes over 95% complete, a discounted cash flow analysis was applied. The discounted cash flow analysis accounts for remaining development costs, marketing and carrying costs and a discount rate through the estimated absorption period for such models and production units. Production units which were under 95% complete were valued on a finished lot basis.

The Appraisal Report is based upon a variety of assumptions and limiting conditions that are described in Appendix D. The City, the Underwriter and the District make no representation as to the accuracy of the Appraisal Report. There is no assurance that the property within the District can be sold for the prices set forth in the Appraisal Report or that any parcel can be sold for a price sufficient to pay the Special Tax for that parcel in the event of a default in payment of Special Taxes by the landowner. See “SPECIAL RISK FACTORS — Property Values,” Appendix D — “APPRAISAL REPORT.”
Estimated Appraised Value-to-Lien Ratios
The aggregate appraised value of property within the District is $72,777,857. Dividing the aggregate estimate of value by the principal amount of the Bonds results in value to lien ratio of 9.10-to-1* for the District.

There is currently no other direct or overlapping special tax or assessment debt on the property within the District.

Including the overlapping general obligation debt in the District and the Bonds, the estimated appraised value to lien ratio for the District is approximately 9.08-to-1 *. See “SPECIAL RISK FACTORS — Direct and Overlapping Indebtedness.” The assessed value of the property within the District is $4,987,187 for Fiscal Year 2023-24, which as a result of timing of the County’s determination of the assessed values for Fiscal Year 2023- 24, does not reflect the substantial development activity that has taken place since such value was determined.

Based on ownership status as of July 1, 2024 (and assuming none of the 16 homes in escrow close to individual homeowners), individual homeowners and Meritage are expected to be responsible for approximately

67.4% and 32.6%, respectively, of the Fiscal Year 2024-25 Special Tax levy.

Table 2 below sets forth the appraised value-to-lien ratio of the Taxable Property within the District based on the appraised values set forth in the Appraisal Report, the principal amount of the Bonds and overlapping general obligation debt. Table 3 below sets forth the estimated appraised value-to-lien ratios for Developed Property within the District by various ranges based upon the principal amount of the Bonds and overlapping general obligation debt. Other than the Bonds, there is currently no overlapping land-secured special tax and assessment debt on the property within the District. * Preliminary, subject to change.
8 4876-9387-7202v5/022042-0026
TABLE 2

CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. 2019-2 (NICHOLS RANCH)

ESTIMATED VALUE-TO-LIEN RATIOS

ALLOCATED BY PROPERTY OWNER
Property Owner(1)
No. of
Parcels
Appraised
Property
Value(2)
% of
Appraised
Value
Maximum
Tax(3)
Percentage
of
Maximum
Tax
Fiscal Year
2024-25
Levy (4)
% of
Estimated
Fiscal Year
2024-25
Levy
CFD 2019-2
2024 Bonds (5)*
All Other
Overlapping
Debt(6)
Total Debt
Issued*
Appraised
Value-to-
Lien Ratio*
Developed Property
Individually Owned 83 $48,736,425 66.97% $ 253,835 49.45% $ 235,204 67.53% $ 5,398,970 $ 16,108 $5,415,077 9.00:1 Meritage Homes 40 13,963,760 19.19 122,092 23.79 113,095 32.47 2,596,030 7,745 2,603,776 5.36:1 Subtotal Developed 123 $62,700,185 86.15% $ 375,927 73.24% $ 348,299 100.00% $ 7,995,000 $ 23,853 $8,018,853 7.82:1 Approved Property
Meritage Homes Owned 45 $10,077,672 13.85% $ 137,373 26.76% $ 0 0.00% $ 0 $ 0 $ 0 N/A Subtotal Approved Developer Owned 45 $10,077,672 13.85% $ 137,373 26.76% $ 0 0.00% $ 0 $ 0 $ 0 N/A Total 168 $72,777,857 100.00% $ 513,301 100.00% $ 348,299 100.00% $ 7,995,000 $ 23,853 $8,018,853 9.08:1 * Preliminary, subject to change.
(1) Property ownership status as of July 1, 2024. Development within the District has progressed since the Date of Value. See “PROPERTY OWNERSHIP AND THE DEVELOPMENT” below.
(2) Based on the appraised value set forth in the Appraisal Report as of the July 1, 2024, the Date of Value. (3) Based on the Backup Special Tax rate on Developed Property and the Maximum Special Tax Rate on Approved Property. See “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Rate and Method of Apportionment of Special Tax.” (4) Fiscal Year 2024-25 Special Tax Levy based upon development status as of July 1, 2024 and an Administrative Expense Cap for Fiscal Year 2024-25 of $30,600. The estimated levy on Developed Property shown is equal to 100% of the Assigned Special Tax rates on Developed Property. Interest on a portion of the Bonds is capitalized through March 1, 2025. The District will not levy Special Taxes on Approved Property in Fiscal Year 2024-25. See “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Rate and Method of Apportionment of Special Tax.”
(5) Allocated based on the Fiscal Year 2024-25 Special Tax levy. (6) Includes overlapping debt set forth in Table 4 below.

Source: County of Riverside Assessor’s Office; Spicer Consulting Group, LLC. 9 4876-9387-7202v5/022042-0026
TABLE 3

CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. 2019-2 (NICHOLS RANCH) VALUE-TO-LIEN STRATIFICATION FOR DEVELOPED PROPERTY*
Value-to-Lien Category
No. of
Parcels of
Developed
Property
% of
Developed
Property
Appraised
Value (1)
% of
Appraised
Value
CFD 2019-2
Estimated
Fiscal Year
2024-25
Levy
Percent
Share of
Estimated
Fiscal Year
2024-25
Levy
CFD 2019-2
2024 Bonds (2)
Percent
Share of
CFD 2019-2
2024 Bonds
All Other
Overlapping
Debt(3)
Overlapping
Debt
Aggregate
Value-to-
Lien
Less than 3.00:1 (4) 0 0.00% $ 0 0.00% $ 0 0.00% $ 0 0.00% $ 0 $ 0 N/A Between 3.00:1 to 6.00:1 17 13.82 3,807,121 6.07 47,925 13.76 1,100,095 13.76 3,282 1,103,377 3.45:1 Between 6.01:1 to 9.00:1 59 47.97 31,658,019 50.49 172,127 49.42 3,951,071 49.42 11,788 3,962,859 7.99:1 Greater than 9.00:1 (4) 47 38.21 27,235,045 43.44 128,247 36.82 2,943,834 36.82 8,783 2,952,617 9.22:1 Totals 123 100.00% $62,700,185 100.00% $ 348,299 100.00% $7,995,000 100.00% $ 23,853 $8,018,853 7.82:1 * Preliminary, subject to change.
(1) Based on the appraised value set forth in the Appraisal Report as of July 1, 2024, the Date of Value. (2) Allocated based on Fiscal Year 2024-25 Special Tax levy based upon development status as of July 1, 2024. (3) Includes overlapping debt set forth in Table 4 below. (4) The minimum value to lien is 3.12:1*. The maximum value to lien in the Greater than 9.00:1 category is 9.48:1*.

Source: County of Riverside Assessor’s Office; Spicer Consulting Group, LLC. 10 4876-9387-7202v5/022042-0026
Direct and Overlapping Debt
The District is included within the boundaries of overlapping local agencies providing governmental services. Some of these local agencies have outstanding bonds, and/or the authority to issue bonds, payable from taxes or assessments. The existing and authorized indebtedness payable from taxes and assessments that may be levied upon the property within the District is shown in Table 4 below. In addition to current debt, new community facilities districts and/or special assessment districts could be formed in the future encompassing all or a portion of the property within the District; and such districts or the agencies that formed them could issue more bonds and levy additional special taxes or assessments.

TABLE 4

CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. 2019-2 (NICHOLS RANCH)

DIRECT AND OVERLAPPING DEBT
AS OF MAY 1, 2023
I. Appraisal Value (1) $72,777,857
II. Land Secured Bond Indebtedness
Outstanding Direct and
Overlapping Bonded Debt Type Issued Outstanding % Applicable Amount
Applicable
City of Lake Elsinore CFD No. 2019-2, Series 2024 CFD $7,995,000 $ 7,995,000 100.000% $ 7,995,000 * Total Land Secured Bonded Debt $ 7,995,000 *
Authorized but Unissued Direct and
Overlapping Indebtedness Type Authorized Unissued % Applicable Amount
Applicable
City of Lake Elsinore CFD No. 2019-2, Series 2024(2) CFD $11,000,000 $ 0 100.000% $ 0 Total Unissued Land Secured Indebtedness $ 0
TOTAL OUTSTANDING AND UNISSUED LAND SECURED INDEBTEDNESS $ 7,995,000 * III. General Obligation Bond Indebtedness
Outstanding Direct and
Overlapping Bonded Debt Type Issued Outstanding % Applicable Amount
Applicable
Metropolitan Water Debt Service GO $850,000,000 $ 19,215,000 0.004% $ 675 Mt. San Jacinto Jr. College Debt Service GO 295,000,000 242,210,000 0.004% 9,576 Lake Elsinore Unified School District Debt Service GO 68,915,000 47,005,000 0.029% 13,602 Total Outstanding General Obligation Bonded Debt (2) $ 23,853 Authorized but Unissued Direct and
Overlapping Indebtedness Type Authorized Unissued % Applicable Amount
Applicable
Metropolitan Water Debt Service GO $850,000,000 $ 0 0.004% $ 0 Mt. San Jacinto Jr. College Debt Service GO 295,000,000 0 0.004% 0 Lake Elsinore Unified School District Debt Service GO 105,000,000 36,085,000 0.029% 10,442 Total Unissued General Obligation Indebtedness (2) $ 10,442 TOTAL OUTSTANDING AND UNISSUED GENERAL OBLIGATION INDEBTEDNESS $ 34,295 TOTAL OF ALL OUTSTANDING DIRECT AND OVERLAPPING BONDED DEBT $ 8,018,853 * TOTAL OF ALL OUTSTANDING DIRECT AND UNISSUED DIRECT OVERLAPPING INDEBTEDNESS $ 8,029,295 * IV. Ratios to Appraisal Value
Outstanding Land Secured Bonded Debt..............9.10:1* Total Outstanding Bonded Debt ...........................9.08:1* * Preliminary, subject to change.
(1) Based on the appraised value set forth in the Appraisal Report as of July 1, 2024, the Date of Value. (2) Parity Bonds may be issued for refunding purposes only.

Source: County of Riverside Assessor’s Office; Spicer Consulting Group, LLC. 11 4876-9387-7202v5/022042-0026
Table 5 below describes the estimated Fiscal Year 2024-25 effective tax burden for Meritage’s development in the District based on the average appraised value of homes within each of Meritage’s floor plans in the District as of the Date of Value, the actual Fiscal Year 2024-25 Special Tax levy and Fiscal Year 2023-24 actual levies for all other overlapping taxing jurisdictions. Based on the foregoing and the projected debt service on the Bonds, the Administrative Expenses Cap of $30,600 (which amount shall escalate at 2.00% per Fiscal Year), in Fiscal Year 2024-25, the projected effective tax rates to be levied on Developed Property in the District will range from approximately 1.90% to 1.93%.

TABLE 5

CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. 2019-2 (NICHOLS RANCH) ESTIMATED FISCAL YEAR 2024-25 TAX OBLIGATION

FOR A SAMPLE OF DEVELOPED PROPERTY

MERITAGE HOMES

HIGHLAND HILLTOP
Plan Type Plan 1 Plan 2 Plan 3 Plan 4 Plan 1 Plan 2 Plan 3 CFD Tax Category 2,301 to 2,501 to 2,701 to Greater than 1,901 to 2,101 to 2,301 to 2,500 S.F. 2,700 S.F. 2,900 S.F. 2,900 S.F. 2,100 S.F. 2,300 S.F. 2,500 S.F.

Home Size(1) 2,308 2,532 2,744 2,932 2,020 2,165 2,417
Appraisal Value (2) $577,000 $595,020 $603,680 $615,720 $565,600 $573,725 $592,165 Ad Valorem Property Taxes:

General Purpose $ 5,770 $ 5,950 $ 6,037 $ 6,157 $ 5,656 $ 5,737 $ 5,922 Metro Water West (0.00350%) 20 21 21 22 20 20 21
Mt. San Jacinto Jr College (0.01320%) 76 79 80 81 75 76 78 Lake Elsinore Unified School District (0.01900%) 110 113 115 117 107 109 113 Total General Property Taxes $ 5,976 $ 6,163 $ 6,252 $ 6,377 $ 5,858 $ 5,942 $ 6,133 Assessment, Special Taxes & Parcel Charges:

Flood Control Stormwater / Cleanwater / Santa Ana $ 4 $ 4 $ 4 $ 4 $ 4 $ 4 $ 4 Northwest Mosquito and Vector Control 11 11 11 11 11 11 11 MWD Standby Charge 9 9 9 9 9 9 9
EVMWD Standby Charge 10 10 10 10 10 10 10
EVMWD Regional Sewer 10 10 10 10 10 10 10
EVMWD CFD 98-1 55 55 55 55 55 55 55
CSA #152 City of Lake Elsinore Stormwater 14 14 14 14 14 14 14 City of Lake Elsinore Citywide LLMD 25 25 25 25 25 25 25 Proposed CFD No. 2015-1 - Safety Services 945 945 945 945 945 945 945 Proposed CFD No. 2015-2 - Maintenance Services 1,208 1,208 1,208 1,208 1,208 1,208 1,208 City of Lake Elsinore CFD 2019-2(3) 2,851 2,903 3,016 3,118 2,596 2,677 2,851 Total Assessments & Special Taxes $ 5,143 $ 5,195 $ 5,307 $ 5,409 $ 4,887 $ 4,968 $ 5,143 Projected Total Property Tax $ 11,119 $ 11,357 $ 11,559 $ 11,786 $ 10,745 $ 10,911 $ 11,276 Projected Effective Tax Rate 1.93% 1.91% 1.91% 1.91% 1.90% 1.90% 1.90% (1) Reflects the average home size of each plan type within the District. (2) Based on the appraised value set forth in the Appraisal Report as of July 1, 2024, the Date of Value. (3) Reflects Fiscal Year 2024-25 Special Tax levy based on development as of July 1, 2024 and includes the Fiscal Year 2024- 25 Administrative Expenses Cap of $30,600.

Source: County of Riverside Assessor’s Office; Spicer Consulting Group, LLC.

Delinquency History
Fiscal Year 2023-24 was the first year of the Special Tax levy. The District levied Special Taxes in Fiscal Year 2023-24 in the amount of $206,765.94 and there were no delinquencies. In each Fiscal Year, the first installment of the Special Tax levy will become delinquent if not paid on or prior to December 10 and the second installment will become delinquent if not paid on or before April 10 12 4876-9387-7202v5/022042-0026

PROPERTY OWNERSHIP AND THE DEVELOPMENT
The information about the property in the District under this caption has been provided by representatives of Meritage, and has not been independently confirmed or verified by the Underwriter, the City or the District. The Underwriter, the City, and the District make no representation as to the accuracy or adequacy of the information contained in this caption. There may be material adverse changes in this information after the date of this Official Statement. Neither the Bonds nor the Net Taxes securing the Bonds and any Parity Bonds are personal obligations of Meritage or any affiliate thereof or any other property owner and, in the event that any property owner defaults in the payment of its Special Taxes, the District may proceed with judicial foreclosure but has no direct recourse to the assets of any property owner or any affiliate thereof.

See the caption “SPECIAL RISK FACTORS.”
Notwithstanding the belief of Meritage that it will have sufficient funds to complete its planned development in the District, no assurance can be given that amounts necessary to fund the remaining planned development by Meritage in the District will be available when needed. None of Meritage, or any other entity or person is under any legal obligation of any kind to expend funds for the development of the property as planned by Meritage in the District. Any contributions by Meritage or any other entity or person to fund the costs of its development are entirely voluntary. If and to the extent the aforementioned sources are inadequate to pay the costs to complete the planned development by Meritage within the District, the remaining portions of such development may not be completed. Meritage has no legal obligation to Bondholders to make any such funds available for construction or development, or the payment of ad valorem property taxes or the Special Taxes. See the caption “SPECIAL RISK FACTORS.”
General
The District contains approximately 58.19 gross acres and approximately and is located in the City on the southeast quadrant of the Interstate 15 and Nichols Road, adjacent to the Temescal Valley High School.

The major infrastructure (sewer, water, storm drains, utilities, and arterial roads) necessary to develop the property within the District is substantially complete. Meritage is required to complete a public park prior to the issuance of the 125 th certificate of occupancy within the District. The park is nearing completion and Meritage does not expect the timing of the completion of the park to adversely affected the projected schedule of home construction and sales in the District. The in-tract infrastructure within the District is also substantially complete with finishing of certain streets and landscaping remaining.

Planned Development Within the District
General. The property within the District is being developed by Meritage into 168 single-family detached homes in a project being marketed as “Nichols Ranch.” As of July 1, 2024, Meritage had completed and conveyed 83 homes within the District to individual homeowners. As of such date Meritage owned four model homes (none of which were in escrow), 49 homes under construction (16 of which were in escrow) and 32 finished lots (none of which were in escrow). Meritage expects to complete and convey all remaining homes to be constructed in the District to individual homeowners by the end of 2025.

Meritage’s project in the District includes two product lines – Hilltop and Highland. The tables below show certain information with respect to the homes in each product line as of July 30, 2024. 13 4876-9387-7202v5/022042-0026
COMMUNITY FACILITIES DISTRICT NO. 2019-2 (NICHOLS RANCH)

HILLTOP
(As of July 30, 2024)
Owned by Meritage
Plan
Total
Units
Planned
Estimated
Home
Square
Footage Closings
Completed
Homes/Homes
Under
Construction(1)
Finished
Lots
Base Home
Prices(2)
1 19 2,020 13 3 3 $616,695
2 27 2,177 17 8 2 636,495
3 31 2,427 20 9 2 653,495
Total 77 50 20 7
(1) Completed Homes/Homes Under Construction consist of two completed model homes and 18 production homes under construction.
(2) Base home prices shown exclude lot premiums, options and extras and any incentives or price reductions. Base sales prices are subject to change.

COMMUNITY FACILITIES DISTRICT NO. 2019-2 (NICHOLS RANCH)

HIGHLAND
(As of July 30, 2024)
Owned by Meritage
Plan
Total
Units
Planned
Estimated
Home
Square
Footage Closings
Completed
Homes/Homes
Under
Construction(1)
Finished
Lots
Base Home
Prices(2)
1 27 2,320 12 8 7 $670,695
2 18 2,541 9 3 6 670,695
3 28 2,771 13 8 7 701,295
4 18 2,948 9 4 5 676,000
Total 91 43 23 25
(1) Completed Homes/Homes Under Construction consist of two completed model homes and 21 production homes under construction.
(2) Base home prices shown exclude lot premiums, options and extras and any incentives or price reductions. Base sales prices are subject to change.

Meritage
General. Meritage Homes of California, Inc., a California corporation (previously defined as “Meritage”) is a subsidiary of Meritage Homes Corporation (“Meritage Homes Corporation”), a Maryland corporation. Meritage Homes Corporation is a homebuilder focused primarily on high-growth regions of the western and southern United States. Meritage Homes Corporation operates as a holding company, has no independent assets or operations, and is traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “MTH.” Homebuilding, construction, development and sales activities are conducted through subsidiaries. As of July 1, 2024, Meritage Homes Corporation was actively selling homes in three geographic regions: West (Arizona, California and Colorado), Central (Texas) and East (Florida, Georgia, North Carolina, South Carolina and Tennessee).

Meritage Homes Corporation is subject to the informational reporting requirements of the Exchange Act, and in accordance therewith is obligated to file reports, proxy statements and other information with the 14 4876-9387-7202v5/022042-0026
SEC. Such filings set forth, among other things, certain data relative to the consolidated results of operations and financial position of Meritage Homes Corporation and its subsidiaries (e.g., see Meritage Homes Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the SEC on February 14, 2024 and Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024, as filed with the SEC on April 26, 2024) as of the dates described therein. The SEC maintains an Internet website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC, including Meritage Homes Corporation. The address of such Internet website is www.sec.gov. All documents subsequently filed by Meritage Homes Corporation pursuant to the requirements of the Exchange Act after the date of this Official Statement will be available for inspection in such manner as the SEC prescribes. Copies of Meritage Homes Corporation’s annual report, quarterly reports and current reports, including any amendments, will be available from Meritage Homes Corporation’s website at www.meritagehomes.com.

The foregoing internet websites are included for reference only and the information on these internet sites is not a part of this Official Statement and is not incorporated by reference into this Official Statement. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on such internet websites. Neither Meritage nor Meritage Home Corporation is obligated to advance funds for construction or development or to pay ad valorem property taxes or the Special Taxes and investors should not rely on the information and financial statements contained on such internet sites in evaluating whether to buy, hold or sell the Bonds.

Financing Plan. Through August 1, 2024, Meritage had spent approximately $8,107,430 in acquiring its land in the District and approximately $63,785,628 in site development costs, permits and impact fees, home construction costs, and other development, marketing and sales costs (exclusive of internal financing repayment, corporate overhead and other carry costs) related to its development within the District. Meritage expects to spend approximately $9,194,102 in additional site development costs, permit and impact fees, home construction costs, and other development, marketing and sales costs (exclusive of corporate overhead and other carry costs) between August 1, 2024 and full build-out of the homes proposed to be constructed in the District.

To date, Meritage has financed its land acquisition, site development and home construction costs related to its property within the District through internally generated funds. Meritage expects to use internal funding (which may include home sales revenues from its project within the District) to complete its development activities within the District. However, home sales revenues from Meritage’s activities in the District are not segregated and set aside for completing the homes in the District. Notwithstanding the foregoing, Meritage believes that it will have sufficient funds to complete its construction and sale of homes in the District.

Except as described in this Official Statement and except for those consents, permits, authorizations, certifications and approvals of governmental entities required in the ordinary course of development, Meritage has no actual knowledge of any impediment to construction or obtaining land use entitlements which could be reasonably expected to have a material adverse effect on its ability to complete the planned development of its property within the District as described in the Official Statement. Although the information in this Official Statement reflects the current development expectations of Meritage, no assurance can be given that home construction and sales will be carried out on the schedule and according to the plans described herein, or that the home construction and sale plans or base prices set forth herein will not change after the date of this Official Statement. Meritage reserves the right to change its development at any time without notice. Additionally, homes under contract to be sold may not result in closed escrows as sales contracts are subject to cancellation.

See “SPECIAL RISK FACTORS – Concentration of Property Ownership.”.

