Agenda packet — Lake Elsinore City Council, May 26, 2026 (part 1 of 4)

City of Lake Elsinore Meeting Date:

City Council Meeting                                                     May 26, 2026 Agenda
Cultural Center                                                            Meeting Time:
183 N. Main Street                                                        Closed Session: NONE Lake Elsinore, CA 92530                                             Open Session: 7:00 PM Mayor Magee
Mayor Pro Tem Sheridan
Council Member Tisdale
Council Member Manos
Council Member Carroll
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 2nd and 4th 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/citycouncil/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 [email protected]. 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) 674- 3124, Option 6, at least 48 hours before the meeting to make reasonable arrangements to ensure accessibility.

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 that 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 the health of the City and community.
• Downtown: Enhancing and creating the highest-quality downtown experience will serve to establish 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.LakeElsinore.org/DreamExtreme2040.

City Council Agenda May 26, 2026
City of Lake Elsinore Page 2
CALL TO ORDER - 7:00 P.M.

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

PLEDGE OF ALLEGIANCE
ROLL CALL

PRESENTATIONS/CEREMONIALS
Certificate of Recognition to Kora Priske
Recommendation:

Present a Certificate of Recognition to Kora Priske who placed first in the Regional Civics Bee and will now head to State finals.

Business in Action Monthly Spotlight for May 2026-Elsinore Barber and Beauty
Recommendation:

Recognize Elsinore Barber and Beauty as the City of Lake Elsinore’s Business in Action Monthly Spotlight for May 2026.

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
Minutes of the Regular City Council Meeting of May 12, 2026 Recommendation:

Approve the Minutes.

CC Warrant Report Dated April 20, 2026 to April 26, 2026 Recommendation:

Receive and file.

CC Warrant Report Dated April 27, 2026 to May 03, 2026
Recommendation:

Receive and file.

CC Investment Report for April 2026
Recommendation:

Receive and file the Investment Report for April 2026.

1. 2.

3. 4.

4.1 4.2

5. 6.

6.1 6.2

6.3 6.4
City Council Agenda May 26, 2026
City of Lake Elsinore Page 3
Second Reading of an Ordinance Approving the Development Agreement Amendment (DA 2026-02) for GC Global, LLC
Recommendation:

Adopt by title only and waive further reading of AN ORDINANCE OF THE CITY COUNCIL

OF THE CITY OF LAKE ELSINORE, CALIFORNIA, APPROVING THE DEVELOPMENT AGREEMENT AMENDMENT (DA-2026-02) FOR GC GLOBAL, LLC LOCATED AT 31875 Corydon Road, unit 140 (APN: 370-051-010).

Second Reading of an Ordinance Regulating Electric Bicycles and Other Electric Transportation Devices
Recommendation:

Adopt by title only and waive further reading of AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, ADDING TITLE 10, CHAPTER 10.54

OF THE LAKE ELSINORE MUNICIPAL CODE TO REGULATE AND PROVIDE FOR

EFFECTIVE ENFORCEMENT REGARDING ELECTRIC BICYCLES AND OTHER ELECTRIC TRANSPORTATION DEVICES.

Contractor Services Agreement with Harrigan’s Toilet Partitions, Inc. for the Purchase and Installation of Bathroom Partitions and Accessories in the New City Hall Project (CIP Project #Z20006)
Recommendation:

Approve and authorize the City Manager to execute a Contractor Services Agreement with Harrigan’s Toilet Partitions Inc in an amount not to exceed $62,000.00 for the design, purchase, and installation of bathroom partitions and accessory equipment in the New City Hall Project in such final form as approved by the City Attorney; authorize the City Manager to execute change orders not to exceed the 10% contingency amount of $6,200.00; and authorize the City Clerk to record the Notice of Completion once work is completed.

Public Works Construction Agreement with Pursuit Electric, Inc. for the Installation of the Electrical and Low Voltage Power Systems in the New City Hall Council Chamber (CIP Project #Z20006)
Recommendation:

Approve and authorize the City Manager to execute a Public Works Construction Agreement with Pursuit Electric, Inc. in an amount not to exceed $225,000.00 for the installation of the electrical and low voltage systems in the New City Hall Council Chamber in such final form as approved by the City Attorney; authorize the City Manager to execute change orders not to exceed the 10% contingency amount of $22,500.00 for uncertainties and adjustments; and authorize the City Clerk to record the Notice of Completion once work is completed.

6.5 6.6

6.7 6.8
City Council Agenda May 26, 2026
City of Lake Elsinore Page 4
CFD 2016-2 (Canyon Hills) 2026 Special Tax Refunding Bonds Recommendation:

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

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

Amendment No. 1 to the Agreement with American Lady Vets Services, Inc. for Lake Water Quality Services
Recommendation:

Approve and authorize the City Manager to execute Amendment No. 1 to the Professional Services Agreement with American Lady Vets Services, Inc. (ALV, Inc.), for an additional amount of $150,000 for a new annual amount not to exceed $356,000 for lake water quality services in such final form as approved by the City Attorney.

Agreement with Mpressions for City Hall Signage in Support of City Operations
Recommendation:

Approve and authorize the City Manager to execute a Contractor Services Agreement with Mpressions in an amount not to exceed $160,000 for the installation and support of City Hall Signage in such final form as approved by the City Attorney.

Public Works Construction Agreement with SAS Construction for the Bid Set ‘B’, on the new City Library Project CIP Project No. Z20003 Recommendation:

Approve and authorize the City Manager to execute a Public Works Construction Agreement with SAS Construction in an amount not to exceed $3,747,900.00 for Bid Set ‘B’, on the new City Library Project in such final form as approved by the City Attorney; authorize the City Manager to execute change orders not to exceed the 10% contingency amount of $374,790.00 for uncertainties and adjustments; and authorize the City Clerk to record the Notice of Completion once work is completed.

Professional Services Agreement with EPD Solutions, Inc. for the Environmental Documentation for the Dreamline Project
Recommendation:

Approve and authorize the City Manager to execute a Professional Services Agreement with EPD Solutions, Inc. for the Dreamline project in an amount not to exceed $302,080.00 in such final form as approved by the City Attorney, and authorize the City Manager to execute change orders not to exceed a contingency amount of $30,200.00 for uncertainties and adjustments.

6.9 6.10

6.11 6.12

6.13 City Council Agenda May 26, 2026
City of Lake Elsinore Page 5
Final Maps TR 31593-2, TR 31593-3, TR 31593-4, TR 31593-5, and TR 31593, South Shore
Recommendation:

Approve Final Tract Maps No. 31593-2, 31593-3, 31593-4, 31593-5, and 31593 subject to the City Engineer‘s acceptance as being true and correct; authorize the City Clerk to sign the maps and arrange for their recordation; and approve and authorize the City Manager to execute the construction agreements.

Agreement with the California Department of Forestry and Fire for Wildland Protection Services
Recommendation:

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

CALIFORNIA, APPROVING AN AGREEMENT WITH THE CALIFORNIA DEPARTMENT

OF FORESTRY AND FIRE FOR WILDLAND PROTECTION SERVICES FOR FISCAL YEAR 2026-2027.

Amendment No. 1 to the Agreement with UniFirst for Employee Uniforms, Shop Towels, and Logo Mat Services
Recommendation:

Approve and authorize the City Manager to execute Amendment No. 1 to the Contractor Services Agreement with Unifirst for the employee uniforms, shop towels, and logo mat services and increase annual compensation by an additional $4,331 for a total amount not to exceed $30,126.64 in such final form as approved by the City Attorney.

SUCCESSOR AGENCY CONSENT CALENDAR
Minutes of the Regular Successor Agency Meeting of May 12, 2026 Recommendation:

Approve the Minutes.

SA Warrant Report Dated April 20, 2026 to April 26, 2026 Recommendation:

Receive and file.

SA Warrant Report Dated April 26, 2026 to May 03, 2026
Recommendation:

Receive and file.

SA Investment Report for April 2026
Recommendation:

Receive and file the Investment Report for April 2026.

PUBLIC HEARINGS
BUSINESS ITEMS

6.14 6.15

6.16 7.

7.1 7.2

7.3 7.4

8. 9.

City Council Agenda May 26, 2026
City of Lake Elsinore Page 6
PUBLIC COMMENTS - NON-AGENDIZED ITEMS - 3 MINUTES
(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 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 on Tuesday, June 9, 2026 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 foregoing agenda was posted at City Hall at 5:30 p.m. on Thursday, May 21, 2026. ______________________________
Candice Alvarez, MMC, City Clerk

10. 11.

12. 13.

14. 15.

City Council Agenda May 26, 2026
City of Lake Elsinore Page 7

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: May 26, 2026
Subject: Certificate of Recognition to Kora Priske
Recommendation
Present a Certificate of Recognition to Kora Priske who placed first in the Regional Civics Bee and will now head to State finals.

Attachments
Attachment 1 – Certificate

CERTIFICATE OF RECOGNITION
the following certificate is presented to Kora Priske
Robert E. Magee Mayor
Presented this 26 day of May 2026
th
In recognition of your outstanding achievement in earning First Place at the Regional Civics Bee Competition held on May 12, 2026.

The National Civics Bee celebrates students who demonstrate exceptional knowledge of American government, civic engagement, and community leadership through thoughtful essays, problem-solving, and academic competition.

Your dedication to civic learning and your commitment to making a positive difference in your community are truly commendable. We proudly recognize your accomplishment and wish you continued success as you advance to the State Finals on June 27, 2026 at the Ronald Reagan Presidential Library.

Congratulations on this remarkable achievement!

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: Gina Gonzalez, Director of Economic Development and Leg Affairs Date: May 26, 2026
Subject: Business in Action Monthly Spotlight for May 2026-Elsinore Barber and Beauty
Recommendation
Recognize Elsinore Barber and Beauty as the City of Lake Elsinore’s Business in Action Monthly Spotlight for May 2026.

Background
The City of Lake Elsinore’s Business in Action Monthly Spotlight Program recognizes exemplary local businesses that contribute to the city’s economic vitality, community engagement, and overall quality of life. Elsinore Barber and Beauty is a valued local business on historic Main Street that has become a trusted destination in the community, known for its professional grooming and beauty services, welcoming atmosphere, and commitment to customer care.

Serving the Lake Elsinore community with pride, Elsinore Barber and Beauty has built a strong reputation for quality service and personalized attention. The business offers a wide range of barbering and beauty services while creating a friendly, family-oriented environment for residents of all ages. Through its dedication to excellence and community connection, Elsinore Barber and Beauty continues to be a positive contributor to the local economy and an important part of the Lake Elsinore business community.

Business in Action Monthly Spotlight – Elsinore Barber and Beauty

Page 2 of 2 ends

Discussion
As a locally owned and operated business, Elsinore Barber and Beauty’s owner Tina Breese has been a part of the shop since 2017 and officially bought the shop she loved in 2021. Offering a wide range of grooming, hairstyling, and beauty services, the business is dedicated to helping clients look and feel their best while delivering exceptional customer care and personalized service.

Beyond its services, Elsinore Barber and Beauty provides a friendly and inviting atmosphere that brings the community together. With its family-oriented approach and commitment to building lasting relationships with clients, the business serves as a gathering place for residents of all ages and backgrounds, supporting the social fabric of Lake Elsinore.

Through its dedication to professionalism, consistency, and customer satisfaction, Elsinore Barber and Beauty exemplifies the entrepreneurial spirit and commitment that define Lake Elsinore’s small business community. The business’s continued success highlights the importance of locally owned businesses in supporting the city’s economic vitality and community identity and above all, Elsinore Barber and Beauty consistently gives of their time, talent and service to not only Main Street, its businesses, the local Downtown Merchants Association, but also to other Lake Elsinore local charities, service clubs, chamber of commerce, and growing entrepreneurs who also are looking to take their aspirations of owning a businesses and mentor them.

Elsinore Barber and Beauty’s dedication to quality service, community connection, and customer care reflects Lake Elsinore’s core values of professionalism, integrity, and community partnership.

Their positive reputation, commitment to excellence, and ongoing support of the Lake Elsinore community make them a deserving recipient of the City’s Business in Action Monthly Spotlight.

Fiscal Impact
None.

Attachments
None.

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Attachments
Attachment 1 – Draft Minutes
City of Lake Elsinore Meeting Date:

City Council Meeting May 12, 2026
Minutes - Draft
Meeting Time:

Closed Session: 6:00 P.M.

Mayor Magee Open Session: 7:00 P.M.

Mayor Pro Tem Sheridan
Council Member Tisdale Cultural Center
Council Member Manos 183 N. Main Street
Council Member Carroll Lake Elsinore, CA 92530

1. CALL TO ORDER – 6:00 P.M.

The Regular Meeting of the City Council was called to order at 6:00 p.m.

2. ROLL CALL

Present: 4 - Council Members Tisdale and Carroll; Mayor Pro Tem Sheridan; and Mayor Magee

Absent: 1 - Council Member Manos

3. PUBLIC COMMENTS ON CLOSED SESSION ITEMS
There were no speakers.

4. CITY COUNCIL CLOSED SESSION

4.1 CONFERENCE WITH REAL PROPERTY NEGOTIATORS
(Gov’t Code Section 54956.8)
Property: APNs 374-263-002, -003, -005 and -006
Agency negotiator: City Manager Simpson
Negotiating parties: City of Lake Elsinore and Li Li
Under negotiation: Price and terms of payment

4.2 CONFERENCE WITH REAL PROPERTY NEGOTIATORS
(Gov’t Code Section 54956.8)
Property: APNs 374-263-001 and 373-153-017
Agency negotiator: City Manager Simpson
Negotiating parties: City of Lake Elsinore and Diane Reynolds Under negotiation: Price and terms of payment
City Council Minutes - Draft May 12, 2026
City of Lake Elsinore Page 2

5. SUCCESSOR AGENCY CLOSED SESSION

5.1 CONFERENCE WITH REAL PROPERTY NEGOTIATORS
(Gov’t Code Section 54956.8)
Property: APNs 373-210-040-0 and 373-210-042-2
Agency negotiator: Executive Director Simpson
Negotiating parties: Successor Agency of the Redevelopment Agency of the City of Lake Elsinore and Lake Elsinore Storm LP, a California limited partnership Under negotiation: Price and terms of payment
City Attorney Leibold announced that this item would not be discussed and would be placed on a future agenda.

6. RECESS
The City Council recessed into Closed Session at 6:01 p.m.

Council Member Manos arrived at 6:12 p.m.

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

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.

8. PLEDGE OF ALLEGIANCE
Mayor Magee led the Pledge of Allegiance.

9. ROLL CALL

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

Absent: 0 - None

10. CLOSED SESSION REPORT
City Attorney Leibold reported that the two City Council items were discussed; however, no reportable action was taken, and added that the Successor Agency item was not discussed and would be placed on a future agenda.

11. PRESENTATIONS/CEREMONIALS

11.2 CalFire 2026 First Quarter Statistical Update
Chief Reed presented the update.

12. PUBLIC COMMENTS - NON-AGENDIZED ITEMS - 1 MINUTE
Kimberly Davidson was called to speak.

City Council Minutes - Draft May 12, 2026
City of Lake Elsinore Page 3
Lauren Venerable was called to speak.

Sukhbir Singh Gill was called to speak.

11. PRESENTATIONS/CEREMONIALS (CONTINUED)

11.1 Public Works Week Proclamation
Present a Proclamation proclaiming the week of May 17-23, 2026, as "National Public Works Week” in the City of Lake Elsinore.

Mayor Magee presented the Proclamation to Public Works Manager DeSantiago.

13. CITY COUNCIL CONSENT CALENDAR
Moved by Council Member Manos, Seconded by Council Member Carroll to approve the City Council Consent Calendar. The motion carried by the following vote:

Yes (5): Council Members Tisdale, Manos, and Carroll; Mayor Pro Tem Sheridan; and Mayor Magee
Absent (0): None
Carried (5 to 0)

13.1 Minutes of the Regular City Council Meeting of April 28, 2026 Approve the Minutes.

This item was approved on the City Council Consent Calendar.

13.2 CC Warrant Report Dated April 06, 2026 to April 12, 2026 Receive and file.

This item was approved on the City Council Consent Calendar.

13.3 CC Warrant Report Dated April 13, 2026 to April 19, 2026 Receive and file.

This item was approved on the City Council Consent Calendar.

City Council Minutes - Draft May 12, 2026
City of Lake Elsinore Page 4

13.4 Citywide Landscaping and Street Lighting District and the Landscaping and Street Lighting District No. 1 for the Fiscal Year 2026-27 Ordering the Preparation and Approval of Engineers’ Reports and Resolutions of Intention

1. Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE

ELSINORE, CALIFORNIA, ORDERING THE PREPARATION OF AN
ENGINEER’S REPORT FOR THE CITYWIDE LANDSCAPING AND STREET LIGHTING DISTRICT (CITYWIDE LLMD);

2. Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, APPROVING THE ENGINEER’S REPORT FOR THE CITYWIDE LLMD;

3. Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, DECLARING COUNCIL’S INTENION TO

PROVIDE FOR AN ANNUAL LEVY AND COLLECTION OF ASSESSMENTS

IN THE CITYWIDE LLMD AND SETTING A PUBLIC HEARING FOR JUNE 23, 2026;

4. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE

ELSINORE, CALIFORNIA, ORDERING THE PREPARATION OF AN
ENGINEER’S REPORT FOR THE LANDSCAPING & STREET LIGHTING MAINTENANCE DISTRICT NO. 1 (LLMD NO. 1);

5. Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, APPROVING THE ENGINEER’S REPORT FOR THE LLMD NO. 1; and

6. Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, DECLARING COUNCIL’S INTENTION TO

PROVIDE FOR AN ANNUAL LEVY AND COLLECTION OF ASSESSMENTS IN THE LLMD NO. 1 AND SETTING A PUBLIC HEARING FOR JUNE 23, 2026.

This item was approved on the City Council Consent Calendar.

City Council Minutes - Draft May 12, 2026
City of Lake Elsinore Page 5

13.5 Calling the General Municipal Election for November 3, 2026, for City Council Districts 1, 3, and 4, and Requesting the Placement of a Ballot Measure to Change the Office of City Treasurer from Elective to Appointive

1. Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE

ELSINORE, CALIFORNIA, CALLING FOR THE HOLDING OF A GENERAL MUNICIPAL ELECTION TO BE HELD ON NOVEMBER 3, 2026, FOR THE ELECTION OF CITY COUNCIL MEMBERS IN DISTRICT 1 (FULL
FOUR◻YEAR TERM), DISTRICT 3 (FULL FOUR◻YEAR TERM), AND
DISTRICT 4 (TWO◻YEAR UNEXPIRED BALANCE OF TERM FORMERLY

HELD BY COUNCIL MEMBER NATASHA JOHNSON) AS REQUIRED BY

THE PROVISIONS OF THE LAWS OF THE STATE OF CALIFORNIA

RELATING TO GENERAL LAW CITIES AND FOR THE SUBMISSION TO

THE VOTERS A QUESTION RELATING TO WHETHER THE OFFICE OF

CITY TREASURER SHALL BE CHANGED FROM AN ELECTED OFFICE TO AN APPOINTED OFFICE, AND SETTING RELATED PROCEDURES;

2. Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE

ELSINORE, CALIFORNIA, REQUESTING THE BOARD OF SUPERVISORS

OF THE COUNTY OF RIVERSIDE TO CONSOLIDATE A GENERAL
MUNICIPAL ELECTION TO BE HELD ON NOVEMBER 3, 2026, WITH THE

STATEWIDE GENERAL ELECTION TO BE HELD ON THE DATE
PURSUANT TO § 10403 OF THE ELECTIONS CODE; and

3. Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE

ELSINORE, CALIFORNIA, ADOPTING REGULATIONS FOR CANDIDATES FOR ELECTIVE OFFICE PERTAINING TO CANDIDATES’ STATEMENTS

SUBMITTED TO THE VOTERS AT AN ELECTION (TO BE HELD ON
TUESDAY, NOVEMBER 3, 2026).

This item was approved on the City Council Consent Calendar.

13.6 Agreement with Dost Engineering for the Design of the Limited Street Sidewalk Improvements Project (CIP Project No. Z10109)
Approve and authorize the City Manager to execute a Professional Services Agreement with Dost Engineering in the amount of $83,360 for the design of the Limited Street Sidewalk Improvements Project in such final form as approved by the City Attorney; authorize the City Manager to execute change orders not to exceed a 10% contingency amount of $8,336, and authorize the City Clerk to record the Notice of Completion once the work is complete.

This item was approved on the City Council Consent Calendar.

City Council Minutes - Draft May 12, 2026
City of Lake Elsinore Page 6

13.7 Lake Elsinore Community Facilities District No. 2015-1 (Safety Services) Declaring Its Intention to Consider Annexing Territory Planning Application No. 2023-06 (PA No. 2023-06) Annexation No. 17
Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE

ELSINORE, CALIFORNIA, ACTING AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 2015-1 OF THE CITY OF LAKE

ELSINORE (SAFETY SERVICES), DECLARING ITS INTENTION TO CONSIDER ANNEXING TERRITORY TO COMMUNITY FACILITIES DISTRICT NO. 2015-1 OF THE CITY OF LAKE ELSINORE (SAFETY SERVICES).

This item was approved on the City Council Consent Calendar.

13.8 Annexation No. 32 Into Community Facilities District No. 2015-2 (Maintenance Services) for Assessor’s Parcel Number 379-315-033 (APN 379-315-033) (Riverside Drive Apartments)
Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE

ELSINORE, CALIFORNIA, DECLARING ITS INTENTION TO ANNEX
TERRITORY INTO COMMUNITY FACILITIES DISTRICT NO. 2015-2 (MAINTENANCE SERVICES) OF THE CITY OF LAKE ELSINORE, ADOPTING A MAP OF THE AREA TO BE PROPOSED (ANNEXATION NO. 32) AND
AUTHORIZING THE LEVY OF SPECIAL TAXES THEREIN.

This item was approved on the City Council Consent Calendar.

13.9 Agreement with Edmondson Construction Co. for the Lower Site Development Hardtop Surfaces for the Library Project (CIP Project No.

Z20003)
Approve and authorize the City Manager to execute an Agreement for Public Works Construction with Edmondson Construction Co. In an amount not to exceed $106,049.65 for the for the Lower Site Development Hardtop Surfaces for the Library Project (CIP Project No. Z20003) in such final form as approved by the City Attorney, authorize the City Manager to execute change orders not to exceed a 10% contingency amount of $10,604.96 for construction uncertainties and adjustments, and authorize the City Clerk to record the Notice of Completion once the work is complete.

This item was approved on the City Council Consent Calendar.

City Council Minutes - Draft May 12, 2026
City of Lake Elsinore Page 7

14. SUCCESSOR AGENCY CONSENT CALENDAR
Moved by Agency Member Tisdale, Seconded by Vice Chair Sheridan to approve the Successor Agency Consent Calendar. The motion carried by the following vote:

Yes (5): Agency Members Tisdale, Manos and Carroll; Vice Chair Sheridan; and Chair Magee
Absent (0): None
Carried (5 to 0)

14.1 Minutes of the Regular Successor Agency Meeting of April 28, 2026 Approve the Minutes.

This item was approved on the Successor Agency Consent Calendar.

14.2 SA Warrant Report Dated April 6, 2026 to April 12, 2026 Receive and file.

This item was approved on the Successor Agency Consent Calendar.

14.3 SA Warrant Report Dated April 13, 2026 to April 19, 2026 Receive and file.

This item was approved on the Successor Agency Consent Calendar.

15. PUBLIC HEARINGS

15.1 15.1 Planning Application No. 2021-19 (Rome Hill Commercial - TPM No. 39493) - A Request to Subdivide an Existing 6.77-acre Parcel into Two Parcels with One Letter Lot Located at the Corner of Grand Avenue and Kathryn Way

1. Find that the proposed subdivision is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15162 and 15315 (Class 15, Minor Land Divisions) since the proposed subdivision project would not have a significant effect on the environment and no new environmental documentation is necessary because all potentially significant effects have been adequately analyzed in a previously adopted Mitigated Negative Declaration (MND; SCH No. 2025090173); and

2. Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, APPROVING TENTATIVE PARCEL MAP NO. 39493 TO SUBDIVIDE AN EXISTING 6.77-ACRE SITE INTO TWO PARCELS (2.19-ACRES AND 4.53-ACRES) AND ONE 0.05-ACRE LETTER LOT FOR THE ROME HILL COMMERCIAL PROJECT LOCATED AT APN 371-150-017.

The Public Hearing was opened at 7:18 p.m.

City Council Minutes - Draft May 12, 2026
City of Lake Elsinore Page 8
City Clerk Alvarez noted that no written requests were received.

Community Development Director Abraham presented the staff report.

There were no speakers.

The Public Hearing was closed at 7:21 p.m.

Moved by Mayor Pro Tem Sheridan, Seconded by Council Member Manos to approve staff’s recommendations. The motion carried by the following vote:

Yes (5): Council Members Tisdale, Manos, and Carroll; Mayor Pro Tem Sheridan; and Mayor Magee
Absent (0): None
Carried (5 to 0)

15.2 15.2 Request to Amend GC Global, LLC‘s Development Agreement to Revise the Community Benefit Fees

1. Find that the proposed project is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15301 (Existing Facilities); and

2. Introduce by title only and waive further reading of AN ORDINANCE OF THE

CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA,
APPROVING THE DEVELOPMENT AGREEMENT AMENDMENT (DA-2026- 02) FOR GC GLOBAL, LLC LOCATED AT 31875 CORYDON ROAD, UNIT 140 (APN: 370-051-010).

The Public Hearing was opened at 7:22 p.m.

City Clerk Alvarez noted that no written requests were received.

Principal Planner Huynh presented the staff report.

There were no speakers.

The Public Hearing was closed at 7:24 p.m.

City Council Minutes - Draft May 12, 2026
City of Lake Elsinore Page 9
Moved by Council Member Tisdale, Seconded by Council Member Manos to approve staff’s recommendations and introduce the Ordinance. The motion carried by the following vote:

Yes (5): Council Members Tisdale, Manos, and Carroll; Mayor Pro Tem Sheridan; and Mayor Magee
Absent (0): None
Carried (5 to 0)

16. BUSINESS ITEM

16.1 Ordinance Regulating Electric Bicycles and Other Electric Transportation Devices
Introduce by title only and waive further reading of AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, ADDING TITLE 10, CHAPTER 10.54 OF THE LAKE ELSINORE MUNICIPAL CODE TO REGULATE

AND PROVIDE FOR EFFECTIVE ENFORCEMENT REGARDING ELECTRIC BICYCLES AND OTHER ELECTRIC TRANSPORTATION DEVICES.

City Attorney Leibold and Chief Boydd presented the staff report.

There were no speakers.

Moved by Mayor Pro Tem Sheridan, Seconded by Council Member Manos to introduce the Ordinance with an amendment to prohibit children under 16 years old from riding after dark. The motion carried by the following vote:

Yes (5): Council Members Tisdale, Manos, and Carroll; Mayor Pro Tem Sheridan; and Mayor Magee
Absent (0): None
Carried (5 to 0)

17. PUBLIC COMMENTS - NON-AGENDIZED ITEMS - 3 MINUTES
John Thornton was called to speak.

18. CITY MANAGER COMMENTS
City Manager Simpson had no comments.

19. CITY ATTORNEY COMMENTS
City Attorney Leibold had no comments.

City Council Minutes - Draft May 12, 2026
City of Lake Elsinore Page 10

20. CITY COUNCIL COMMENTS/REPORTS ON MEETINGS ATTENDED
Council Member Carroll encouraged residents to thank construction workers who are working on city facilities; shared his attendance at the first annual Firefighter BBQ and Assemblywoman Johnson's Kentucky Derby event; shared hat he met with the Family Service Association; and noted his attendance at the Southwest Riverside County Association of REALTORS' City Managers' Breakfast and Lake Elsinore Unified School District's State of the District event.

Council Member Tisdale thanked Chief Reed for hosting the First Annual Firefighters BBQ; reported on his attendance at the Western Riverside Council of Governments Executive Committee meeting on May 4, 2026; and spoke on the Northwest Mosquito and Vector Control District services.

Council Member Manos reported on his attendance at the Southern California Association of Governments Annual Conference May 7-8, 2026.

Mayor Pro Tem Sheridan noted ongoing discussions with Greg Langworthy; shared that the next Riverside Transit Agency Board of Directors meeting will be held on May 28, 2026; and shared his participation in Herk Bouris Elementary School's Career & College Fair.

Mayor Magee noted that the Riverside County Transportation Commission will consider an Agreement for the Phase I Design-Build for the I-15 Express Lanes; invited the community to participate in the 13th Annual Lake Elsinore Dream Extreme Fishing Derby from 5:00 a.m. to 2:00 p.m. on Saturday, May 16, 2026 at Launch Pointe, 2nd Annual Carp Quest from 6:00 a.m. to 2:30 p.m. on Sunday, May 17, 2026, and the San Diego SCCA Chapter Autocross event on May 23-24, 2026 at Diamond Stadium; and reported on his attendance at the Animal Friends of the Valleys Animal Shelter JPA meeting on May 7, 2026.

21. ADJOURNMENT
The Lake Elsinore City Council adjourned at 8:02 p.m. to the next Regular meeting of Tuesday, May 26, 2026 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.

Candice Alvarez, MMC
City Clerk

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
APRIL 20, 2026
TO APRIL 26, 2026

CITY OF LAKE ELSINORE CITY WARRANT SUMMARY
FUND NO. FUND DESCRIPTION TOTAL
100 GENERAL 726,344.80 $
103 THE ANCHOR 984.50
110 GAS TAX 1,664.26
114 SB1186 CASp EDUCATION PROGRAM 339.60
130 LIGHTING, LANDSCAPE, MAINTENANCE DIST - CITYWIDE 5,669.67 155 NATIONAL POLLUTANT DISCHARGE ELIMINATION SYSTEM 187.64 180 LAUNCH POINTE 71,752.45
300 INSURANCE SERVICE (11,402.48)
305 INFORMATION SYSTEMS SERVICE 29,844.71
310 SUPPORT SERVICE 2,604.90
315 FLEET SERVICE 25,318.81
320 FACILITIES SERVICE 17,169.95
330 CFD 2015-2S MAINTENANCE SERVICES 10,000.00
500 CAPITAL IMPROVEMENT PLAN 2,468,764.81
608 TRUST DEPOSITS 33,886.27
620 COST RECOVERY TRUST DEPOSITS 12,184.98
655 CFD 2015-1S LAW, FIRE, PARAMEDIC SERVICES 5,000.00
GRAND TOTAL 3,400,314.87 $
Attachment 1 1 of 1
APRIL 20, 2026
TO APRIL 26, 2026

CITY OF LAKE ELSINORE CITY WARRANT LIST
WARRANT NO. VENDOR NAME AMOUNT
APA26001928 ACTION GAS & WELDING SUPPLY 121.65 $
APA26001929 ATKINSON, ANDELSON, LOYA, RUUD & ROMO 31,583.00 APA26001930 AUTOZONE PARTS, INC. 23.92
APA26001931 CALIFORNIA, DIVISION OF THE STATE ARCHITECT 339.60 APA26001932 CARDLOCK FUELS SYSTEM LLC 5,840.09
APA26001933 CED LAGUNA 72,930.68
APA26001934 CHARLES ABBOTT ASSOCIATES, INC. 7,845.58
APA26001935 COSTAR REALTY INFORMATION INC. 902.14
APA26001936 CR&R, INC. 1,531.13
APA26001937 CR&R, INC. 4,998.95
APA26001938 DEPT. OF FORESTRY & FIRE PROTECTION 93,882.03 APA26001939 DISCOUNT HAULING & CLEANUP SERVICE 8,025.00 APA26001940 DP GLASS CO 137,750.09
APA26001941 EMBROIDERY & MORE, INC. 1,148.03
APA26001942 EXCEL LANDSCAPE, INC. 789.65
APA26001943 FEHR & PEERS 3,462.50
APA26001944 FRONTIER CALIFORNIA - INTERNET 306.36
APA26001945 FRONTIER CALIFORNIA, INC. 79.55
APA26001946 GREAT AMERICA FINANCIAL SERVICES 2,604.90
APA26001947 HOLIDAYGOO 698.72
APA26001948 INLAND BOBCAT, INC. 3,102.36
APA26001949 JIMNI SYSTEMS, INC. 150.00
APA26001950 KNORR SYSTEMS, INC. 5,141.75
APA26001951 LAI GROUP 91.68
APA26001952 LAKE ELSINORE STORM, LP 7,880.00
APA26001953 LSA ASSOCIATES, INC. 10,073.00
APA26001954 MIG 36,440.00
APA26001955 PRESS-ENTERPRISE, THE 5,294.47
APA26001956 PYE BARKER 430,418.50
APA26001957 RAMCO DOCKS, LLC 4,380.00
APA26001958 SAS CONSTRUCTION 1,349,950.00
APA26001959 SCOTT FAZEKAS & ASSOCIATES, INC. 125.00
APA26001960 SCW CONTRACTING CORPORATION 13,965.00
APA26001961 SOUTHERN CALIFORNIA EDISON CO. 515.93
APA26001962 STEVE'S TOWING 680.00
APA26001963 STEWART TITLE OF CALIFORNIA 550.00
APA26001964 STK ARCHITECTURE, INC. 17,094.85
APA26001965 STORYLAND STUDIOS DBA PLAINJOE STUDIOS 2,533.15 APA26001966 SUNBELT RENTALS, INC. 1,034.50
APA26001967 TRB AND ASSOCIATES, INC. 2,541.99
APA26001968 UNIFIRST CORP 699.66
Attachment 2 1 OF 3
APRIL 20, 2026
TO APRIL 26, 2026

CITY OF LAKE ELSINORE CITY WARRANT LIST
WARRANT NO. VENDOR NAME AMOUNT
APA26001969 VULCAN MATERIALS COMPANY 1,541.45
APA26001970 WAXIE SANITARY SUPPLY 92.06
APA26001971 WE-DO EQUIPMENT REPAIR & SUPPLY INC 500.24
11433 AK SECURITY ALARM LLC 20,760.46
11434 AMAZON BUSINESS 2,464.78
11435 AMERICAN MATERIAL COMPANY 272.01
11436 AREA 63 PRODUCTIONS 6,500.00
11437 CM WASH EQUIPMENT 6,826.13
11438 ENDRESEN DEVELOPMENT, INC. 6,984.33
11439 ENDRESEN DEVELOPMENT, INC. 19,877.84
11440 ENDRESEN DEVELOPMENT, INC. 19,877.84
11441 ENDRESEN DEVELOPMENT, INC. 21,990.70
11442 ENDRESEN DEVELOPMENT, INC. 25,000.00
11443 FENNEMORE CRAIG, P.C. 9,660.00
11445 METROCELL CONSTRUCTION, INC. 258,319.72
11446 MICHAEL BAKER INTERNATIONAL, INC. 2,866.75
11447 MICHAEL BAKER INTERNATIONAL, INC. 6,488.00
11448 MICHAEL BAKER INTERNATIONAL, INC. 3,018.50
11449 MICHAEL BAKER INTERNATIONAL, INC. 15,280.60
11450 PROSTAFF, LLC 18,725.00
11452 PURSUIT ELECTRIC, INC. 55,200.00
11453 RIGHTWAY SITE SERVICES, INC. 9,082.01
11454 SAN DIEGO ICE COMPANY, INC. 158.85
11455 SECURITAS SECURITY SERVICES USA, INC. 2,957.04
11456 SECURITAS SECURITY SERVICES USA, INC. 2,983.68
11457 SERVICE FIRST 14,598.10
11458 SPICER CONSULTING GROUP 15,000.00
11459 STAPLES ADVANTAGE 246.93
144086 CALIFORNIA MUNICIPAL REVENUE & TAX ASSOC. 80.00
144087 EVMWD 24,059.56
144090 PIAZZA, DOMENICO 25.64
144091 HOMIS, DEVAN 7,875.00
144092 SAFFE 350.00
144093 SALINAS, JUAN 16,531.07
144094 WALKER, ADIE 17,355.20
DFT260731 FRANCHISE TAX BOARD 26,101.28
DFT260732 INTERNAL REVENUE SERVICE 124,546.51
DFT260733 FRANCHISE TAX BOARD 85.00
DFT260734 INTERNAL REVENUE SERVICE 198.50
DFT260735 LEGAL SHIELD 108.65
DFT260736 MISSION SQUARE RETIREMENT 450.77
DFT260737 MISSION SQUARE RETIREMENT 9,073.51
Attachment 2 2 OF 3
APRIL 20, 2026
TO APRIL 26, 2026

CITY OF LAKE ELSINORE CITY WARRANT LIST
WARRANT NO. VENDOR NAME AMOUNT
DFT260738 NATIONWIDE TRUST COMPANY, FSB 2,104.59
DFT260739 RIVERSIDE COUNTY SHERIFF'S OFFICE 926.50
DFT260740 PAYCHEX OF NEW YORK, LLC 2,314.18
DFT260741 STATE DISBURSEMENT UNIT 245.53
DFT260742 STATE DISBURSEMENT UNIT 134.30
DFT260743 TASC 11,661.68
DFT260744 COLONIAL LIFE 1,324.89
DFT260748 CALIFORNIA DEPARTMENT OF FISH AND WILDLIFE 35.09 PR04232026 NET PAYROLL 339,928.99
GRAND TOTAL 3,400,314.87 $
Attachment 2 3 OF 3

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: Shannon Buckley, Assistant City Manager
Date: May 26, 2026
Subject: CC Warrant Report Dated April 27, 2026 to May 03, 2026 Recommendation
Receive and file
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
APRIL 27, 2026
TO MAY 03, 2026

CITY OF LAKE ELSINORE CITY WARRANT SUMMARY
FUND NO. FUND DESCRIPTION TOTAL
100 GENERAL 1,595,054.12 $
103 THE ANCHOR 2,500.60
110 GAS TAX 4,980.38
130 LIGHTING, LANDSCAPE, MAINTENANCE DIST - CITYWIDE 60,312.18 135 LIGHTING, LANDSCAPE, MAINTENANCE DIST - NO. 1 11,254.47 155 NATIONAL POLLUTANT DISCHARGE ELIMINATION SYSTEM 596.52 180 LAUNCH POINTE 71,711.85
300 INSURANCE SERVICE 13,649.81
305 INFORMATION SYSTEMS SERVICE 16,121.71
310 SUPPORT SERVICE 562.24
315 FLEET SERVICE 14,902.80
320 FACILITIES SERVICE 7,130.18
330 CFD 2015-2S MAINTENANCE SERVICES 1,628.25
331 CFD 2006-1 IA-CC SUMMERLY IMPROVEMENT 835.13
332 CFD 2006-1 IA-B SUMMERLY IMPROVEMENT 835.13
333 CFD 2015-4 TERRACINA IMPROVEMENT 835.13
334 CFD 2015-5 TRIESTE IMPROVEMENT 813.33
336 CFD 2006-1 IA-FF SUMMERLY IMPROVEMENT 813.33
337 CFD 2016-2 CANYON HILLS IMPROVEMENT 789.64
338 CFD 2006-1 IA-JJ SUMMERLY IMPROVEMENT 813.33
339 CFD 2006-1 IA-KK SUMMERLY IMPROVEMENT 835.13
340 CFD 2006-1 IA-EE SUMMERLY IMPROVEMENT 813.33
342 CFD 2007-5S RED KITE SERVICES 596.52
343 CFD 2006-2S VISCAYA SERVICES 596.52
344 CFD 2005-2S ALBERHILL RANCH SERVICES 596.52
345 CFD 2003-2 IA-D CANYON HILLS IMPROVEMENT 1,648.47
347 CFD 2006-1 IA-A SUMMERLY IMPROVEMENT 1,431.65
350 CFD 98-1 SUMMERHILL IMPROVEMENT 835.13
351 CFD 2006-1 IA-II SUMMERLY IMPROVEMENT 835.13
355 RAD 2021-1 CANYON HILLS IMPROVEMENT 2,279.85
357 CFD 2003-2 IA-A CANYON HILLS IMPROVEMENT 1,073.74
358 CFD 2007-4S MAKENNA SERVICES 596.52
359 CFD 2021-1 IA-2 TUSCANY VALLEY & CREST IMPROVEMENT 715.28 361 CFD 2022-2 LAKESHORE IMPROVEMENT 694.44
362 CFD 2006-8S RUNNING DEER ESTATES SERVICES 596.52
363 CFD 2023-1 LAKESIDE IMPROVEMENT 694.44
364 CFD 2023-2 COASTAL MISSION TRAIL IMPROVEMENT 1,807.30 366 CFD 2005-6 CITY CENTER TOWNHOMES IMPROVEMENT 596.52 367 CFD 2006-1S SUMMERLY SERVICES 596.52
368 CFD 2006-2 VISCAYA IMPROVEMENT 596.52
369 CFD 2004-3 IA-1 ROSETTA CANYON IMPROVEMENT 835.13
370 CFD 2006-1 IA-HH SUMMERLY IMPROVEMENT 835.13
Attachment 1 1 of 2
APRIL 27, 2026
TO MAY 03, 2026