SPECIAL RISK FACTORS
The Bonds have not been rated by any rating agency, and the purchase of the Bonds involves significant risks that are not appropriate for certain investors. The following is a discussion of certain risk factors which should be considered, in addition to other matters set forth herein, in evaluating the investment quality of the 15 4876-9387-7202v5/022042-0026
Bonds. This discussion does not purport to be comprehensive or definitive and does not purport to be a complete statement of all factors which may be considered as risks in evaluating the credit quality of the Bonds. The occurrence of one or more of the events discussed herein could adversely affect the ability or willingness of property owners in the District to pay their Special Taxes when due. Such failures to pay Special Taxes could result in the inability of the District to make full and punctual payments of debt service on the Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect the value of the property in the District. See “— Property Values” below.

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 the District, the supply of or demand for competitive properties in such area, and the market value of residential property or buildings and/or sites in the event of sale or foreclosure; (ii) changes in real estate tax rates and other operating expenses, governmental rules (including, without limitation, zoning laws and laws relating to endangered species and hazardous materials) and fiscal policies; (iii) natural disasters (including, without limitation, earthquakes, wildfires and floods), which may result in uninsured losses; (iv) adverse changes in local market conditions; and (v) increased delinquencies due to rising mortgage costs and other factors.

No assurance can be given that the property owners within the District 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 “— Enforcement Delays — Bankruptcy” for a discussion of certain limitations on the District’s ability to pursue judicial proceedings with respect to delinquent parcels.

Insufficiency of Special Tax Revenues
As discussed below, the Special Taxes may not produce revenues sufficient to pay the debt service on the Bonds either due to nonpayment of the amounts levied or because acreage within the District becomes exempt from taxation due to the transfer of title to a public agency.

In order to pay debt service on the Bonds, it is generally necessary that the Special Taxes be paid in a timely manner. Should the Special Taxes not be paid on time, the District has established a Reserve Account under the Indenture to be maintained in an amount equal to the Reserve Requirement to pay debt service on the Bonds to the extent other funds are not available. See “SOURCES OF PAYMENT FOR THE BONDS — Reserve Account of the Special Tax Fund.” The District will covenant in the Indenture to maintain in the Reserve Account an amount equal to the Reserve Requirement, subject, however, to the availability of Net Taxes in amounts sufficient to do so and to the limitation that the District may not levy the Special Tax in any Fiscal Year at a rate in excess of the maximum amounts permitted under the Rate and Method. See Appendix A and Appendix E hereto. As a result, if a significant number of Special Tax delinquencies occurs within the District, the District could be unable to replenish the Reserve Account to the Reserve Requirement due to the limitations on the amount of the Special Tax that may be levied. If such defaults were to continue in successive years, the Reserve Account could be depleted and a default on the Bonds could occur.

The Act provides that, if any property within the District 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 Act provides that, if property subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property is to be treated as if it were a special assessment and be paid from the eminent domain award. The constitutionality and operation of these provisions of the Act have not been tested in the courts, but it is doubtful that they would be upheld as to, for example, property owned by the federal government. If for any reason property within the District becomes exempt from taxation by reason of ownership by a non-taxable entity such as the federal government or another public agency, subject to 16 4876-9387-7202v5/022042-0026
the limitation of the Maximum Special Tax, the Special Tax will be reallocated to the remaining taxable parcels within the District. This would result in the owners of such property paying a greater amount of the Special Tax and could have an adverse impact upon their willingness and/or ability to pay the Special Tax. Moreover, if a substantial portion of additional land within the District became exempt from the Special Tax because of public ownership, or otherwise, the Maximum Special Tax which could be levied upon the remaining acreage might not be sufficient to pay principal of and interest on the Bonds when due and a default will occur with respect to the payment of such principal and interest.

The District will covenant in the Indenture that, under certain circumstances, it will institute foreclosure proceedings to sell any property with delinquent Special Taxes in order to obtain funds to pay debt service on the Bonds. If foreclosure proceedings were ever instituted, any mortgage or deed of trust holder could, but would not be required to, advance the amount of the delinquent Special Tax to protect its security interest. See “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales” for provisions which apply in the event of such foreclosure and which the District is required to follow in the event of delinquencies in the payment of the Special Tax.

In the event that sales or foreclosures of property are necessary, there could be a delay in payments to Owners of the Bonds (if the Reserve Account has been depleted) pending such sales or the prosecution of such foreclosure proceedings and receipt by the City on behalf of the District of the proceeds of sale. The District may adjust the future Special Tax levied on taxable parcels in the District, subject to limitations described above under the caption “THE DISTRICT — Rate and Method of Apportionment,” to provide an amount required to pay interest on and principal of the Bonds, and the amount, if any, necessary to replenish the Reserve Account to an amount equal to the Reserve Requirement, and to pay all current expenses. There is, however, no assurance that the total amount of the Special Tax that could be levied and collected against taxable parcels in the District will be at all times sufficient to pay the amounts required to be paid by the Indenture, even if the Special Tax is levied at the Maximum Special Tax rates. See “— Enforcement Delays — Bankruptcy.” No assurance can be given that the real property subject to sale or foreclosure will be sold, or if sold, that the proceeds of sale will be sufficient to pay any delinquent installments of the Special Tax. The Act does not require the City to purchase or otherwise acquire any lot or parcel of property to be sold at foreclosure if there is no other purchaser at such sale. The Act and the Indenture do specify that the Special Tax will have the same lien priority as for ad valorem property taxes in the case of delinquency. Section 53356.6 of the Act requires that property sold pursuant to foreclosure under the Act be sold for not less than the amount of judgment in the foreclosure action, plus post judgment interest and authorized costs, unless the consent of the owners of 75% of the Outstanding Bonds is obtained.

Prior to July 1, 1983, the right of redemption from foreclosure sales was limited to a period of one year from the date of sale. Under legislation effective July 1, 1983, the statutory right of redemption from such foreclosure sales has been repealed. However, a period of 20 days must elapse after the date on which the notice of levy of the interest in real property was served on the judgment debtor before the sale of such lot or parcel can be made. Furthermore, if the purchaser at the sale is the judgment creditor (e.g., the District), an action may be commenced by the delinquent property owner within 90 days after the date of sale to set aside such sale. The constitutionality of the aforementioned legislation, which repeals the one year redemption period, has not been tested and there can be no assurance that, if tested, such legislation will be upheld. (Section 701.680 of the Code of Civil Procedure of the State.)
Impact of Economic Conditions on the Development in the District Certain events and factors which negatively affect the regional, State and national economies could have an adverse effect on the pace at which the current or any future developers in the District can complete the remaining infrastructure and future homes, and demand by, and the ability of individuals to purchase homes within the District. Such events and factors could include rising inflation and interest rates, persistent supply 17 4876-9387-7202v5/022042-0026
chain issues and global market instability caused by geopolitical events. Any adverse impact of the foregoing and other economic factors on the project in the District and the real estate market in general cannot be predicted.

Increasing Mortgage Interest Rates
Since approximately November 2021, interest rates for mortgage loans have increased significantly.

Increases in mortgage interest rates could have a negative impact on the estimated absorption rates of the planned for-sale residential units in the District described herein. With respect to entry-level households, increased mortgage interest rates may adversely impact the affordability of homes and may increase mortgage payment levels for owning a lower-priced home relative to renting a residence, thereby making purchasing less attractive.

With respect to move-up households, higher mortgage interest rates may impact the desire of current homeowners to move from their present home due to the fact that their present home likely has a relatively low mortgage interest rate. In addition, in such instances, a new home would likely have a higher interest rate on a new mortgage loan as well as a higher purchase price and property taxes. Such considerations may decrease the desire for move-up households to purchase a new home. The foregoing factors could reduce demand for and/or the ability to achieve the sales prices of the planned for-sale homes within the District as described herein.

Concentration of Ownership
Based on ownership status as of July 1, 2024 (and assuming none of the 16 homes or lots under construction and in escrow close to individual homeowners), individual homeowners and Meritage are expected to be responsible for approximately 67.4% and 32.6%, respectively, of the Fiscal Year 2024-25 Special Tax levy.

The timely payment of principal of and interest on the Bonds depends upon the willingness and ability of the current and future property owners in the District to pay the Special Taxes prior to delinquency. General and local economic conditions and governmental requirements or restrictions may affect the willingness of the current property owners, or any successor property owners, to pay the Special Taxes, and there is no assurance that the current property owners, or any successor property owners, will pay such Special Taxes even if financially able to do so. Due to the concentration of ownership of the property within the District, a failure by Meritage or any successor property owner thereto to pay the Special Taxes may result in a default in the payment of debt service on the Bonds. See “PROPERTY OWNERSHIP AND THE DEVELOPMENT.” See “SOURCES OF PAYMENT FOR THE BONDS — Meritage Letter of Credit” for a description of the letter of credit provided by Meritage to secure the payment of Special Taxes levied on the property in the District owned by Meritage.

Property Values
The value of the property within the District is a critical factor in determining the investment quality of the Bonds. If a property owner is delinquent in the payment of Special Taxes, the District’s only remedy is to commence foreclosure proceedings against the delinquent parcel in an attempt to obtain funds to pay the Special Taxes. Reductions in property values due to a downturn in the economy, physical events such as earthquakes, fires or floods, stricter land use regulations, delays in development or other events will adversely impact the security underlying the Special Taxes. See “THE DISTRICT — Appraisal Report” and APPENDIX D — “APPRAISAL REPORT.”
The Appraiser has estimated, on the basis of certain assumptions and limiting conditions contained in the Appraisal Report, that as of the Date of Value, the market value of the land and improvements within the District was approximately $72,777,857. See “THE DISTRICT — Appraisal Report.” The Appraisal Report indicates the Appraiser’s opinion as to the market value of the properties referred to therein as of the date and under the conditions specified therein. The Appraiser’s opinion reflects conditions prevailing in the applicable 18 4876-9387-7202v5/022042-0026
market as of the Date of Value. The Appraiser’s opinion does not predict the future value of the subject property, and there can be no assurance that market conditions will not change adversely in the future.

Prospective purchasers of the Bonds should not assume that the taxable land within the District could be sold for the appraised amount or for the assessed values at a foreclosure sale for delinquent Special Taxes. In arriving at the estimate of market value of the property in the District, the Appraiser assumes that any sale will be unaffected by undue stimulus and will occur following a reasonable marketing period, which is not always present in a foreclosure sale. See Appendix D for a description of other assumptions made by the Appraiser and for the definitions and limiting conditions used by the Appraiser. Any event which causes one of the Appraiser’s assumptions to be untrue could result in a reduction of the value of the taxable land and improvements within the District from the market value estimated by the Appraiser.

No assurance can be given that any bid will be received for a parcel with delinquent Special Taxes offered for sale at foreclosure or, if a bid is received, that such bid will be sufficient to pay all delinquent Special Taxes. See “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales.”
Natural Disasters
The District, like all California communities, may be subject to unpredictable seismic activity, fires, flood, or other natural disasters. Southern California is a seismically active area. Seismic activity represents a potential risk for damage to buildings, roads, bridges and property within the District. In addition, land susceptible to seismic activity may be subject to liquefaction during the occurrence of such event. The property within the District is not located in an Alquist-Priolo Earthquake Study Zone and is not located within one-half mile of an active earthquake fault.

The area in the District was previously mapped within a flood zone. A letter of map revision was filed and accepted by the Federal Emergency Management Agency and the property in the District is no longer mapped within a flood zone. Flood insurance is not required for the homes in the District.

In recent years, wildfires have caused extensive damage throughout the State, including within the County. Certain of these fires have burned thousands of acres and destroyed hundreds and in some cases thousands of homes. In some instances entire neighborhoods have been destroyed. Several fires in recent years damaged or destroyed property in areas that were not previously considered to be at risk from such events.

In 2018, the Holy Fire was a wildfire which burned in the Cleveland National Forest in Orange and Riverside counties. Certain portions of the City were placed under evacuation orders. While no structures within the City were lost as a result of such wildfire, the City incurred significant costs as a result of such event, which costs were substantially reimbursed to the City from the State and federal governments.

The District is located in an area which the Department of Forestry and Fire Protection of the State of California has designated as a very high fire hazard severity zone. There is a risk of residential property within the District being destroyed by wildfires and no assurance can be given as to the severity or frequency of wildfires within the vicinity of the District. Additionally, property located adjacent to burn areas can be subject to mudslides and flooding, which can cause significant damage and destruction to property.

In the event of a severe earthquake, fire, flood or other natural disaster, there may be significant damage to both property and infrastructure in the District. As a result, a substantial portion of the property owners may be unable or unwilling to pay the Special Taxes when due. In addition, the value of land in the District could be diminished in the aftermath of such a natural disaster, reducing the resulting proceeds of foreclosure sales in the event of delinquencies in the payment of the Special Taxes. 19 4876-9387-7202v5/022042-0026
Hazardous Substances
While government taxes, assessments and charges are a common claim against the value of a parcel, other less common claims may also be relevant. One of the most serious in terms of the potential reduction in the value of a parcel is a claim with regard to a hazardous substance. 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 “Super Fund Act,” is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar 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 the District be affected by a hazardous substance, is to reduce the marketability and value by the costs of remedying the condition.

The District is not aware of the presence of any federally or state classified hazardous substances in violation of any environmental laws, located on the property within the District. However, it is possible that such materials do currently exist and that the District is not aware of them.

It is possible that property in the District may be liable for hazardous substances in the future as a result of 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 the existence, currently, on the property of a substance not presently classified as hazardous but which may in the future be so classified. Additionally, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling such substance.

All of these possibilities could have the effect of reducing the value of the applicable property.

Enforcement Delays – Bankruptcy
In the event of a delinquency in the payment of the Special Taxes, the District is required to commence enforcement proceedings under the circumstances described under the caption “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales.” However, prosecution of such proceedings could be delayed due to crowded local court calendars or by bankruptcy, insolvency and other laws generally affecting creditors’ rights (such as the Soldiers’ and Sailors’ Relief Act of 1940) and by the laws of the State relating to judicial and non-judicial foreclosure. Although bankruptcy proceedings would not cause the liens of the Special Taxes to become extinguished, bankruptcy of a person or entity with an interest in the applicable property could result in a delay in the enforcement proceedings because federal bankruptcy laws provide for an automatic stay of foreclosure and tax sale proceedings. Any such delay could increase the likelihood of delay or default in payment of the principal of and interest on the Bonds. The various legal opinions to be delivered in connection with the issuance of the Bonds, including Bond Counsel’s approving legal opinion, are qualified as to the enforceability of the Bonds and the Indenture by reference to bankruptcy, reorganization, moratorium, insolvency and other laws affecting the rights of creditors generally or against public entities such as the District.

Special Tax Delinquencies
Under provisions of the Act, the Special Taxes, from which funds necessary for the payment of principal of, and interest on, the Bonds are derived, will be billed to the properties within the District on the regular ad valorem property tax bills sent to owners of such properties by the County Tax Collector. The Act currently provides that such Special Tax installments are due and payable, and bear the same penalties and interest for non-payment, as do ad valorem property tax installments.

See APPENDIX E — “SUMMARY OF THE INDENTURE — COVENANTS AND WARRANTY — Covenants” for a discussion of the provisions which apply, and procedures which the District is obligated to follow under the Indenture, in the event of delinquencies in the payment of Special Taxes. See “— FDIC/Federal Government Interests in Parcels” for a discussion of the policy of the Federal Deposit Insurance Corporation 20 4876-9387-7202v5/022042-0026
regarding the payment of special taxes and assessment and limitations on the District’s ability to foreclosure on the lien of the Special Taxes in certain circumstances.

FDIC/Federal Government Interests in Parcels
The ability of the District to collect interest and penalties specified by the Act and to foreclose the lien of delinquent Special Taxes may be limited in certain respects with regard to parcels in which the Federal Deposit Insurance Corporation (the “FDIC”), or other federal government entities such as Fannie Mae or Freddie Mac, has or obtains an interest.

In the case of the FDIC, in the event that any financial institution making a loan which is secured by parcels is taken over by the FDIC and the applicable Special Tax is not paid, the remedies available to the District may be constrained. The FDIC’s policy statement regarding the payment of state and local real property taxes (the “Policy Statement”) provides that taxes other than ad valorem taxes which are secured by a valid lien in effect before the FDIC acquired an interest in a property will be paid unless the FDIC determines that abandonment of its interests is appropriate. The Policy Statement provides that the FDIC generally will not pay installments of non-ad valorem taxes which are levied after the time the FDIC acquires its fee interest, nor will the FDIC recognize the validity of any lien to secure payment except in certain cases where the Resolution Trust Corporation had an interest in property on or prior to December 31, 1995. Moreover, the Policy Statement provides that, with respect to parcels on which the FDIC holds a mortgage lien, the FDIC will not permit its lien to be foreclosed out by a taxing authority without its specific consent, nor will the FDIC pay or recognize liens for any penalties, fines or similar claims imposed for the nonpayment of taxes.

The FDIC has taken a position similar to that expressed in the Policy Statement in legal proceedings brought against Orange County in United States Bankruptcy Court and in Federal District Court. The Bankruptcy Court issued a ruling in favor of the FDIC on certain of such claims. Orange County appealed that ruling, and the FDIC cross-appealed. On August 28, 2001, the Ninth Circuit Court of Appeals issued a ruling favorable to the FDIC except with respect to the payment of pre-receivership liens based upon delinquent property tax.

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

In the case of Fannie Mae and Freddie Mac, in the event a parcel of taxable property is owned by a federal government entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, or a private deed of trust secured by a parcel of taxable property is owned by a federal government entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, the ability to foreclose on the parcel or to collect delinquent Special Taxes may be limited. Federal courts have held that, based on the supremacy clause of the United States Constitution “this Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, anything in the Constitution or Laws of any State to the contrary notwithstanding.” In the absence of Congressional intent to the contrary, a state or local agency cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal government interest. This means that, unless Congress has otherwise provided, if a federal government entity owns a parcel of taxable property but does not pay taxes and assessments levied on the parcel (including Special Taxes), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments.

Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and the 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 sufficient to pay delinquent taxes and 21 4876-9387-7202v5/022042-0026
assessments on a parity with the Special Taxes and preserve the federal government’s mortgage interest. For a discussion of risks associated with taxable parcels within the District becoming owned by the federal government, federal government entities or federal government sponsored entities, see “—Insufficiency of Special Tax Revenues.”
The District’s remedies may also be limited in the case of delinquent Special Taxes with respect to parcels in which other federal agencies (such as the Internal Revenue Service and the Drug Enforcement Administration) have or obtain an interest.

Direct and Overlapping Indebtedness
The ability of an owner of property within the District to pay the applicable Special Taxes could be affected by the existence of other taxes and assessments imposed upon taxable parcels. See “THE DISTRICT — Direct and Overlapping Debt” herein. The City and other public agencies whose boundaries overlap those of the District could impose additional taxes or assessment liens on the property within the District in order to finance public improvements or services to be located or provided inside of or outside of such area. The lien created on the property within the District through the levy of such additional taxes may be on a parity with the lien of the Special Taxes applicable to the property within the District.

The imposition of additional liens on a parity with the Special Taxes may reduce the ability or willingness of property owners to pay the Special Taxes and increase the possibility that foreclosure proceeds will not be adequate to pay delinquent Special Taxes. The District will covenant in the Indenture not to issue Parity Bonds other than for refunding all of a portion of the Bonds or Parity Bonds.

Payment of Special Taxes is not a Personal Obligation of the Property Owners An owner of a taxable parcel is not personally obligated to pay Special Taxes. Rather, Special Taxes are 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 Special Taxes, the District has no recourse against the property owner.

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

Limited Obligations
The Bonds and interest thereon are not payable from the general funds of the City. Except with respect to the Net Taxes, neither the credit nor the taxing power of the District or the City is pledged for the payment of the Bonds or the interest thereon, and, except as provided in the Indenture, no Owner of the Bonds may compel the exercise of any taxing power by the District or the City or force the forfeiture of any City or District property.

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 Net Taxes and other amounts pledged under the Indenture.

The District’s legal obligations with respect to any delinquent Special Taxes are limited to: (i) payments from the Reserve Account to the extent of funds on deposit therein; and (ii) the institution of judicial foreclosure proceedings under certain circumstances with respect to any parcels for which Special Taxes are delinquent. See the caption “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales.” The Bonds cannot be accelerated in the event of any default. 22 4876-9387-7202v5/022042-0026
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. See the caption “— Payment of the Special Tax is Not a Personal Obligation of the Property Owners.” 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 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.

Failure by owners of the parcels to pay Special Tax installments when due, delay in foreclosure proceedings, or the inability of the District to sell parcels that have been subject to foreclosure proceedings for amounts sufficient to cover the delinquent installments of Special Taxes levied against such parcels may result in the inability of the District to make full or timely payments of debt service on the Bonds, which may in turn result in the depletion of the Reserve Account. See the caption “— Enforcement Delays — Bankruptcy.” Ballot Initiatives
Articles XIII A, XIII B, XIII C, and XIII D of the California Constitution were adopted pursuant to measures qualified for the ballot pursuant to the State’s constitutional initiative process. From time to time, other initiative measures could be adopted by California voters. The adoption of any such initiative might place limitations on the ability of the State, the City, or other local agencies to increase revenues or to increase appropriations.

Proposition 218
An initiative measure entitled “The Right to Vote on Taxes Act” (“Proposition 218”) was approved by the voters at the November 5, 1996 statewide general election. Among other things, Proposition 218 added a new Article XIII C to the California Constitution which states that “. . . the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge.” The Act 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 Act prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the Act unless such legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt. While the application of Proposition 218 in this context has not yet been interpreted by the courts and the matter is not completely free from doubt, it is not likely that Proposition 218 has conferred on the voters the power to effect a repeal or reduction of the Special Tax if the result thereof would be to impair the security of the Bonds.

It may be possible, however, for voters or the City Council, 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. Therefore, no assurance can be given with respect to the future levy of Special Taxes in amounts greater than the amount necessary for the timely retirement of the Bonds. Nevertheless, to the maximum extent that the law permits it to do so, the District will covenant that it will not initiate proceedings under the Act to reduce the maximum Special Tax rates for the District, unless, in connection therewith, (i) such changes do not reduce the maximum Special Taxes that may be levied in each year on property within the District to an amount which is less than the Administrative Expenses Cap plus 110% of the Annual Debt Service due in each corresponding future Bond Year with respect to the Bonds and Parity Bonds Outstanding as of the date of such proposed reduction; and (ii) the District is not delinquent in the payment of the principal of or interest on the Bonds or any Parity Bonds. The District also will covenant that, in the event an initiative is adopted which purports to reduce or otherwise alter the Rate and Method, it will commence and pursue legal action in order to preserve its ability to comply with the foregoing covenant. However, no assurance can be given as to the enforceability of the foregoing covenants.
23 4876-9387-7202v5/022042-0026
Litigation with Respect to Community Facilities Districts Shapiro. The California Court of Appeal, Fourth Appellate District, Division One, issued its opinion in City of San Diego v. Melvin Shapiro (2014) 228 Cal.App.4th 756 (the “San Diego Decision”). The case involved a Convention Center Facilities District (the “CCFD”) established by the City of San Diego (“San Diego”). The CCFD is a financing district much like a community facilities district established under the provisions of the Act. The CCFD is comprised of all of the real property in San Diego. However, the special tax to be levied within the CCFD was to be levied only on hotel properties located within the CCFD.

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

Horizon. The Sacramento County Superior Court issued a ruling in Horizon Capital Investments, LLC v. City of Sacramento et al. (Case No. 34-2017-80002661), which was a case involving an election to approve the levy of a special tax within a community facilities district (“CFD”) formed under the Act.

In 2017, the City of Sacramento initiated proceedings to form a CFD to finance certain costs to operate and maintain a streetcar line. As permitted by the Act, the proposed district included non-contiguous parcels of non-residential property. Because there were fewer than 12 registered voters residing within the territory of the proposed CFD, the City Council submitted the special tax proposed to be levied within the proposed CFD to the owners of land within the proposed CFD, as required by the Act. The proposed special tax received the requisite two-thirds vote in the landowner election.

Petitioners Horizon Capital Investments, LLC et al. filed a writ of mandate and complaint for reverse validation and declaratory relief. Petitioners argued, and the superior court agreed in its final ruling, that under section 4(a) of article XIII A of the California Constitution (which provides that “Cities, Counties and special districts, by a two-thirds vote of the qualified electors of such district [sic], may impose special taxes on such district…”) the phrase “qualified electors” means the registered voters of the entire City of Sacramento and not just the owners of the property within the boundaries of the proposed CFD. Citing the San Diego Decision, the tentative ruling states that the phrase “qualified electors of the district” refers to the registered voters of the entity imposing the special tax, which in this case was the City of Sacramento. Because the vote within the proposed CFD was by landowners only and not by all registered voters in the City of Sacramento, the final ruling states that the special tax is invalid.

The superior court’s final ruling is not binding upon other courts within the State and does not directly apply to the District, the Special Taxes, or the Bonds. The City of Sacramento did not appeal the superior court’s ruling.

The Special Tax Election in the District. With respect to the San Diego Decision, the facts of such case show that there were thousands of registered voters within the CCFD (viz., all of the registered voters in San Diego). The elections held in the District had less than 12 registered voters at the time of the election to authorize the Special Taxes. In the San Diego Decision, the court expressly stated that it was not addressing the validity of landowner voting to impose special taxes pursuant to the Act in situations where there are fewer than 12 registered voters. Thus, by its terms, the court’s holding in the San Diego Decision does not apply to the Special Tax election in the District. Moreover, Section 53341 of the Act provides that any “action or proceeding to attack, review, set aside, void or annul the levy of a special tax…shall be commenced within 30 days after the 24 4876-9387-7202v5/022042-0026
special tax is approved by the voters.” Similarly, Section 53359 of the Act provides that any action to determine the validity of bonds issued pursuant to the Act be brought within 30 days of the voters approving the issuance of such bonds. The petitioners in Horizon filed the writ of mandate within 30 days of the landowner election.

Voters in the District approved the Special Tax on January 12, 2021. Based on Sections 53341 and 53359 of the Act and analysis of existing laws, regulations, rulings and court decisions, the District believes that no successful challenge to the Special Tax being levied in accordance with the Rate and Method may now be brought. In connection with the issuance of the Bonds, Bond Counsel expects to deliver its opinion in the proposed form attached hereto as Appendix C.

Loss of Tax Exemption
As discussed under the heading “TAX MATTERS,” interest on the Bonds could cease to be excluded from gross income for purposes of federal income taxation, retroactive to the date the Bonds were issued, as a result of future acts or omissions of the District or the City. In addition, it is possible that future changes in applicable federal tax laws could cause interest on the Bonds to be included in gross income for federal income taxation or could otherwise reduce the equivalent taxable yield of such interest and thereby reduce the value of the Bonds.

No Ratings – Limited Secondary Market
The District has not applied to have the Bonds rated by any nationally recognized bond rating company, and it does not expect to do so in the future.

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, there can be no assurance that such information will be available to Bond owners on a timely basis. 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, the absence of a credit rating for the Bonds 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.

Limitations on Remedies
Remedies available to the Owners of the Bonds may be limited by a variety of factors and may be inadequate to assure the timely payment of principal of and interest on the Bonds or to preserve the tax-exempt status of interest on the Bonds.

Bond Counsel has limited its opinion as to the enforceability of the Bonds and of 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 creditor’s rights, by equitable principles and by the exercise of judicial discretion and by limitations on remedies against public agencies in the State of California. The lack of availability of certain remedies or the limitation of remedies may entail risks of delay, limitation or modification of the rights of the Owners.

Potential Early Redemption of Bonds from Prepayments or Community Facilities District Bond Proceeds
Property owners within the District are permitted to prepay their Special Taxes at any time. Such prepayments could also be made from the proceeds of bonds issued by or on behalf of an overlapping community facilities district. Such prepayments will result in a redemption of the Bonds on the Interest Payment Date for 25 4876-9387-7202v5/022042-0026
which timely notice may be given under the Indenture following the receipt of the prepayment. The resulting redemption of Bonds that were purchased at a price greater than par could reduce the otherwise expected yield on such Bonds. See the caption “THE BONDS — Redemption — Special Mandatory Redemption from Special Tax Prepayments.”
Cybersecurity
The City, like many other public and private entities, rely on computer and other digital networks and systems to conduct their operations. The City is potentially subject to multiple cyber threats, including without limitation hacking, viruses, ransomware, malware and other attacks. No assurance can be given that the efforts of the City to manage cyber threats and attacks will be successful in all cases, or that any such attack will not materially impact the operations or finances of the City, or the administration of the Bonds. The City is also reliant on other entities and service providers in connection with the administration of the Bonds, including without limitation the County tax collector for the levy and collection of Special Taxes and the Trustee. No assurance can be given that the City and these other entities will not be affected by cyber threats and attacks in a manner that may affect the Bond owners.

CONTINUING DISCLOSURE
District Continuing Disclosure
Pursuant to a Continuing Disclosure Certificate, dated as of September 1, 2024 (the “Disclosure Certificate”), to be executed and delivered by the District at the time of issuance of the Bonds, the District will covenant for the benefit of the holders and Beneficial Owners of the Bonds to provide certain financial information and operating data relating to the District by February 15 following the end of the District’s Fiscal Year (currently its Fiscal Year ends on June 30) (the “Annual Report”), commencing with the report for the Fiscal Year ending June 30, 2024, and to provide notices of the occurrence of certain enumerated events. The Annual Report and the notices of enumerated events will be filed by the District with EMMA. The specific nature of the information to be contained in the Annual Report and the notice of enumerated events is set forth in Appendix F — “FORM OF DISTRICT CONTINUING DISCLOSURE CERTIFICATE.” These covenants have been made in order to assist the Underwriter in complying with subsection (b)(5) of Rule 15c2-12.

The District has not had any continuing disclosure undertakings outstanding during the previous five- year period. Although the City and its affiliated entities other than the District (such as the Lake Elsinore Facilities Financing Authority, the Lake Elsinore Public Financing Authority, the City’s former redevelopment agency and its successor agency (the “Agency”), and other community facilities districts formed by the City) are not obligated persons pursuant to Rule 15c2-12 with respect to the Bonds, during the last five years the City and such affiliated entities failed to comply in certain respects with continuing disclosure obligations related to outstanding bonded indebtedness (the City Council of the City serves as the governing board of the Lake Elsinore Facilities Financing Authority, the Lake Elsinore Public Financing Authority, the Agency and all of the City’s community facilities districts). The failures to comply include late filings with respect to several annual reports, and failure to provide notice of late annual financial information, more specifically:
(1) Updated tabular and other operating information relating to the City, the Agency and community facilities districts for Fiscal Years 2018-19 and 2019-20 were filed late. (2) Failure to provide notices of the late filing of certain of the annual financial information that is described in item (1) above.
(3) Several of the annual reports included incomplete information relating to community facilities districts, including tax prepayment information, improvement fund balances and special tax delinquency information.
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The City and its affiliated entities have made additional filings to provide certain of the previously omitted information.

The City has retained Spicer Consulting Group, LLC to serve as Dissemination Agent for the continuing disclosure undertaking related to the Bonds, and has adopted policies and procedures with respect to its continuing disclosure practices.

Developer Continuing Disclosure
The Underwriter does not consider Meritage to be an “obligated person” with respect to the Bonds for purposes of the Rule. Notwithstanding the foregoing, to provide updated information with respect to the development within the District, Meritage will execute a continuing disclosure certificate (the “Developer Continuing Disclosure Certificate”) pursuant to which it will covenant to provide semiannual reports until satisfaction of certain conditions set forth in the Developer Continuing Disclosure Certificate. The semiannual reports to be provided by Meritage will contain updates regarding the development within the District as outlined in Section 4 of the Developer Continuing Disclosure Certificate attached hereto as APPENDIX G. In addition to its semiannual reports, Meritage will agree to provide notices of certain events set forth in the Developer Continuing Disclosure Certificate.

Meritage’s obligations under the Developer Continuing Disclosure Certificate will terminate upon the earliest to occur of: (a) the legal defeasance, prior redemption or payment in full of all the Bonds; or (b) at such time as Meritage has conveyed 135 residential units in the District to individual homeowners.

Meritage notes the following with respect to its prior continuing disclosure obligations entered into in connection with the following issuances: (1) with respect to the $10,905,000 City of Roseville Creekview Community Facilities District No. 1 (Public Facilities) Improvement Area No. 1 Special Tax Bonds Series 2020, Meritage was late in filing the first periodic report due on November 1, 2021; Meritage filed the curative report on April 28, 2022; (2) with respect to the $14,735,000 Improvement Area No. 1 of the City of Dixon Community Facilities District No. 2019-1 (Homestead) Special Tax Bonds, Series 2020, Meritage was late in filing its first periodic report due June 15, 2021. The oversight was discovered in August 2021, and Meritage Homes promptly filed a curative report on August 23, 2021 or approximately two months after the due date..

TAX EXEMPTION
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 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 Internal Revenue Code of 1986, as amended (the “Code”), generally certain corporations with more than $1,000,000,000 of average annual adjusted financial statement income, interest (and original issue discount) with respect to 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 of California personal income tax.

The excess of the stated redemption price at maturity of a Bond over the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity is to be sold to the public) constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Beneficial Owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by the Beneficial Owner will increase the Beneficial Owner’s basis in the applicable Bond.
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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, the City and others and is subject to the condition that the District, the City and others making such representations 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 the 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 and the City will covenant to comply with all such requirements.

The amount by which a Beneficial 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 Beneficial 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 Beneficial Owner realizing a taxable gain when a Bond is sold by the Beneficial Owner for an amount equal to or less (under certain circumstances) than the original cost of the Bond to the Beneficial Owner. Purchasers of the Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable Bond premium.

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 other similar bonds). 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 (and original issue discount) 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 BEING IMPOSED 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 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 of issuance of the Bonds. Bond Counsel has not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. 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 will render 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 and the City continue to comply with certain requirements of the Code, the ownership of the Bonds and the accrual or receipt of interest 28 4876-9387-7202v5/022042-0026
(and original issue discount) with respect to 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 on the Bonds (including any original issue discount) become includable in gross income for federal income tax purposes, the Bonds are not subject to early redemption 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 C.

LEGAL OPINION
The legal opinion of Bond Counsel approving the validity of the Bonds, in substantially the form set forth as Appendix C hereto, will be made available to purchasers of the Bonds at the time of original delivery of the Bonds. Certain legal matters will be passed upon for the City and the District by Leibold, McClendon, & Mann, Irvine, California, City Attorney, and for the District by Stradling Yocca Carlson & Rauth LLP, Disclosure Counsel, for the Underwriter by Kutak Rock LLP, Irvine, California, and for the Trustee by its counsel. Bond Counsel undertakes no responsibility to the purchasers of the Bonds for the accuracy, completeness or fairness of this Official Statement.

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

NO RATING
The District has not made, and does not contemplate making, an application to any rating organization for the assignment of a rating on the Bonds.

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

Under certain circumstances, the Underwriter may offer and sell the Bonds to certain dealers and others at prices lower or yields higher than those stated on the page immediately following the cover page of this Official Statement. The offering prices may be changed from time to time by the Underwriter. 29 4876-9387-7202v5/022042-0026

FINANCIAL INTERESTS
The fees being paid to the Underwriter and its counsel, Bond Counsel, Disclosure Counsel and the Trustee are contingent upon the issuance and delivery of the Bonds. From time to time, Stradling Yocca Carlson & Rauth LLP, represents the Underwriter on matters unrelated to the Bonds.

MUNICIPAL ADVISOR
The District has retained Urban Futures, Inc., Walnut Creek, California, as Municipal Advisor for the sale of the Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement.

Urban Futures, Inc., is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities.

MISCELLANEOUS
So far as any statements made in this Official Statement involve matters of opinion, assumptions, projections, anticipated events or estimates, whether or not expressly stated, they are set forth as such and not as presentations of fact, and actual results may differ substantially from those set forth therein. Neither this Official Statement nor any statement that may have been made verbally or in writing is to be construed as a contract with the Owners of the Bonds.

The summaries of certain provisions of the Bonds, statutes and other documents or agreements referred to in this Official Statement do not purport to be complete, and reference is made to each of them for a complete statement of their provisions. Copies are available for review by making requests to the City.

The execution and delivery of this Official Statement by the City Manager of the City has been duly authorized by the City Council of the City acting in its capacity as the legislative body of the District.

COMMUNITY FACILITIES DISTRICT NO. 2019-2 OF

THE CITY OF LAKE ELSINORE (NICHOLS RANCH)
By:

City Manager of the City of Lake Elsinore
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APPENDIX A

RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX

CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. 2019-2
(NICHOLS RANCH)
A Special Tax (all capitalized terms are defined in Section A, “Definitions”, below) shall be applicable to each Assessor’s Parcel of Taxable Property located within the boundaries of the City of Lake Elsinore Community Facilities District No. 2019-2 (Nichols Ranch) (“CFD No. 2019-2”). The amount of Special Tax to be levied in each Fiscal Year on an Assessor’s Parcel shall be determined by the City Council of the City of Lake Elsinore, acting in its capacity as the legislative body of CFD No. 2019-2, by applying the appropriate Special Tax for Developed Property, Approved Property, Undeveloped Property, and Provisional Undeveloped Property that is not Exempt Property as set forth below. All of the real property, unless exempted by law or by the provisions hereof in Section F, shall be taxed for the purposes, to the extent and in the manner herein provided.

A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
“Acre or Acreage” means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor’s Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, or other recorded County parcel map or instrument. The square footage of an Assessor’s Parcel is equal to the Acreage multiplied by 43,560. “Act” means the Mello-Roos Communities Facilities Act of 1982, as amended, being Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the Government Code of the State of California. “Administrative Expenses” means the following actual or reasonably estimated costs directly related to the administration of CFD No. 2019-2: the costs of computing the Special Taxes and preparing the Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the City or otherwise); the costs of remitting Special Taxes to the Trustee; the costs of the Trustee (including legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 2019-2 or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No. 2019-2 or any designee thereof of complying with disclosure requirements of the City, CFD No. 2019-2 or obligated persons associated with applicable federal and state securities laws and the Act; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, CFD No. 2019-2 or any designee thereof related to an appeal of the Special Tax; the costs associated with the release of funds from an escrow account; and the City’s annual administration fees and third party expenses. Administration Expenses shall also include amounts estimated by the CFD Administrator or advanced by the City or CFD No. 2019-2 for any other administrative purposes of CFD No. 2019-2, including attorney’s fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes.
“Approved Property” means all Assessor’s Parcels of Taxable Property: (i) that are included in a Final Map that was recorded prior to the January 1st preceding the Fiscal Year in which the Special Tax is being levied, (ii) and has an assigned Assessor’s Parcel Number from the County shown on an Assessor’s Parcel Map for the individual lot included on the Final Map, and (iii) that have not been issued a building permit on or before May 1st preceding the Fiscal Year in which the Special Tax is being levied. “Assessor’s Parcel” means a lot or parcel of land designated on an Assessor’s Parcel Map with an assigned Assessor’s Parcel Number.

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“Assessor’s Parcel Map” means an official map of the Assessor of the County designating parcels by Assessor’s Parcel Number.
“Assessor’s Parcel Number” means that number assigned to an Assessor’s Parcel by the County for purposes of identification.
“Assigned Special Tax” means the Special Tax of that name described in Section D below. “Backup Special Tax” means the Special Tax of that name described in Section D below. “Boundary Map” means a recorded map of the CFD which indicates the boundaries of the CFD. “Bonds” means any obligation to repay a sum of money, including obligations in the form of bonds, notes, certificates of participation, long-term leases, loans from government agencies, or loans from banks, other financial institutions, private businesses, or individuals, or long-term contracts, or any refunding thereof, to which Special Tax of CFD No. 2019-2 have been pledged.
“Building Permit” means the first legal document issued by a local agency giving official permission for new construction. For purposes of this definition, “Building Permit” may or may not include any subsequent building permit document(s) authorizing new construction on an Assessor’s Parcel that are issued or changed by the City after the first original issuance, as determined by the CFD Administrator as necessary to fairly allocate Special Tax to the Assessor’s Parcel, provided that following such determination the Maximum Special Tax that may be levied on all Assessor’s Parcels of Taxable Property will be at least 1.1 times maximum annual debt service on all outstanding Bonds plus the estimated annual Administrative Expenses. “Building Square Footage” or “BSF” means the square footage of assessable internal living space, exclusive of garages or other structures not used as living space, as determined by reference to the Building Permit for such Assessor’s Parcel.
“Calendar Year” means the period commencing January 1 of any year and ending the following December 31. “CFD Administrator” means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement, and providing for the levy and collection of the Special Taxes. “CFD” or “CFD No. 2019-2” means Community Facilities District No. 2019-2 (Nichols Ranch) established by the City under the Act.
“City” means the City of Lake Elsinore.
“City Council” means the City Council of the City of Lake Elsinore, acting as the Legislative Body of CFD No. 2019-2.
“Condominium Plan” means a condominium plan as set forth in the California Civil Code Section 4200 et seq. “County” means the County of Riverside.
“Developed Property” means all Assessor’s Parcels that: (i) are included in a Final Map that was recorded prior to the January 1st preceding the Fiscal Year in which the Special Tax is being levied, and (ii) has an Assessor’s Parcel Number from the County shown on an Assessor’s Parcel Map for the individual lot included on the Final Map, and (iii) a Building Permit for new construction was issued on or before May 1st preceding the Fiscal Year in which the Special Tax is being levied.
“Exempt Property” means all Assessor’s Parcels designated as being exempt from Special Taxes as provided for in Section F.

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“Final Map” means a subdivision of property by recordation of a final map, parcel map, or lot line adjustment, pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or recordation of a Condominium Plan pursuant to California Civil Code Section 4200 et seq. that creates individual lots for which Building Permits may be issued without further subdivision. “Fiscal Year” means the period commencing on July 1st of any year and ending the following June 30th. “Indenture” means the indenture, fiscal agent agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same.
“Land Use Category” means any of the categories listed in Table 1 of Section D. “Maximum Special Tax” means for each Assessor’s Parcel, the maximum Special Tax, determined in accordance with Section D below, that can be levied by CFD No. 2019-2 in any Fiscal Year on such Assessor’s Parcel.
“Multifamily Property” means all Assessor’s Parcels of Developed Property for which a Building Permit has been issued for the purpose of constructing a building or buildings comprised of attached Residential Units available for rental by the general public, not for sale to an end user, and under common management, as determined by the CFD Administrator.
“Non-Residential Property” or “NR” means all Assessor's Parcels for which a building permit(s) was issued or will be issued for a non-residential use. The CFD Administrator shall make the determination if an Assessor’s Parcel is Non-Residential Property.
“Partial Prepayment Amount” means the amount required to prepay a portion of the Special Tax obligation for an Assessor’s Parcel, as described in Section G.2.
“Prepayment Amount” means the amount required to prepay the Special Tax obligation in full for an Assessor’s Parcel, as described in Section G.1.
“Proportionately” means for Taxable Property that is (i) Developed Property, that the ratio of the actual Special Tax levy to the Assigned Special Tax is the same for all Assessor’s Parcels of Developed Property, (ii) Approved Property, that the ratio of the actual Special Tax levy to the Maximum Special Tax is the same for all Assessor’s Parcels of Approved Property, and (iii) Undeveloped Property, or Provisional Undeveloped Property, that the ratio of the actual Special Tax levy per Acre to the Maximum Special Tax per Acre is the same for all Assessor’s Parcels of Undeveloped Property, or Provisional Undeveloped Property, as applicable. “Provisional Undeveloped Property” means all Assessor’s Parcels of Taxable Property that would otherwise be classified as Exempt Property pursuant to the provisions of Section F, but cannot be classified as Exempt Property because to do so would be reduce the Acreage of all Taxable Property below the required minimum Acreage set forth in Sections F.
“Residential Property” means all Assessor’s Parcels of Developed Property for which a building permit has been issued for purposes of constructing one or more Residential Units. “Residential Unit” or “RU” means a residential unit that is used or intended to be used as a domicile by one or more persons, as determined by the CFD Administrator.
“Single Family Residential Property” means all Assessor’s Parcels of Residential Property other than Multifamily Property.

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“Special Tax” means any of the special taxes authorized to be levied within CFD No. 2019-2 pursuant to the Act to fund the Special Tax Requirement.
“Special Tax Requirement “ means the amount required in any Fiscal Year to pay: (i) the debt service or the periodic costs on all outstanding Bonds due in the Calendar Year that commences in such Fiscal Year, (ii) Administrative Expenses, (iii) the costs associated with the release of funds from an escrow account, (iv) any amount required to replenish any reserve funds established in association with the Bonds, (v) an amount equal to any anticipated shortfall due to Special Tax delinquencies, and (vi) for the collection or accumulation of funds for the acquisition or construction of facilities authorized by CFD No. 2019-2 or the payment of debt services on Bonds anticipated to be issued, provided that the inclusion of such amount does not cause an increase in the levy of Special Tax on Approved Property or Undeveloped Property as set forth in Steps Two or Three of Section E., less (vii) any amounts available to pay debt service or other periodic costs on the Bonds pursuant to the Indenture.
“Taxable Property” means all Assessor’s Parcels within CFD No. 2019-2, which are not Exempt Property. “Taxable Unit” means either a Residential Unit or an Acre. “Tract(s)” means an area of land within a subdivision identified by a particular tract number on a Final Map approved for the subdivision.
“Trustee” means the trustee, fiscal agent, or paying agent under the Indenture. “Undeveloped Property” means all Assessor’s Parcels of Taxable Property which are not Developed Property, Approved Property, Provisional Undeveloped Property.

B. SPECIAL TAX
Commencing Fiscal Year 2021-2022 and for each subsequent Fiscal Year, the City Council shall levy Special Taxes on all Taxable Property, up to the applicable Maximum Special Tax, to fund the Special Tax Requirement.