CITY OF LAKE ELSINORE CITY WARRANT SUMMARY
FUND NO. FUND DESCRIPTION TOTAL
371 CFD 2005-1 SERENITY IMPROVEMENT 835.13
372 CFD 2005-2 IA-A ALBERHILL RANCH IMPROVEMENT 835.13
373 CFD 2005-5S WASSON CANYON SERVICES 596.52
374 CFD 2005-4 LAKEVIEW VILLAS IMPROVEMENT 298.26
375 CFD 2006-4 ROSETTA HILLS IMPROVEMENT 298.26
376 CFD 2006-3 LA STRADA IMPROVEMENT 596.52
377 CFD 2006-6 TESSARA IMPROVEMENT 357.91
378 CFD 2006-8 RUNNING DEER ESTATES IMPROVEMENT 789.64
379 CFD 2022-1 ALBERHILL IMPROVEMENT 694.44
380 CFD 2015-4S TERRACINA SERVICES 607.56
384 CFD 2003-2 IA-B CANYON HILLS IMPROVEMENT 3,676.64
385 CFD 2004-3 IA-2 ROSETTA CANYON IMPROVEMENT 835.13
386 CFD 2007-4 MAKENNA IMPROVEMENT 789.64
387 CFD 2007-5 RED KITE IMPROVEMENT 789.64
390 CFD 2003-2 IA-C CANYON HILLS IMPROVEMENT 2,147.48
394 CFD 2005-5 WASSON CANYON IMPROVEMENT 596.52
395 CFD 2018-1 WASSON CANYON II IMPROVEMENT 564.03
396 CFD 2019-2 NICHOLS RANCH IMPROVEMENT 802.15
397 CFD 2019-1 WESTLAKE IMPROVEMENT 802.15
398 CFD 2021-1 IA-1 TUSCANY VALLEY & CREST IMPROVEMENT 715.28 500 CAPITAL IMPROVEMENT PLAN 126,748.52
617 HOUSING 147,012.00
620 COST RECOVERY TRUST DEPOSITS (806.00)
650 CFD 2003-1S LAW,FIRE, PARAMEDIC SERVICES 835.13
651 CFD 2006-5S PARK, OPEN SPACE, STORM DRAIN SERVICES 596.52 652 CFD 2007-1S LAW,FIRE, PARAMEDIC SERVICES 596.52
653 CFD 2009-1S PARK,OPEN SPACE,STREET LIGHT SERVICES 596.52 655 CFD 2015-1S LAW, FIRE, PARAMEDIC SERVICES 948.95
GRAND TOTAL 2,120,402.63 $
Attachment 1 2 of 2
APRIL 27, 2026
TO MAY 03, 2026

CITY OF LAKE ELSINORE CITY WARRANT LIST
WARRANT NO. VENDOR NAME AMOUNT
APA26001972 ALLIED TRAFFIC EQUIPMENT RENTAL 1,515.70 $
APA26001973 ATHLETIC SPORTS HOLDING 500.00
APA26001974 CARDLOCK FUELS SYSTEM LLC 6,276.59
APA26001975 CED LAGUNA 11,982.23
APA26001976 CHARTER COMMUNICATIONS 61.54
APA26001977 CIRESON LLC 4,108.89
APA26001978 CLEARWATER PIPELINE, INC. 55,519.60
APA26001979 COUNTY OF RIVERSIDE DEPT. OF ENVIRONMENTAL HEALTH 437.00 APA26001980 DISCOUNT HAULING & CLEANUP SERVICE 7,405.00 APA26001981 EXCEL LANDSCAPE, INC. 36,726.00
APA26001982 FIX AUTO LAKE ELSINORE 3,873.10
APA26001983 FRONTIER CALIFORNIA - INTERNET 819.76
APA26001984 FRONTIER CALIFORNIA, INC. 12,361.38
APA26001985 GOLDEN STATE BAIT, INC. 15,000.00
APA26001987 GREAT AMERICA FINANCIAL SERVICES 562.24
APA26001988 HANCOCK, LORENA 3,307.50
APA26001989 HAZZARD BACKFLOW, INC. 2,990.00
APA26001991 INTERSTATE STRIPING, INC. 8,408.70
APA26001992 O'REILLY AUTO STORES INC/FIRST CALL 212.96
APA26001994 RUFF RUFF PET PRODUCTS, INC. 413.14
APA26001995 SAFETY-KLEEN SYSTEMS, INC. 509.69
APA26001996 SCW CONTRACTING CORPORATION 13,951.49
APA26001997 SOUTHERN CALIFORNIA EDISON CO. 16,281.94
APA26001998 STORYLAND STUDIOS DBA PLAINJOE STUDIOS 2,250.00 APA26001999 STRADLING YOCCA CARLSON & RAUTH 1,100.00
APA26002000 THE CENTRE FOR ORGANIZATION EFFECTIVENESS 13,260.72 APA26002001 TRB AND ASSOCIATES, INC. 1,138.78
APA26002002 UNIFIRST CORP 703.13
APA26002003 VULCAN MATERIALS COMPANY 3,464.68
APA26002004 WAXIE SANITARY SUPPLY 997.32
APA26002005 WILLDAN 1,777.50
APA26002006 WILLSCOT MOBILE MINI 1,707.14
11461 BARROZO, ANTHONY 503.50
11462 BASUBAS, EDGARDO 1,169.00
11463 BLOCK, DIANE 1,169.00
11464 BOBO, LAWRENCE 1,169.00
11465 BOONE, ROBERT 1,169.00
11466 BRADY, ROBERT A. 551.66
11467 CASTANEDA, FRANCISCO 319.29
11468 CHADD, DANIEL 2,658.58
11469 CHIPMAN, ROBIN 1,913.79
Attachment 2 1 OF 3
APRIL 27, 2026
TO MAY 03, 2026

CITY OF LAKE ELSINORE CITY WARRANT LIST
WARRANT NO. VENDOR NAME AMOUNT
11470 DAVIS, CLAUDIA 1,169.00
11471 DAVIS, RITA 800.58
11472 DOUGLAS, JOSE A. 1,776.10
11473 EAKINS, CATHERINE 755.91
11474 ELKINS, MARIAN C. 503.50
11475 ESPINOZA, GUILLERMO PEREZ 551.66
11476 FAZZIO, JON 194.83
11477 FERGUSON, DAVID 1,935.31
11478 FOSTER, MAUREEN 551.66
11479 GIRON, DIANA 807.05
11480 GOMEZ, GUADALUPE 2,357.53
11481 GONZALES, RAMON 1,169.00
11482 GORDON, CAROL 188.16
11483 GULBRANSEN, ARLINE 319.29
11484 HANSEN, VI M. 319.29
11485 HOFFARTH, GARY 551.66
11486 HOUTZ, WILLIAM M 1,163.88
11487 JECTER, MICHELE 1,169.00
11488 KILROY, PAT 1,169.00
11489 LEON, CHARLES KIM 503.50
11490 LEPPER, LUCIUS 503.50
11491 MACHOTT, RICHARD J. 1,169.00
11492 MAGEE, KIMBERLY 503.50
11493 MILLER, CORDIE 800.58
11494 MOLENDYK, RONALD 1,169.00
11495 NORTH, EDWARD L. 551.66
11496 NORVANI, CARLOS 435.57
11497 ODONNELL, RAYMOND 503.50
11498 PAYNE, WILLIAM 981.40
11499 PEREZ, SHAR-MARIE 1,776.10
11500 PORCHE, DANA 551.66
11501 PREISENDANZ, ROLFE 1,169.00
11502 RAMIREZ, FRANCES 800.58
11503 REDMEIER, MICHAEL D. 503.50
11504 REID, SUSAN 1,169.00
11505 RUSSELL, LAWRENCE 1,169.00
11506 SANTA CRUZ, MARY 1,169.00
11507 SAPP, DAVID 1,033.14
11508 SOLORZANO, LEONEL 1,776.10
11509 TAYLOR, GRANT 800.58
11510 TEYLER, KENNETH 194.83
11511 THOMPSON, RITA 1,913.79
Attachment 2 2 OF 3
APRIL 27, 2026
TO MAY 03, 2026

CITY OF LAKE ELSINORE CITY WARRANT LIST
WARRANT NO. VENDOR NAME AMOUNT
11512 TURK, JILL 503.50
11513 UNSWORTH, NOLA 1,248.29
11514 WAITE, DENNIS 503.50
11515 WATENPAUGH, RICHARD 503.50
11516 WILKIE, RAE 194.83
11517 YATES, GRANT 2,701.62
11518 AK SECURITY ALARM LLC 9,821.00
11519 AMAZON BUSINESS 2,059.49
11520 AMERICAN MATERIAL COMPANY 128.30
11521 CM WASH EQUIPMENT 795.83
11522 COTTER CONSTRUCTION, INC. 9,300.00
11523 COTTER CONSTRUCTION, INC. 18,700.00
11524 FERGUSON 4,189.36
11525 KPA SERVICES, LLC 2,996.48
11526 READYREFRESH 1,163.14
11527 RIVERSIDE COUNTY SHERIFF'S, ACCOUNTING & FINANCE 1,444,925.16 11528 RIVERSIDE COUNTY SHERIFF'S, ACCOUNTING & FINANCE 5,546.34 11529 SPARKHOUSE 12,500.00
11530 SPICER CONSULTING GROUP 53,231.78
11535 WEST COAST SERVICES 1,325.00
144095 CALIFORNIA JPIA 10.00
144096 LIUNA LOCAL 777 720.00
144097 MCDANIELS, DELORES 503.50
144098 BROWN, MATTHEW SCOTT 390.77
144099 EVMWD 39,615.76
DFT260719 FRONTIER CALIFORNIA - INTERNET 505.03
DFT260720 FRONTIER CALIFORNIA - INTERNET 822.20
DFT260750 CALPERS 76,479.96
DFT260751 CALPERS 251.36
DFT260753 STEWART TITLE OF CALIFORNIA 147,012.00
DFT260754 SYSCO RIVERSIDE, INC 1,289.80
DFT260755 SYSCO RIVERSIDE, INC 631.13
DFT260756 SYSCO RIVERSIDE, INC (35.00)
DFT260757 SYSCO RIVERSIDE, INC 840.70
DFT260758 SYSCO RIVERSIDE, INC (26.39)
DFT260760 CALIFORNIA INLAND EMPIRE COUNCIL (806.00)
DFT260761 FRONTIER CALIFORNIA - INTERNET 490.98
DFT260762 CALIFORNIA DEPARTMENT OF FISH AND WILDLIFE 369.05 DFT260763 DISH 154.22
GRAND TOTAL 2,120,402.63 $
Attachment 2 3 OF 3

Page 1 of 1 ends

Discussion
The Investment Report lists all funds invested for the City as the date shown on the report.

Fiscal Impact
No fiscal impact.

Attachments
Attachment 1 – Investment Report April 2026

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: May 26, 2026
Subject: Second Reading of an Ordinance Approving the Development Agreement Amendment (DA 2026-02) for GC Global, LLC
Recommendation
Adopt by title only and waive further reading of AN ORDINANCE OF THE CITY COUNCIL OF

THE CITY OF LAKE ELSINORE, CALIFORNIA, APPROVING THE DEVELOPMENT AGREEMENT AMENDMENT (DA-2026-02) FOR GC GLOBAL, LLC LOCATED AT 31875 Corydon Road, unit 140 (APN: 370-051-010).

Background/Discussion
At its Regular meeting on May 12, 2026, the City Council introduced by title only and waived further reading of the Ordinance.

Attachments
Attachment 1 – Ordinance
Exhibit A – Development Agreement Amendment
ORDINANCE NO. 2026-1534

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE,

CALIFORNIA, APPROVING THE DEVELOPMENT AGREEMENT AMENDMENT (DA-2026-02) FOR GC GLOBAL LLC LOCATED AT 31875 CORYDON ROAD, UNIT 140 (APN: 370-051-010)
Whereas, Vanessa Salladay, GC Global, LLC, has filed an application with the City of Lake Elsinore (City) requesting approval of Development Agreement (DA) No. 2026-02 to amend the DA to revise the Community Benefit Fee (CBF) and establish a separate CBF rate for retail (e.g. storefront, delivery to customers) versus non-retail (e.g. cultivation, distribution, manufacturing and testing laboratory) cannabis operations. The proposed amendment also includes revisions to the definitions and general provisions. The project is located at 31875 Corydon Road (APN: 370-051-010);
Whereas, Section 6.0 of the Western Riverside County Multiple Species Habitat Conservation Plan (MSHCP) requires that all discretionary projects within a MSHCP Criteria Cell undergo the Lake Elsinore Acquisition Process (LEAP) and Joint Project Review (JPR) to analyze the scope of the proposed development and establish a building envelope that is consistent with the MSHCP criteria;
Whereas, Section 6.0 of the MSHCP further requires that the City adopt consistency findings demonstrating that the proposed discretionary entitlement complies with the MSHCP Criteria Cell, and the MSHCP goals and objectives;
Whereas, pursuant to Chapter 19.12 (Development Agreements) of the Lake Elsinore Municipal Code (LEMC) the Planning Commission (Commission) has been delegated with the responsibility of reviewing and making a recommendation to the City Council (Council) whether the development agreement is consistent with the City’s General Plan and whether to approve the development agreement;
Whereas, on April 21, 2026, at a duly noticed public hearing, the Commission has considered evidence presented by the Community Development Department and other interested parties with respect to this item, and adopted a resolution recommending that the Council approve Development Agreement Amendment No. 2026-02; and
Whereas, on May 12, 2026, at a duly noticed Public Hearing, the Council has considered the recommendation of the Commission as well as evidence presented by the Community Development Department and other interested parties with respect to this item.

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

Section 1: That in accordance with the MSHCP, the Council makes the following findings for MSHCP consistency:

1. The Project is not subject to the City’s LEAP and the Western Riverside County Regional Conservation Authority’s (RCA) JPR processes as it is not located within a Criteria Cell.

2. The Project is consistent with the Riparian/Riverine Areas, Vernal Pools Guidelines, and the Fuel Management Guidelines as the Project is wholly located within an existing Ord. No. 2026-1534

Page 2 of 4 ends

building and does not include any earth disturbing activities therefore Sections 6.1.2 or

6.3.1 of the MSHCP are not applicable.

3. The Project is consistent with the Protection of Narrow Endemic Plant Species Guidelines and the Additional Survey Needs and Procedures because the project is not located within any Narrow Endemic Plant Species Survey Areas or Critical Species Survey Areas.

4. The Project is consistent with the Fuels Management Guidelines because the Project site is not within or adjacent to any MSHCP Criteria Cell or conservation areas.

5. The Project has been conditioned to pay any applicable MSHCP Local Development Mitigation fees.

Section 2: The Council hereby finds and determines that the Project is categorically exempt from California Environmental Quality Act (Cal. Publ. Res. Code §§21000 et seq. “CEQA”) and CEQA Guidelines (14. Cal. Code Regs. §§15000 et seq.), specifically pursuant to Section 15301 (Class 1 – Existing Facilities), because the proposed project is an existing cannabis business that is operating within a fully developed site and building. The proposed amendment to the business’ development agreement would not result in new construction, additional square footage, or expansion of the existing use.

Section 3: That in accordance with California Planning and Zoning Law and the Section

19.12.080.B. of the LEMC, the Council makes the following findings regarding Development Agreement Amendment No. 2026-02:

1. It is consistent with the objectives, policies, general land uses and programs specified in the General Plan and any applicable specific plan.

The proposed development agreement amendment will continue to help offset the potential costs incurred by the City associated with the establishment of a cannabis facility within an industrial district. The project site’s General Plan Land Use designation is Limited Industrial (LI). The proposed project is consistent the LI land use designation and with the objectives, policies, general land uses and programs specified in the General Plan.

2. It is compatible with the uses authorized in, and the regulations prescribed for, the land use district in which the real property is located.

The proposed development agreement amendment will continue to facilitate the establishment of the cannabis facility within an existing industrial building. The cannabis facility has been in operation which includes manufacturing and storage uses consistent with other similar businesses within the Limited Industrial (LI) General Plan Land use designation and the Limited Manufacturing (M-1) Zoning designation.

3. It is in conformity with public convenience, general welfare and good land use practices.

The existing cannabis facility has been operating in a manner that has not resulted in negative impacts to the public and its general welfare. The proposed development agreement amendment will ensure the cannabis facility continues to have beneficial impacts to the surrounding community. Furthermore, the project has been reviewed and conditioned by all applicable City departments to reduce the potential for any adverse effects.

Ord. No. 2026-1534

Page 3 of 4 ends

4. It will not be detrimental to the health, safety and general welfare.

The proposed development agreement amendment will not be detrimental to the health, safety, and general welfare of the community because the existing cannabis facility has been operation without negative impacts or concerns. The development agreement amendment will ensure the cannabis facility continues to operate in a safe manner.

Furthermore, the proposed project has been reviewed and conditioned by all applicable City departments to reduce the potential for any adverse effects to the health, safety, and general welfare.

5. It will not adversely affect the orderly development of property or the preservation of property values;
The cannabis facility is an existing business that has been operation without land use issues and has not caused adverse impacts for existing businesses and future developments. The proposed development agreement amendment will ensure the cannabis facility continues to operate as such.

6. It is consistent with the provisions of Government Code Sections 65864 through 65869.5.

The proposed development agreement amendment includes all mandatory provisions required by Government Code § 65865.2 and does not include any provisions that are not authorized by the Development Agreement Act.

Section 4: Approval. The City Council hereby approves the Development Agreement Amendment No. 2026-02 attached hereto as Exhibit A with such modifications as approved by the City Attorney. The Mayor and City Clerk are hereby authorized and directed to execute and attest, respectively, the Development Agreement Amendment on behalf of the City of Lake Elsinore. The City Clerk is directed to transmit the Development Agreement Amendment to the County Recorder for recordation no later than ten (10) days after the adoption of this ordinance.

Section 5: Severability. If any provision of this Ordinance or its application is held invalid by a court of competent jurisdiction, such invalidity shall not affect other provisions, sections, or applications of the Ordinance which can be given effect without the invalid provision or application, and to this end each phrase, section, sentence, or word is declared to be severable.

Section 6: Effective Date. This Ordinance shall become effective at 12:01 a.m. on the thirty-first (31st) day after the date of adoption.

Section 7: Certification. The City Clerk shall certify to the passage of this Ordinance and shall cause a synopsis of the same to be published according to law PASSED, APPROVED, AND ADOPTED at a regular meeting of the City Council of the City of Lake Elsinore, California, on this 26th day of May 2026.

Robert E. Magee
Mayor
Ord. No. 2026-1534

Page 4 of 4 ends

Attest:

Candice Alvarez, MMC
City Clerk

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 Ordinance No. 2026-1534 was introduced by the City Council of the City of Lake Elsinore, California, at the Regular meeting of May 12, 2026 and adopted at the Regular meeting of May 26, 2026 and that the same was adopted by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Candice Alvarez, MMC
City Clerk

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of Lake Elsinore
130 South Main Street
Lake Elsinore, CA 92530
Attn: City Clerk
(Space Above Line For Recorder’s Use Only)
(Exempt from Recording Fees Per Gov. Code § 27383)
_______________ AMENDMENT TO

DEVELOPMENT AGREEMENT

BY AND BETWEEN THE

CITY OF LAKE ELSINORE
AND
___________________________________
Approved ___________ __, 2025
Ordinance No. 2025-_____
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______________ AMENDMENT TO

DEVELOPMENT AGREEMENT

BY AND BETWEEN THE CITY OF LAKE ELSINORE
AND ________________________.

This _________ Amendment to Development Agreement (“Second Amendment”), dated for identification only as of May 20, 2025, is made by and between the City of Lake Elsinore, a California municipal corporation (“City”), and _______________, a California _______________ (“Developer”). This Amendment shall take effect on the “Amendment Effective Date,” as this term is hereafter defined. City and Developer may each be referred to herein individually as a “Party” or collectively as the “Parties.”

RECITALS
A. On ___________, ______, pursuant to Ordinance No. 20__-_____, the City approved and adopted that certain “Development Agreement by and between the City of Lake Elsinore and _____________________,” which Development Agreement was recorded on __________ in the Official Records of Riverside County, California as Instrument No. 20__- _____ (the “Development Agreement”).

B. [If applicable] On ___________, ______, pursuant to Ordinance No. 20__-_____, the City approved and adopted that certain, the City approved and adopted that certain “First Amendment To Development Agreement by and between the City of Lake Elsinore and _________________.,” which Development Agreement was recorded on _________ in the Official Records of Riverside County, California as Instrument No. 20__-_____ (the “First Amendment”).

C. In connection with the Developer Agreement [and the First Amendment], Developer acquired an equitable interest in that certain real property located at _______________________ in the City of Lake Elsinore, County of Riverside, State of California, Assessor Parcel Number ______________, which is within a manufacturing zoning district (the “Site”).

D. The Site is more particularly described in the Legal Description attached hereto as Exhibit A, and the Site is attached hereto as Exhibit B.

E. The total Cannabis Retail Business Floor Area (as defined below) is [ ] sq. ft. The total Non-Retail Cannabis Business Floor Area (as defined below) is [ ] sq. ft. The Floor Plan depicting the total floor area is attached hereto as Exhibit C.

F. Developer affirms that it has an equitable interest in the Site, evidenced by way of a lease with the Property Owner of the Site, [insert name].

G. The Property Owner have provided notarized written consent to the terms of this Amendment and the recordation thereof, attached hereto as Exhibit D.

H. Developer uses the Site for a Cannabis Business in accordance with California Cannabis Laws and the LEMC, as each may be amended from time to time (the “Project”). -2-
I. On __________ __, 2025, the City Council approved Ordinance No. 2025-____ amending the Lake Elsinore Municipal Code (“LEMC”) Chapter 17.156 to: (i) streamline the regulation of cannabis-related business; (ii) to limit the number of cannabis-related business in the City.

J. To strengthen the public planning process, encourage private participation in comprehensive planning, and reduce the economic risk of development, the California Legislature adopted Government Code section 65864 et seq. (the “Development Agreement Statute”), which authorizes the City and an individual with an interest in real property to enter into a development agreement that establishes certain development rights in real property that is subject to a development agreement application.