C. ASSIGNMENT TO LAND USE CATEGORY FOR SPECIAL TAX
Each Fiscal Year, beginning with Fiscal Year 2021-2022, each Assessor’s Parcel within CFD No. 2019-2 shall be classified as Taxable Property or Exempt Property. In addition, each Assessor’s Parcel of Taxable Property shall be further classified as Developed Property, Approved Property, Undeveloped Property or Provisional Undeveloped Property.

Assessor’s Parcels of Developed Property shall further be classified as Residential Property or Non-Residential Property. Each Assessor’s Parcel of Residential Property shall further be classified as a Single Family Residential Property, or Multifamily Property. Each Assessor’s Parcel of Single Family Residential Property shall be further categorized into Land Use Categories based on its Building Square Footage and assigned to its appropriate Assigned Special Tax rate.

In the event that an Assessor’s Parcel for which one or more Building Permits have been issued and the County has not yet assigned final Assessor’s Parcel Number(s) to the Residential Unit(s) (in accordance with the Final Map or Condominium Plan) on such Assessor’s Parcel, the amount of the Special Tax levy on such Assessor’s Parcel for each Fiscal Year shall be determined as follows: (1) the CFD Administrator shall first determine an amount of the Maximum Special Tax levy for such Assessor’s Parcel, based on the classification of such Assessor’s Parcel as Undeveloped Property; (2) the amount of the Special Tax levy for the Residential Units on such Assessor’s Parcel for which Building Permits have been issued shall be determined based on the Developed Property Special Tax rates and shall be taxed as Developed Property in accordance with Step 1 of Section E below; and (3) the amount of the Special Tax levy on the Taxable Property in such Assessor’s Parcel not subject to the Special Tax levy in clause (2) shall be equal to: (A) the percentage of the Maximum Special Tax rate A-5
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levied on all other Undeveloped Property multiplied by the total of the amount determined in clause (1), less the amount determined in clause (2).

D. MAXIMUM SPECIAL TAX

1. Developed Property
The Maximum Special Tax for each Assessor’s Parcel of Single Family Residential Property in any Fiscal Year shall be the greater of (i) the Assigned Special Tax or (ii) the Backup Special Tax.

The Maximum Special Tax for each Assessor’s Parcel of Non-Residential or Multifamily Residential Property shall be the applicable Assigned Special Tax described in Table 1 of Section D. a. Assigned Special Tax
Each Fiscal Year, each Assessor’s Parcel of Single Family Residential Property, Multifamily Property or Non-Residential shall be subject to an Assigned Special Tax. The Assigned Special Tax applicable to an Assessor's Parcel of Developed Property shall be determined pursuant to Table 1 below.

TABLE 1

ASSIGNED SPECIAL TAX FOR DEVELOPED PROPERTY
Land Use Category
Taxable
Unit Building Square Footage
Assigned
Special Tax Per
Taxable Unit

1. Single Family Residential Property RU Less than 1,700 sq. ft $2,302.00

2. Single Family Residential Property RU 1,700 sq. ft to 1,900 sq. ft $2,379.00

3. Single Family Residential Property RU 1,901 sq. ft to 2,100 sq. ft $2,446.00

4. Single Family Residential Property RU 2,101 sq. ft to 2,300 sq. ft $2,523.00

5. Single Family Residential Property RU 2,301 sq. ft to 2,500 sq. ft $2,687.00

6. Single Family Residential Property RU 2,501 sq. ft to 2,700 sq. ft $2,736.00

7. Single Family Residential Property RU 2,701 sq. ft to 2,900 sq. ft $2,842.00

8. Single Family Residential Property RU Greater than 2,900 sq. ft $2,938.00

9. Multifamily Property Acre N/A $21,333.00

10. Non-Residential Property Acre N/A $21,333.00
On each July 1, commencing July 1, 2022, the Assigned Special Tax rate for Developed Property shall be increased by two percent (2.00%) of the amount in effect in the prior Fiscal Year. b. Multiple Land Use Categories
In some instances an Assessor’s Parcel of Developed Property may contain more than one Land Use Type.

The Maximum Special Tax levied on an Assessor’s Parcel shall be the sum of the Maximum Special Tax for all Land Use Categories located on the Assessor’s Parcel. The CFD Administrator’s allocation to each type of property shall be final.
c. Backup Special Tax
The Backup Special Tax for an Assessor’s Parcel within a Final Map classified or to be classified as Single Family Property shall calculated according to the following formula.

B = (U x A) / L
The terms above have the following meanings:

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B = Backup Special Tax per Assessor’s Parcel within the Final Map U = Maximum Special Tax per Acre of Undeveloped Property per Section D.3 below A = Acreage of Single Family Residential Property expected to exist in such Final Map at the time of calculation, as determined by the Administrator
L = Number of Residential Units expected to exist in such Final Map at the time of calculation, as determined by the Administrator.

In the event any portion of the Final Map is changed or modified, the Backup Special Tax for all Assessor’s Parcels within such changed or modified area shall be $21,333 per Acre.

In the event any superseding Final Map is recorded as a Final Map within the Boundaries of the CFD, the Backup Special Tax for all Assessor’s Parcels within such Final Map shall be $21,333 per Acre. The Backup Special Tax shall not apply to Multifamily Residential Property, or Non-Residential Property.

On each July 1, commencing July 1, 2022, the Backup Special Tax rate shall be increased by two percent (2.00%) of the amount in effect in the prior Fiscal Year.

2. Approved Property
The Maximum Special Tax for each Assessor’s Parcel of Approved Property expected to be classified as Single Family Property shall be the Backup Special Tax computed pursuant to Section D.1.c above.

The Maximum Special Tax for each Assessor’s Parcel of Approved Property expected to be classified as Multifamily Residential Property or Non-Residential Property shall be $21,333 per Acre.

On each July 1, commencing July 1, 2022, the Maximum Special Tax rate for Approved Property shall be increased by two percent (2.00%) of the amount in effect in the prior Fiscal Year.

3. Undeveloped Property and Provisional Undeveloped Property that is not Exempt Property pursuant to the provisions of Section F
The Maximum Special Tax for each Assessor’s Parcel of Undeveloped Property and Provisional Undeveloped Property that is not Exempt Property shall be equal to the product of $21,333 multiplied by the Acreage of such Assessor’s Parcel.

On each July 1, commencing July 1, 2022, the Maximum Special Tax rate for Undeveloped and Provisional Undeveloped Property shall be increased by two percent (2.00%) of the amount in effect in the prior Fiscal Year.

E. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
Commencing Fiscal Year 2021-2022 and for each subsequent Fiscal Year, the City Council shall levy Special Taxes on all Taxable Property in accordance with the following steps:

Step One: The Special Tax shall be levied Proportionately on each Assessor’s Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax rates in Table 1 to satisfy the Special Tax Requirement.

Step Two: If additional moneys are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on each Assessor’s Parcel of A-7
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Approved Property at up to 100% of the Maximum Special Tax applicable to each such Assessor’s Parcel as needed to satisfy the Special Tax Requirement.

Step Three: If additional moneys are needed to satisfy the Special Tax Requirement after the first two steps have been completed, the Annual Special Tax shall be levied Proportionately on each Assessor’s Parcel of Undeveloped Property up to 100% of the Maximum Special Tax applicable to each such Assessor’s Parcel as needed to satisfy the Special Tax Requirement.

Step Four: If additional moneys are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special Tax levy on each Assessor's Parcel of Developed Property for which the Maximum Special Tax is the Backup Special Tax shall be increased Proportionately from the Assigned Special Tax up to 100% of the Backup Special Tax as needed to satisfy the Special Tax Requirement.

Step Five: If additional moneys are needed to satisfy the Special Tax Requirement after the first four steps have been completed, the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Provisional Undeveloped Property up to 100% of the Maximum Special Tax applicable to each such Assessor’s Parcel as needed to satisfy the Special Tax Requirement.

Notwithstanding the above, under no circumstances will the Special Taxes levied in any Fiscal Year against any Assessor’s Parcel of Residential Property as a result of a delinquency in the payment of the Special Tax applicable to any other Assessor’s Parcel be increased by more than ten percent (10%) above the amount that would have been levied in that Fiscal Year had there never been any such delinquency or default.

F. EXEMPTIONS
The City shall classify as Exempt Property, in the following order of priority, (i) Assessor’s Parcels which are owned by, irrevocably offered for dedication, encumbered by or restricted in use by the State of California, Federal or other local governments, including school districts, (ii) Assessor’s Parcels which are used as places of worship and are exempt from ad valorem property taxes because they are owned by a religious organization, (iii) Assessor’s Parcels which are owned by, irrevocably offered for dedication, encumbered by or restricted in use by a homeowners' association, (iv) Assessor’s Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement, (v) Assessor’s Parcels which are privately owned and are encumbered by or restricted solely for public uses, or (vi) Assessor’s Parcels restricted to other types of public uses determined by the City Council, provided that no such classification would reduce the sum of all Taxable Property to less than 22.74 Acres.

Notwithstanding the above, the City Council shall not classify an Assessor’s Parcel as Exempt Property if such classification would reduce the sum of all Taxable Property to less than 22.74 Acres. Assessor's Parcels which cannot be classified as Exempt Property because such classification would reduce the Acreage of all Taxable Property to less than 22.74 Acres will be classified as Provisional Undeveloped Property, and will be subject to Special Tax pursuant to Step Five in Section E.

G. PREPAYMENT OF SPECIAL TAX
The following additional definitions apply to this Section G:
“CFD Public Facilities” means $8,000,000 expressed in 2021 dollars, which shall increase by the Construction Inflation Index on July 1, 2022, and on each July 1 thereafter, or such lower amount (i) determined by the City Council as sufficient to provide the public facilities under the authorized bonding program for CFD No. 2019- 2, or (ii) determined by the City Council concurrently with a covenant that it will not issue any more Bonds to be supported by Special Tax levied under this Rate and Method of Apportionment.

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“Construction Fund” means an account specifically identified in the Indenture or functionally equivalent to hold funds, which are currently available for expenditure to acquire or construct public facilities eligible to be financed by CFD No. 2019-2.
“Construction Inflation Index” means the annual percentage change in the Engineering News-Record Building Cost Index for the Riverside-San Bernardino-Ontario area, measured as of the Calendar Year which ends in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the City that is reasonably comparable to the Engineering News-Record Building Cost Index for the Riverside-San Bernardino-Ontario area. “Future Facilities Costs” means the CFD Public Facilities minus public facility costs available to be funded through existing construction or escrow accounts funded by the Outstanding Bonds, and minus public facility costs funded by interest earnings on the Construction Fund actually earned prior to the date of prepayment. “Outstanding Bonds” means all previously issued Bonds issued and secured by the levy of Special Tax which will remain outstanding after the first interest and/or principal payment date following the current Fiscal Year, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayments of Special Tax.

1. Prepayment in Full
The Maximum Special Tax obligation may be prepaid and permanently satisfied for (i) Assessor’s Parcels of Developed Property, (ii) Assessor’s Parcels of Approved Property or Undeveloped Property for which a Building Permit has been issued, (iii) Approved Property or Undeveloped Property for which a Building Permit has not been issued and (iv) Assessor’s Parcels of Public Property or Property Owner’s Association Property, or Provisional Undeveloped Property that are not Exempt Property pursuant to Section F. The Maximum Special Tax obligation applicable to an Assessor’s Parcel may be fully prepaid and the obligation to pay the Special Tax for such Assessor’s Parcel permanently satisfied as described herein; provided that a prepayment may be made only if there are no delinquent Special Taxes with respect to such Assessor’s Parcel at the time of prepayment.

An owner of an Assessor’s Parcel intending to prepay the Maximum Special Tax obligation for such Assessor’s Parcel shall provide the CFD Administrator with written notice of intent to prepay, and within 5 business days of receipt of such notice, the CFD Administrator shall notify such owner of the amount of the non-refundable deposit determined to cover the cost to be incurred by the CFD in calculating the Prepayment Amount (as defined below) for the Assessor’s Parcel. Within 15 days of receipt of such non-refundable deposit, the CFD Administrator shall notify such owner of the Prepayment Amount for the Assessor’s Parcel. Prepayment must be made not less than 60 days prior to the redemption date for any Bonds to be redeemed with the proceeds of such prepaid Special Taxes.

The Prepayment Amount (defined below) shall be calculated as follows (capitalized terms are defined below):

Bond Redemption Amount
plus Redemption Premium
plus Future Facilities Amount
plus Defeasance Amount
plus Administrative Fees and Expenses
less Reserve Fund Credit
Equals: Prepayment Amount
The Prepayment Amount shall be determined as of the proposed prepayment date as follows:

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

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2. For an Assessor’s Parcel of Developed Property, compute the Maximum Special Tax for the Assessor’s Parcel. For an Assessor’s Parcel of Approved Property or Undeveloped Property for which a Building Permit has been issued, compute the Maximum Special Tax for the Assessor’s Parcel as though it was already designated as Developed Property, based upon the Building Permit which has been issued for the Assessor’s Parcel. For an Assessor’s Parcel of Approved Property or Undeveloped Property for which a Building Permit has not been issued, Public Property, Property Owner’s Association Property, or Provisional Undeveloped Property to be prepaid compute the Maximum Special Tax for the Assessor’s Parcel.

3. Divide the Maximum Special Tax derived pursuant to paragraph 2 by the total amount of Special Taxes that could be levied at the Maximum Special Tax at build out of all Assessor’s Parcels of Taxable Property based on the applicable Maximum Special Tax for Assessor’s Parcels of Developed Property not including any Assessor’s Parcels for which the Special Tax obligation has been previously prepaid.

4. Multiply the quotient derived pursuant to paragraph 3 by the principal amount of the Outstanding Bonds to determine the amount of Outstanding Bonds to be redeemed with the Prepayment Amount (the “Bond Redemption Amount”).

5. Multiply the Bond Redemption Amount by the applicable redemption premium, if any, on the Outstanding Bonds to be redeemed (the “Redemption Premium”).

6. Determine the Future Facilities Costs.

7. Multiply the quotient derived pursuant to paragraph 3 by the amount determined pursuant to paragraph 6 to determine the amount of Future Facilities Costs for the Assessor’s Parcel (the “Future Facilities Amount”).

8. Determine the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Outstanding Bonds on which Bonds can be redeemed from Special Tax prepayments.

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

10. Determine the amount the CFD Administrator reasonably expects to derive from the investment of the Bond Redemption Amount and the Redemption Premium from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the Prepayment Amount.

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

12. Verify the administrative fees and expenses of the CFD, including the cost of computation of the Prepayment Amount, the cost to invest the Prepayment Amount, the cost of redeeming the Outstanding Bonds, and the cost of recording notices to evidence the prepayment of the Maximum Special Tax obligation for the Assessor’s Parcel and the redemption of Outstanding Bonds (the “Administrative Fees and Expenses”).

13. The reserve fund credit (the “Reserve Fund Credit”) shall equal the lesser of: (a) the expected reduction in the reserve requirement (as defined in the Indenture), if any, associated with the redemption of Outstanding Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirement (as defined in the Indenture) in effect after the redemption of Outstanding Bonds as a result of A-10
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the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero.

14. The Prepayment Amount is equal to the sum of the Bond Redemption Amount, the Redemption Premium, the Future Facilities Amount, the Defeasance Amount and the Administrative Fees and Expenses, less the Reserve Fund Credit.

15. From the Prepayment Amount, the Bond Redemption Amount, the Redemption Premium, and Defeasance Amount shall be deposited into the appropriate fund as established under the Indenture and be used to redeem Outstanding Bonds or make debt service payments. The Future Facilities Amount shall be deposited into the Construction Fund. The Administrative Fees and Expenses shall be retained by the CFD.

The Prepayment Amount may be sufficient to redeem other than a $5,000 increment of Bonds. In such event, the increment above $5,000 or an integral multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next redemption from other Special Tax prepayments of Outstanding Bonds or to make debt service payments.

As a result of the payment of the current Fiscal Year’s Special Tax levy as determined pursuant to paragraph 9 above, the CFD Administrator shall remove the current Fiscal Year’s Special Tax levy for the Assessor’s Parcel from the County tax roll. With respect to any Assessor’s Parcel for which the Maximum Special Tax obligation is prepaid, the City Council shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of Maximum Special Tax obligation and the release of the Special Tax lien for the Assessor’s Parcel, and the obligation to pay the Special Tax for such Assessor’s Parcel shall cease.

Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the amount of Maximum Special Tax that may be levied on all Assessor’s Parcels of Taxable Property after the proposed prepayment will be at least 1.1 times maximum annual debt service on the Bonds that will remain outstanding after the prepayment plus the estimated annual Administrative Expenses.

Tenders of Bonds in prepayment of the Maximum Special Tax obligation may be accepted upon the terms and conditions established by the City Council pursuant to the Act. However, the use of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by the City Council.

2. Prepayment in Part
The Maximum Special Tax obligation for an Assessor’s Parcel of Developed Property, Approved Property or Undeveloped Property may be partially prepaid. For purposes of determining the partial prepayment amount, the provisions of Section G.1 shall be modified as provided by the following formula:

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

PP = Partial Prepayment Amount
PE = the Prepayment Amount calculated according to Section G.1 F = the percent by which the owner of the Assessor’s Parcel(s) is partially prepaying the Maximum Special Tax obligation
A = the Administrative Fees and Expenses determined pursuant to Section G.1 The owner of an Assessor’s Parcel who desires to partially prepay the Maximum Special Tax obligation for the Assessor’s Parcel shall notify the CFD Administrator of (i) such owner’s intent to partially prepay the Maximum Special Tax obligation, (ii) the percentage of the Maximum Special Tax obligation such owner wishes to prepay, and (iii) the company or agency that will be acting as the escrow agent, if any. Within 5 days of receipt of such notice, the CFD Administrator shall notify such property owner of the amount of the non-refundable deposit A-11
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determined to cover the cost to be incurred by the CFD in calculating the amount of a partial prepayment. Within 15 business days of receipt of such non-refundable deposit, the CFD Administrator shall notify such owner of the amount of the Partial Prepayment Amount for the Assessor’s Parcel. A Partial Prepayment Amount must be made not less than 60 days prior to the redemption date for the Outstanding Bonds to be redeemed with the proceeds of the Partial Prepayment Amount.

With respect to any Assessor’s Parcel for which the Maximum Special Tax obligation is partially prepaid, the CFD Administrator shall (i) distribute the Partial Prepayment Amount as provided in Paragraph 15 of Section G.1, and (ii) indicate in the records of the CFD that there has been a Partial Prepayment for the Assessor’s Parcel and that a portion of the Maximum Special Tax obligation equal to the remaining percentage (1.00 - F) of the Maximum Special Tax obligation will continue to be levied on the Assessor’s Parcel pursuant to Section E.

H. TERMINATION OF SPECIAL TAX
For each Fiscal Year that any Bonds are outstanding the Special Tax shall be levied on all Assessor’s Parcels subject to the Special Tax. The Special Tax shall cease not later than the 2060-2061 Fiscal Year, however, Special Tax will cease to be levied in an earlier Fiscal Year if the CFD Administrator has determined (i) that all the required interest and principal payments on the CFD No. 2019-2 Bonds have been paid; (ii) all authorized facilities of CFD No. 2019-2 have been acquired and all reimbursements to the developer have been paid, (iii) no delinquent Special Tax remain uncollected and (iv) all other obligations of CFD No. 2019-2 have been satisfied.

I. MANNER OF COLLECTION
The Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that CFD No. 2019-2 may collect Special Taxes at a different time or in a different manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on delinquent Assessor’s Parcels as permitted by the Act.

J. APPEALS OF SPECIAL TAXES
Any taxpayer may file a written appeal of the Special Taxes on his/her Assessor’s Parcel(s) with the CFD Administrator, provided that the appellant is current in his/her payments of Special Taxes. During pendency of an appeal, all Special Taxes previously levied must be paid on or before the payment date established when the levy was made. The appeal must specify the reasons why the appellant claims the Special Tax is in error. The CFD Administrator shall review the appeal, meet with the appellant if the CFD Administrator deems necessary, and advise the appellant of its determination. If the CFD Administrator agrees with the appellant, the CFD Administrator shall grant a credit to eliminate or reduce future Special Taxes on the appellant’s Assessor’s Parcel(s). No refunds of previously paid Special Taxes shall be made.

The CFD Administrator shall interpret this Rate and Method of Apportionment and make determinations relative to the annual levy and administration of the Special Taxes and any taxpayer who appeals, as herein specified.

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APPENDIX B

CERTAIN ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING
The following information relating to the City of Lake Elsinore (the “City”) and the County of Riverside, California (the “County”), California (the “State”) is supplied solely for purposes of information. Neither the City nor the County is obligated in any manner to pay principal of or interest on the Bonds or to cure any delinquency or default on the Bonds. The Bonds are payable solely from the sources described in the Official Statement.

General
The City was founded in 1883 and incorporated as a general law city effective April 23, 1888 in San Diego County. In 1893, the Elsinore Valley, previously located in San Diego County, became part of the new County of Riverside. The City encompasses approximately 43 square miles, with over 10 miles of lakeshore, and is located at the southwestern end of the County, 73 miles southeast of downtown Los Angeles and 74 miles north of downtown San Diego.

Population
The following table offers population figures for the City, the County and the State for 2019 through 2023.

Area 2019 2020 2021 2022 2023
City of Lake Elsinore 63,154 63,453 64,762 71,989 71,973 County of Riverside 2,422,146 2,442,304 2,454,453 2,430,976 2,439,234 State of California 39,695,376 39,782,870 39,466,855 39,078,674 38,940,231 Source: California State Department of Finance, Demographic Research Unit. 2010 Census Benchmark. Population and Housing Estimates for Cities, Counties, and the State — January 1, 2022 and 2023 Building Activity
The following tables provide summaries of the building permit valuations and the number of new dwelling units authorized in the City and County from 2018 through 2022.

BUILDING PERMIT VALUATIONS
City of Lake Elsinore
2018-2022
(Dollars in Thousands)
2018 2019 2020 2021 2022
Valuation ($000):

Residential $102,858 $ 94,437 $101,321 $ 61,598 $105,539 Non-residential 13,307 26,442 4,248 12,276 18,301
Total* $116,165 $120,879 $105,569 $ 73,874 $123,840
Residential Units:

Single family 345 327 410 218 297
Multiple family 0 83 0 0 13
Total 345 410 410 218 310
* Totals may not add to sums because of rounding.

Source: Construction Industry Research Board.

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BUILDING PERMIT VALUATIONS
County of Riverside
2018-2022
(Dollars in Thousands)
2018 2019 2020 2021 2022
Valuation ($000):

Residential $2,558,081 $2,275,405 $2,519,303 $2,262,642 $2,921,112 Non-residential 1,959,680 1,285,856 1,153,778 1,154,998 1,701,615 Total* $4,517,761 $3,561,261 $3,673,081 $3,417,640 $4,622,727 Residential Units:

Single family 7,540 6,563 8,443 7,360 8,863
Multiple family 1,628 1,798 723 1,126 2,861
Total 9,168 8,361 9,166 8,486 11,724
* Totals may not add to sums because of rounding.

Source: Construction Industry Research Board.

Employment
The following tables show the largest employers located in the City and County as of June 30, 2023.

LARGEST EMPLOYERS
City of Lake Elsinore
(as of June 30, 2023)
Rank Name of Business Employees Type of Business

1. Lake Elsinore Unified School District 2,541 School District

2. M & M Framing 471 Construction

3. Stater Bros 353 Supermarkets

4. Costco 306 Retail Stores

5. Walmart 295 Retail Stores

6. Lake Elsinore Hotel & Casino 243 Casino & Resort

7. Riverside County – Dept. of Social Services 224 Government

8. Elsinore Valley Municipal Water District 169 Water District

9. Home Depot 160 Building Supplies

10. City of Lake Elsinore 159 Government
Source: City of Lake Elsinore Comprehensive Annual Financial Report for the year ending June 30, 2023.

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LARGEST EMPLOYERS
County of Riverside
(as of June 30, 2023)
Rank Name of Business Employees Type of Business

1. County of Riverside 25,366 County Government

2. Amazon 14,317 Online Retailer

3. March Air Reserve Base 9,600 Military Reserve Base

4. Nestle UA 8,874 Food and Beverage Company

5. University of California, Riverside 8,623 University

6. State of California 8,383 State Government

7. Wal-Mart 7,494 Supermarket

8. Moreno Valley Unified School District 6,020 School District

9. Kaiser Permanente Riverside Medical Center 5,817 Medical Center

10. Corona-Norco Unified School District 5,478 School District Source: County of Riverside Comprehensive Annual Financial Report for the year ending June 30, 2023.

Employment and Industry
Employment data by industry is not separately reported on an annual basis for the City but is compiled for the Riverside-San Bernardino-Ontario Metropolitan Statistical Area (the “MSA”), which includes all of Riverside and San Bernardino Counties. In addition to varied manufacturing employment, the MSA has large and growing commercial and service sector employment, as reflected in the table below.

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The following table represents the Annual Average Labor Force and Industry Employment for the period from 2018 through 2023.

RIVERSIDE-SAN BERNARDINO-ONTARIO METROPOLITAN STATISTICAL AREA

INDUSTRY EMPLOYMENT & LABOR FORCE - BY ANNUAL AVERAGE
2019 2020 2021 2022 2023
Civilian Labor Force 2,071,600 2,091,700 2,120,600 2,148,700 2,171,500 Civilian Employment 1,987,500 1,885,400 1,964,300 2,058,400 2,068,800 Civilian Unemployment 84,000 206,200 156,300 90,200 102,700 Civilian Unemployment Rate 4.1% 9.9% 7.4% 4.2% 4.7%
Total Farm 15,400 14,100 13,700 13,800 13,100
Total Nonfarm 1,552,700 1,495,800 1,575,100 1,659,800 1,679,800 Total Private 1,291,500 1,247,800 1,333,100 1,409,800 1,418,900 Goods Producing 209,700 202,200 207,700 216,300 216,100 Mining and Logging 1,200 1,300 1,400 1,500 1,500
Construction 107,200 104,900 110,100 114,700 115,700
Manufacturing 101,300 96,000 96,100 100,000 98,900
Service Providing 1,343,000 1,293,700 1,367,400 1,443,500 1,463,700 Trade, Transportation and Utilities 395,100 406,900 443,200 464,900 456,500 Wholesale Trade 67,700 65,600 67,400 69,500 68,700
Retail Trade 180,700 168,800 177,000 181,000 182,700
Transportation, Warehousing and Utilities 146,600 172,500 198,800 214,400 205,100 Information 14,100 12,400 12,500 13,000 13,300
Financial Activities 45,000 44,100 45,200 46,000 44,900 Professional and Business Services 155,300 152,100 166,600 173,900 164,800 Educational and Health Services 250,300 248,800 254,300 267,500 287,500 Leisure and Hospitality 175,900 141,300 160,200 180,900 186,500 Other Services 46,200 40,200 43,600 47,400 49,300
Government 261,200 248,000 242,000 250,000 260,900
Total, All Industries 1,568,100 1,509,900 1,588,800 1,673,500 1,692,900 Note: Does not include proprietors, self-employed, unpaid volunteers or family workers, domestic workers in households and persons involved in labor-management trade disputes. Employment reported by place of work. Items may not add to total due to independent rounding. The “Total, All Industries” data is not directly comparable to the employment data found in this Appendix B.

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

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The following table summarizes the labor force, employment and unemployment figures for the period from 2018 through 2022 for the City, the County, the State and the nation as a whole.

CITY OF LAKE ELSINORE,

COUNTY OF RIVERSIDE,

STATE OF CALIFORNIA AND UNITED STATES
Average Annual Civilian Labor Force, Employment and Unemployment Year and Area Labor Force Employment(1) Unemployment(2) Unemployment
Rate (%)(3)
2018
City of Lake Elsinore 30,000 28,800 1,200 4.0%
County of Riverside 1,092,400 1,044,600 47,800 4.4
State of California 19,398,200 18,582,800 815,400 4.2
United States 162,075,000 155,761,000 6,314,000 3.9
2019
City of Lake Elsinore 30,800 29,600 1,200 3.9%
County of Riverside 1,104,000 1,057,900 46,100 4.2
State of California 19,411,600 18,627,400 784,200 4.0
United States 163,539,000 157,538,000 6,001,000 3.7
2020
City of Lake Elsinore 31,300 28,100 3,100 10.1%
County of Riverside 1,107,700 997,700 110,000 9.9
State of California 18,821,200 16,913,100 1,908,100 10.1 United States 160,472,000 147,795,000 12,947,000 8.1
2021
City of Lake Elsinore 30,100 27,800 2,300 7.6%
County of Riverside 1,129,600 1,046,700 82,800 7.3
State of California 18,923,200 17,541,900 1,381,200 7.3 United States 161,204,000 152,581,000 8,623,000 5.3
2022
City of Lake Elsinore 30,700 29,400 1,300 4.2%
County of Riverside 1,152,100 1,104,100 48,000 4.2
State of California(4) -- -- -- --
United States(4) -- -- -- --
Note: Data is not seasonally adjusted.
(1) Annual averages, unless otherwise specified.
(2) Includes persons involved in labor-management trade disputes. (3) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures in this table.
(4) The Average Annual Civilian Labor Force, Employment and Unemployment figures for the State of California and the United States for the 2022 have not yet been published by the U.S. Department of Labor, Bureau of Labor Statistics.

Source: U.S. Department of Labor – Bureau of Labor Statistics, California Employment Development Department. 2021 Benchmark.

Personal Income
Personal Income is the income that is received by all persons from all sources. It is calculated as the sum of wage and salary disbursements, supplements to wages and salaries, proprietors’ income with inventory valuation and capital consumption adjustments, rental income of persons with capital consumption adjustment, B-6
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personal dividend income, personal interest income, and personal current transfer receipts, less contributions for government social insurance.

The personal income of an area is the income that is received by, or on behalf of, all the individuals who live in the area; therefore, the estimates of personal income are presented by the place of residence of the income recipients.

Total personal income in the County increased by 31.14% between 2018 and 2022. The following tables summarize personal income for the County for 2018 through 2022.

PERSONAL INCOME
Riverside County
2018-2022
(Dollars in Thousands)
Year Riverside County
Annual
Percent Change
2018 $ 96,994,918 N/A
2019 103,614,307 6.8%
2020 116,939,915 12.9
2021 126,261,006 8.0
2022 127,195,983 0.7
Source: U.S. Department of Commerce, Bureau of Economic Analysis.

The following table summarizes per capita personal income for the County, California and the United States for 2018-2022. This measure of income is calculated as the personal income of the residents of the area divided by the resident population of the area.

PER CAPITA PERSONAL INCOME
Riverside County, State of California and the United States 2018-2022
Year Riverside County California United States
2018 $40,582 $60,984 $53,309
2019 43,073 64,174 55,547
2020 48,265 70,061 59,151
2021 51,468 76,991 64,427
2022 51,415 77,036 65,473
Source: U.S. Department of Commerce, Bureau of Economic Analysis.

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Taxable Sales
The table below presents taxable sales for the years 2017 through 2021 for the City.

TAXABLE SALES
City of Lake Elsinore
2017-2021
(Dollars in Thousands)
Year Permits Taxable Transactions
2017 1,529 $ 854,947
2018 1,626 869,151
2019 1,692 905,476
2020 1,843 1,015,341
2021 1,907 1,294,278
Source: Taxable Sales in California, California Department of Tax and Fee Administration for 2017-2021. Ci The table below presents taxable sales for the years 2018 through 2022 for the County.

TAXABLE SALES
County of Riverside
2018-2022
(Dollars in Thousands)
Year Permits Taxable Transactions
2018 61,433 $38,919,497
2019 64,063 40,557,844
2020 69,284 42,313,474
2021 64,335 43,414,533
2022 66,738 46,908,344
Source: Taxable Sales in California, California Department of Tax and Fee Administration for 2018-2022.

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APPENDIX C

FORM OF OPINION OF BOND COUNSEL
Upon issuance of the Bonds, Stradling Yocca Carlson & Rauth LLP, Bond Counsel, proposes to render its final approving opinion in substantially the following form:
[Closing Date]
City of Lake Elsinore
Community Facilities District No. 2019-2 (Nichols Ranch) Lake Elsinore, California
Re:$_________ Community Facilities District No. 2019-2 of the City of Lake Elsinore (Nichols Ranch) Special Tax Bonds, Series 2024
Ladies and Gentlemen:

We have examined the Constitution and the laws of the State of California, a certified record of the proceedings of the City of Lake Elsinore (the “City”) taken in connection with the formation of Community Facilities District No. 2019-2 of the City of Lake Elsinore (Nichols Ranch) (the “District”) and the authorization and issuance of the District’s Special Tax Bonds, Series 2024 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 District, the City, the initial purchasers 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), a resolution adopted by the City Council of the City, acting in its capacity as the legislative body of the District (the “City Council”) on August 13, 2024 (the “Resolution”), and a Bond Indenture (the “Indenture”) dated as of September 1, 2024, by and between the District and Wilmington Trust, National Association, as trustee (the “Trustee”). All capitalized terms not defined herein shall have the meaning 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.

The Bonds are limited obligations of the District but are not a debt of the City, the State of California or any other political subdivision thereof within the meaning of any constitutional or statutory limitation, and, except for the Net Taxes, neither the faith and credit nor the taxing power of the City, the State of California, or any of its political subdivisions is pledged for the payment thereof. (2) The Indenture has been duly executed and delivered by the District. The Indenture creates a valid pledge of, and the Bonds are secured by, the Net Taxes and the amounts on deposit in certain funds and accounts established under the Indenture, as and to the extent provided in the Indenture. The Indenture is enforceable in accordance with its terms; provided, however, 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 indemnification, penalty, contribution, choice of law, choice of forum or waiver provisions contained therein.

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(3) 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, it should be noted that, 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 purposes of computing the alternative minimum tax imposed on such corporations.
(4) Interest (and original issue discount) on the Bonds is exempt from State of California personal income tax.
(5) The difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity are 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 a Bond Owner will increase the Bond Owner’s basis in the applicable Bond.
(6) 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.

The opinions expressed in paragraphs (3) and (5) above as to the exclusion from gross income for federal income tax purposes of interest (and original issue discount) on the Bonds is subject to the condition that the District and the City comply with 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 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 and the City have covenanted to comply with all such requirements. Except as set forth in paragraphs (3), (4), (5) and (6) above, we express no opinion as to any tax consequences related to the Bonds.

Certain agreements, requirements and procedures contained or referred to in the Indenture, the Tax Certificate executed by the District and the City and other documents related to the Bonds may be changed and certain actions may be taken or omitted, under the circumstances and subject to the terms and conditions set forth in such documents. We express no opinion as to the effect on the exclusion from gross income for federal income tax purposes of interest (and original issue discount) on any Bond if any such change occurs or action is taken or omitted upon advice or approval of bond counsel other than Stradling Yocca Carlson & Rauth LLP.

Our opinion is limited to matters 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. We call attention to the fact that the rights and obligations under the Bonds, the Indenture and the Tax Certificate may be limited by bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, by the application of equitable principles and the exercise of judicial discretion in appropriate cases and by the limitations on legal remedies against public agencies in the State of California.

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

The opinions expressed herein are based upon an analysis of existing statutes, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. Such 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).

Respectfully submitted,
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APPENDIX D

APPRAISAL REPORT
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APPENDIX E

SUMMARY OF THE INDENTURE
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APPENDIX F

FORM OF DISTRICT CONTINUING DISCLOSURE CERTIFICATE
THIS CONTINUING DISCLOSURE CERTIFICATE (this “Disclosure Certificate”), dated as of September 1, 2024, is executed and delivered by Community Facilities District No. 2019-2 of the City of Lake Elsinore (Nichols Ranch) (the “District”) in connection with the issuance of the Community Facilities District No. 2019-2 of the City of Lake Elsinore (Nichols Ranch) Special Tax Bonds, Series 2024 (the “Bonds”). The Bonds are being issued pursuant to a Resolution of Issuance adopted by the City Council of the City of Lake Elsinore, acting as the legislative body of the District on August 13, 2024 and a Bond Indenture by and between the District and Wilmington Trust, National Association, as Trustee, dated as of September 1, 2024 (the “Indenture”).

The District covenants as follows:

SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered, 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 and the Rate and Method of Apportionment, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report provided by the District pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.
“Beneficial Owner” shall mean any person who (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bond (including a person holding Bond through a nominee, depository or other intermediary), or (b) is treated as the owner of any Bond for federal income purposes.
“City” shall mean the City of Lake Elsinore, County of Riverside, California. “Disclosure Representative” shall mean the City Manager of the City, or such other officer or employee as the District shall designate in writing to the Dissemination Agent from time to time. “Dissemination Agent” shall mean, initially, Spicer Consulting Group, LLC, or any successor Dissemination Agent designed in writing by the District. “EMMA” shall mean the Electronic Municipal Market Access System of the Municipal Securities Rulemaking Board, which can be found at www.emma.msrb.org, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission in the future. “Financial Obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term financial obligation shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule. “Listed Events” shall mean any of the events listed in Section 5 of this Disclosure Certificate. “MSRB” shall mean the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise F-2
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designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org.
“Official Statement” shall mean the District’s official statement with respect to the Bonds. “Participating Underwriter” shall mean Stifel, Nicolaus & Company, Incorporated. “Rate and Method of Apportionment” means that certain Rate and Method of Apportionment of Special Tax approved pursuant to the Resolution of Formation.
“Resolution of Formation” means the resolutions adopted by the City Council pursuant to which the City Council formed the District and undertook certain change proceedings with respect to the District. “Rule” shall mean 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) Not later than February 15 of each year commencing February 15, 2024, the District shall, or shall cause the Dissemination Agent to, provide to EMMA and the Participating Underwriter an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. If the Dissemination Agent is other than the District, then not later than 15 business days prior to the date referred to in the prior sentence hereof, the District shall provide the Annual Report (in a form suitable for filing with EMMA) to the Dissemination Agent. The Annual Report may be submitted as a single document or as separate documents comprising a package and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the District 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.
(b) In the event that 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, the District shall provide the Annual Report to the Dissemination Agent. If by fifteen (15) Business Days prior to the due date for an Annual Report 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. The Dissemination Agent may conclusively rely upon such certification of the District and shall have no duty or obligation to review such Annual Report.
(c) 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 send a notice in a timely manner to EMMA, in the form required by EMMA. If the District acts as its own Dissemination Agent, it shall file a notice with EMMA no later than the date specified in subsection (a) for filing an Annual Report if the District fails to file the Annual Report by that date. (d) If the Dissemination Agent is other than the District, the Dissemination Agent shall:
(i) determine each year prior to the date for providing the Annual Report the name and address of the repository if other than the MSRB through EMMA; and F-3
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(ii) promptly after receipt of the Annual Report, file a report with the District certifying that the Annual Report has been provided to EMMA and the date it was provided. (e) Notwithstanding any other provision of this Disclosure Certificate, all filings shall be made in accordance with the MSRB’s EMMA system or in another manner approved under the Rule.

SECTION 4. Content of Annual Reports. The District’s Annual Report shall contain or include by reference:
(a) Financial Statements. The audited financial statements of the District, if any, for the prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the District’s audited financial statements, if any are prepared, are not available by the time the Annual Report is required to be filed pursuant to Section 3, the Annual Report shall contain unaudited financial statements, and the audited financial statements shall be filed in the same manner as the Annual Report when they come available. (b) Financial and Operating Data. The Annual Report shall contain or incorporate by reference the following information:
(i) the principal amount of Bonds outstanding as of the September 2 preceding the filing of the Annual Report;
(ii) the balance in each fund under the Indenture as of the September 2 preceding the filing of the Annual Report;
(iii) the aggregate assessed valuation of the Taxable Property within the District; (iv) any changes to the Rate and Method of Apportionment of the Special Tax approved or submitted to the qualified electors for approval prior to the filing of the Annual Report; (v) a table setting forth the annual Special Tax delinquency rate within the District at June 30 for each fiscal year on which a delinquency exists, listing for each fiscal year the total Special Tax levy, the amount delinquent and the percent delinquent;
(vi) the status of any foreclosure actions being pursued by the District with respect to delinquent Special Taxes within the District; and
(vii) an update of the value-to-lien of the property within the District based on the assessed value and the Special Tax levy for then current fiscal year, which update may be provided in a form similar to Table 2 in the Official Statement; provided that such update need not include overlapping special tax, assessment or general obligation indebtedness.
(c) Any or all of the items listed in (a) or (b) above may be included by specific reference to other documents, including official statements of debt issues of the District or related public entities, which have been 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 MSRB through EMMA. The District shall clearly identify each such other document so included by reference.

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SECTION 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the District shall give, or cause the Dissemination Agent to give, notice to EMMA in a timely manner not in excess of ten (10) business days after the occurrence of any of the following events with respect to the Bonds:

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 or the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds;

6. defeasances;

7. tender offers;

8. bankruptcy, insolvency, receivership or similar proceedings;

9. ratings changes; and

10. default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the obligated person, any of which reflect financial difficulties.
(b) Additionally, the District shall give or cause the Dissemination Agent to give notice to EMMA in a timely manner not in excess of ten (10) business days after the occurrence of any of the following events with respect to the Bonds, if material:

1. mergers, consolidations, acquisitions, the sale of all or substantially all of the assets of the obligated persons or their termination;

2. appointment of a successor or additional fiscal agent or the change of the name of a fiscal agent;

3. nonpayment related defaults;

4. modifications to the rights of Bondholders;

5. bond calls;

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

7. incurrence of a Financial Obligation of the obligated person, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the obligated person, any of which affect security holders.

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(c) In the event that the District’s fiscal year changes, the District shall report or shall instruct the Dissemination Agent to report such change in the same manner and to the same parties as Listed Events would be reported pursuant to this Section.
(d) The District hereby agrees that the undertaking set forth in this Disclosure Certificate is the responsibility of the District, and the Dissemination Agent, if other than the District, shall not be responsible for determining whether the District’s instructions to the Dissemination Agent under this Section 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 Certificate 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. 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 the Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be Spicer Consulting Group, LLC. The Dissemination Agent may resign by providing (i) thirty days written notice to the District, and (ii) upon appointment of a new Dissemination Agent hereunder.

SECTION 8. Amendment.
(a) This Disclosure Certificate may be amended, by written agreement of the parties, without the consent of the Owners, and any provision of this Disclosure Certificate may be waived, if all of the following conditions are satisfied: (1) such amendment or waiver 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) the undertakings in this Disclosure Certificate as so amended or waived would, in the opinion of a nationally recognized bond counsel, have complied with the requirements of the Rule as of the date of this Disclosure Certificate, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances, and (3) the amendment or waiver either (i) is approved by the Owners of the Bonds in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Owners or (ii) does not, in the determination of the District, materially impair the interests of the Owners or Beneficial Owners of the Bonds. (b) To the extent any amendment to this Disclosure Certificate results in a change in the type of financial information or operating data provided pursuant to this Disclosure Certificate, 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. (c) 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 Certificate shall be deemed to prevent the District from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the District chooses to include any information in any Annual Report or notice of occurrence of F-6
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a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the District shall have no obligation under this 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 Certificate, any Owner or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the District and/or the Dissemination Agent to comply with their respective obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the District or the Dissemination Agent to comply with this Disclosure Certificate shall be an action to compel performance.

SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent. Where an entity other than the District is acting as the Dissemination Agent, the Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, 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 they may incur arising out of or in the exercise or performance of their powers and duties hereunder, including the costs and expenses (including attorney’s fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. Any Dissemination Agent 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 in the performance of its duties hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the District pursuant to this Disclosure Certificate. The obligations of the District under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. No person shall have any right to commence any action against the Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Certificate. The Dissemination Agent shall not be liable under any circumstances for monetary damages to any person for any breach under this Disclosure Certificate.

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

SECTION 13. 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.

This Disclosure Certificate is executed as of the date and year first set forth above.