K. Consistent with the requirements of the Development Agreement Statute, the City adopted LEMC, Chapter 19.12 (“Development Agreement Ordinance”), authorizing the use of and establishing the procedures and requirements for the consideration of development agreements within the City along with amendments thereto. LEMC, Section 19.12.020, provides for amendments to a development agreement “is the same as the procedure for entering into an agreement in the first instance.” LEMC, Section 19.12.010 requires submittal of an application along with information and supporting data as requested by the Director of Community Development for consideration of any development agreement. Developer has satisfied this requirement.

L. On _________ __, 2025, the City of Lake Elsinore Planning Commission held a duly noticed public hearing to consider the application for this __________ Amendment and recommended to the City Council approval of this Amendment.

M. On ___________ __, 2025, the City Council held a duly noticed public hearing to consider this ______ Amendment and found and determined that this ___________ Amendment:
(a) is consistent with the objectives, policies, general land uses, and programs specified in the City’s General Plan and any applicable specific plan; (b) is compatible with the uses authorized in, and the regulations prescribed for the Site and the surrounding area and will not adversely affect the orderly development of the Site or the preservation of property values; (c) is in conformity with public convenience, general welfare, and good land use practices; (d) will have an overall positive effect on the health, safety and welfare of the residents of and visitors to the City; and (e) constitutes a lawful, present exercise of the City’s police power and authority under the Development Agreement Statute and Development Agreement Ordinance.

N. Based on the findings set forth in Recital __herein, the City Council entered into this Amendment pursuant to and in compliance with the requirements of the Development Agreement Statute and the Development Agreement Ordinance; and did, therefore, in approving this Amendment introduce for first reading Ordinance No. 2025-___ (the “Enabling Ordinance”).

On __________ __, 2025, the City Council conducted the second reading of the Enabling Ordinance, thereby approving this Amendment to become effective thirty (30) days after the adoption thereof.
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NOW, THEREFORE, in consideration of the mutual terms, obligations, promises, covenants, and conditions contained herein and for other valuable consideration, the sufficiency of which is hereby acknowledged, the Parties, and each of them, agree as follows:

SECTION 1. EXHIBITS
The Development Agreement has attached to it four exhibits designated alphabetically as Exhibit A through Exhibit D. Exhibits A through D of the Development Agreement shall remain in full force and effect except to the extent that the provisions of this Section 1 of the Second Amendment modify those Exhibits.

The following documents are referred to in this _______Amendment, attached hereto and incorporated herein by this reference:

Exhibit A Legal Description
Exhibit B Site Plan1
Exhibit C Floor Plan1
Exhibit D Property Owner’s Consent
1 The Approved Site Plan and Floor Plan exhibits are on file as a public record and available for review at the City of Lake Elsinore’s City Clerk’s Office located at 130 South Main Street, Lake Elsinore, CA 92530.

SECTION 2. REVISIONS TO DEFINITIONS
The words and phrases used in this ______Amendment as defined terms shall have the meaning set forth in Section 2 of the Development Agreement, except as added and/or modified below, which defined terms shall be applicable to both the Development Agreement and the ______Amendment.
“Amendment Effective Date” means the later of: (i) the latest date of execution shown on the signature page hereto; or (ii) the Effective Date of the Enabling Ordinance. The Amendment Effective Date does not amend the Effective Date as defined in the Development Agreement, nor does the Amendment Effective Date modify or change the “Term” or the “Term Commencement Date.”
“Cannabis Business License” or “Cannabis Business Permit” means the City license established and authorized by LEMC, Section 17.156.080, authorizing permissible Cannabis Business activity, which can only be issued upon City approval of a conditional use permit, development agreement, and Additional City Approvals for each proposed Cannabis Business activity project.
“Conditional Use Permit” means Conditional Use Permit No. ____-__ issued by the City to Developer pertaining to Developer’s original development of the Project and any subsequent amendments thereto. In the event that an amendment to the Conditional Use Permit -4-
pertaining to the Suite G Site has not been issued to the Developer as of the Amendment Effective Date, the City hereby reserves its discretion under the police power to approve, conditionally approve, or deny the issuance of any amendment to the Conditional Use Permit. “Development Regulations” means the following regulations as they are in effect as of the Effective Date and to the extent they govern or regulate the development of the Site, but excluding any amendment or modification to the Development Regulations adopted, approved, or imposed after the Effective Date that impairs or restricts Developer’s rights set forth in this Agreement, unless such amendment or modification is expressly authorized by this Agreement or is agreed to by Developer in writing: the City’s General Plan; any existing Specific Plan that include the Site, and, to the extent not expressly superseded by this Agreement, all other land use and subdivision regulations governing the permitted uses, density and intensity of use for obtaining required City permits and approvals for development, and similar matters that may apply to development of the Project on the Site during the Term of this Agreement that are set forth in Title 16 of the LEMC (Subdivisions), Title 17 of the LEMC (Zoning), except that Chapter 17.156 of Title 17 shall be as amended by Ordinance No. 2025-___, and Title 19 of the LEMC (Development). Notwithstanding the foregoing, the term “Development Regulations,” as used herein, does not include any City ordinance, resolution, code, rule, regulation, or official policy governing any of the following: (i) the conduct of businesses, professions, and occupations; (ii) taxes and assessments; (iii) the control and abatement of nuisances; (iv) the granting of encroachment permits and the conveyance of rights and interests which provide for the use of or the entry upon public property; (v) the exercise of the power of eminent domain; or (vi) the California Building Standards Codes.
“Cannabis Retail Business Floor Area” means interior gross floor area allocated and dedicated to the retail operation of a Cannabis Retail Business and shall include but not limited to reception or entrance lobby area for customer check-in, retail product storage room(s), office(s), and other ancillary area(s) to support the retail operation (including cannabis delivery). “Cannabis Non-Retail Business Floor Area” means interior gross floor area allocated and dedicated to the cannabis non-retail operation(s) of a Cannabis Non-Retail Business, such as cultivation, distribution, manufacturing, and/or testing laboratory, and shall include but not limited to storage room(s) of finished and raw products, office(s), and other ancillary area(s) to support the non-retail operation(s).

SECTION 3. REVISIONS TO GENERAL PROVISIONS
In order to update certain renumbering of the Lake Elsinore Municipal Code, subparts e and f of Section 1.8 of the Development Agreement entitled Termination are hereby amended to read as follows.
e. abandonment of the Developer’s Conditional Use Permit pursuant to LEMC, Section 17.415.070(D), including the failure of the Developer to commence operation of the Project on the Site within the time presented following the approval of the Conditional Use Permit;
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f. suspension or revocation of Developer’s Conditional Use Permit pursuant to LEMC, Section 17.415.070(G);
In order to address the potential for Developer modifications to the square footage of area allocated to the Cannabis Retail Business and/or Cannabis Non-Retail Business, Section 1.9(a) of the Development Agreement entitled Operating Memoranda; Amendment of Agreement is hereby amended to read as follows.
a. Operating Memoranda. The provisions of this Agreement require a close degree of cooperation between the City and the Developer. The Development of the Developer Property may demonstrate that clarifications to this Agreement and the Existing Land Use Regulations are appropriate with respect to the details of performance of the City and the Developer. To the extent allowable by law, the Developer shall retain a certain degree of flexibility as provided herein with respect to all matters, items and provisions covered in general under this Agreement, except for those which relate to the (i) term; or (ii) permitted uses. When and if the Developer finds it necessary or appropriate to make changes, adjustments or clarifications to matters, items or provisions not enumerated in (i) through (ii) above, the Parties shall effectuate such changes, adjustments or clarifications through operating memoranda (the “Operating Memoranda”) approved by the Parties in writing which reference this Section 1.9(a). Operating Memoranda are not intended to constitute an amendment to this Agreement but mere ministerial clarifications; therefore public notices and hearings shall not be required. The City Manager shall be authorized, upon consultation with, and approval of, the Developer, to determine whether a requested clarification may be effectuated pursuant to this Section or whether the requested clarification is of such character to constitute an amendment to this Agreement which requires compliance with the provisions of Section 1.9(b) below. The Parties agree that proposed changes to the Cannabis Retail Business Floor Area and/or the Cannabis Non-Retail Business Floor Area may be addressed by way of an Operating Memoranda and shall generally include and be evidenced by an updated Floor Plan (Exhibit C) reflecting such changes.

SECTION 4. REVISIONS TO COMMUNITY BENEFITS FEE
Section 4.2 of the Development Agreement entitled Community Benefits Fee is hereby amended to add the following subparts c and d:
c. Community Benefits Fee Upon the Amendment Effective Date.

Notwithstanding subparts (a) and (b) above, concurrent with the Amendment Effective Date, and on each anniversary thereafter, Developer shall make payment to the City pursuant to the following fee schedule:
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All Cannabis Business
activities
$[insert rate as of 6/30/25] per square foot
of area allocated to the Cannabis Retail
Business with an annual 4% increase but
in no event to exceed $25 per square foot;
and
$5 per square foot of area allocated to
Cannabis Non-Retail Business with no
annual increase as provided in subpart d.

Developer may elect to make payments of the Community Benefit Fee due on the Amendment Effective Date and each Adjustment Date (as defined herein) in up to 12 (monthly) equal installments, the first installment to be made on the Amendment Effective Date or Adjustment Date, as applicable. Installment payment plans shall be evidenced by separate agreements of the Parties.
d. Annual Increase. In order to account for the increasing cost of providing City services, the Community Benefits Fee set forth in Section 4.2(c) for any Cannabis Retail Business shall be increased annually commencing on each anniversary of the Amendment Effective Date (each of which day shall be continued to be referred to as an “Adjustment Date”) until said fee reaches $25 per square foot of Floor Area. Each Adjustment Date shall be continued to be numbered in sequence (e.g., Third Adjustment Date, Fourth Adjustment Date, etc.).

The annual increase shall not apply to the area allocated and dedicated to any Cannabis Non-Retail Business. Each such annual increase in the Community Benefits Fee shall be determined as follows:

Article 4 of the Development Agreement is hereby amended to add the following Section

4.5:

4.5 Tax Payment and Facility Payment Offset.
a. In the event that the voters of the City of Lake Elsinore approve a Cannabis business tax or any percentage of gross receipts based fee, Developer shall pay the amount established by any such measure or initiative (“Tax Payment”) in accordance with any procedure so established by the City, provided, however, that Developer shall be entitled to an offset, dollar for dollar, of such Tax Payment against the Community Benefit Fee then owing or, alternatively, if the Community Benefit Fee then owing is insufficient to fully satisfy the offset as provided herein, such unsatisfied offset shall be a credit against the payment of any future Community Benefit Fee until such offset is fully satisfied. b. In the event that the voters of the City of Lake Elsinore or the City Council approve a fee based on the square footage of premises where permitted commercial cannabis activities, Developer shall pay the amount established thereby -7-
(“Facility Payment”) in accordance with any procedure so established by the City, provided, however, that Developer shall be entitled to an offset, dollar for dollar, of such Facility Payment against the Community Benefit Fee then owing or, alternatively, if the Community Benefit Fee then owing is insufficient to fully satisfy the offset as provided herein, such unsatisfied offset shall be a credit against the payment of any future Community Benefit Fee until such offset is fully satisfied.
c. Imposition of a Tax Payment and/or a Facility Payment obligation by the City or the voters of the City of Lake Elsinore shall not relieve Developer of its obligation to pay the Community Benefit Fee except for the offset as set forth in Sections 4.5.a, 4.5.b, 4.5.c, and 4.5.d above.

SECTION 5. ADDITIONAL PROVISIONS

5.1 Release. In consideration for this ______________ Amendment and the provisions as set forth herein, and subject to the City Council approving/adopting this ______________ Amendment Developer, on behalf of itself and its respective successors, assigns, officials, directors, officers, employees, insurers, lenders, lien holders, attorneys, agents, and other representatives, do hereby release the City as any and all claims, actions and causes of action, obligations, liabilities, indebtedness, breaches of duty, claims for injunctive and other equitable relief, suits, liens, losses, costs or expenses, including attorney’s fees, of any nature whatsoever, known or unknown, fixed or contingent as of the Amendment Effective Date.

5.2 Counterparts. This ______________ Amendment may be executed in counterparts, each of which so executed shall be deemed an original, and such counterparts together shall constitute but one ______________ Amendment.

5.3 No Other Changes. Except as modified by this ______________ Amendment, the terms and conditions of the Original Development Agreement, remain in full force and effect and shall be incorporated as a part of and interpreted as one integrated agreement covering the subjects included therein. If there are any conflicts between the provisions of this ______________ Amendment and the original Development Agreement, the provisions of this ______________ Amendment shall control.

5.4 Recordation by City Clerk. Pursuant to Government Code Section 65868.5, within ten (10) days of execution of this ______________ Amendment by the Parties, the City Clerk shall record a copy with the Riverside County Recorder. Thereafter, pursuant to Government Code Section 65868.5, the burdens of the ______________ Amendment shall be binding upon, and the benefits of the agreement shall inure to, all successors in interest to the Parties to the ______________ Amendment.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the Parties have executed this ______________ Amendment as of the dates set forth below.
“CITY”

CITY OF LAKE ELSINORE,
a municipal corporation
Date: By:

Mayor
ATTEST:

By:

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

By:

David Mann, Acting City Attorney
“DEVELOPER”
____________________________,
a ___________________
Date: By:
_______________, Its: ____________

STATE OF CALIFORNIA )
) §
County of )
On , before me, a
Notary Public, personally appeared who proved to me on
the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

A notary public or other officer completing this
certificate verifies only the identity of the individual who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or
validity of that document.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct
WITNESS my hand and official seal.
________________________________
Signature of Notary
(Affix seal here)
A notary public or other officer completing this
certificate verifies only the identity of the individual who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or
validity of that document.

Page 1 ends

EXHIBIT A

LEGAL DESCRIPTION
The real property referred to herein is situated in the County of Riverside, City of Lake Elsinore, State of California, and is described as follows:

Page 1 ends

EXHIBIT B

SITE PLAN
[TO BE INSERTED]

Page 1 ends

EXHIBIT C

FLOOR PLAN
[Delineated to Show Cannabis Retail Business Area versus Non-Retail Area(s)] [TO BE INSERTED]

Page 1 ends

EXHIBIT D
PROPERTY OWNER’S CONSENT
[ATTACHED]

Page 2 ends

PROPERTY OWNER’S CONSENT
__________________________, a California ________________, being the owner of the real properties described in Exhibit A to this ____________ Amendment to Development Agreement by and between the City of Lake Elsinore and ______________________, dated for identification as of ________________, 2025 (the “________ Amendment”), do hereby consent to the recordation of said ____________ Amendment in the Official Records of the County of Riverside. ____________________________,
a ___________________
Date: By:
_______________, Its: ____________
[notary required]

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: May 26, 2026
Subject: Second Reading of an Ordinance Regulating Electric Bicycles and Other Electric Transportation Devices
Recommendation
Adopt by title only and waive further reading of AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, ADDING TITLE 10, CHAPTER 10.54 OF THE

LAKE ELSINORE MUNICIPAL CODE TO REGULATE AND PROVIDE FOR EFFECTIVE

ENFORCEMENT REGARDING ELECTRIC BICYCLES AND OTHER ELECTRIC TRANSPORTATION DEVICES.

Background/Discussion
At its Regular meeting on April 28, 2026, the City Council introduced by title only and waived further reading of the Ordinance.

Attachment
Attachment 1 – Ordinance
ORDINANCE NO. 2026-1535

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, ADDING TITLE 10, CHAPTER 10.54 OF THE LAKE ELSINORE

MUNICIPAL CODE TO REGULATE AND PROVIDE FOR EFFECTIVE

ENFORCEMENT REGARDING ELECTRIC BICYCLES AND OTHER ELECTRIC

TRANSPORTATION DEVICES
WHEREAS, the City of Lake Elsinore (“City”) is a municipal corporation, duly organized under the constitution and laws of the State of California; and WHEREAS, the California Legislature has recognized that electric bikes/e-bikes should no longer be regulated like scooters or mopeds and the same rules of the road apply to both ebikes and human-powered bicycles (A.B. 1096); and WHEREAS, the Legislature defines an “Electric Bicycle” as a bicycle with fully operable pedals and an electric motor of less than 750 watts, and created 3 classes of Electric Bicycles under California Vehicle Code Section 312.5; and
WHEREAS, pursuant to California Vehicle Code Section 21207.5(a), class 3 Electric Bicycles are not to be operated on specified paths or trails unless permitted by ordinance; and WHEREAS, pursuant to California Vehicle Code Section 21207.5(b), a local agency having jurisdiction over a bicycle path or trail, equestrian trail, or hiking or recreational trail, may prohibit, by ordinance, the operation of a Class 1 or Class 2 Electric Bicycle on that path or trail; and
WHEREAS, Electric Bicycle regulations are necessary to protect the public health, safety, and welfare;
WHEREAS, the widespread use of Electric Bicycles did not exist at the time the City’s municipal sidewalks, parks, trails, and certain other public areas were established and developed, and is contrary to the original intent underlying the establishment and development of these areas for passive, non-vehicular use, and may be detrimental to the safety of electric cyclists and the general public;
WHEREAS, given the number of pedestrians on these areas of the City, regulation of Electric Bicycles and other electric transportation devices, to the extent permitted by State law, is necessary and will promote the safe and efficient use of the City’s parks, sidewalks, trails, and other public areas;
WHEREAS, the City, therefore, has identified a need to address objective health, safety, and welfare concerns and regulations regarding Electric Bicycles and other electric transportation devices; and,
WHEREAS, parental co-responsibility for violations, risk, and harm caused by minors in their custody and/or control will help encourage compliance with the law, discourage recidivism, and therefore, encourage and protect public health, safety, and welfare.

Ord. No. 2026-1535

Page 2 of 9 ends

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

SECTION 1. Chapter 10.54 is hereby added to the Lake Elsinore Municipal Code to read as follows:

Chapter 10.54

ELECTRIC BICYCLES AND OTHER ELECTRIC TRANSPORTATION DEVICES Sections:

10.54.010 Purpose.

10.54.020 Definitions.

10.54.030 Operation and Use of Electric Bicycles and Electric Motorcycles.

10.54.040 Regulations Provided upon Retail Sale or Rental of an Electric Regulated Mobility Device.

10.54.050 Enforcement and Penalties.

10.54.060 Exemptions.

10.54.010 Purpose.
(a) The purpose and intent of this chapter is to regulate the operation and use of Electric Bicycles and Electric Motorcycles in accordance with State law in order to promote and protect the health, safety, and general welfare of residents and visitors within the City, and in compliance with other requirements imposed upon the City. The City is authorized to regulate and enforce this activity pursuant to California Constitution, Art. 11, Section 7, Vehicle Code Sections 312.5, 21207, and 21200-21212, Government Code Sections 38771, and other provisions of law. (b) The City Council finds and declares that these regulations are directly related to objective health, safety, and welfare concerns created by the use of Electric Bicycles and other electric transportation devices, including public health and safety, pedestrian access and safety, health and safety of operators and passengers, vehicular traffic and the right and ability of the public to safely access and utilize public and other property within the City.

10.54.020 Definitions.

For purposes of this chapter, the following definitions shall apply, unless the context clearly indicates otherwise:
“Bicycle” shall have the same meaning as set forth in California Vehicle Code Section 231, as amended from time to time.
“Electric Bicycle” or “E-Bike” shall have the same meaning as set forth in California Vehicle Code Section 312.5, as amended from time to time, and shall be categorized as follows:

1. Class 1 Electric Bicycle: An Electric Bicycle equipped with a motor that provides assistance only when the rider is pedaling and ceases to provide assistance when the bicycle reaches a speed of 20 miles per hour.

2. Class 2 Electric Bicycle: An Electric Bicycle equipped with a motor that may be used exclusively to propel the bicycle and ceases to provide assistance when the bicycle reaches a speed of 20 miles per hour.

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3. Class 3 Electric Bicycle: An Electric Bicycle equipped with a motor that provides assistance only when the rider is pedaling and ceases to provide assistance when the bicycle reaches a speed of 28 miles per hour. Such Electric Bicycles shall be equipped with a speedometer.
"Electric Personal Assistive Mobility Device" shall have the same meaning as set forth in California Vehicle Code Section 313, as amended from time to time. "Electrically Motorized Boards" shall have the same meaning as set forth in California Vehicle Code Section 313.5, as amended from time to time.
"Electric Motorcycle" shall mean any electric-powered two- or three-wheeled vehicle with a motor of more than 750 watts, that lacks operable pedals, and/or can attain a speed greater than 20 miles per hour on motor power alone. Such vehicles shall not be considered an Electric Bicycle and shall be treated as a motorcycle as defined by California Vehicle Code Sections 400(a) and 400(b).
"Highway" shall mean any publicly maintained way or place open to the use of the public for purposes of vehicular travel, including streets.
"Hours of Darkness" shall mean all times of the week that occur between 30 minutes past sunset and 30 minutes before sunrise.
"Low-Speed Vehicle" shall have the same meaning as set forth in California Vehicle Code Section 385.5, as amended from time to time.
"Motorized Scooter" shall have the same meaning as set forth in California Vehicle Code Section 407.5, as amended from time to time.
"Operator" shall mean any person who owns, operates, or controls a Regulated Mobility Device. "Public Area" shall mean any outdoor area open to the public for public use, whether owned or operated by the City, other governmental agency, or a private party. "Regulated Mobility Device" shall include Electric Bicycles, Electric Personal Assistive Mobility Devices, Electrically Motorized Boards, Low-Speed Vehicles, Electric Motorcycles, Motorized Scooters, Shared Mobility Devices, and other similar vehicles. "Rider" shall mean a traveler riding on a Regulated Mobility Device who is not operating it. "Seat" shall mean a device manufactured, designed, and factory-installed/appropriately installed on a Regulated Mobility Device for the purpose of providing points of contact that support an operator or rider in a sitting position on the Regulated Mobility Device, including foot support.

When transporting passengers, this term shall mean a device, or devices, manufactured, designed, and factory-installed/appropriately-installed on a Regulated Mobility Device, for the purpose of providing points of contact that support each rider in a sitting position, including foot pegs, separate from the operator's seat such that each person operating or riding on the Regulated Mobility Device is seated on the device to allow for their individual occupancy with individual foot support.
"Shared Mobility Device" shall have the same meaning as set forth in California Civil Code Section 2505, as amended from time to time.
"Unsafe manner" shall mean operating in such a way as that violates any provision of State law or the City’s municipal code, including riding in prohibited areas, underaged riders or illegal Ord. No. 2026-1535

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modifications, or constitutes a danger to the operator, a passenger, other motorists, other riders, or pedestrians in the area.
"Wheelie" shall mean an acrobatic stunt where the front tire or wheel is lifted off the ground due to extreme torque being applied to the rear wheel while in motion.

10.54.030 Operation and Use of Electric Bicycles and Other Regulated Mobility Devices.

A. Operation in Compliance with City Regulations. It shall be unlawful for any person to ride or operate any Electric Bicycle, Electric Motorcycle, motor-driven cycle, any electric or motorized conveyance, or other Regulated Mobility Device unless such ride or operation complies with the provisions of this Chapter 10.54.

B. Helmet Requirement. All operators and passengers riding or operating an Electric Bicycle or other Regulated Mobility Device who are under 18 years of age shall wear a properly fitted and fastened bicycle helmet, as specified in California Vehicle Code Sections 21212 and 21213. All operators and passengers of Class 3 E-bikes shall wear a properly fitted and fastened bicycle helmet,
C. Direction of Travel. The operator of a Bicycle, Electric Bicycle, electric scooter, electric skateboard or other Regulated Mobility Device shall travel in the same direction as vehicles are required to be driven, regardless of whether or not the operator is in the roadway, highway, or in a bike lane.

D. Passenger Restrictions. No person riding or operating an Electric Bicycle, motor-driven cycle, any electric or motorized conveyance, or other Regulated Mobility Device shall transport another person upon an Electric Bicycle, motor-driven cycle, any electric or motorized conveyance, or other Regulated Mobility Device unless:

1. Such passenger is seated upon a seat attached to the Regulated Mobility Device and designed for such use, and in a safe manner; and

2. The operator is at least 16 years of age and possesses a valid driver's license or is at least 18 years of age.

E. Requirements During Hours of Darkness.

1. During hours of darkness, Electric Bicycles, electric personal assistive mobility devices, and electrically motorized boards shall only be operated by persons 16 years of age or older.

2. During hours of darkness, Electric Bicycles, electric personal assistive mobility devices, and electrically motorized boards shall only be operated with a front lamp emitting a white light visible from a distance of 300 feet and a rear solid or flashing red light with a built-in reflector visible from a distance of 500 feet.

F. Prohibited Actions.

1. It shall be unlawful for any person to ride or operate any Electric Bicycle, Electric Motorcycle, motor-driven cycle, any electric or motorized conveyance, or Regulated Mobility Device in an unsafe manner.

2. It shall be unlawful to operate any Regulated Mobility Device on highways, roadways, sidewalks, or other Public Areas while performing stunts such as Wheelies, endo Wheelies (stoppies), or other reckless or dangerous behavior.

3. It shall be unlawful to operate any Regulated Mobility Device while utilizing a hand-held mobile communication device, such as using a mobile phone to text.

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4. It shall be unlawful to operate any regulated mobility Device upon any sidewalk, open space conservation area, playground, park, landscaped area, athletic fields, sport courts, school ground, or public trail not specifically designated as a bicycle path or route, unless specifically posted.
i. Class 1 and Class 2 Electric Bicycles may be ridden on the following public trails within the City:

1. All skate parks, designated as such, owned or operated by the City

2. BMX Pump Track

3. Lake Elsinore Levee Trail

4. Murrieta Creek Trail
ii. Class 3 Electric Bicycles are prohibited on all public trails within the City.

G. Use of Designated Lanes.

1. Any Regulated Mobility Device, including all Electric Bicycles, must use designated bicycle lanes where available, and must comply with Sections 21202 and 21208 of the California Vehicle Code regarding use of the right-hand curb and bicycle lanes.

2. Electric Bicycle operators must yield the right-of-way to all pedestrians and maintain a cautious speed that does not endanger pedestrian safety.

H. Age Requirements for Electric Bicycles. A person must be 16 years of age or older to operate a Class 3 Electric Bicycle.

I. Compliance with Safety Standards. All Electric Bicycles and other Regulated Mobility Devices shall meet the following criteria:

1. Comply with the equipment and manufacturing requirements for Bicycles adopted by the United States Consumer Product Safety Commission (16 C.F.R. 1512.1, et seq.).

2. Operate in a manner so that the electric motor is disengaged or ceases to function when the brakes are applied, or operate in a manner such that the motor is engaged through a switch or mechanism that, when released or activated, will cause the electric motor to disengage or cease to function.

3. A person shall not tamper with or modify an Electric Bicycle so as to change the speed capability of the Bicycle unless he or she appropriately replaces the label indicating the classification.

J. Electric Motorcycles. Electric motorcycles shall not be operated within the limits of the City without the following:

1. The operator shall have a valid motorcycle license as required by California Vehicle Code Section 12500(b); and

2. The Electric Motorcycle shall have, and the operator shall carry proof of, valid registration and license plate as required by California Vehicle Code Section 4000(a)(1); and

3. All operators and riders shall wear a helmet approved by the United States Department of Transportation (DOT) as required by California Vehicle Code Section 27803(b); and

4. All operators shall have and maintain evidence of financial responsibility (Insurance) as required by California Vehicle Code Section 16028a or other State law.

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10.54.040 Regulations Provided upon Retail Sale or Rental of an Electric Regulated Mobility Device.

A. Every business selling or renting any Electric Bicycle or other Regulated Mobility Device shall supply a copy of this Chapter (LEMC Chapter 10.54) to every person(s) purchasing or renting an electric Regulated Mobility Device and shall maintain proof of providing such copy for a minimum of three years. Records of proof shall be provided to the City immediately upon request by any Enforcement Officer of the City, the City Manager, or designee during normal business hours of the store or business.

B. Every store or business selling or renting an electric Regulated Mobility Device must apply a label that is permanently affixed to each electric Regulated Mobility Device that contains, among other things, the classification number of the electric device as specified.

C. Vehicles not classified as Electric Bicycles under this code must not be advertised, sold, offered for sale, or labeled as Electric Bicycles, including a vehicle that is modified to attain a speed greater than 20 miles per hour on motor power alone or to have motor power of more than 750 watts
D. The sale of a product or device that can modify the speed capability of an Electric Bicycle such that it no longer meets the definition of an Electric Bicycle, as provided by this Chapter, is prohibited.

10.54.050 Enforcement and Penalties.

A. This Chapter may be enforced by any Enforcement Officer, as that term is defined in Section

1.20.020 of this Code.

B. It shall be a violation of this Code to fail to comply with a lawful order or command of any Enforcement Officer.

C. Responsibility of Parent or Legal Guardian. Each parent or legal guardian having custody or control of a minor who violates this Chapter shall be jointly and severally liable with such minor for such violation.

D. Violations and Penalties.

1. Each violation of this Chapter, and each day a violation occurs or continues, shall constitute a separate and distinct violation.

2. Each violation of this Chapter shall be subject to an administrative citation pursuant to Chapter 1.20 of this Code.

3. Pursuant to Sections 1.06.050 and 1.16.010 of this Code, each violation of this Chapter constitutes a misdemeanor unless prosecuted as an infraction in the discretion of the City Attorney or City Prosecutor in the interest of justice.

4. Violation of any provision of this Chapter is a public nuisance and may be abated by any means available by law, including injunction.

5. Any person found in violation of any provision of this Chapter may, in lieu of payment of a fine or other penalty, be required to complete a City-approved training and education class on the safe operation of Electric Bicycles or other Regulated Mobility Device. Payment for the costs of such a class shall be the responsibility of the offender.

Proof of completion must be provided to the City within 90 days of the violation notice if such a class is required. The violation shall not be deemed adjudicated until the offender provides such notice in a timely manner.

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6. Impoundment. A Bicycle, Electric Bicycle or other Regulated Mobility Device may be impounded by any Enforcement Officer when any of the following conditions are present:
(a) Obstruction of Public Areas. The device is left upon public property or other Public Areas in such a manner as to block or impede pedestrian or vehicular traffic, obstruct ingress or egress to any building, stairway, ramp, or similar space, or otherwise create a hazard to public safety.
(b) Excessive Duration. The device has been left unattended in a Public Area for a period of more than seventy-two (72) hours.
(c) Abandonment. The device shows objective signs of abandonment, disuse, or neglect, such as broken or missing parts, flat tires, accumulation of debris, or conditions evidencing that the device has been discarded and is not reasonably intended to be retrieved.
(d) Incident to Citation or Arrest. The operator of the device has been criminally cited or arrested for a violation of this Chapter or of any other applicable law or ordinance, and impoundment of the device is necessary to preserve evidence or protect public safety.
(e) In the event of any impoundment pursuant to this Chapter, the City shall:
i. Provide the person from whom the Bicycle, Electric Bicycle, or other Regulated Mobility Device was impounded with a receipt and instructions for retrieval of the property, which shall be given in person at the time of impoundment, or promptly mailed by first-class mail to the person at the last known address.
ii. If the Enforcement Officer has knowledge that the person from whom the Bicycle, Electric Bicycle, or other Regulated Mobility Device was impounded is not the owner, the Enforcement Officer shall make reasonable efforts to identify the owner, and if identified, shall mail by first-class mail a receipt and instructions for retrieval of the item. iii. The receipt and instructions shall notify the person that the Bicycle, Electric Bicycle or other Regulated Mobility Device must be claimed within 60 days after the City obtained possession or the property will be disposed of in accordance with Civil Code section 2080.10. iv. Within said 60 days, the owner may retrieve the Bicycle, Electric Bicycle or other Regulated Mobility Device upon payment of the fees and costs provided by the City, may authorize in writing another person to pay and retrieve the item, or may notify the City that the person is unable to retrieve it within 60 days because the person is in police custody and request the City hold the item, in which case, the City may hold it for a period not longer than 10 months total.
v. In the event of a violation by a juvenile, the Bicycle, Electric Bicycle, or other Regulated Mobility Device may be released only to a responsible adult. The fee for storage and other costs incurred by the City or Sheriff’s Office shall be paid prior to the release of the item. In the event the Bicycle, Electric Bicycle, or other Regulated Mobility Device is not retrieved within 60 days, it may be disposed of pursuant to Civil Code section 2080.10.

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10.54.060 Exemptions.

A. Public Agency Personnel. Notwithstanding any other provision of this chapter, or any other section of this code, City and public agency personnel may operate Regulated Mobility Devices or other vehicles at any place in the City in the performance of their official duties.

B. Disability. This chapter is not intended to apply to or otherwise restrict Regulated Mobility Devices used in a safe manner by physically disabled persons as defined under the Americans with Disabilities Act (42 U.S.C. Sections 12101 et seq.).

SECTION 2. Severability. If any section, subsection, sentence, clause, phase, or portion of this Ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have adopted this Ordinance, and each section, subsection, subdivision, sentence, clause, phrase or portion thereof, irrespective of the fact that any one or more sections, subsections, subdivisions, sentences, clauses, phrases or portions might subsequently be declared invalid or unconstitutional.

SECTION 3. CEQA. The City Council finds that this Ordinance is not subject to the California Environmental Quality Act (“CEQA”) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Division 6, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly.

SECTION 4. Effective Date. This Ordinance shall become effective at 12:01 a.m. on the thirtyfirst (31st) day after the date of adoption.

SECTION 5. Certification. The City Clerk shall certify to the passage of this Ordinance and cause a synopsis of the same to be published according to law.

PASSED, APPROVED, AND ADOPTED at a regular meeting of the City Council of the City of Lake Elsinore, California, on this 26th day of May 2026.

Robert E. Magee
Mayor
Attest:

Candice Alvarez, MMC
City Clerk
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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 Ordinance No. 2026-1535 was introduced by the City Council of the City of Lake Elsinore, California, at the Regular meeting of May 12, 2026 and adopted at the Regular meeting of May 26, 2026 and that the same was adopted by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Candice Alvarez, MMC
City Clerk

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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: May 26, 2026
Subject: Contractor Services Agreement with Harrigan’s Toilet Partitions, Inc. for the Purchase and Installation of Bathroom Partitions and Accessories in the New City Hall Project (CIP Project #Z20006)
Recommendation
Approve and authorize the City Manager to execute a Contractor Services Agreement with Harrigan’s Toilet Partitions Inc in an amount not to exceed $62,000.00 for the design, purchase, and installation of bathroom partitions and accessory equipment in the New City Hall Project in such final form as approved by the City Attorney; authorize the City Manager to execute change orders not to exceed the 10% contingency amount of $6,200.00; and authorize the City Clerk to record the Notice of Completion once work is completed.

Background
Staff working with the interior design professional have determined the Bobrick Restroom Accessories will complement the City Hall interior concepts and provide durability and aesthetic value to the building. For the new City Hall, the bathroom design has combined both great looking finishes and surfaces that will survive decades of public use without becoming a maintenance headache. As such, the design priorities are durability, accessibility, efficiency, security, and civic appearance.

Discussion
In this scope of work, the contractor will be responsible for the delivery and installation of the Bobrick restroom accessory items below:

Harrigan’s Toilet Partitions New City Hall Project

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Concealed Mount Grab Bars
Paper Towel Dispenser / Waste Receptacle
Surface Mount Toilet Paper Dispenser
Surface Mount Seat Cover Dispenser
Surface Mount Sanitary Napkin Disposal
Koala Baby Changing Station / Surface Mount / Stainless Steel Phenolic, Floor Mount Overhead Braced (Stalls and Urinal Screens 72" Panels and Doors
Color To Be Brushed Aluminum
These items will be common to all City Hall bathrooms and have very low maintenance requirements. Therefore, the evaluation of this purchase and installation took into consideration the lifecycle asset (spend a little more upfront on finishes and fixtures, because replacing cheap municipal bathroom components later is very expensive).

Wavier of Competitive Bidding Procedures
Pursuant to Section 3.08.070(G) of the Municipal Code, the City Council has the discretion to waive the competitive bidding requirement that would otherwise be utilized for this purchase. In conclusion, the competitive bidding procedures are waived because the selected bathroom accessories and components satisfy the City’s requirements and are immediately available. This expedites the project timeline, ensuring that installation can proceed without delays associated with sourcing materials or waiting for shipments. It is in the City’s best interest to exercise the exception to the standard bidding process as permitted by Section 3.08.070(G) of the Municipal Code. This approach ensures that a single contractor is responsible for both the procurement and the installation phases of the work. In addition, the contractor has completely vetted all of the details and requirements to provide the material and perform the work at the highest level.

Fiscal Impact
Funding costs are included in the Fiscal Year 25/26 – 29/30 Capital Improvement Plan (CIP) budget, CIP Project #Z20006.

Attachments
Attachment 1 – Agreement
Exhibit A – Quote

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AGREEMENT FOR CONTRACTOR SERVICES
Harrigan’s Toilet Partitions, Inc.

Purchase and installation of bathroom partitions and accessories This Agreement for Contractor Services (the “Agreement”) is made and entered into as of May 26, 2026, by and between the City of Lake Elsinore, a municipal corporation (‘‘City") and Harrigan’s Toilet Partitions, Inc., a corporation ("Contractoor").

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

Purchase and installation of the bathroom partitions and accessories in the new City Hall project.

B. Contractor has submitted to City a proposal, dated May 5, 2026, 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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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. 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 thirdparty 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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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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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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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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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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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: Harrigan’s Toilet Partitions, Inc.

Attn: Tabatha Canady
9340 7th St., Suite C
Rancho Cucamonga, CA 91730

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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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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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) nonmonetary 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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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”
Harrigan’s Toilet Partitions, Inc., a
corporation

By: Tabatha Canady
Its: Officer
Attachments: Exhibit A – Contractor’s Proposal

EXHIBIT A

EXHIBIT A
CONTRACTOR’S PROPOSAL
[ATTACHED]

EXHIBIT B

LIST OF SUBCONTRACTORS
[ATTACHED]
DATE: 5/5/2026 48626
TO: CITY OF LAKE ELSINORE

GUS PAPAGOLOS
PROJECT: LAKE ELSINORE CITY HALL - LAKE ELSINORE, CA
We Hereby Purpose To Furnish And Install Only Materials Listed Below As Set Forth Per PLANS.

Prevailing Wage Rates Apply
Bobrick Restroom Accessories
Item # Description Qty
B-6806-36" 1 ½” Concealed Mount Grab Bar – 36” 10
B-6806-48" 1 ½” Concealed Mount Grab Bar – 48” 10
B-3803 Recessed Paper Towel Dispenser / Waste Receptacle 12 B-69997 Surface Mount Toilet Paper Dispenser 25
B-221 Surface Mount Seat Cover Dispenser 25
B-270 Surface Mount Sanitary Napkin Disposal 17
KB310-SSWM Koala Baby Changing Station / Surface Mount / Stainless Steel 4 Accu Tec MFG Qty
Phenolic, Floor Mount Overhead Braced 21 Stalls
Standard Hardware Throughout 5 Urinal Screens
72" Panels And Doors
Installed 9" AFF
Color To Be Brushed Aluminum
FURNISHED & INSTALLED, TAX INCLUDED…...................................................................................................................... $62,000.00

PRICE SUBJECT TO CHANGE IF ANY VARIATION OF THIS QUOTE
EXCLUSION - Mirrors & Soap Dispensers
ACCUTEC'S PRICE GOOD TILL10/21/2026
BOBRICK'S PRICE GOOD TILL 6/1/2026
Tabatha Canady
9340 7th St., Ste C * Rancho Cucamonga, CA 91730
Tel: 909.879.0400
[email protected]

REVISED BID QUOTATION
PRICE DOES NOT INCLUDE: Backing, shim, caulking, filler and wall openings.

If no backing available, handicap grab bars will not be installed without the use of a Wing-It, which is an additional cost of $40.00 each or customer to provide backing.

Not responsible for incorrect items and / or their quantities due to plan and / or spec inaccuracy / discrepancy

Page 1 of 3 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: May 26, 2026
Subject: Public Works Construction Agreement with Pursuit Electric, Inc. for the Installation of the Electrical and Low Voltage Power Systems in the New City Hall Council Chamber (CIP Project #Z20006)
Recommendation
Approve and authorize the City Manager to execute a Public Works Construction Agreement with Pursuit Electric, Inc. in an amount not to exceed $225,000.00 for the installation of the electrical and low voltage systems in the New City Hall Council Chamber in such final form as approved by the City Attorney; authorize the City Manager to execute change orders not to exceed the 10% contingency amount of $22,500.00 for uncertainties and adjustments; and authorize the City Clerk to record the Notice of Completion once work is completed.

Background
The purpose of this report is to award a contract for the installation of electrical and low-voltage systems needed to support the technical operations of the nearly 4,000-square-foot City Council Chamber. Because the chamber will incorporate advanced technologies, the project requires specialized coordination and enhanced power distribution to support multiple components, systems, and operational functions, including broadcast video and live studio presentations.

Pursuit Electric New City Hall Project Council Chambers

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Discussion
The installation of the electrical and low-voltage systems for the City Council Chamber involves several critical factors to ensure reliable performance, operational efficiency, and long-term functionality. Given the complexity and technological demands of the chamber, these systems must be carefully coordinated to support a wide range of integrated components.

A primary consideration is the delivery of electrical power and low-voltage infrastructure to the council chamber, particularly at the control room console and dais. This includes power and connectivity for audio, video, lighting, and digital signage systems that are essential for conducting meetings and supporting public engagement. These elements must be seamlessly integrated to provide consistent performance during live proceedings and recorded broadcasts.

In addition, the chamber will incorporate studio-quality broadcast and video lighting systems, which require specialized power distribution and control to ensure proper illumination for televised and streamed content. Complementing this is the house lighting system, which must be synchronized to provide adequate general illumination while remaining adaptable to various operational scenarios.

The system must also provide dedicated and reliable power supply to critical infrastructure, including the central control console, the council chamber server room, and all presentation displays such as televisions and monitors. These components are essential to the operation of audiovisual systems and require stable and uninterrupted power to prevent disruptions.

To enhance system reliability, backup power provisions will be incorporated to maintain functionality in the event of a power outage. This is particularly important for ensuring continuity of public meetings and safeguarding sensitive electronic equipment.

Finally, the scope of work includes the power supply and integration of audio speakers and communication systems throughout the council chamber. These systems are critical for clear sound distribution, effective communication among participants, and accessibility for the public and require a clean power supply and close coordination between the electrician and communications contractor.