COMMUNITY FACILITIES DISTRICT NO. 2019-2 OF

THE CITY OF LAKE ELSINORE (NICHOLS RANCH)
By:

Disclosure Representative
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APPENDIX G

FORM OF DEVELOPER CONTINUING DISCLOSURE CERTIFICATE
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APPENDIX H

BOOK-ENTRY ONLY SYSTEM
The information in this Appendix concerning DTC and DTC’s book-entry only system has been obtained from sources that the District and the Underwriter believe to be reliable, but neither the District nor 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 certificates 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 such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

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Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

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

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

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

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

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

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

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

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

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

VALIDITY OF SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMPTION OF THE BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE. 4858-5434-7218/022042-0026

BOND INDENTURE
Between
COMMUNITY FACILITIES DISTRICT NO. 2019-2

OF THE CITY OF LAKE ELSINORE
(NICHOLS RANCH)
and

WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Trustee
$________
COMMUNITY FACILITIES DISTRICT NO. 2019-2

OF THE CITY OF LAKE ELSINORE (NICHOLS RANCH)
SPECIAL TAX BONDS, SERIES 2024
Dated as of September 1, 2024
Table of Contents
Page
i
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ARTICLE I

DEFINITIONS
Section 1.1. Definitions ..................................................................................................................... 1

ARTICLE II

GENERAL AUTHORIZATION AND BOND TERMS
Section 2.1. Amount, Issuance, Purpose and Nature of Bonds and Parity Bonds........................... 10 Section 2.2. Type and Nature of Bonds and Parity Bonds .............................................................. 10 Section 2.3. Equality of Bonds and Parity Bonds and Pledge of Net Taxes ................................... 11 Section 2.4. Description of Bonds; Interest Rates ........................................................................... 11 Section 2.5. Place and Form of Payment......................................................................................... 12 Section 2.6. Form of Bonds and Parity Bonds ................................................................................ 13 Section 2.7. Execution and Authentication ..................................................................................... 13 Section 2.8. Bond Register .............................................................................................................. 14 Section 2.9. Registration of Exchange or Transfer.......................................................................... 14 Section 2.10. Mutilated, Lost, Destroyed or Stolen Bonds or Parity Bonds ..................................... 14 Section 2.11. Validity of Bonds and Parity Bonds ............................................................................ 15 Section 2.12. Book-Entry System...................................................................................................... 15 Section 2.13. Representation Letter................................................................................................... 16 Section 2.14. Transfers Outside Book-Entry System ........................................................................ 16 Section 2.15. Payments to the Nominee ............................................................................................ 16 Section 2.16. Initial Depository and Nominee .................................................................................. 16

ARTICLE III

CREATION OF FUNDS AND APPLICATION OF PROCEEDS
Section 3.1. Creation of Funds; Application of Proceeds................................................................ 16 Section 3.2. Deposits to and Disbursements from Special Tax Fund.............................................. 18 Section 3.3. Administrative Expense Account of the Special Tax Fund......................................... 18 Section 3.4. Interest Account and Principal Account of the Special Tax Fund .............................. 18 Section 3.5. Redemption Account of the Special Tax Fund............................................................ 19 Section 3.6. Reserve Account of the Special Tax Fund .................................................................. 20 Section 3.7. Rebate Fund................................................................................................................. 21 Section 3.8. Surplus Fund................................................................................................................ 24 Section 3.9. Acquisition and Construction Fund............................................................................. 25 Section 3.10. Investments.................................................................................................................. 25

ARTICLE IV

REDEMPTION OF BONDS AND PARITY BONDS
Section 4.1. Redemption of Bonds .................................................................................................. 27 Table of Contents
(continued)
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Section 4.2. Selection of Bonds and Parity Bonds for Redemption ................................................ 29 Section 4.3. Notice of Redemption.................................................................................................. 29 Section 4.4. Partial Redemption of Bonds or Parity Bonds............................................................. 31 Section 4.5. Effect of Notice and Availability of Redemption Money ........................................... 31

ARTICLE V

COVENANTS AND WARRANTY
Section 5.1. Warranty ...................................................................................................................... 31 Section 5.2. Covenants .................................................................................................................... 31

ARTICLE VI

AMENDMENTS TO INDENTURE
Section 6.1. Supplemental Indentures or Orders Not Requiring Owner Consent ........................... 35 Section 6.2. Supplemental Indentures or Orders Requiring Owner Consent .................................. 36 Section 6.3. Notation of Bonds or Parity Bonds; Delivery of Amended Bonds or Parity Bonds ...........................................................................................................................37

ARTICLE VII

TRUSTEE
Section 7.1. Trustee ......................................................................................................................... 37 Section 7.2. Removal of Trustee ..................................................................................................... 38 Section 7.3. Resignation of Trustee................................................................................................. 38 Section 7.4. Liability of Trustee ...................................................................................................... 39 The Trustee shall be entitled to request and receive written instructions from the District or other parties and shall have no responsibility or liability for any losses or damages of any nature that may arise from any action taken or not taken by the Trustee in accordance with the written direction of the District or such other parties .................................................................................................................42 Section 7.5. Merger or Consolidation.............................................................................................. 43

ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.1. Events of Default ......................................................................................................... 43 Section 8.2. Remedies of Owners.................................................................................................... 43 Section 8.3. Application of Revenues and Other Funds After Default ........................................... 44 Section 8.4. Power of Trustee to Control Proceedings.................................................................... 45 Section 8.5. Appointment of Receivers ........................................................................................... 45 Section 8.6. Non-Waiver ................................................................................................................. 45 Section 8.7. Limitations on Rights and Remedies of Owners ......................................................... 45 Table of Contents
(continued)
Page
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Section 8.8. Termination of Proceedings......................................................................................... 46

ARTICLE IX

DEFEASANCE AND PARITY BONDS
Section 9.1. Defeasance................................................................................................................... 46 Section 9.2. Conditions for the Issuance of Parity Bonds and Other Additional Indebtedness ................................................................................................................48

ARTICLE X

MISCELLANEOUS
Section 10.1. Cancellation of Bonds and Parity Bonds..................................................................... 49 Section 10.2. Execution of Documents and Proof of Ownership...................................................... 50 Section 10.3. Unclaimed Moneys...................................................................................................... 50 Section 10.4. Provisions Constitute Contract; Governing Law......................................................... 51 Section 10.5. Future Contracts .......................................................................................................... 51 Section 10.6. Further Assurances ...................................................................................................... 51 Section 10.7. Entire Agreement; Severability ................................................................................... 51 Section 10.8. Notices ......................................................................................................................... 51 Signatures ....................................................................................................................................S-1 EXHIBIT A FORM OF SPECIAL TAX BOND...........................................................................A-1 EXHIBIT B REQUISITION FOR DISBURSEMENT OF PROJECT COSTS ............................B-1 4858-5434-7218/022042-0026

BOND INDENTURE
THIS BOND INDENTURE dated as of September 1, 2024, by and between COMMUNITY FACILITIES DISTRICT NO. 2019-2 OF THE CITY OF LAKE ELSINORE (NICHOLS RANCH) (the “District”) and WILMINGTON TRUST, NATIONAL ASSOCIATION, as trustee (the “Trustee”), governs the terms of the Community Facilities District No. 2019-2 of the City of Lake Elsinore (Nichols Ranch) Special Tax Bonds, Series 2024 and any Parity Bonds issued in accordance herewith from time to time.

RECITALS :

A. The City Council of the City of Lake Elsinore, located in the County of Riverside, California (the “City Council”), has undertaken proceedings and declared the necessity to issue bonds on behalf of the District pursuant to the terms and provisions of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5, of the Government Code of the State of California (the “Act”).

B. Based upon Resolution Nos. 2019-096, 2019-097 and 2021-16 adopted by the City Council on December 10, 2019 and on January 12, 2021, and elections held on December 10, 2019 and on January 12, 2021, authorizing the levy of a special tax and the issuance of bonds, the District is authorized to issue bonds in one or more series pursuant to the Act, in an aggregate principal amount not to exceed $11,000,000.

C. Pursuant to Resolution No. 2024-__ adopted on August 13, 2024, by the City Council, acting as the legislative body of the District, the District is authorized to issue the Bonds (as defined herein) in an aggregate principal amount of $________ to finance various Project Costs (as defined herein);
D. The District has determined that all requirements of the Act for the issuance of the Bonds have been satisfied.

NOW, THEREFORE, in order to establish the terms and conditions upon and subject to which the Bonds are to be issued, and in consideration of the premises and of the mutual covenants contained herein and of the purchase and acceptance of the Bonds by the Owners thereof, and for other valuable consideration, the receipt of which is hereby acknowledged, the District does hereby covenant and agree, for the benefit of the Owners of the Bonds and any Parity Bonds (as defined herein) which may be issued hereunder from time to time, as follows:

ARTICLE I

DEFINITIONS
Section 1.1. Definitions. Unless the context otherwise requires, the following terms shall have the following meanings:

Account. The term “Account” means any account created pursuant to this Indenture.

Act. The term “Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Section 53311 et seq. of the California Government Code. 2 4858-5434-7218/022042-0026
Acquisition and Construction Fund. The term “Acquisition and Construction Fund” means the fund by that name established pursuant to Section 3.1 hereof.

Administrative Expense Account. The term “Administrative Expense Account” means the account by that name created and established in the Special Tax Fund pursuant to Section 3.1 hereof.

Administrative Expenses. The term “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 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 hereunder.

Administrative Expenses Cap. The term “Administrative Expenses Cap” means $30,600, which amount shall escalate at 2.00% per Fiscal Year, commencing July 1, 2025.

Alternate Penalty Account. The term “Alternate Penalty Account” means the account by that name created and established in the Rebate Fund pursuant to Section 3.1 hereof.

Annual Debt Service. The term “Annual Debt Service” means the principal amount of any Outstanding Bonds or Parity Bonds payable in a Bond Year either at maturity or pursuant to a Sinking Fund Payment and any interest payable on any Outstanding Bonds or Parity Bonds in such Bond Year, if the Bonds and any Parity Bonds are retired as scheduled.

Authorized Investments. The term “Authorized Investments” means any of the following which at the time of investment are legal investments under the laws of the State for the moneys proposed to be invested therein:
(1) For all purposes, including defeasance investments in refunding escrow accounts:
(a) cash; or
(b) obligations of, or obligations guaranteed as to principal and interest by, the U.S. or any agency or instrumentality thereof, when such obligations are backed by the full faith and credit of the U.S., including U.S. treasury obligations, all direct or fully guaranteed obligations, Farmers Home Administration, General Services Administration, guaranteed Title XI financing, Government National Mortgage Association (GNMA) and State and Local Government Series; or (c) obligations of government-sponsored agencies that are not backed by the full faith and credit of the U.S. Government: Federal Home Loan Mortgage Corporation (FHLMC) debt obligations, Farm Credit System (formerly: Federal Land Banks, Federal Intermediate Credit Banks and Banks for Cooperatives), Federal Home Loan Banks (FHL Banks), Federal National Mortgage Association (FNMA) debt obligations, Financing Corp. (FICO) debt obligations, Resolution Funding Corp. (REFCORP) debt obligations and U.S. Agency for International Development (U.S.A.I.D.) guaranteed notes.
3 4858-5434-7218/022042-0026
(2) For all purposes other than defeasance investments in refunding escrow accounts:
(a) obligations of any of the following federal agencies, which obligations represent the full faith and credit of the United States of America: Export-Import Bank, Rural Economic Community Development Administration, U.S. Maritime Administration, Small Business Administration, U.S. Department of Housing & Urban Development (PHAs), Federal Housing Administration and Federal Financing Bank;
(b) direct obligations of any of the following federal agencies, which obligations are not fully guaranteed by the full faith and credit of the United States of America: senior debt obligations issued by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC), obligations of the Resolution Funding Corporation (REFCORP) and senior debt obligations of the Federal Home Loan Bank System; (c) U.S. dollar denominated deposit accounts, federal funds and bankers’ acceptances with domestic commercial banks (including those of the Trustee and its affiliates) which have a rating on their short term certificates of deposit on the date of purchase of “A-1” or “A-1+” by S&P and “P-1” by Moody’s and maturing no more than 360 days after the date of purchase (ratings on holding companies are not considered as the rating of the bank); (d) commercial paper which is rated at the time of purchase in the single highest classification “A-1+” by S&P and “P-1” by Moody’s and which matures not more than 270 days after the date of purchase;
(e) investments in a money market fund rated “AAm,” “AAm-G” or better by S&P, including funds for which the Trustee or its affiliates provide investment advisory or other management services;
(f) pre-refunded municipal obligations defined as follows: any bonds or other obligations of any state of the United States of America, or any agency, instrumentality or local governmental unit of any such state, which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice, and
(i) which are rated, based on irrevocable escrow account or fund (the “escrow”), in the highest rating category of S&P and Moody’s or any successors thereto; or (ii) (1) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or obligations described in paragraph (1)(b) above, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate; and (2) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate;
(g) municipal obligations rated “Aaa/AAA” or general obligations of states with a rating of at least “Aa2/AA” or higher by both Moody’s and S&P; 4 4858-5434-7218/022042-0026
(h) Investment Agreements (supported by appropriate opinions of counsel); and (i) the Local Agency Investment Fund of the State, created pursuant to Section 16429.1 of the California Government Code, to the extent the Trustee is authorized to register such investment in its name.

The value of the above investments shall be determined as follows:
(a) for the purpose of determining the amount in any fund, all Authorized Investments credited to such fund shall be valued at market value. The Trustee shall determine the market value based on accepted industry standards, including the Trustee’s internal systems, and from accepted industry providers. Accepted industry providers shall include, but are not limited to, pricing services provided by Financial Times Interactive Data Corporation, Bank of America Merrill Lynch or Salomon Smith Barney. Notwithstanding anything to the contrary herein, in making any valuation of investments hereunder, the Trustee may utilize computerized securities pricing services that may be available to it, including those available through its regular accounting system, and rely thereon;
(b) as to certificates of deposit and bankers acceptances: the face amount thereof, plus accrued interest thereon; and
(c) as to any investment not specified above: the value thereof established by prior agreement between the City and the Trustee.

Authorized Representative of the District. The term “Authorized Representative of the District” means the Mayor, City Manager, Assistant City Manager, or City Clerk of the City, or any other officer or employee authorized by the City Council of the City or by an Authorized Representative of the District to undertake the action referenced in this Agreement as required to be undertaken by an Authorized Representative of the District.

Bond Counsel. The term “Bond Counsel” means Stradling Yocca Carlson & Rauth LLP, or another attorney at law or a firm of attorneys selected by the District of nationally recognized standing in matters pertaining to the tax-exempt nature of interest on bonds issued by states and their political subdivisions duly admitted to the practice of law before the highest court of any state of the United States of America or the District of Columbia.

Bond Register. The term “Bond Register” means the books which the Trustee shall keep or cause to be kept on which the registration and transfer of the Bonds and any Parity Bonds shall be recorded.

Bond Year. The term “Bond Year” means the twelve month period commencing on September 2 of each year and ending on September 1 of the following year, except that the first Bond Year for the Bonds or an issue of Parity Bonds shall begin on the Delivery Date and end on the first September 1 which is not more than 12 months after the Delivery Date.

Bonds. The term “Bonds” means the District’s Special Tax Bonds, Series 2024 issued on September ___, 2024 in the aggregate principal amount of $________.

Business Day. The term “Business Day” means a day which is not a Saturday or Sunday or a day of the year on which banks or trust companies in New York, New York, Los Angeles, California, 5 4858-5434-7218/022042-0026
or the city where the corporate trust office of the Trustee is located, are not required or authorized by law, regulation or executive order, to close or to remain closed.

Certificate of an Authorized Representative. The term “Certificate of an Authorized Representative” means a written certificate or warrant request executed by an Authorized Representative of the District.

City. The term “City” means the City of Lake Elsinore, County of Riverside, State of California.

City Council. The term “City Council” means the City Council of the City.

City Facilities Account. The term “City Facilities Account” means the account by that name created and established in the Acquisition and Construction Fund pursuant to Section 3.1 hereof.

Code. The term “Code” means the Internal Revenue Code of 1986, as amended, and any Regulations, rulings, judicial decisions, and notices, announcements, and other releases of the United States Treasury Department or Internal Revenue Service interpreting and construing it.

Continuing Disclosure Certificate. The term “Continuing Disclosure Certificate” means that certain Continuing Disclosure Certificate dated as of September 1, 2024, as originally executed by the District and as it may be from time to time amended or supplemented in accordance with its terms.

Costs of Issuance. The term “Costs of Issuance” means the costs and expenses incurred in connection with the formation of the District and the issuance and sale of the Bonds or any Parity Bonds, including the acceptance and initial annual fees and expenses of the Trustee and its counsel, legal fees and expenses, costs of printing the Bonds and Parity Bonds and the preliminary and final official statements for the Bonds and Parity Bonds, fees of financial consultants, costs of the appraisal and all other related fees and expenses, including reimbursement to property owners within the District for design, engineering and legal costs, as set forth in a Certificate of an Authorized Representative of the District.

Costs of Issuance Account. The term “Costs of Issuance Account” means the account by that name created and established in the Acquisition and Construction Fund pursuant to Section 3.1 hereof.

Delivery Date. The term “Delivery Date” means, with respect to the Bonds and each issue of Parity Bonds, the date on which the bonds of such issue were issued and delivered to the initial purchasers thereof.

Depository. The term “Depository” means The Depository Trust Company, New York, New York, and its successors and assigns as securities depository for the Bonds, or any other securities depository acting as Depository under Article II hereof.

District. The term “District” means Community Facilities District No. 2019-2 of the City of Lake Elsinore (Nichols Ranch) established pursuant to the Act and the Resolution of Formation.

Event of Default. The term “Event of Default” means an event described in Section 8.1 hereof.
6 4858-5434-7218/022042-0026
Fiscal Year. The term “Fiscal Year” means the period beginning on July 1 of each year and ending on the next following June 30.

Gross Taxes. The term “Gross Taxes” means the amount of all Special Taxes received by the District, together with the proceeds collected from the sale of property pursuant to foreclosure for the delinquency of such Special Taxes remaining after the payment of all costs related to such foreclosure actions.

Indenture. The term “Indenture” means this Bond Indenture, together with any Supplemental Indenture approved pursuant to Article 6 hereof.

Independent Financial Consultant. The term “Independent Financial Consultant” means a financial consultant or firm of such consultants generally recognized to be well qualified in the financial consulting field, appointed and paid by the District, who, or each of whom: (1) is in fact independent and not under the domination of the District or the City; (2) does not have any substantial interest, direct or indirect, in the District or the City; and (3) is not connected with the District or the City as a member, officer or employee of the District or the City, but who may be regularly retained to make annual or other reports to the District or the City.

Interest Account. The term “Interest Account” means the account by that name created and established in the Special Tax Fund pursuant to Section 3.1 hereof.

Interest Payment Date. The term “Interest Payment Date” means March 1, 2025 and each March 1 and September 1 thereafter; provided, however, that, if any such day is not a Business Day, interest up to the Interest Payment Date will be paid on the Business Day next succeeding such date.

Investment Agreement. The term “Investment Agreement” means one or more agreements for the investment of funds of the District complying with the criteria therefor as set forth in subsection (2)(h) of the definition of Authorized Investments herein.

Maximum Annual Debt Service. The term “Maximum Annual Debt Service” means the maximum sum obtained for any Bond Year prior to the final maturity of the Bonds and any Parity Bonds by adding the following for each Bond Year: (1) the principal amount of all Outstanding Bonds and Parity Bonds payable in such Bond Year either at maturity or pursuant to a Sinking Fund Payment; and (2) the interest payable on the aggregate principal amount of all Bonds and Parity Bonds Outstanding in such Bond Year if the Bonds and Parity Bonds are retired as scheduled.

Moody’s. The term “Moody’s” means Moody’s Investors Service, Inc., its successors and assigns.

Net Taxes. The term “Net Taxes” means Gross Taxes minus amounts set aside to pay Administrative Expenses.

Nominee. The term “Nominee” means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant to Section 2.16 hereof.

Ordinance. The term “Ordinance” means Ordinance No. 2021-1446 adopted by the City Council on January 26, 2021 providing for the levying of the Special Tax. 7 4858-5434-7218/022042-0026
Outstanding. The terms “Outstanding” or “Outstanding Bonds and Parity Bonds” means all Bonds and Parity Bonds theretofore issued by the District, except: (i) Bonds and Parity Bonds theretofore cancelled or surrendered for cancellation in accordance with Section 10.1 hereof; (ii) Bonds and Parity Bonds for payment or redemption of which monies shall have been theretofore deposited in trust (whether upon or prior to the maturity or the redemption date of such Bonds or Parity Bonds), provided that, if such Bonds or Parity Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as provided in this Indenture or any applicable Supplemental Indenture for Parity Bonds; and (iii) Bonds and Parity Bonds which have been surrendered to the Trustee for transfer or exchange pursuant to Section 2.9 hereof or for which a replacement has been issued pursuant to Section 2.10 hereof.

Owner. The term “Owner” means the person or persons in whose name or names any Bond or Parity Bond is registered.

Parity Bonds. The term “Parity Bonds” means all bonds, notes or other similar evidences of indebtedness hereafter issued, payable out of the Net Taxes and which, as provided in this Indenture or any Supplemental Indenture, rank on a parity with the Bonds.

Participants. The term “Participants” means those broker-dealers, banks and other financial institutions from time to time for which the Depository holds Bonds or Parity Bonds as securities depository.

Person. The term “Person” means natural persons, firms, corporations, partnerships, associations, trusts, public bodies and other entities.

Prepayments. The term “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 the District made in accordance with the RMA.

Principal Account. The term “Principal Account” means the account by that name created and established in the Special Tax Fund pursuant to Section 3.1 hereof.

Principal Office of the Trustee. The term “Principal Office of the Trustee” means the office of the Trustee located in Costa Mesa, California, or such other office or offices as the Trustee may designate from time to time, or the office of any successor Trustee where it principally conducts its business of serving as trustee under indentures pursuant to which municipal or governmental obligations are issued.

Project. The term “Project” means those public facilities described in the Resolution of Formation which are to be acquired or constructed within and outside of the District, including all engineering, planning and design services and other incidental expenses related to such facilities and other facilities, if any, authorized by the qualified electors within the District from time to time.

Project Costs. The term “Project Costs” means the amounts necessary to finance the Project, to create and replenish any necessary reserve funds, to pay the initial and annual costs associated with the Bonds or any Parity Bonds, including, but not limited to, remarketing, credit enhancement, Trustee and other fees and expenses relating to the issuance of the Bonds or any Parity Bonds and the formation of the District, and to pay any other “incidental expenses” of the District, as such term is defined in the Act.
8 4858-5434-7218/022042-0026
Rating Agency. The term “Rating Agency” means Moody’s or S&P, or both, as the context requires.

Rebate Account. The term “Rebate Account” means the account by that name created and established in the Rebate Fund pursuant to Section 3.1 hereof.

Rebate Fund. The term “Rebate Fund” means the fund by that name established pursuant to Section 3.1 hereof in which there are established the Accounts described in Section 3.1 hereof.

Rebate Regulations. The term “Rebate Regulations” means any final, temporary or proposed Regulations promulgated under Section 148(f) of the Code.

Record Date. The term “Record Date” means the fifteenth day of the month preceding an Interest Payment Date, regardless of whether such day is a Business Day.

Redemption Account. The term “Redemption Account” means the account by that name created and established in the Special Tax Fund pursuant to Section 3.1 hereof.

Regulations. The term “Regulations” means the regulations adopted or proposed by the Department of Treasury from time to time with respect to obligations issued pursuant to Section 103 of the Code.

Representation Letter. The term “Representation Letter” means the Blanket Letter of Representations from the District to the Depository as described in Section 2.13 hereof.

Reserve Account. The term “Reserve Account” means the account by that name created and established in the Special Tax Fund pursuant to Section 3.1 hereof. “Reserve Policy” means a letter of credit, insurance policy, surety bond or other such funding instrument issued by a municipal bond insurance company rated least “Aa2” or higher by Moody’s or “AA” or higher by S&P, delivered to the Trustee for the purpose of providing all or a portion of the Reserve Requirement for Bonds and Parity Bonds.

Reserve Requirement. The term “Reserve Requirement” means that amount as of any date of calculation equal to the lesser of: (i) 10% of the initial principal amount of the Bonds and Parity Bonds, if any; (ii) Maximum Annual Debt Service on the then Outstanding Bonds and Parity Bonds, if any; (iii) 125% of average Annual Debt Service on the then Outstanding Bonds and Parity Bonds, if any; provided, however, that the Reserve Requirement shall not exceed $___________ except in connection with the issuance of Parity Bonds.