Overall, the successful implementation of these systems depends on careful planning, coordination among electrical and low voltage disciplines, and adherence to high technical standards to support the council chamber’s advanced operational and broadcast requirements.

Fiscal Impact
Funding costs are included in the Fiscal Year 25/26 – 29/30 Capital Improvement Plan (CIP) budget, CIP Project #Z20006.

Pursuit Electric New City Hall Project Council Chambers

Page 3 of 3 ends

This will be one of the most elaborate and complicated power and low voltage systems in the building. It is for the many reasons mentioned in the staff report and the technical requirements of the installation of the systems that are in the best interest of the City an exception to the bidding process being invoked in accordance with section 3.08.070(G) of the contract code. Here-in the installation is completed by the same contractor. It is also worth mentioning that Pursuit Electric Inc. will perform the maintenance of the system.

Attachments
Attachment 1 – Agreement
Exhibit A – Proposal
1 Agreement No. __________

AGREEMENT FOR PUBLIC WORKS CONSTRUCTION
Pursuit Electric Inc.

For the
City Hall Installation of the
Electrical and Low voltage
Power Systems
CIP PROJECT NO. Z20006
This Agreement for Public Works Construction (“Agreement”) is made and entered into as of May 26, 2026 by and between the City of Lake Elsinore, a municipal corporation (“City”) and Pursuit Electric Inc. (“Contractor”).

The City and Contractor, in consideration of the mutual promises and covenants set forth herein, agree as follows:

1. The Project and Project Documents. Contractor agrees to construct the following public improvements (“work”) identified as:

City Hall Installation of the Electrical and Low voltage Power Systems Council Chamber Room(the “Project”)
The City-approved plans for the construction of the Project, which are incorporated herein by reference and prepared by Staff, are identified as:

City Hall City Hall Installation of the Electrical and Low voltage Power Systems Council Chamber Room
The Project Documents include this Agreement and all of the following: (1) the Notice Inviting Bids, Instructions to Bidders, Bid Documents including Bidder’s Proposal as submitted by the Contractor, Contract Documents, General Specifications, Special Provisions, and all attachments and appendices; (2) everything referenced in such documents, such as specifications, details, standard plans or drawings and appendices, including all applicable State and Federal requirements; (3) all required bonds, insurance certificates, permits, notices, and affidavits; and (4) any and all addenda or supplemental agreements clarifying, amending or extending the work contemplated as may be required to insure completion in an acceptable manner. All of the provisions of the above-listed documents are made a part of this Agreement as though fully set forth herein.

2. Compensation.
a. For and in consideration of the payments and agreements to be made and performed by City, Contractor agrees to construct the Project, including furnishing all materials and performing all work required for the Project, and to fulfill all other obligations as set forth in the Bidder’s Proposal, such contract price being two hundred twenty five thousand dollars and no cents ($225,000.00).
2 b. City hereby promises and agrees to employ, and does hereby employ, Contractor to provide the materials, do the work, and fulfill the obligations according to the terms and conditions herein contained and referred to, for the prices set forth, and hereby contracts to pay the same at the time, in the manner, and upon the conditions set forth in the Project Documents.
c. Contractor agrees to receive and accept the prices set forth in the Bidder’s Proposal as full compensation for furnishing all materials, performing all work, and fulfilling all obligations hereunder. Such compensation shall cover all expenses, losses, damages, and consequences arising out of the nature of work during its progress or prior to its acceptance including those for well and faithfully completing the work and the whole thereof in the manner and time specified in the Project Documents; and also including those arising from actions of the elements, unforeseen difficulties or obstructions encountered in the prosecution of the work, suspension or discontinuance of the work, and all other unknowns or risks of any description connected with the work.

3. Completion of Work.
a. Contractor shall perform and complete all work within 45 working days from the date of commencement specified in the Notice to Proceed, and shall provide, furnish and pay for all the labor, materials, necessary tools, expendable equipment, and all taxes, utility and transportation services required for construction of the Project. b. All work shall be performed and completed in a good workmanlike manner in strict accordance with the drawings, specifications and all provisions of this Agreement as hereinabove defined and in accordance with applicable laws, codes, regulations, ordinances and any other legal requirements governing the Project.
c. Contractor shall not be excused with respect to the failure to so comply by any act or omission of the City, the City Engineer, a City inspector, or a representative of any of them, unless such act or omission actually prevents the Contractor from fully complying with the requirements of the Project Documents, and unless the Contractor protests at the time of such alleged prevention that the act or omission is preventing the Contractor from fully complying with the Project Documents. Such protest shall not be effective unless reduced to writing and filed with the City within three (3) working days of the date of occurrence of the act or omission preventing the Contractor from fully complying with the Project Documents. d. City and Contractor recognize that time is of the essence in the performance of this Agreement and further agree that if the work called for under the Agreement is not completed within the time hereinabove specified, damages will be sustained by the City and that, it is and will be impracticable or extremely difficult to ascertain and determine the actual amount of damages the City will sustain in the event of, and by reason of, such delay. It is, therefore, agreed that such damages shall be presumed to be in the amount of $500.00 per calendar day, and that the Contractor will pay to the City, or City may retain from amounts otherwise payable to Contractor, such amount for each calendar day by which the Contractor fails to complete the work, including corrective items of work, under this Agreement within the time hereinabove specified and as adjusted by any changes to the work. 3 4. Changes to Work. City and Contractor agree that the City may make changes to the work, or suspend the work, and no matter how many changes, such changes or suspensions are within the contemplation of the Contractor and City and will not be a basis for a compensable delay claim against the City nor be the basis for a liquidated damage claim against the Contractor.

Any change to the work shall be by way of a written instrument (“change order”) signed by the City and the Contractor, stating their agreement to the following:
a. The scope of the change in the work;
b. The amount of the adjustment to the contract price; and c. The extent of the adjustment to the Schedule of Performance.

The City Engineer is authorized to sign any change order provided that sufficient contingency funds are available in the City’s approved budget for the Project. All change in the work authorized by the change order shall be performed under the applicable conditions of the Project Documents. City and Contractor shall negotiate in good faith and as expeditiously as possible the appropriate adjustments for such changes.

5. Bonds. Contractor shall provide, before commencing work, a Faithful Performance Bond and a Labor and Material Bond, each for one-hundred percent (100%) of the contract price in the form that complies with the Project Documents and is satisfactory to the City Attorney.

6. Non-Assignability. Neither this Agreement nor any rights, title, interest, duties or obligations under this Agreement may be assigned, transferred, conveyed or otherwise disposed of by Contractor without the prior written consent of City.

7. Licenses. Contractor represents and warrants to City that it holds the contractor’s license or licenses set forth in the Project Documents, is registered with the Department of Industrial Relations pursuant to Labor Code Section 1725.5, and holds such other licenses, permits, qualifications, insurance and approvals of whatsoever nature which are legally required of Contractor. 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.

8. Indemnity. Contractor shall indemnify, defend, and hold harmless the City and its officials, officers, employees, agents, the County and Board Supervisors, 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 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
4 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.

9. Insurance Requirements.
a. Insurance. Contractor, at Contractor’s own cost and expense, shall procure and maintain, for the duration of the Agreement, 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. Commercial 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.
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.
5 iv. Builder’s Risk Coverage. Prior to the commencement of any construction of the Project, Design-Builder shall obtain (or cause to be obtained) and keep in force during the term of any construction, builder’s risk insurance insuring for all risks of physical loss of or damage (excluding the perils of earthquake and flood). v. 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 commercial 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. The City, its elected or appointed officers, officials, employees, agents and volunteers are to be covered as additional insured with respect to liability arising out of work performed by or on behalf of the Contractor, including materials, parts or equipment furnished in connection with such work or operations. 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.
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 6 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.

10. 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.

Attn: Jed Miller
831 McCormac Ln
Plancenta CA 92870

11. Entire Agreement. This Agreement constitutes the complete and exclusive statement of agreement between the City and Contractor. All prior written and oral communications, including correspondence, drafts, memoranda, and representations, are superseded in total by this Agreement.

12. 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.

13. Assignment and Subcontracting. Contractor shall be fully responsible to City for all acts or omissions of any subcontractors. Assignments of any or all rights, duties for obligations of the Contractor under this Agreement will be permitted only with the express consent of the City. 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.

14. 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.

15. 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.

16. 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. 7 17. 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.

18. 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.

19. Authority to Enter Agreement and Administration. 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 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. The City Engineer shall act as the Project administrator on behalf of the City.

20. 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.

21. 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.

22. Prevailing Wages.
a. Contractor and all subcontractors shall adhere to the general prevailing rate of per diem wages as determined and as published by the State Director of the Department of Industrial Relations pursuant to Labor Code Sections 1770, 1773, and 1773.2. Copies of these rates and the latest revisions thereto are on file in the office of the City Clerk of the City of Lake Elsinore and are available for review upon request. 8 b. Contractor's attention is directed to the provisions of Labor Code Sections 1774, 1775, 1776, 1777.5 and 1777.6. Contractor shall comply with the provisions of these Sections. The statutory provisions for penalties for failure to comply with the State's wage and the hours laws will be enforced.
c. Labor Code Sections 1774 and 1775 require the Contractor and all subcontractors to pay not less than the prevailing wage rates to all workmen employed in the execution of the contract and specify forfeitures and penalties for failure to do so. The minimum wages to be paid are those determined by the State Director of the Department of Industrial Relations. Labor Code Section 1776 requires the Contractor and all subcontractors to keep accurate payroll records, specifies the contents thereof, their inspection and duplication procedures and certain notices required of the Contractor pertaining to their location. The statutory penalties for failure to pay prevailing wages will be enforced. If the Project has been awarded to Contractor on or after April 1, 2015, Contractor and its subcontractors must furnish electronic certified payroll records to the Labor Commissioner. Beginning January 1, 2016, Contractor and its subcontractors must furnish electronic certified payroll records to the Labor Commissioner without regard to when the Project was awarded to Contractor. d. Labor Code Section 1777.5 requires Contractor or subcontractor employing tradesmen in any apprenticeable occupation to apply to the Joint Apprenticeship Committee nearest the site of the public works project, which administers the apprenticeship program in that trade for a certificate of approval. The certificate will also fix the ratio of apprentices to journeymen to be used in the performance of the Agreement. The Contractor is required to make contributions to funds established for the administration of apprenticeship programs if the Contractor employs registered apprentices or journeymen in any apprenticeable trade and if other contractors on the public works site are making such contributions.

Information relative to apprenticeship standards, contributions, wage schedules and other requirements may be obtained from the State Director of Industrial Relations or from the Division of Apprenticeship Standards. Labor Code Section 1777.6 provides that it shall be unlawful to refuse to accept otherwise qualified employees as registered apprentices solely on the grounds of race, religious creed, color, national origin, ancestry, sex, or age. e. Eight hours labor constitutes a legal day's work, as set forth in Labor Code Section 1810.

23. Execution. 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. [Signatures on next page]
9 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
“CONTRACTOR”
Pursuit Electric Inc., a corporation
City Manager
ATTEST:

By: Jed Miller
Its: Owner
City Clerk
APPROVED AS TO FORM:

By: Click or tap here to enter text.

Its: Click or tap here to enter text.

City Attorney
Director of Administrative Services

EXHIBIT A
CONTRACTOR’S PROPOSAL
[ATTACHED]

EXHIBIT B

LIST OF SUBCONTRACTORS
[ATTACHED]
PURSUIT ELECTRIC INC.
1831 McCormack Ln | Placentia, CA 92870
951-609-5675 | [email protected]
C10-1044091

PROPOSAL / SCOPE OF WORK
Customer: City of Lake Elsinore
130 S. Main St., Lake Elsinore, CA 92530
Pursuit Electric Inc. proposes to provide labor and coordination necessary to complete the following electrical and low voltage scope of work for the Council Chamber project:
• Design and install electrical power and low voltage Council Chamber systems • Dais power, audio, video, lighting, and signage
• Studio and broadcast video lighting
• House lighting, signage, and monitors
• Power supply for control console, server room, presentation TVs, and isolated control room cooling system • Back-up power panels
• Certify all power and low voltage connections
• Low voltage for audio speakers and communications systems Proposal Amount: $225,000.00
Thank you for the opportunity to provide this proposal. Please contact our office with any questions or requests for additional information.

Sincerely,
______________________________
Jed Miller | Owner
Pursuit Electric Inc.

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: May 26, 2026
Subject: CFD 2016-2 (Canyon Hills) 2026 Special Tax Refunding Bonds Recommendation
Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE,

CALIFORNIA, ACTING AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 2016-2 OF THE CITY OF LAKE ELSINORE (CANYON HILLS), AUTHORIZING THE ISSUANCE OF ITS 2026 SPECIAL TAX REFUNDING BONDS AND APPROVING CERTAIN DOCUMENTS AND TAKING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH.

Background
Over the years, staff have been proactive in monitoring outstanding land-secured debt (community facilities districts) for refinancing candidates. In fact, since 2015, staff and City Council have identified and taken advantage of several refinancing opportunities, leading to savings (reduction in special taxes) or money for eligible projects directly benefiting property owners.

There is currently an opportunity to refinance two series of outstanding bonds issued on behalf of Community Facilities District No. 2016-2 (Canyon Hills) (the “District”):
 Special Tax Bonds, Series 2018: In 2018, the District issued its Special Tax Bonds, Series 2018 (“2018 Bonds”) in the par amount of $19,745,000 to finance certain public improvements serving the District. Currently, there is $18,785,000 of par outstanding. The

CFD 2016-2 (Canyon Hills) 2026 Special Tax Refunding Bonds

Page 2 of 4 ends

2018 Bonds have a final maturity of September 1, 2048 and interest rates ranging from 3.00% to 5.00%. The 2018 Bonds are subject to optional redemption on September 1, 2026 at a redemption price of 102%.
 Subordinate Special Tax Bonds, Series 2022: In 2022, the District issued its Subordinate Special Tax Bonds, Series 2022 (“2022 Bonds” and together with the 2018 Bonds, the “Refunded Bonds”) in the par amount of $1,411,480 to finance certain public improvements serving the District. Currently, there is $1,385,070 of par outstanding. The 2022 Bonds have a final maturity of September 1, 2048 and carry an interest rate of 4.89%. The 2022 Bonds are subject to optional redemption on September 1, 2026 at a redemption price of 102%.

If the resolution is approved this evening, staff will continue to work with the financing team on finalizing all legal documents and the preliminary official statement with the goal of pricing the refunding bonds sometime in early June, assuming market conditions remain favorable.

Discussion
The proposed 2026 Bonds would maintain the same final maturity as the refunded bonds listed above. In other words, there will be no extension of the original bond term for the refunding. Final interest rates will be determined if and when the 2026 Bonds are priced.

While the outstanding bonds are not currently rated, the 2026 Bonds are expected to qualify for an investment grade rating and bond insurance, which would lead to a lower cost of borrowing.

Furthermore, the 2026 Bonds may also qualify for a reserve fund surety policy. With a reserve fund surety policy, the 2026 Bonds would not need to cash fund a debt service reserve (or a portion thereof) as part of the issuance. This would enable the City to downsize the 2026 Bonds.

As established in the Resolution, the 2026 Bonds will only be sold if District is able to realize at least 2.5% net present value savings by refunding the Refunded Bonds. The savings generated will be used to complete eligible projects. Based on interest rates as of May 12, 2026, it is estimated that a refunding of the prior bonds will generate savings sufficient to fund approximately $2.3 million of projects. Interest rates have remained volatile in 2026, and the final savings and estimated amounts for additional capital will be determined when the bonds are priced and sold.

As required under Section 5852.1 of the California Government Code, good faith estimates have been provided to the City by Urban Futures, Inc., the Municipal Advisor, in consultation with Stifel, Nicolaus & Company, Incorporated, as underwriter of the 2026 Bonds as Attachment A.

CFD 2016-2 (Canyon Hills) 2026 Special Tax Refunding Bonds

Page 3 of 4 ends

Documents to be Approved
The documents for consideration by the City Council are described below. Approval of the Resolution approves the preparation, form, and/or authorizes the execution and delivery of the following documents:
 Preliminary Official Statement: The POS is the ‘offering document,’ providing a description of the District, the 2026 Bonds, and all other information that would be material to a prospective investor’s decision on whether to purchase the 2026 Bonds. While the City’s counsel, consultants, and underwriter have participated in preparing the POS, 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 2026 Bonds. This document contains terms of the 2026 Bonds including, but not limited to, the payment and redemption provisions, the pledge of revenues to pay the 2026 Bonds, rights and duties of the Trustee, remedies upon a default in the payment of the 2026 Bonds, and other related matters.  Bond Purchase Agreement: Pursuant to the Bond Purchase Agreement, the City agrees to sell the 2026 Bonds to the underwriter and the underwriter agrees to purchase the 2026 Bonds, subject to typical closing conditions. City staff, its municipal advisor, and bond counsel will sign off on the final pricing prior to the execution of the Bond Purchase Agreement.  Continuing Disclosure Agreement: Executed for the benefit of bondholders, this agreement obligates the City 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 underlying tax jurisdictions. The City is also required to report certain events to bondholders if and when they occur.
 Escrow Agreements: These documents contain terms by which the Wilmington Trust, National Association, as escrow agent, will hold bond proceeds on the behalf of the owners of the outstanding bonds to pay and discharge the outstanding bonds on the redemption dates.

Bond Counsel, City Attorney, and the rest of the financing team have reviewed the attached documents on behalf of the City. As previously mentioned, if the Resolution is approved, City staff will continue to work with the appointed financing team to finalize all of the documents. The pricing date, assuming interest rates remain favorable, would be targeted for early June.

Fiscal Impact
Except for a rating cost from S&P (which can be reimbursed from bond proceeds), there is no impact to the City’s General Fund. It is estimated that the 2026 Bonds will generate an estimated $2.3 million for eligible projects. The estimated amounts for additional capital quoted above are CFD 2016-2 (Canyon Hills) 2026 Special Tax Refunding Bonds

Page 4 of 4 ends

net of all financing costs (including the cost of purchasing bond insurance and a reserve fund surety policy). All figures are preliminary and subject to prevailing market conditions at the time of sale.

Attachments
Attachment 1 – Resolution Approving Issuance
Attachment 2 – Preliminary Official Statement
Attachment 3 – Bond Indenture
Attachment 4 – The 2018 Bonds Escrow Agreement
Attachment 5 – The 2022 Bonds Escrow Agreement
Attachment 6 – Bond Purchase Agreement
Attachment 7 – Continuing Disclosure Agreement
RESOLUTION NO. ______

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE

ELSINORE,CALIFORNIA, ACTING AS THE LEGISLATIVE BODY OF
COMMUNITY FACILITIES DISTRICT NO. 2016-2 OF THE CITY OF LAKE ELSINORE (CANYON HILLS), AUTHORIZING THE ISSUANCE OF ITS 2026

SPECIAL TAX REFUNDING BONDS AND APPROVING CERTAIN

DOCUMENTS AND TAKING CERTAIN OTHER ACTIONS IN CONNECTION

THEREWITH
Whereas, the City Council (the “City Council” or the “legislative body of the District”) of the City of Lake Elsinore (the “City”) has previously undertaken proceedings to establish Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) (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, pursuant to proceedings taken and an election held on December 13, 2006 to authorize the issuance of bonds of the District, the levy of special taxes within the District and the establishment of an appropriations limit for the District, the District was authorized to issue bonds in one or more series, pursuant to the Act, in an aggregate principal amount not to exceed $27,500,000; and
Whereas, the District has previously issued its Special Tax Bonds, Series 2018 in the aggregate principal amount of $19,745,000, of which $18,785,000 is currently outstanding (the “2018 Bonds”), to finance certain public improvements serving the District; and Whereas, the District has previously issued its Subordinate Special Tax Bonds, Series 2022 in the aggregate principal amount of $1,411,480, of which $1,385,070 is currently outstanding (the “2022 Bonds” and, together with the 2018 Bonds, the “Refunded Bonds”), to finance certain public improvements serving the District; and Whereas, in order to benefit taxpayers within the District by lowering the annual special taxes to be levied for debt service, and to finance certain public improvements serving the District the City Council, acting as the legislative body of the District, now desires to refund and defease the Refunded Bonds maturing on and after September 1, 2026 through the issuance of bonds in an aggregate principal amount not to exceed $25,000,000 designated as the “Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) 2026 Special Tax Refunding Bonds” (the “2026 Bonds”); and
Whereas, in order to effect the issuance of the 2026 Bonds, the City Council, acting as the legislative body of the District, desires to approve the forms of and authorize the execution and delivery of: (i) a Bond Indenture (the “Indenture”) with Wilmington Trust, National Association, as Trustee; (ii) an Escrow Agreement (2018 Bonds) (the “2018 Bonds Escrow Agreement”) with Wilmington Trust, National Association, as escrow agent; (ii) an Escrow Agreement (2022 Bonds) (the “2022 Bonds Escrow Agreement” and, together with the 2018 Bonds Escrow Agreement, the “Escrow Agreements”) with Wilmington Trust, National Association, as escrow agent; (iv) a Preliminary Official Statement for the 2026 Bonds (the “Preliminary Official Statement”), which the Underwriter (as such term is defined herein) will use to market the 2026 Bonds; (v) a Bond Purchase Agreement (the “Bond Purchase CC Reso No. 2026-

Page 2 of 6 ends

2 Agreement”) with the Underwriter; and (vi) a Continuing Disclosure Agreement of the District relating to the 2026 Bonds (the “Continuing Disclosure Agreement”), all in substantially the forms presented herewith, and to authorize such changes and additions thereto as the Authorized Officers (as such term is defined herein) deem necessary or desirable; and Whereas, the City Council, acting in its capacity as the legislative body of the District, finds that the issuance of the 2026 Bonds will achieve debt service savings and will benefit taxpayers within the District, and has determined that it is prudent in the management of the District’s fiscal affairs to issue the 2026 Bonds; and
Whereas, the legislative body of the District has determined, in consultation with its municipal advisor, in accordance with Government Code Section 53360.4, that a negotiated sale of the 2026 Bonds to Stifel, Nicolaus & Company, Incorporated, as underwriter (the “Underwriter”) in accordance with the terms of the Bond Purchase Agreement approved as to form by the City Council herein will result in a lower overall cost to the District than a public sale, in that a negotiated sale will allow for the timing of the sale of the 2026 Bonds to be accomplished at a time of the District’s choosing; and
Whereas, the aggregate assessed value of the real property in the District that is subject to the special tax to pay debt service on the 2026 Bonds is not less than three times the principal amount of the 2026 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, which fact is required as a precondition to the issuance of the 2026 Bonds;

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, ACTING AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 2016-2

OF THE CITY OF LAKE ELSINORE (CANYON HILLS), DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS:

Section 1. Recitals True and Correct. Each of the above recitals is true and correct and is adopted by the City Council, acting in its capacity as the legislative body of the District.

Section 2. Findings. The City Council, acting in its capacity as the legislative body of the District: (i) finds that the issuance of the 2026 Bonds as described in the Preliminary Official Statement will provide significant public benefits by reducing the total amount of special taxes to be levied for debt service within the District; and (ii) finds and determines that the issuance and sale of the 2026 Bonds are consistent with the District’s financing policy with respect to community facilities district financings adopted pursuant to Government Code Section 53312.7 and currently in effect.

In satisfaction of the requirements contained in Government Code Section 53363.2, the City Council hereby determines that:
(a) it is anticipated that the purchase of the 2026 Bonds will occur on or about June 4, 2026 and that the refunding of the Refunded Bonds will occur on September 1, 2026, or as soon thereafter as practicable and permitted by the terms of the Refunded Bonds (subject to change at the discretion of any of the Authorized Officers);
(b) the 2026 Bonds shall be dated their date of issuance, and be in the denominations, have the maturity dates (which do not exceed the latest maturity date of the Refunded Bonds being CC Reso No. 2026-

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3 refunded), be payable at the place and be in the form specified in the Bond Purchase Agreement to be executed by the District in accordance with Section 6; (c) the 2026 Bonds will bear interest at the minimum rate of 0.05% per annum; (d) the Refunded Bonds shall be payable at the place specified in the Escrow Agreements to be executed by the District in accordance with Section 4; and (e) the designated cost of issuing the 2026 Bonds, as defined by Government Code Section 53363.8, shall include all of the costs specified in Government Code Section 53363.8(a), (b)(2) and (c).

Section 3. Authorization of Bonds; Approval of Indenture. If the District is able to realize at least 2.5% net present value savings by refunding the Refunded Bonds, the issuance of the 2026 Bonds in a principal amount not to exceed $25,000,000 is hereby authorized and approved pursuant to the Act. The 2026 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 and otherwise shall be substantially in the form set forth in the Indenture on file with the City Clerk of the City. All other provisions of the 2026 Bonds shall be governed by the terms and conditions set forth in the Indenture prepared by Bond Counsel to the District and executed by the Mayor of the City, the City Manager of the City and the Assistant City Manager of the City, or the written designee thereof (each, an “Authorized Officer”). The Indenture is hereby approved substantially in the form on file with the City Clerk of the City. Each Authorized Officer is hereby authorized and directed to execute and deliver the Indenture with such changes, insertions and omissions as may be recommended by the City Attorney or Bond Counsel to the District and approved by the officer executing the same, said execution being conclusive evidence of such approval. Capitalized terms that are used in this Resolution and not defined have the meaning ascribed to them in the form of the Indenture.

Section 4. Approval of Escrow Agreements. The Escrow Agreements are hereby approved substantially in the form on file with the City Clerk of the City. Each Authorized Officer is hereby authorized and directed to execute and deliver the Escrow Agreements with such changes, insertions and omissions as may be recommended by the City Attorney or Bond Counsel to the District and approved by the officer executing the same, said execution being conclusive evidence of such approval.

Section 5. Approval of Preliminary Official Statement. The Preliminary Official Statement is hereby approved in substantially in the form on file with the City Clerk of the City, and the Authorized Officers are each hereby authorized and directed, for and in the name and on behalf of the District, to deliver such Preliminary Official Statement to the Underwriter to be used in connection with the offering and sale of the 2026 Bonds. The Authorized Officers are each hereby authorized and directed, for and in the name and on behalf of the District, to deem the Preliminary Official Statement “final” pursuant to Rule 15c2-12 of the Securities Exchange Act of 1934 prior to its distribution and to execute and deliver to the Underwriter a final Official Statement substantially in the form of the Preliminary Official Statement, with such changes therein, deletions therefrom and modifications thereto as the Authorized Officer executing the same shall approve (the “Official Statement”). The Underwriter is hereby authorized to distribute copies of the Preliminary Official Statement to persons who may be interested in the purchase of the 2026 Bonds and is directed to deliver copies of the Official Statement to the purchasers of the 2026 Bonds. Execution of the Official Statement shall conclusively evidence the District’s approval of the Official Statement.

CC Reso No. 2026-

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4 Section 6. Approval of Bond Purchase Agreement. The Bond Purchase Agreement is hereby approved substantially in the form on file with the City Clerk of the City. Each Authorized Officer is hereby authorized and directed to execute and deliver the Bond Purchase Agreement with such changes, insertions and omissions as may be recommended by the City Attorney or Bond Counsel to the District and approved by the officer executing the same, said execution being conclusive evidence of such approval; provided, however, that: (i) the principal amount of the 2026 Bonds shall not exceed $25,000,000; (ii) the net present value savings realized by refunding Refunded Bonds shall not be less than 2.5%; and (iii) the Underwriter’s discount for the 2026 Bonds shall not exceed 0.825% of the principal amount thereof.

Section 7. Approval of Continuing Disclosure Agreement. The Continuing Disclosure Agreement is hereby approved substantially in the form on file with the City Clerk of the City.

Each Authorized Officer is hereby authorized and directed to execute and deliver the Continuing Disclosure Agreement with such changes, insertions and omissions as may be recommended by the City Attorney or Bond Counsel to the District and approved by the officer executing the same, said execution being conclusive evidence of such approval.

Section 8. Good Faith Estimates. The good faith estimates of costs related to the 2026 Bonds which are required by California Government Code Section 5852.1 are disclosed in Exhibit A hereto and are available to the public at the meeting at which this Resolution is approved.

Section 9. Findings related to Assessed Value. In accordance with the requirements of Government Code Section 53345.8, the City Council hereby determines that the aggregate assessed value of the real property in the District that is subject to the special tax to pay debt service on the 2026 Bonds is not less than three times the principal amount of the 2026 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. This determination is based on the assessed value of the real property within the District as set forth in the fiscal year 2025-26 County Assessor’s roll.

Section 10. Authorization relating to Bond Insurance. The City Council hereby authorizes the Authorized Officers: (i) to solicit bids on a municipal bond insurance policy and/or reserve surety policy for the 2026 Bonds; (ii) to negotiate the terms of such policy or policies; (iii) to finalize, if appropriate, the form of such policy or policies with a municipal bond insurer; and (iv) if it is determined that the policy or policies will result in net savings for the District, to pay the insurance premium of such policy or policies from the proceeds of the issuance and sale of the 2026 Bonds. The City Council hereby authorizes such changes to the Indenture as are necessary to reflect the purchase of municipal bond insurance and/or a reserve surety.

Section 11. Other Actions Authorized. All actions heretofore taken by officers and agents of the City and the District with respect to the sale and issuance of the 2026 Bonds are hereby approved, confirmed and ratified, and the Authorized Officers and the other officers of the City and the District who are 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 2026 Bonds in accordance with the provisions of this Resolution, including but not limited to the solicitation and acceptance of bond insurance and/or a reserve surety policy for the 2026 Bonds, the preparation of escrow or redemption instructions with respect to the Refunded Bonds, the approval of the investment of the moneys deposited under the Escrow Agreements in federal securities, State and Local Government Series or other investments as permitted under the Escrow Agreements and the bond indentures CC Reso No. 2026-

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5 pursuant to which the Refunded Bonds were issued, the retention of a bidding agent with respect to such escrow investments, the retention of a verification agent to verify the sufficiency of the escrow deposit and the fulfillment of all other purposes of the 2026 Bonds as described in the Indenture.

Section 12. Effective Date. This Resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk of the City shall certify the vote adopting this Resolution.

Section 13. 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 26th day of May, 2026.

Robert E. Magee
Mayor

Attest:

Candice Alvarez, MMC
City Clerk

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. 2026-____ was adopted by the City Council of the City of Lake Elsinore, California, at the Regular meeting of May 26, 2026 and that the same was adopted by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Candice Alvarez, MMC
City Clerk
A-1
4934-6413-5841v4/022042-0054

EXHIBIT A

GOOD FAITH ESTIMATES
The good faith estimates set forth herein are provided with respect to the 2026 Bonds in accordance with California Government Code Section 5852.1.

Principal Amount. Based on the District’s financing plan and current market conditions, a good faith estimate of the principal amount of the 2026 Bonds is $19,440,000 (the “Estimated Principal Amount”).

True Interest Cost. Assuming that the 2026 Bonds are issued in the Estimated Principal Amount, and based on market interest rates prevailing at the time of preparation of such estimate, a good faith estimate of the true interest cost of the 2026 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 2026 Bonds, is 4.37%.

Finance Charge. Assuming that the 2026 Bonds are issued in the Estimated Principal Amount, and based on market interest rates prevailing at the time of preparation of such estimate, a good faith estimate of the finance charge for the 2026 Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the 2026 Bonds), is $563,572.

Amount of Proceeds to be Received. Assuming that the 2026 Bonds are issued in the Estimated Principal Amount, and based on market interest rates prevailing at the time of preparation of such estimate, a good faith estimate of the amount of proceeds expected to be received by the District from the 2026 Bonds (including original issue premium), less the finance charge of the 2026 Bonds, as estimated above, and any reserves or capitalized interest paid or funded with proceeds of the 2026 Bonds, is $20,546,114.

Total Payment Amount. Assuming that the 2026 Bonds are issued in the Estimated Principal Amount, and based on market interest rates prevailing at the time of preparation of such estimate, a 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 2026 Bonds, plus the finance charge for the 2026 Bonds, as described above, not paid with the proceeds of the 2026 Bonds, calculated to the final maturity of the 2026 Bonds, is $34,064,450.

The foregoing estimates constitute good faith estimates only. The actual principal amount of the 2026 Bonds, 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 issuance of the 2026 Bonds being different than the date assumed for purposes of such estimates; (b) the actual principal amount of the 2026 Bonds being different from the Estimated Principal Amount; (c) the actual amortization of the 2026 Bonds being different than the amortization assumed for purposes of such estimates; (d) the actual market interest rates at the time of issuance of the 2026 Bonds being different than those estimated for purposes of such estimates; (e) other market conditions; or (f) alterations in the District’s financing plan, delays in the financing, additional legal work or a combination of such factors and additional finance charges, if any, attributable thereto. The actual issuance date and principal amount of the 2026 Bonds will be determined by the District based on the timing of the need for proceeds of the 2026 Bonds and other factors.

Stradling Yocca Carlson & Rauth
Draft of 5/13/26
PRELIMINARY OFFICIAL STATEMENT DATED ___________, 2026
4920-1683-8817v5/022042-0054
NEW ISSUE — BOOK-ENTRY ONLY Ratings: [Insured Bonds: S&P “___” Underlying/Uninsured Bonds: S&P “___”]
See the caption “CONCLUDING INFORMATION—Ratings”
In the opinion of Stradling Yocca Carlson & Rauth LLP, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described in this Official Statement, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State of California personal income tax. See the caption “CONCLUDING INFORMATION—Tax Matters” with respect to tax consequences relating to the Bonds, including with respect to the alternative minimum tax imposed on certain large corporations.

COUNTY OF RIVERSIDE STATE OF CALIFORNIA
4920-1683-8817v5/022042-0054
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. $19,435,000
COMMUNITY FACILITIES DISTRICT NO. 2016-2 OF THE

CITY OF LAKE ELSINORE (CANYON HILLS)
2026 SPECIAL TAX REFUNDING BONDS
Dated: Date of Delivery Due: September 1, as shown on the inside cover page The Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) 2026 Special Tax Refunding Bonds (the “Bonds”) are being issued by Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) (the “District”) pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the Government Code of the State of California) (the “CFD Act”), and a Bond Indenture, dated as of June 1, 2026 (the “Indenture”), by and between the District and Wilmington Trust, National Association, as trustee (the “Trustee”), and will be secured as described herein. See the caption “SECURITY FOR THE BONDS.” The Bonds are being issued to: (i) finance certain public improvements; (ii) together with other available funds, to refund the outstanding Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) Special Tax Bonds, Series 2018 and the outstanding Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) Special Tax Bonds, Series 2022; (iii) to pay the premium for a Municipal Bond Debt Service Reserve Insurance Policy for deposit in the Reserve Account; and (iv) to pay certain costs of issuance of the Bonds, including the premium for an insurance policy insuring the Insured Bonds (defined below).

The Bonds will be secured by special tax liens on taxable property within the District and certain funds held by the Trustee under the Indenture. The City of Lake Elsinore (the “City”) has determined that it will not obligate itself to advance funds from its treasury to cover any delinquency on the Bonds. See the caption “SECURITY FOR THE BONDS.”
The Bonds will be issued in book-entry form, initially registered in the name of Cede & Co., New York, New York, as nominee of The Depository Trust Company (“DTC”), New York, New York. Interest on the Bonds will be payable on September 1, 2026 and each March 1 and September 1 thereafter.

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

The Bonds are subject to optional redemption, mandatory sinking fund redemption and extraordinary redemption from Special Tax prepayments prior to maturity as set forth herein. See the caption “THE BONDS—Redemption.”

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

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

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

MATURITY SCHEDULE
(See inside cover)
The Bonds are offered when, as and if issued and accepted by the Underwriter, subject to approval as to their 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 _________, 2026. [UNDERWRITER’S LOGO]
Dated: _______, 2026
4920-1683-8817v5/022042-0054

Preliminary, subject to change.
4920-1683-8817v5/022042-0054
$19,435,000
COMMUNITY FACILITIES DISTRICT NO. 2016-2 OF THE

CITY OF LAKE ELSINORE (CANYON HILLS)
2026 SPECIAL TAX REFUNDING BONDS

MATURITY SCHEDULE
Base CUSIP®†: ______
Maturity Date
(September 1)
Principal
Amount Interest Rate Yield Price CUSIP®†
$ % %
$_______ ______% Term Bonds Due September 1, ______I, Yield _____%, Price _____, CUSIP®† ____ 
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© CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. None of the District, the Underwriter or their agents or counsel assume responsibility for the accuracy of such numbers. 4920-1683-8817v5/022042-0054

CITY OF LAKE ELSINORE

COUNTY OF RIVERSIDE, CALIFORNIA

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

TRUSTEE/ESCROW AGENT
Wilmington Trust, National Association
Costa Mesa, California

VERIFICATION AGENT
Causey Public Finance, LLC
Denver, Colorado
4920-1683-8817v5/022042-0054
No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations, other than as contained in this Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by the City or the District.

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

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

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

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

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

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

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

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

The City maintains a website and certain social media accounts; however, the information presented there is not part of this Official Statement and should not be relied upon in making an investment decision with respect to the Bonds.
[[Insurer] (the “Insurer”) makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, the Insurer has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the 4920-1683-8817v5/022042-0054
information regarding the Insurer, supplied by the Insurer and presented under the caption “BOND INSURANCE” and in Appendix G—“SPECIMEN MUNICIPAL BOND INSURANCE POLICY.”]

TABLE OF CONTENTS
Page Page
i
4920-1683-8817v5/022042-0054
INTRODUCTION.............................................................1 Summary ....................................................................1 Covenant to Foreclose................................................2 No Parity Bonds Except for Refunding Purposes......2
Bond Insurance...........................................................2 Reserve Account ........................................................2 Risk Factors................................................................3 THE REFUNDING PLAN................................................3 THE BONDS.....................................................................6 Description of the Bonds............................................6 Redemption ................................................................7 Notice of Redemption ................................................8 Effect of Redemption .................................................9 Transfers and Exchanges..........................................10 Debt Service Schedule .............................................10 SECURITY FOR THE BONDS .....................................11 Repayment of the Bonds..........................................11 Levy and Collection of Special Taxes......................14 Rate and Method of Apportionment of Special
Taxes.................................................................15 No Teeter Plan..........................................................17 Covenant to Foreclose..............................................17 No Parity Bonds Except for Refunding Purposes....18
Priority of Lien .........................................................19 No Obligation of the City Upon Delinquency .........19
Prepayment of Special Taxes...................................19 BOND INSURANCE......................................................19 Bond Insurance Policy .............................................19 [TO COME].....................................................................19 THE DISTRICT ..............................................................19 General.....................................................................19 Historical Assessed Values ......................................20 Major Property Ownership.......................................21 Delinquency History ................................................22 Direct and Overlapping Debt ...................................23 Estimated Assessed Value-to-Lien Ratios ...............25 THE CITY OF LAKE ELSINORE.................................26 SPECIAL RISK FACTORS............................................26 The Bonds are Limited Obligations of the
District...............................................................26 The Special Taxes are Not Personal Obligations
of the Owners....................................................27 Potential Early Redemption of Bonds from
Prepayments......................................................27 Risks of Real Estate Secured Investments
Generally...........................................................27 Concentration of Ownership ....................................27 Insufficiency of Special Taxes.................................27 Billing of Special Taxes...........................................29 Non-Cash Payments of Special Taxes .....................29 Bankruptcy and Foreclosure Delays ........................29 FDIC/Federal Government Interests in Properties...31
Direct and Overlapping Debt ...................................32 Natural Disasters......................................................32 Property Insurance....................................................34 Hazardous Substances..............................................34 Cumulative Burden of Parity Taxes and Special
Assessments......................................................35 Litigation with Respect to Community Facilities
Districts.............................................................35 Proposition 218 ........................................................36 No Acceleration........................................................37 Limited Secondary Market.......................................37 Ballot Initiatives.......................................................37 Limitations on Remedies..........................................38 Cybersecurity ...........................................................38 Loss of Tax Exemption ............................................38 [Risks Associated with Bond Insurance] .................38 CONCLUDING INFORMATION..................................39 Underwriting ............................................................39 Municipal Advisor....................................................39 Legal Opinion; Legal Matters..................................39 Tax Matters ..............................................................40 No Litigation ............................................................41 Ratings......................................................................41 Continuing Disclosure..............................................42 Miscellaneous...........................................................43 APPENDIX A—SUMMARY OF CERTAIN
PROVISIONS OF THE INDENTURE .................A-1
APPENDIX B—FORM OF BOND COUNSEL
OPINION ...............................................................B-1 APPENDIX C—FORM OF CONTINUING
DISCLOSURE AGREEMENT..............................C-1
APPENDIX D—INFORMATION CONCERNING
DTC........................................................................D-1 APPENDIX E—AMENDED AND RESTATED RATE

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

CONCERNING THE CITY OF LAKE

ELSINORE AND THE COUNTY OF
RIVERSIDE ...........................................................F-1 [APPENDIX G—SPECIMEN MUNICIPAL BOND
INSURANCE POLICY........................................G-1] 1 4920-1683-8817v5/022042-0054
$19,435,000
COMMUNITY FACILITIES DISTRICT NO. 2016-2 OF THE

CITY OF LAKE ELSINORE (CANYON HILLS)
2026 SPECIAL TAX REFUNDING BONDS

INTRODUCTION
Summary
This Official Statement is provided to furnish certain information in connection with the issuance and sale by Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) (the “District”) of $19,435,000* aggregate principal amount of Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) 2026 Special Tax Refunding Bonds (the “Bonds”).

The Bonds will be issued pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 et seq. of the Government Code of the State of California (the “CFD Act”), and a Bond Indenture, dated as of June 1, 2026 (the “Indenture”), by and between the District and Wilmington Trust, National Association, as trustee (the “Trustee”). Capitalized terms that are used in this Official Statement and not defined have the meanings which are ascribed thereto in Appendix A.