Resolution of Formation. The term “Resolution of Formation” means collectively, Resolution No. 2019-096 adopted by the City Council on December 10, 2019 and Resolution No. 2021-16 adopted by the City Council on January 12, 2021, pursuant to which the City Council formed the District and undertook certain change proceedings with respect to the District.

RMA. The term “RMA” means the Amended and Restated Rate and Method of Apportionment of Special Tax for the District approved by the qualified electors of the District at the January 12, 2021 election.
9 4858-5434-7218/022042-0026
Sinking Fund Payment. The term “Sinking Fund Payment” means the annual payment to be deposited in the Redemption Account to redeem a portion of the Term Bonds in accordance with the schedules set forth in Section 4.1(b) hereof and any annual sinking fund payment schedule to retire any Parity Bonds which are designated as Term Bonds.

Six-Month Period. The term “Six-Month Period” means the period of time beginning on the Delivery Date of each issue of Bonds or Parity Bonds, as applicable, and ending six consecutive months thereafter, and each six-month period thereafter until the latest maturity date of the Bonds and the Parity Bonds (and any obligations that refund an issue of the Bonds or Parity Bonds).

Special Tax Administrator. The term “Special Tax Administrator” means the individual or entity appointed by the City to administer the calculation and collection of the Special Taxes.

Special Tax Fund. The term “Special Tax Fund” means the fund by that name created and established pursuant to Section 3.1 hereof.

Special Taxes. The term “Special Taxes” means the Special Tax for Facilities (as defined in the RMA) authorized to be levied by the District on property within the District in accordance with the Ordinance, the Resolution of Formation, the Act and the voter approval obtained at the January 12, 2021 election in the District, including any scheduled payments and any Prepayments thereof, 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; provided that any delinquent Special Tax sold to an independent third-party or to the City for 100% of the delinquent amount shall no longer be pledged hereunder to the payment of the Bonds or Parity Bonds.

S&P. The term “S&P” means S&P Global Ratings, a Standard & Poor’s Financial Services LLC business, its successors and assigns.

Subaccount. The term “Subaccount” means any subaccount created pursuant to this Indenture.

Supplemental Indenture. The term “Supplemental Indenture” means any supplemental indenture amending or supplementing this Indenture.

Surplus Fund. The term “Surplus Fund” means the fund by that name created and established pursuant to Section 3.1 hereof.

Tax Certificate. The term “Tax Certificate” means the certificate by that name to be executed by the District on a Delivery Date to establish certain facts and expectations and which contains certain covenants relevant to compliance with the Code.

Tax-Exempt. The term “Tax-Exempt” means, with reference to an Authorized Investment, an Authorized Investment the interest earnings on which are excludable from gross income for federal income tax purposes pursuant to Section 103(a) of the Code, other than one described in Section 57(a)(5)(C) of the Code.

Taxable Property. The term “Taxable Property” has the meaning ascribed to it in the RMA. 10 4858-5434-7218/022042-0026
Term Bonds. The term “Term Bonds” means the Bonds maturing on September 1, 2038, September 1, 2043, September 1, 2048 and September 1, 2053, and any term maturities of an issue of Parity Bonds as specified in a Supplemental Indenture.

Trustee. The term “Trustee” means Wilmington Trust, National Association, a national banking association duly organized and existing under the laws of the United States, at its principal corporate trust office in Costa Mesa, California, and its successors or assigns, or any other bank or trust company which may at any time be substituted in its place as provided in Sections 7.2 or 7.3, and any successor thereto.

Underwriter. The term “Underwriter” means, with respect to the Bonds, Stifel, Nicolaus & Company, Incorporated, and with respect to each issue of Parity Bonds, the institution or institutions, if any, with whom the District enters into a purchase contract for the sale of such issue.

Water Facilities Account. The term “Water Facilities Account” means the account by that name created and established in the Acquisition and Construction Fund pursuant to Section 3.1 hereof.

ARTICLE II

GENERAL AUTHORIZATION AND BOND TERMS
Section 2.1. Amount, Issuance, Purpose and Nature of Bonds and Parity Bonds.

Under and pursuant to the Act, the Bonds in the aggregate principal amount of $________, together with any Parity Bonds authorized by the City Council in accordance with Section 9.2 hereof, shall be issued for the purposes of financing and/or refinancing the Project, paying Costs of Issuance, funding the Reserve Account and paying capitalized interest; provided that the aggregate principal amount of the Bonds and any Parity Bonds shall not exceed the total indebtedness presently authorized or subsequently authorized by the qualified electors within the District in accordance with the Act. The Bonds and any Parity Bonds shall be and are limited obligations of the District and shall be payable as to the principal thereof and interest thereon and any premiums upon the redemption thereof solely from the Net Taxes and the other amounts in the Special Tax Fund (other than amounts in the Administrative Expense Account of the Special Tax Fund).

Section 2.2. Type and Nature of Bonds and Parity Bonds. Neither the faith and credit nor the taxing power of the City, the State of California, or any political subdivision thereof other than the District is pledged to the payment of the Bonds or any Parity Bonds. Except for the Net Taxes, no other taxes are pledged to the payment of the Bonds or any Parity Bonds. The Bonds and any Parity 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 certain amounts deposited by the District in the Special Tax Fund (exclusive of the Administrative Expense Account), as more fully described herein. The District’s limited obligation to pay the principal of, premium, if any, and interest on the Bonds and any Parity Bonds from amounts in the Special Tax Fund (exclusive of the Administrative Expense Account) is absolute and unconditional, free of deductions and without any abatement, offset, recoupment, diminution or set-off whatsoever. No Owner of the Bonds or any Parity Bonds may compel the exercise of the taxing power by the District (except as pertains to the Special Taxes) or the City or the forfeiture of any of their property. The principal of and interest on the Bonds and any Parity Bonds and premiums upon the redemption thereof, if any, are not a debt of the City, the State of California or any of its political subdivisions within the meaning of any 11 4858-5434-7218/022042-0026
constitutional or statutory limitation or restriction. The Bonds and any Parity Bonds are not a legal or equitable pledge, charge, lien, or encumbrance upon any of the District’s property, or upon any of its income, receipts or revenues, except the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expense Account) which are, under the terms of this Indenture and the Act, set aside for the payment of the Bonds, any Parity Bonds and interest thereon, and neither the members of the legislative body of the District or the members of the City Council nor any persons executing the Bonds or any Parity Bonds are liable personally on the Bonds or any Parity Bonds, by reason of their issuance.

Notwithstanding anything to the contrary contained in this Indenture, the District shall not be required to advance any money derived from any source of income other than the Net Taxes for the payment of the interest on or the principal of the Bonds or any Parity Bonds, or for the performance of any covenants contained herein. The District may, however, advance funds for any such purpose, provided that such funds are derived from a source legally available for such purpose.

Section 2.3. Equality of Bonds and Parity Bonds and Pledge of Net Taxes. Pursuant to the Act and this Indenture, the Bonds and any Parity Bonds shall be equally payable from and secured by a first pledge of and lien on the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expense 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, shall be exclusively paid from the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expense Account) which are hereby set aside for the payment of the Bonds and any Parity Bonds; provided that any delinquent Special Tax sold to an independent third-party or to the City for 100% of the delinquent amount shall no longer be pledged hereunder to the payment of the Bonds or Parity Bonds. Amounts in the Special Tax Fund (other than the Administrative Expense Account therein) shall 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 remain Outstanding, shall not be used for any other purpose, except as permitted by this Indenture or any Supplemental Indenture.

Notwithstanding any provision contained in this Indenture to the contrary, Net Taxes deposited in the Rebate Fund and the Surplus Fund shall no longer be considered to be pledged to the Bonds or any Parity Bonds, and none of the Rebate Fund, the Surplus Fund, the Acquisition and Construction Fund or the Administrative Expense Account of the Special Tax Fund shall be construed as a trust fund held for the benefit of the Owners.

Nothing in this Indenture or any Supplemental Indenture shall preclude: (i) subject to the limitations contained hereunder, the redemption prior to maturity of any Bonds or Parity Bonds subject to call and redemption and payment of said Bonds or Parity Bonds from proceeds of refunding bonds issued under the Act as the same now exists or as hereafter amended, or under any other law of the State of California; or (ii) the issuance, subject to the limitations contained herein, of Parity Bonds which shall be payable from Net Taxes.

Section 2.4. Description of Bonds; Interest Rates. The Bonds and any Parity Bonds shall be issued in fully registered form in denominations of $5,000 or any integral multiple thereof.

The Bonds and any Parity Bonds of each issue shall be numbered as desired by the Trustee.

The Bonds shall be designated “Community Facilities District No. 2019-2 of the City of Lake Elsinore (Nichols Ranch) Special Tax Bonds, Series 2024.” The Bonds shall be dated as of their 12 4858-5434-7218/022042-0026
Delivery Date and shall mature and be payable on September 1 in the years and in the aggregate principal amounts and shall be subject to and shall bear interest at the rates set forth in the table below payable on March 1, 2025 and each Interest Payment Date thereafter:

Maturity Date
September 1
Principal
Amount
Interest
Rate
T Term Bonds.

Interest shall be payable on each Bond and Parity Bond from the date established in accordance with Section 2.5 below on each Interest Payment Date thereafter until the principal sum of such Bond or Parity Bond has been paid; provided, however, that if at the maturity date of any Bond or Parity Bond (or if the same is redeemable and shall be duly called for redemption, then at the date fixed for redemption) funds are available for the payment or redemption thereof in full, in accordance with the terms of this Indenture, such Bonds and Parity Bonds shall then cease to bear interest. Interest due on the Bonds and Parity Bonds shall be calculated on the basis of a 360-day year comprised of twelve 30-day months.

Section 2.5. Place and Form of Payment. The Bonds and Parity Bonds shall be payable both as to principal and interest, and as to any premiums upon the redemption thereof, in lawful money of the United States of America. The principal of the Bonds and Parity Bonds and any premiums due upon the redemption thereof shall be payable upon presentation and surrender thereof at the Principal Office of the Trustee, or at the designated office of any successor Trustee. If the Nominee of the Bonds or Parity Bonds is registered to Cede & Co., payment of principal and any premiums shall be made without presentment. Interest on any Bond or Parity Bond shall be payable from the Interest Payment Date next preceding the date of authentication of such Bond or Parity Bond, unless: (i) such 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 is after a Record Date 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 occurring after the issuance of such Bond or Parity Bond, in which event interest shall be payable from the dated date of such Bond or Parity Bond, as applicable; provided, however, that if at the time of authentication of such Bond or Parity Bond, interest is in default, interest on such Bond or Parity 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 13 4858-5434-7218/022042-0026
interest has been paid or made available for payment on such Bond or Parity Bond, interest on such Bond or Parity Bond shall be payable from its dated date. Interest on any Bond or Parity Bond shall be paid to the person whose name shall appear in the Bond Register as the Owner of such Bond or Parity Bond as of the close of business on the Record Date. Such interest shall be paid by check of the Trustee mailed by first class mail, postage prepaid, to such Owner 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 shall be made on the Interest Payment Date by wire transfer in immediately available funds to an account within the United States of America designated by such Owner.

Section 2.6. Form of Bonds and Parity Bonds. The definitive Bonds may be printed from steel engraved or lithographic plates or may be typewritten. The Bonds and the certificate of authentication shall be substantially in the form attached hereto as Exhibit A, which form is hereby approved and adopted as the form of such Bonds and of the certificate of authentication. Each issue of Parity Bonds and the certificate of authentication therefor shall be in the form provided in the Supplemental Indenture for such issue of Parity Bonds.

Until definitive Bonds or Parity Bonds, as applicable, shall be prepared, the District may cause to be executed and delivered in lieu of such definitive Bonds or Parity Bonds temporary bonds in typed, printed, lithographed or engraved form and in fully registered form, subject to the same provisions, limitations and conditions as are applicable in the case of definitive Bonds or Parity Bonds, except that they may be in any denominations authorized by the District. Until exchanged for definitive Bonds or Parity Bonds, as applicable, any temporary bond shall be entitled and subject to the same benefits and provisions of this Indenture as definitive Bonds and Parity Bonds. If the District issues temporary Bonds or Parity Bonds, it shall execute and furnish definitive Bonds or Parity Bonds, as applicable, without unnecessary delay and thereupon any temporary Bond or Parity Bond may be surrendered to the Trustee at its office, without expense to the Owner, in exchange for a definitive Bond or Parity Bond of the same issue, maturity, interest rate and principal amount in any authorized denomination. All temporary Bonds or Parity Bonds so surrendered shall be cancelled by the Trustee and shall not be reissued.

Section 2.7. Execution and Authentication. The Bonds and Parity Bonds shall be signed on behalf of the District by the manual or facsimile signature of the Mayor of the City and countersigned by the manual or facsimile signature of the City Clerk, or any duly appointed Deputy Clerk, in their capacity as officers of the District, and the seal of the City or the District (or a facsimile thereof) may be impressed, imprinted, engraved or otherwise reproduced thereon, and attested by the signature of the City Clerk. In case any one or more of the officers who shall have signed or sealed any of the Bonds or Parity Bonds shall cease to be such officer before the Bonds or Parity Bonds so signed and sealed have been authenticated and delivered by the Trustee (including new Bonds or Parity Bonds delivered pursuant to the provisions hereof with reference to the transfer and exchange of Bonds or Parity Bonds or lost, stolen, destroyed or mutilated Bonds or Parity Bonds), such Bonds and Parity Bonds shall nevertheless be valid and may be authenticated and delivered as herein provided, and may be issued as if the person who signed or sealed such Bonds or Parity Bonds had not ceased to hold such office.

Only the Bonds as shall bear thereon such certificate of authentication in the form set forth in Exhibit A attached hereto shall be entitled to any right or benefit under this Indenture, and no Bond 14 4858-5434-7218/022042-0026
shall be valid or obligatory for any purpose until such certificate of authentication shall have been duly executed by the Trustee.

Section 2.8. Bond Register. The Trustee will keep or cause to be kept, at its office, sufficient books for the registration and transfer of the Bonds and any Parity Bonds which shall upon reasonable prior notice be open to inspection by the District during all regular business hours, and, subject to the limitations set forth in Section 2.9 below, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be transferred on said Bond Register, Bonds and any Parity Bonds as herein provided.

The District and the Trustee may treat the Owner of any Bond or Parity Bond whose name appears on the Bond Register as the absolute Owner of that Bond or Parity Bond for any and all purposes and the District and the Trustee shall not be affected by any notice to the contrary. The District and the Trustee may rely on the address of the Owner as it appears in the Bond Register for any and all purposes. It shall be the duty of the Owner to give written notice to the Trustee of any change in the Owner’s address so that the Bond Register may be revised accordingly.

Section 2.9. Registration of Exchange or Transfer. Subject to the limitations set forth in the following paragraph, the registration of any Bond or Parity Bond may, in accordance with its terms, be transferred upon the Bond Register by the person in whose name it is registered, in person or by his or her duly authorized attorney, upon surrender of such Bond or Parity Bond for cancellation at the office of the Trustee, accompanied by delivery of written instrument of transfer in a form acceptable to the Trustee and duly executed by the Owner or his or her duly authorized attorney.

Bonds or Parity Bonds may be exchanged at the office of the Trustee for a like aggregate principal amount of Bonds or Parity Bonds for other authorized denominations of the same maturity and issue. The Trustee shall not collect from the Owner any charge for any new Bond or Parity Bond issued upon any exchange or transfer, but shall require the Owner requesting such exchange or transfer to pay any tax or other governmental charge required to be paid with respect to such exchange or transfer. Whenever any Bonds or Parity Bonds shall be surrendered for registration of transfer or exchange, the District shall execute and the Trustee shall authenticate and deliver a new Bond or Bonds or a new Parity Bond or Parity Bonds, as applicable, of the same issue and maturity, for a like aggregate principal amount; provided that the Trustee shall not be required to register transfers or make exchanges of: (i) Bonds or Parity Bonds for a period of 15 days next preceding any selection of the Bonds or Parity Bonds to be redeemed; or (ii) any Bonds or Parity Bonds chosen for redemption.

Section 2.10. Mutilated, Lost, Destroyed or Stolen Bonds or Parity Bonds. If any Bond or Parity Bond shall become mutilated, the District shall execute, and the Trustee shall authenticate and deliver, a new Bond or Parity Bond of like tenor, date, issue and maturity in exchange and substitution for the Bond or Parity Bond so mutilated, but only upon surrender to the Trustee of the Bond or Parity Bond so mutilated. Every mutilated Bond or Parity Bond so surrendered to the Trustee shall be cancelled by the Trustee pursuant to Section 10.1 hereof. If any Bond or Parity Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence is satisfactory to the Trustee and, if any indemnity satisfactory to the Trustee shall be given, the District shall execute and the Trustee shall authenticate and deliver a new Bond or Parity Bond, as applicable, of like tenor, maturity and issue, numbered and dated as the Trustee shall determine in lieu of and in substitution for the Bond or Parity Bond so lost, destroyed or 15 4858-5434-7218/022042-0026
stolen. Any Bond or Parity Bond issued in lieu of any Bond or Parity Bond alleged to be mutilated, lost, destroyed or stolen shall be equally and proportionately entitled to the benefits hereof with all other Bonds and Parity Bonds issued hereunder. The Trustee shall not treat both the original Bond or Parity Bond and any replacement Bond or Parity Bond as being Outstanding for the purpose of determining the principal amount of Bonds or Parity Bonds which may be executed, authenticated and delivered hereunder or for the purpose of determining any percentage of Bonds or Parity Bonds Outstanding hereunder, but both the original and replacement Bond or Parity Bond shall be treated as one and the same. Notwithstanding any other provision of this Section, in lieu of delivering a new Bond or Parity Bond which has been mutilated, lost, destroyed or stolen, and which has matured, the Trustee may make payment with respect to such Bonds or Parity Bonds.

Section 2.11. Validity of Bonds and Parity Bonds. The validity of the authorization and issuance of the Bonds and any Parity Bonds shall not be affected in any way by any defect in any proceedings taken by the District for the financing of the Project, or by the invalidity, in whole or in part, of any contracts made by the District in connection therewith, and shall not be dependent upon the completion of the financing of the Project or upon the performance by any Person of his obligation with respect to the Project, and the recital contained in the Bonds or any Parity Bonds that the same are issued pursuant to the Act and other applicable laws of the State shall be conclusive evidence of their validity and of the regularity of their issuance.

Section 2.12. Book-Entry System. The Bonds shall be initially delivered in the form of a separate single fully registered Bond (which may be typewritten) for each maturity of the Bonds.

Upon initial delivery, the ownership of each such Bond shall be registered in the registration books kept by the Trustee in the name of the Nominee as nominee of the Depository. Except as provided in Section 2.14 hereof, all of the Outstanding Bonds shall be registered in the registration books kept by the Trustee in the name of the Nominee. At the election of the District, any Parity Bonds may also be issued as book-entry bonds registered in the name of the Nominee as provided herein, in which case the references in Sections 2.12 through 2.15 to “Bonds” shall be applicable to such Parity Bonds.

With respect to Bonds registered in the registration books kept by the Trustee in the name of the Nominee, the District and the Trustee shall have no responsibility or obligation to any such Participant or to any Person on behalf of which such a Participant holds an interest in the Bonds.

Without limiting the immediately preceding sentence, the District and the Trustee shall have no responsibility or obligation with respect to: (i) the accuracy of the records of the Depository, the Nominee, or any Participant with respect to any ownership interest in the Bonds; (ii) the delivery to any Participant or any other Person, other than an Owner as shown in the registration books kept by the Trustee, of any notice with respect to the Bonds, including any notice of redemption; (iii) the selection by the Depository and its Participants of the beneficial interests in the Bonds to be redeemed in the event that the Bonds are redeemed in part; or (iv) the payment to any Participant or any other Person, other than an Owner as shown in the registration books kept by the Trustee, of any amount with respect to principal of, premium, if any, or interest due with respect to the Bonds. The District and the Trustee may treat and consider the Person in whose name each Bond is registered in the registration books kept by the Trustee as the holder and absolute owner of such Bond for the purpose of payment of the principal of, premium, if any, and interest on such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond and for all other purposes whatsoever. The Trustee shall pay all principal of, premium, if any, and interest due on the Bonds only to or upon the order of the respective Owner, as shown in the registration books kept by the Trustee, or their respective 16 4858-5434-7218/022042-0026
attorneys duly authorized in writing, and all such payments shall be valid and effective to satisfy and discharge fully the District’s obligations with respect to payment of the principal, premium, if any, and interest due on the Bonds to the extent of the sum or sums so paid. No Person other than an Owner, as shown in the registration books kept by the Trustee, shall receive a Bond evidencing the obligation of the District to make payments of principal, premium, if any, and interest pursuant to this Indenture. Upon delivery by the Depository to the Trustee and the District of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to Record Dates, the word Nominee in this Indenture shall refer to such new nominee of the Depository.

Section 2.13. Representation Letter. In order to qualify the Bonds and any Parity Bonds which the District elects to register in the name of the Nominee for the Depository’s book-entry system, an Authorized Representative of the District is hereby authorized to execute from time to time and deliver to such Depository the Representation Letter. The execution and delivery of the Representation Letter shall not in any way limit the provisions of Section 2.12 or in any other way impose upon the District or the Trustee any obligation whatsoever with respect to persons having interests in the Bonds other than the Owners, as shown on the registration books kept by the Trustee.

The District agrees to take all action necessary to continuously comply with all representations made by it in the Representation Letter. In addition to the execution and delivery of the Representation Letter, the Authorized Representatives of the District are hereby authorized to take any other actions, not inconsistent with this Indenture, to qualify the Bonds for the Depository’s book-entry program.

Section 2.14. Transfers Outside Book-Entry System. In the event that: (i) the Depository determines not to continue to act as securities depository for the Bonds; or (ii) the District determines that the Depository shall no longer so act, then the District will discontinue the book-entry system with the Depository. If the District fails to identify another qualified securities depository to replace the Depository then the Bonds so designated shall no longer be restricted to being registered in the registration books kept by the Trustee in the name of the Nominee, but shall be registered in whatever name or names Persons transferring or exchanging Bonds shall designate, in accordance with the provisions of Section 2.9 hereof.

Section 2.15. Payments to the Nominee. Notwithstanding any other provisions of this Indenture to the contrary, so long as any Bond is registered in the name of the Nominee, all payments with respect to principal, premium, if any, and interest due with respect to such Bond and all notices with respect to such Bond shall be made and given, respectively, as provided in the Representation Letter or as otherwise instructed by the Depository.

Section 2.16. Initial Depository and Nominee. The initial Depository under this Indenture shall be The Depository Trust Company, New York, New York. The initial Nominee shall be Cede & Co., as Nominee of The Depository Trust Company, New York, New York.

ARTICLE III

CREATION OF FUNDS AND APPLICATION OF PROCEEDS
Section 3.1. Creation of Funds; Application of Proceeds. (a) There are hereby created and established and shall be maintained by the Trustee the following funds and accounts:
17 4858-5434-7218/022042-0026
(1) The Community Facilities District No. 2019-2 of the City of Lake Elsinore (Nichols Ranch) Special Tax Fund (the “Special Tax Fund”) (in which there shall be established and created an Interest Account, a Principal Account, a Redemption Account, a Reserve Account, and an Administrative Expense Account).
(2) The Community Facilities District No. 2019-2 of the City of Lake Elsinore (Nichols Ranch) Rebate Fund (the “Rebate Fund”) (in which there shall be established a Rebate Account and an Alternate Penalty Account).
(3) The Community Facilities District No. 2019-2 of the City of Lake Elsinore (Nichols Ranch) Acquisition and Construction Fund (the “Acquisition and Construction Fund”) (in which there shall be established a Costs of Issuance Account, a City Facilities Account and a Water Facilities Account).
(4) The Community Facilities District No. 2019-2 of the City of Lake Elsinore (Nichols Ranch) Surplus Fund (the “Surplus Fund”).

The amounts on deposit in the foregoing funds, accounts and subaccounts shall be held by the Trustee. The Trustee shall invest and disburse the amounts in such funds, accounts and subaccounts in accordance with the provisions of this Article III and shall disburse investment earnings thereon in accordance with the provisions of Section 3.10 hereof.

In connection with the issuance of any Parity Bonds, which may be issued only for the purpose of refunding the Bonds as described in Section 9.2, the Trustee, at the direction of an Authorized Representative of the District, may create new funds, accounts or subaccounts, or may create additional accounts and subaccounts within any of the foregoing funds and accounts for the purpose of separately accounting for the proceeds of the Bonds and any Parity Bonds. (b) The proceeds of the sale of the Bonds shall be received by the Trustee on behalf of the District and deposited and transferred as follows:
(1) $________ shall be transferred to the Costs of Issuance Account of the Acquisition and Construction Fund to pay the Costs of Issuance of the Bonds; (2) $_________ shall be transferred to the Reserve Account of the Special Tax Fund to fund the Reserve Requirement;
(3) $________ shall be transferred to the Interest Account to pay a portion of the interest on the Bonds due through March 1, 2025; and
(4) $_________ shall be transferred to the Acquisition and Construction Fund of which $________ shall be deposited in the City Facilities Account and $_________ shall be deposited in the Water Facilities Account.

The Trustee may, in its discretion, establish temporary funds or accounts in its books and records to facilitate such transfers.
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Section 3.2. Deposits to and Disbursements from Special Tax Fund. (a) Except for Prepayments, which shall be deposited to the Redemption Account of the Special Tax Fund, the Trustee shall, 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 shall transfer the Special Taxes on deposit in the Special Tax Fund on the dates and in the amounts set forth in the following Sections, in the following order of priority, to:
(1) the Administrative Expense 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 Expense Account of the Special Tax Fund to the extent that Administrative Expenses exceed or are expected to exceed the Administrative Expense Cap; (7) the Rebate Fund; and
(8) the Surplus Fund.
(b) At maturity of all of the Bonds and Parity Bonds and, after all principal and interest then due on the Bonds and Parity Bonds then Outstanding have 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.

Section 3.3. Administrative Expense Account of the Special Tax Fund. The Trustee shall transfer from the Special Tax Fund and deposit in the Administrative Expense 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 District; provided, however, that, except as set forth in the following sentence, the total amount transferred with respect to a Bond Year shall 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.

Notwithstanding the foregoing, amounts in excess of the Administrative Expenses Cap may be transferred to the Administrative Expense Account to the extent necessary to collect delinquent Special Taxes. Moneys in the Administrative Expense Account of the Special Tax Fund may be invested in any Authorized Investments as directed in writing by an Authorized Representative of the District and shall be disbursed as directed in a Certificate of an Authorized Representative.

Section 3.4. Interest Account and Principal Account of the Special Tax Fund. The principal of and interest due on the Bonds and any Parity Bonds until maturity, other than principal due upon redemption, shall be paid by the Trustee from the Principal Account and the Interest Account of the Special Tax Fund, respectively.
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For the purpose of assuring that the payment of principal of and interest on the Bonds and any Parity Bonds will be made when due, after making the transfer required by Section 3.3, at least one Business Day prior to each March 1 and September 1, the Trustee shall 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 or 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 and the Administrative Expense Account) are inadequate to make the foregoing transfers, then any deficiency shall be made up by transfers 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 shall be 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 which remains unpaid. Moneys in the Interest Account shall 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, commencing September 1, 2026, shall equal the principal 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 shall be used for the payment of the principal of such Bonds and any Parity Bonds as the same become due at maturity.

Section 3.5. Redemption Account of the Special Tax Fund. (a) With respect to each September 1 on which a Sinking Fund Payment is due, after the deposits have been made to the Administrative Expense Account, the Interest Account and the Principal Account of the Special Tax Fund as required by Sections 3.3 and 3.4 hereof, the Trustee shall next transfer into the Redemption Account of the Special Tax Fund from the Special Tax Fund the amount needed to make the balance in the Redemption Account one Business Day prior to each September 1 on which a Sinking Fund Payment is due equal to the Sinking Fund Payment due on any Outstanding Bonds and Parity Bonds on such September 1; provided, however, that, if amounts in the Special Tax Fund are inadequate to make the foregoing transfers, then any deficiency shall be made up by an immediate transfer from the Reserve Account, if funded, pursuant to Section 3.6 below. Moneys so deposited in the Redemption Account shall be used and applied by the Trustee to call and redeem Term Bonds in accordance with the Sinking Fund Payment schedules set forth in Section 4.1(b) hereof, and to redeem Parity Bonds in accordance with any Sinking Fund Payment schedule in the Supplemental Indenture for such Parity Bonds. (b) After making the deposits to the Administrative Expense Account, the Interest Account and the Principal Account of the Special Tax Fund pursuant to Sections 3.3 and 3.4 above and to the Redemption Account for Sinking Fund Payments then due pursuant to subparagraph (a) of this Section, and in accordance with the District’s election to call Bonds for optional redemption as set forth in Section 4.1(a) hereof, or to call Parity Bonds for optional redemption as set forth in any Supplemental Indenture for Parity Bonds, the Trustee shall 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 or Parity Bonds called for optional redemption; provided, however, that amounts in the Special Tax Fund (other than the Administrative 20 4858-5434-7218/022042-0026
Expense Account therein) may be applied to optionally redeem Bonds and Parity Bonds only if immediately following such redemption the amount in the Reserve Account will equal the Reserve Requirement.
(c) Prepayments deposited to the Redemption Account shall be applied on the redemption date established pursuant to Section 4.1(c) hereof to the payment of the principal of, premium, if any, and interest on the Bonds and Parity Bonds to be redeemed with such Prepayments. (d) Moneys set aside in the Redemption Account shall be used solely for the purpose of redeeming Bonds and Parity Bonds and shall 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 of such Bonds or Parity Bonds, and, in the case of an optional redemption or a special mandatory 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 hereinafter provided. Purchases of Outstanding Bonds or Parity 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 a special mandatory redemption, the premium applicable at the next following call date according to the premium schedule established pursuant to Section 4.1(a) or 4.1(c) hereof, as applicable, or in the case of Parity Bonds the premium established in any Supplemental Indenture. Any accrued interest payable upon the purchase of Bonds or Parity 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.

Section 3.6. Reserve Account of the Special Tax Fund. There shall be maintained in the Reserve Account of the Special Tax Fund an amount equal to the Reserve Requirement. The Reserve Requirement may be satisfied in whole or in part by cash, a Reserve Policy, or a combination thereof. The amounts in the Reserve Account shall be applied as follows:
(a) Moneys in the Reserve Account shall be used solely for the purpose of paying the principal of, including Sinking Fund Payments, and interest on the Bonds and any Parity 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 Section 3.7 hereof 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 Parity Bonds when due, or amounts in the Special Tax Fund are insufficient to make transfers to the Rebate Fund when required, the Trustee shall withdraw from the Reserve Account, first from the cash on deposit therein, and second from a draw on the Reserve Policy, if any, 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. (b) Whenever moneys are withdrawn from the Reserve Account, after making the required transfers referred to in Sections 3.3, 3.4 and 3.5 above, the Trustee shall transfer to the Reserve Account from available moneys in the Special Tax Fund, or from any other legally available funds which the District elects to apply to such purpose, the amount needed to restore the amount of such Reserve Account to the Reserve Requirement by first, repaying any amounts due under the 21 4858-5434-7218/022042-0026
Reserve Policy, and second to fund the Reserve Account to the Reserve Requirement. Moneys in the Special Tax Fund shall be deemed available for transfer to the Reserve Account only if the Trustee determines that such amounts will not be needed to make the deposits required to be made to the Administrative Expense Account, the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund on or before the next September 1. If amounts in the Special Tax Fund together with any other amounts transferred to replenish the Reserve Account are inadequate to restore the Reserve Account to the Reserve Requirement, including any amounts necessary to pay costs related to the Reserve Policy, if any, then the District shall include the amount necessary to restore the Reserve Account to the Reserve Requirement, in the next annual Special Tax levy to the extent of the maximum permitted Special Tax rates.
(c) In connection with a redemption of Bonds pursuant to Section 4.1(a) or 4.1(c) or Parity Bonds in accordance with any Supplemental Indenture, or a partial defeasance of Bonds or Parity Bonds in accordance with Section 9.1 hereof, amounts in the Reserve Account may be applied to such redemption or partial defeasance so long as the amount on deposit in the Reserve Account following such redemption or partial defeasance equals the Reserve Requirement. The District shall set forth in a Certificate of an Authorized Representative the amount in the Reserve Account to be transferred to the Redemption Account on a redemption date or to be transferred pursuant to this Indenture to partially defease Bonds or Parity Bonds, and the Trustee shall make such transfer on the applicable redemption or defeasance date, subject to the limitation in the preceding sentence. (d) To the extent that the Reserve Account is at the Reserve Requirement as of the first day of the final Bond Year for the Bonds or an issue of Parity Bonds, amounts in the Reserve Account may be applied to pay the principal of and interest due on the Bonds and Parity Bonds, as applicable, in the final Bond Year for such issue. Moneys in the Reserve Account in excess of the Reserve Requirement not transferred in accordance with the preceding provisions of this Section shall be withdrawn from the Reserve Account on the Business Day before each March 1 and September 1 and shall be transferred to the Acquisition and Construction Fund or an Account therein, as directed by an Authorized Representative of the District, until all amounts have been disbursed from the Acquisition and Construction Fund (or such fund is closed) and thereafter to the Interest Account of the Special Tax Fund.

Section 3.7. Rebate Fund.
(a) The Trustee shall establish and maintain a fund separate from any other fund established and maintained hereunder designated as the Rebate Fund and shall establish a separate Rebate Account and Alternate Penalty Account therein. All money at any time deposited in the Rebate Account or the Alternate Penalty Account of the Rebate Fund shall be held by the Trustee in trust, for payment to the United States Treasury. A separate subaccount of the Rebate Account and the Alternate Penalty Account shall be established for the Bonds and each issue of Parity Bonds the interest on which is excluded from gross income for federal income tax purposes. All amounts on deposit in the Rebate Fund with respect to the Bonds or an issue of Parity Bonds shall be governed by this Section 3.7 and the Tax Certificate for such issue, unless the District obtains an opinion of Bond Counsel that the exclusion from gross income for federal income tax purposes of interest payments on the Bonds and Parity Bonds will not be adversely affected if such requirements are not satisfied.
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(1) Rebate Account. The following requirements shall be satisfied with respect to each subaccount of the Rebate Account:
(i) Annual Computation. Within 55 days of the end of each Bond Year, the District shall calculate or cause to be calculated the amount of rebatable arbitrage for the Bonds and each issue of Parity Bonds to which this Section 3.7 is applicable, in accordance with Section 148(f)(2) of the Code and Section 1.148-3 of the Rebate Regulations (taking into account any applicable exceptions with respect to the computation of the rebatable arbitrage described in the Tax Certificate for each issue (e.g., the temporary investments exceptions of Section 148(f)(4)(B) and (C) of the Code), and taking into account whether the election pursuant to Section 148(f)(4)(C)(vii) of the Code (the “1½% Penalty”) has been made), for this purpose treating the last day of the applicable Bond Year as a computation date, within the meaning of Section 1.148-1(b) of the Rebate Regulations (the “Rebatable Arbitrage”). The District shall obtain expert advice as to the amount of the Rebatable Arbitrage to comply with this Section.
(ii) Annual Transfer. Within 55 days of the end of each Bond Year for which Rebatable Arbitrage must be calculated as required by the Tax Certificate for each issue, upon the written direction of an Authorized Representative of the District, an amount shall be deposited to each subaccount of the Rebate Account by the Trustee from any funds so designated by the District if and to the extent required, so that the balance in the Rebate Account shall equal the amount of Rebatable Arbitrage so calculated by or on behalf of the District in accordance with clause (i) of this subsection (a)(1) with respect to the Bonds and each issue of Parity Bonds to which this Section 3.7 is applicable. In the event that immediately following any transfer required by the previous sentence, or the date on which the District determines that no transfer is required for such Bond Year, the amount then on deposit to the credit of the applicable subaccount of the Rebate Account exceeds the amount required to be on deposit therein, upon written instructions from an Authorized Representative of the District, the Trustee shall withdraw the excess from the appropriate subaccount of the Rebate Account and then credit the excess to the Special Tax Fund. (iii) Payment to the Treasury. The Trustee shall pay, as directed in writing by an Authorized Representative of the District, to the United States Treasury, out of amounts in each subaccount of the Rebate Account:
(X) not later than 60 days after the end of: (A) the fifth Bond Year for the Bonds and each issue of Parity Bonds to which this Section 3.7 is applicable; and (B) each applicable fifth Bond Year thereafter, an amount equal to at least 90% of the Rebatable Arbitrage calculated as of the end of such Bond Year for the Bonds and each issue of Parity Bonds, as applicable; and
(Y) not later than 60 days after the payment or redemption of all of the Bonds or an issue of Parity Bonds, as applicable, an amount equal to 100% of the Rebatable Arbitrage calculated as of the end of such applicable Bond Year, and any income attributable to the Rebatable Arbitrage, computed in accordance with Section 148(f) of the Code.

In the event that, prior to the time of any payment required to be made from the Rebate Account, the amount in the Rebate Account is not sufficient to make such payment when such payment is due, the District shall calculate or cause to be calculated the amount of such deficiency and deposit an amount received from any legally available source equal to such deficiency prior to the time such payment is due. Each payment required to be made pursuant to this subsection (a)(1) 23 4858-5434-7218/022042-0026
shall be made to the Internal Revenue Service Center, Ogden, Utah 84201 on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038-T, or shall be made in such other manner as provided under the Code. (2) Alternate Penalty Account.
(i) Six-Month Computation. If the 1½% Penalty has been elected for the Bonds or an issue of Parity Bonds, within 85 days of each particular Six-Month Period, the District shall determine or cause to be determined whether the 1½% Penalty is payable (and the amount of such penalty) as of the close of the applicable Six-Month Period. The District shall obtain expert advice in making such determinations.
(ii) Six-Month Transfer. Within 85 days of the close of each Six-Month Period, the Trustee, at the written direction of an Authorized Representative of the District, shall deposit an amount in the appropriate subaccounts of the Alternate Penalty Account from any source of funds held by the Trustee pursuant to this Indenture and designated by the District in such written directions or provided to it by the District, if and to the extent required, so that the balance in each subaccount of the Alternate Penalty Account equals the amount of 1½% Penalty due and payable to the United States Treasury determined as provided in subsection (a)(2)(i) above. In the event that immediately following any transfer provided for in the previous sentence, or the date on which the District determines that no transfer is required for such Bond Year, the amount then on deposit in a subaccount of the Alternate Penalty Account exceeds the amount required to be on deposit therein to make the payments required by subsection (iii) below, the Trustee, at the written direction of an Authorized Representative of the District, may withdraw the excess from the applicable subaccount of the Alternate Penalty Account and credit the excess to the Special Tax Fund. (iii) Payment to the Treasury. The Trustee shall pay, as directed in writing by an Authorized Representative of the District, to the United States Treasury, out of amounts in a subaccount of the Alternate Penalty Account, not later than 90 days after the close of each Six-Month Period the 1½% Penalty, if applicable and payable, computed with respect to the Bonds and any issue of Parity Bonds in accordance with Section 148(f)(4) of the Code. In the event that, prior to the time of any payment required to be made from a subaccount of the Alternate Penalty Account, the amount in such subaccount is not sufficient to make such payment when such payment is due, the District shall calculate the amount of such deficiency and direct the Trustee, in writing, to deposit an amount equal to such deficiency into such subaccount of the Alternate Penalty Account from any funds held by the Trustee pursuant to this Indenture and designated by the District in such written directions prior to the time such payment is due. Each payment required to be made pursuant to this subsection (a)(2) shall be made to the Internal Revenue Service, Ogden, Utah 84201 on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038-T or shall be made in such other manner as provided under the Code. (b) Disposition of Unexpended Funds. Any funds remaining in the Accounts of the Rebate Fund with respect to the Bonds or an issue of Parity Bonds after redemption and payment of such issue and after making the payments described in subsections (a)(1)(iii) or (a)(2)(iii) (whichever is applicable), may be withdrawn by the Trustee at the written direction of the District and utilized in any manner by the District.
(c) Survival of Defeasance and Final Payment. Notwithstanding anything in this Section or this Indenture to the contrary, the obligation to comply with the requirements of this Section shall 24 4858-5434-7218/022042-0026
survive the defeasance and final payment of the Bonds and any Parity Bonds with respect to which an Account has been created in the Rebate Fund.
(d) Amendment Without Consent of Owners. This Section 3.7 may be deleted or amended in any manner without the consent of the Owners, provided that prior to such event there is delivered to the District an opinion of Bond Counsel to the effect that such deletion or amendment will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds and any issue of Parity Bonds issued on a tax-exempt basis. (e) Trustee. The Trustee shall have no responsibility to monitor or calculate any amounts payable to the U.S. Treasury pursuant to this Section and shall be deemed constructively to have complied with its obligations hereunder if it follows the written instructions of the District given pursuant to this Section.

Section 3.8. Surplus Fund. After making the transfers required by Sections 3.3, 3.4, 3.5,

3.6 and 3.7 hereof, as soon as practicable after each September 1, the Trustee shall transfer all remaining amounts in the Special Tax Fund to the Surplus Fund, unless on or prior to such date, it has received a Certificate of an Authorized Representative directing that certain amounts be retained in the Special Tax Fund because the District has included such amounts as being available in the Special Tax Fund in calculating the amount of the levy of Special Taxes for such Fiscal Year pursuant to Section 5.2(b) hereof. Moneys deposited in the Surplus Fund will be transferred by the Trustee at the direction of an Authorized Representative of the District: (i) to the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund to pay the principal of, including Sinking Fund Payments, premium, if any, and interest on the Bonds and any Parity Bonds when due in the event that moneys in the Special Tax Fund and the Reserve Account of the Special Tax Fund are insufficient therefor; (ii) to the Reserve Account in order to replenish the Reserve Account to the Reserve Requirement; (iii) to the Administrative Expense Account of the Special Tax Fund to pay Administrative Expenses to the extent that the amounts on deposit in the Administrative Expense Account of the Special Tax Fund are insufficient to pay Administrative Expenses; (iv) to the Acquisition and Construction Fund to pay Project Costs; or (v) after all Project Costs have been paid, to the District, for any other lawful purpose of the District.

The amounts in the Surplus Fund are not pledged to the repayment of the Bonds or the Parity Bonds and may be used by the District for any lawful purpose. In the event that the District reasonably expects to use any portion of the moneys in the Surplus Fund to pay debt service on any Outstanding Bonds or Parity Bonds, the District shall notify the Trustee in a Certificate of an Authorized Representative and the Trustee shall segregate such amount into a separate subaccount and the moneys on deposit in such subaccount of the Surplus Fund shall be invested at the written direction of the District in Authorized Investments the interest on which is excludable from gross income under Section 103 of the Code (other than bonds the interest on which is a tax preference item for purposes of computing the alternative minimum tax of individuals under the Code) or in Authorized Investments at a yield not in excess of the yield on the issue of Bonds or Parity Bonds to which such amounts are to be applied, unless, in the opinion of Bond Counsel, investment at a higher yield will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or any Parity Bonds which were issued on a tax-exempt basis for federal income tax purposes. Such amounts shall be disbursed as directed by an Authorized Representative of the District.
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Section 3.9. Acquisition and Construction Fund.
(a) The moneys in the Costs of Issuance Account shall be disbursed by the Trustee pursuant to a Certificate of an Authorized Representative of the District, and any balance remaining therein after 180 days shall be transferred by the Trustee to an Account within the Acquisition and Construction Fund as directed in writing by an Authorized Representative of the District. Following such transfer to the Acquisition and Construction Fund, the Costs of Issuance Account shall be closed.
(b) The moneys in the Acquisition and Construction Fund and the Accounts therein (other than the Costs of Issuance Account) shall be applied exclusively to pay the Project Costs.

Amounts for Project Costs shall be disbursed by the Trustee from the Acquisition and Construction Fund or the Accounts therein (other than the Costs of Issuance Account), as specified in a Request for Disbursement of Project Costs, substantially in the form of Exhibit B-1 attached hereto. A properly executed Request for Disbursement of Project Costs must be submitted in connection with each requested disbursement and the Trustee may rely thereon without investigating the accuracy thereof. Amounts in an Account of the Acquisition and Construction Fund may be transferred to another Account or Accounts therein pursuant to a Certificate of an Authorized Representative of the District.
(c) Upon receipt of a Certificate of an Authorized Representative of the District stating that all or a specified portion of the amount remaining in the Acquisition and Construction Fund or the Accounts therein (other than the Costs of Issuance Account) is no longer needed to pay Project Costs, the Trustee shall: (i) transfer all or such specified portion, as applicable, of the moneys remaining on deposit in the Acquisition and Construction Fund or the Accounts therein (other than the Costs of Issuance Account) to the Interest Account, the Principal Account or Redemption Account of the Special Tax Fund, to the Costs of Issuance Account or to the Surplus Fund, as directed in such certificate, provided that in connection with any direction to transfer amounts to the Surplus Fund there shall have been delivered to the Trustee with such certificate an opinion of Bond Counsel to the effect that such transfer to the Surplus Fund will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or any Parity Bonds which were issued on a tax-exempt basis for federal income tax purposes; and (ii) thereafter, close the Acquisition and Construction Fund.

Lake Elsinore City CouncilAugust 13, 2024

Lake Elsinore City Council
August 13, 2024