The Bonds are being issued to: (i) finance certain public improvements; (ii) together with other available funds, to refund the outstanding Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) Special Tax Bonds, Series 2018 (the “2018 Bonds”) and the outstanding Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) Special Tax Bonds, Series 2022 (the “2022 Bonds”); [(iii) to pay the premium for a Municipal Bond Debt Service Reserve Insurance Policy (the “Reserve Policy”) to be issued by [Insurer] (the “Insurer”) for deposit in the Reserve Account; and (iv) to pay certain costs of issuance of the Bonds, including the premium for a Municipal Bond Insurance Policy (the “Policy”) insuring the Bonds maturing on September 1 of the years 20___ through 20___, inclusive (collectively, the “Insured Bonds”), to be issued by the Insurer concurrently with the issuance of the Bonds].

See the caption “THE REFUNDING PLAN.”
The Bonds are limited obligations of the District payable from Net Taxes (as such term is defined under the caption “SECURITY FOR THE BONDS—Payment of the Bonds—General”) which are derived from the levy of Special Taxes on certain taxable property within the District and from certain funds held by the Trustee under the Indenture. See the caption “THE DISTRICT” for information related to the property within the District subject to the lien of the Special Taxes.

The District was formed on December 13, 2016, for the purpose of financing a portion of certain public improvements within the City of Lake Elsinore (the “City”), a general law city organized and existing under the laws of the State of California. The District contains approximately 166 gross acres and approximately 72 net taxable acres, and is located in the southeastern portion of the City, north of Railroad Canyon Road and to the west of Canyon Lake. The property within the District was developed by Pardee Homes, a California corporation (“Pardee Homes”) into a neighborhood known as “Westridge.” Westridge was the eighth phase of the master-planned community in the City known as “Canyon Hills.” The property within the District contains 516 residential units, and community parks and other open space. The final building permit for a single family home within the District was issued in 2022 and the land within the District is fully developed. See the caption “THE DISTRICT.”

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

SPECIAL OBLIGATIONS OF THE DISTRICT, PAYABLE SOLELY FROM THE NET TAXES AND THE 
Preliminary, subject to change.
2 4920-1683-8817v5/022042-0054
FUNDS PLEDGED THEREFOR UNDER THE INDENTURE. NEITHER THE FAITH AND CREDIT NOR

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

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

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

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

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

Reserve Account
A Reserve Account for the Bonds has been established pursuant to the Indenture. The Reserve Requirement for the Bonds, as of the date of issuance of the Bonds, equals $_____. The Reserve Requirement on the date the Bonds are issued will be satisfied at the time of issuance of the Bonds by the deposit of the Reserve Policy in the stated amount of the Reserve Requirement. Subject to the limitations set forth in the Indenture, the Trustee may draw upon the Reserve Policy to pay the principal of, including sinking fund 3 4920-1683-8817v5/022042-0054
payments, and interest on the Bonds when due in the event that the moneys in the Special Tax Fund are insufficient therefor. See the caption “SECURITY FOR THE BONDS—Repayment of the Bonds—Reserve Account of the Special Tax Fund.”
In the event of a draw on the Reserve Policy or the failure by the Insurer to honor a draw request, the District has no obligation to replenish the Reserve Account with cash or to provide an alternate reserve policy.

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

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

THE REFUNDING PLAN
The Bonds are being issued in order to provide funds to defease and refund in full the 2018 Bonds and the 2022 Bonds, which are described in the following tables. The 2018 Bonds and 2022 Bonds were issued to finance capital improvements within the District.
4 4920-1683-8817v5/022042-0054
TABLE 1
2018 BONDS
Principal
Payment Date
(September 1)
CUSIP®†
(50963N)
Principal
Amount Interest Rate
Redemption
Price Redemption Date
2026 NV7 $ 250,000 5.00% 102% September 1, 2026
2027 NW5 285,000 3.000 102 September 1, 2026
2028 NX3 315,000 3.000 102 September 1, 2026
2029 NY1 350,000 5.000 102 September 1, 2026
2030 NZ8 390,000 5.000 102 September 1, 2026
2031 PA1 435,000 5.000 102 September 1, 2026
2032 PB9 480,000 5.000 102 September 1, 2026
2033 PC7 530,000 3.375 102 September 1, 2026
2034 PD5 575,000 3.500 102 September 1, 2026
2035 PE3 620,000 3.500 102 September 1, 2026
2036 PF0 670,000 5.000 102 September 1, 2026
2037 PG8 730,000 5.000 102 September 1, 2026
2038 PH6 795,000 3.625 102 September 1, 2026
2043* PJ2 5,045,000 3.000 102 September 1, 2026
2048* PK9 7,315,000 3.000 102 September 1, 2026
TOTAL $18,785,000

* Term Bonds.
2018 Bonds. Under an Escrow Agreement (2018 Bonds), dated as of June 1, 2026 (the “2018 Bonds Escrow Agreement”), by and between the District and Wilmington Trust, National Association, as escrow agent (the “Escrow Agent”), the District will deliver a portion of the proceeds of the Bonds which, together with moneys held in certain funds related to the 2018 Bonds, will be deposited by the Escrow Agent in the escrow fund established under the 2018 Bonds Escrow Agreement (the “2018 Bonds Escrow Fund”).

Sufficiency of the deposits in the 2018 Bonds Escrow Fund for such purposes will be verified by Causey Public Finance LLC, Denver, Colorado (the “Verification Agent”). Assuming the accuracy of such computations, as a result of the deposit and application of funds as provided in the 2018 Bonds Escrow Agreement, the 2018 Bonds will be defeased pursuant to the provisions of the indenture under which they were issued as of the date of issuance of the Bonds.

The Escrow Agent will invest a portion of the amounts deposited in the 2018 Bonds Escrow Fund in federal securities as set forth in the 2018 Bonds Escrow Agreement. From the moneys on deposit in the 2018 Bonds Escrow Fund and the investment earnings thereon, the Escrow Agent will pay: (i) the regularly scheduled principal of and interest on the outstanding 2018 Bonds maturing on September 1, 2026 (the “2018 Bonds Redemption Date”); and (ii) on the 2018 Bonds Redemption Date, the redemption price on the principal of the outstanding 2018 Bonds maturing after the 2018 Bonds Redemption Date, plus interest with respect thereto accrued through the 2018 Bonds Redemption Date, with a premium of 2%. 
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© CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. None of the District, the Underwriter or their agents or counsel assume responsibility for the accuracy of such numbers. 5 4920-1683-8817v5/022042-0054
Upon the issuance of the Bonds, the Verification Agent will deliver a report on the mathematical accuracy of certain computations based upon certain information and assertions provided to it by the Underwriter relating to the adequacy of the moneys deposited in the 2018 Bonds Escrow Fund to pay: (i) the principal of and interest on the outstanding 2018 Bonds maturing on the Redemption Date; and (ii) on the Redemption Date, the principal of the outstanding 2018 Bonds maturing after the Redemption Date, plus interest with respect thereto accrued through the Redemption Date, without premium.

The amounts held by the Escrow Agent in the 2018 Bonds Escrow Fund are pledged solely to the payment of the outstanding 2018 Bonds. Neither the funds deposited in the 2018 Bonds Escrow Fund, nor any interest thereon, will be available for the payments of principal of or interest on the Bonds.

TABLE 2
2022 BONDS
Principal Payment
Date (September 1) Principal Amount Interest Rate Redemption Price Redemption Date 2048*
$1,385,070 4.890% 102% September 1, 2026

* Term Bond.
2022 Bonds. Under an Escrow Agreement (2022 Bonds), dated as of June 1, 2026 (the “2022 Bonds Escrow Agreement”), by and between the District and Wilmington Trust, National Association, as escrow agent (the “Escrow Agent”), the District will deliver a portion of the proceeds of the Bonds which, together with moneys held in certain funds related to the 2022 Bonds, will be deposited by the Escrow Agent in the escrow fund established under the 2022 Bonds Escrow Agreement (the “2022 Bonds Escrow Fund”).

Sufficiency of the deposits in the 2022 Bonds Escrow Fund for such purposes will be verified by the Verification Agent. Assuming the accuracy of such computations, as a result of the deposit and application of funds as provided in the 2022 Bonds Escrow Agreement, the 2022 Bonds will be defeased pursuant to the provisions of the indenture under which they were issued as of the date of issuance of the Bonds.

The Escrow Agent will invest a portion of the amounts deposited in the 2022 Bonds Escrow Fund in federal securities as set forth in the 2022 Bonds Escrow Agreement. From the moneys on deposit in the 2022 Bonds Escrow Fund and the investment earnings thereon, the Escrow Agent will pay: (i) the regularly scheduled principal of and interest on the outstanding 2022 Bonds maturing on September 1, 2026 (the “2022 Bonds Redemption Date”); and (ii) on the 2022 Bonds Redemption Date, the redemption price on the principal of the outstanding 2022 Bonds maturing after the 2022 Bonds Redemption Date, plus interest with respect thereto accrued through the 2022 Bonds Redemption Date, with a premium of 2%.

The amounts held by the Escrow Agent in the 2022 Bonds Escrow Fund are pledged solely to the payment of the outstanding 2022 Bonds. Neither the funds deposited in the 2022 Bonds Escrow Fund, nor any interest thereon, will be available for the payments of principal of or interest on the Bonds.

TABLE 3

ESTIMATED SOURCES AND USES
The estimated sources and uses of funds with respect to the Bonds and amounts transferred by the District to the Escrow Agent are set forth in the following table:

Preliminary, subject to change.
6 4920-1683-8817v5/022042-0054
Sources of Funds(1)
Principal Amount of Bonds $
[Plus/less] [Net] [Original Premium/Discount]
Plus Other Available Moneys(2)
Total Sources $
Uses of Funds(1)
Transfer to Escrow Agent for Deposit in 2018 Bonds Escrow Fund $ Transfer to Escrow Agent for Deposit in 2022 Bonds Escrow Fund Underwriter’s Discount
Construction Fund(3)
Costs of Issuance(4)
Total Uses $

(1) Rounded to nearest dollar.
(2) Includes moneys on deposit in funds and accounts related to the 2018 Bonds and the 2022 Bonds. (3) Represents moneys used to pay the costs of certain capital facilities, including, but not limited to, __________ serving the District.
(4) Includes legal fees, Municipal Advisor fees, printing fees, Trustee fees, Escrow Agent fees, Special Tax Consultant fees, Verification Agent fees, premiums for the Policy and the Reserve Policy and other Costs of Issuance.

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

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

Interest on any Bond will be paid to the person whose name appears in the Bond Register as the Owner of such Bond as of the close of business on the Record Date. Such interest will be paid by check of the Trustee mailed on the applicable Interest Payment Date by first class mail, postage prepaid, to such Bondowner at his or her address as it appears on the Bond Register. In addition, upon a request in writing received by the Trustee on or before the applicable Record Date from an Owner of $1,000,000 or more in principal amount of the Bonds or of any issue of Parity Bonds, payment will be made on the Interest Payment 7 4920-1683-8817v5/022042-0054
Date by wire transfer in immediately available funds to an account designated in writing by such Owner.

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

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

Redemption
Optional Redemption. The Bonds with stated maturities on or after September 1, 20__ are subject to redemption prior to their respective stated maturities, as a whole or in part, as directed by the District in a written request provided to the Trustee at least 35 days (or such lesser number of days acceptable to the Trustee in the sole discretion of the Trustee, such notice for the convenience of the Trustee) prior to redemption, by lot within each maturity in integral multiples of $5,000, on September 1, 20__ or any date thereafter, at a redemption price equal to the principal amount thereof plus accrued interest thereon to the date fixed for redemption, without premium.

Mandatory Sinking Fund Redemption. The Bonds maturing on September 1, 20___ (the “Term Bonds”) will be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account, on September 1, 20____ and September 1, 20___, in accordance with the schedule of Sinking Fund Payments set forth below. The Term Bonds so called for redemption will be selected by the Trustee by lot and redeemed at a redemption price for each redeemed 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___
Redemption Date
(September 1) Principal Amount
*

* Maturity.

If, during the Fiscal Year immediately preceding one of the redemption dates specified above, the District purchases Bonds, then at least 45 days prior to the redemption date the District will notify the Trustee as to the principal amount purchased and the amount of Bonds so purchased will be credited at the time of purchase, to the extent of the full principal amount thereof, to reduce such upcoming Sinking Fund Payment for the Bonds so purchased. All Bonds purchased pursuant to the foregoing provision will be cancelled pursuant to the Indenture.

In the event of a partial optional redemption or extraordinary redemption of the Bonds, each of the remaining Sinking Fund Payments for such Bonds, as described above, will be reduced, as nearly as practicable, on a pro rata basis, in integral multiples of $5,000, as directed by the District. 
Preliminary, subject to change.
8 4920-1683-8817v5/022042-0054
Extraordinary Redemption of the Bonds from Special Tax Prepayments. The Bonds are subject to extraordinary redemption as a whole, or in part by lot, on any Interest Payment Date, and will be redeemed by the Trustee, from Prepayments deposited to the Redemption Account pursuant to the Indenture, plus amounts transferred from the Reserve Account pursuant to the Indenture, among maturities as directed in writing by the District, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date:

Redemption Date Redemption Price
Any Interest Payment Date from (and including) September 1, 20__ through (and including) March 1, 20__
103%
September 1, 20__20__ and March 1, 20__ 102
September 1, 20__ and March 1, 20__ 101
September 1, 20__ and any Interest Payment Date thereafter 100 The District will notify the Trustee of any extraordinary redemption at least 45 days prior to the Interest Payment Date on which such redemption shall occur.

See the caption “SPECIAL RISK FACTORS—Potential Early Redemption of Bonds from Prepayments.” No property owner has prepaid its Special Taxes to date.

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

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

Notice of Redemption
When Bonds are due for redemption under the Indenture, subject in the case of optional redemption to its receipt of timely notice from the District of its election to exercise optional redemption, the Trustee will give notice, in the name of the District, of the redemption of such Bonds; provided, however, that a notice of a redemption to be made from other than from Sinking Fund Payments will be conditioned on there being on deposit on the redemption date sufficient money to pay the redemption price of the Bonds or Parity Bonds to be redeemed. Such notice of redemption will: (a) specify the CUSIP numbers (if any) and the maturity date or dates of the Bonds selected for redemption; (b) state the date fixed for redemption and surrender of the Bonds to be redeemed; (c) state the redemption price; (d) state the place or places where the Bonds are to be redeemed; (e) in the case of Bonds to be redeemed only in part, state the portion of such Bond that is to be redeemed; (f) state the date of issue of the Bonds as originally issued; (g) state the rate of interest borne by each Bond being redeemed; and (h) state any other descriptive information needed to identify accurately the Bonds being redeemed as specified by the Trustee (the Trustee having no duty to state such additional descriptive information). Such notice will further state that on the date fixed for redemption, there will become due and payable on each Bond or portion thereof called for redemption the principal thereof, together with any 9 4920-1683-8817v5/022042-0054
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 least 30 days but no more than 45 days prior to the redemption date, the Trustee will mail a copy of such notice, by first class mail, postage prepaid, to the respective Owners thereof at their addresses appearing on the Bond Register. The actual receipt by the Owner of any Bond or the original purchaser of any Bond of notice of such redemption is not a condition precedent to redemption, and neither the failure to receive nor any defect in such notice will affect the validity of the proceedings for the redemption of such Bonds or the cessation of interest on the redemption date. A certificate by the Trustee that notice of such redemption has been given as provided in the Indenture will be conclusive as against all parties, and the Owner is not entitled to show that he or she failed to receive notice of such redemption. Redemption notices may state that no representation is made as to the accuracy or correctness of the CUSIP numbers printed therein or on the Bonds.

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

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

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

Effect of Redemption
Notice of redemption having been duly given, as provided in the Indenture, and the amount necessary for the redemption having been made available to the Trustee for that purpose and being available to the Trustee therefor on the date fixed for such redemption:
(a) the Bonds, or portions thereof, designated for redemption will, on the date fixed for redemption, become due and payable at the redemption price thereof as provided in the Indenture, anything in the Indenture or in the Bonds to the contrary notwithstanding; (b) upon presentation and surrender thereof at the Principal Office of the Trustee, the redemption price of such Bonds will be paid to the Owners thereof; (c) as of the redemption date, the Bonds, or portions thereof so designated for redemption will be deemed to be no longer Outstanding and such Bonds, or portions thereof, will cease to bear further interest; and
(d) as of the date fixed for redemption, no Owner of any of the Bonds or portions thereof so designated for redemption will be entitled to any of the benefits of the Indenture, or to any other rights, except 10 4920-1683-8817v5/022042-0054
with respect to payment of the redemption price and interest accrued to the redemption date from the amounts so made available.

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

TABLE 4

DEBT SERVICE SCHEDULE
Year Ending
September 1 Principal Interest
Total Debt
Service
2026 $ - $ $
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
Total $ $ $

Source: Underwriter.
11 4920-1683-8817v5/022042-0054

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

Definitions. The following definitions are applicable to the above-described pledge. “Administrative Expenses” means the administrative costs with respect to the calculation and collection of the Special Taxes, including all attorneys’ fees and other costs related thereto, the fees and expenses of the Trustee, any fees and related costs for credit enhancement for the Bonds or any Parity Bonds which are not otherwise paid as costs of issuance, any costs related to the District’s compliance with state and federal laws requiring continuing disclosure of information concerning the Bonds and the District, and any other costs otherwise incurred by the City staff on behalf of the District in order to carry out the purposes of the District as set forth in the Resolution of Formation and any obligation of the District under the Indenture. “Administrative Expenses Cap” means an amount equal to $35,000 for the first Bond Year, increasing by 2% per annum for each subsequent Bond Year, or such lesser amount as may be designated in written instructions from an Authorized Representative of the City. “Rate and Method” means the Rate and Method of Apportionment of Special Tax for the District approved by the qualified electors of the District on December 13, 2016 and recorded on December 14, 2016 as Document No. 2016-0558198, and set forth in Appendix E. “Net Taxes” means Special Taxes less amounts set aside to pay Administrative Expenses not to exceed the Administrative Expenses Cap.
“Ordinance” means Ordinance No. 2017-1366 adopted by the legislative body of the District on January 10, 2017, providing for the levying of the Special Tax. “Prepayments” means any amounts paid by the District to the Trustee and designated by the District as a prepayment of Special Taxes for one or more parcels in the District made in accordance with the Rate and Method.
“Resolution of Formation” means Resolution No. 2016-143 adopted by the City Council of the City on December 13, 2016, pursuant to which the City formed the District. 12 4920-1683-8817v5/022042-0054
“Special Taxes” means the taxes authorized to be levied by the District on property within the District in accordance with the Ordinance, the Resolution of Formation, the CFD Act, the Rate and Method, and the voter approval obtained at the December 13, 2016 special election in the District, including any scheduled payments and any Prepayments thereof, and the net proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and penalties and interest thereon.

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

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

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

Interest Account and Principal Account. The principal of (including any Sinking Fund Payment) and interest due on the Bonds and any Parity Bonds until maturity, other than principal due upon optional or extraordinary redemption, will be paid by the Trustee from the Principal Account and the Interest Account of the Special Tax Fund, respectively. For the purpose of assuring that the payment of principal of (including any Sinking Fund Payment) and interest on the Bonds and any Parity Bonds will be made when due, after making a transfer to the Administrative Expenses Account as described above, at least one Business Day prior to each March 1 and September 1, the Trustee will make the following transfers from the Special Tax Fund first to the Interest Account and then to the Principal Account; provided, however, that to the extent that deposits have been made in the Interest Account or the Principal Account from the proceeds of the sale of an issue of the Bonds, any Parity Bonds, or otherwise, the transfer from the Special Tax Fund need not be made; and 13 4920-1683-8817v5/022042-0054
provided, further, that, if amounts in the Special Tax Fund (exclusive of the Reserve Account) are inadequate to make the foregoing transfers, then any deficiency will be made up by an immediate transfer from the Reserve Account:
(a) To the Interest Account, an amount such that the balance in the Interest Account one Business Day prior to each Interest Payment Date is equal to the installment of interest due on the Bonds and any Parity Bonds on said Interest Payment Date and any installment of interest due on a previous Interest Payment Date that remains unpaid. Moneys in the Interest Account will be used for the payment of interest on the Bonds and any Parity Bonds as the same become due.
(b) To the Principal Account, an amount such that the balance in the Principal Account one Business Day prior to September 1 of each year is equal to the principal payment (including any Sinking Fund Payment) due on the Bonds and any Parity Bonds maturing on such September 1 and any principal payment due on a previous September 1 which remains unpaid. Moneys in the Principal Account will be used for the payment of the principal (including any Sinking Fund Payment) of such Bonds and any Parity Bonds as the same become due at maturity.

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

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

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

Reserve Account of the Special Tax Fund. There will be maintained in the Reserve Account of the Special Tax Fund the Reserve Policy in an amount equal to the Reserve Requirement. The Reserve Policy will be drawn upon solely for the purpose of paying the principal of, including Sinking Fund Payments, and interest on the Bonds when due in the event that the moneys in the Interest Account and the Principal Account of the Special Tax Fund are insufficient therefor or moneys in the Redemption Account of the Special Tax Fund are insufficient to make a Sinking Fund Payment when due, and for the purpose of making any required transfer to the Rebate Fund pursuant to the Indenture upon written direction from the District. If the amounts in the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund are insufficient to pay the principal of, including Sinking Fund Payments, or interest on any Bonds when due, or amounts in the Special Tax Fund are insufficient to make transfers to the Rebate Fund when required, the Trustee will draw 14 4920-1683-8817v5/022042-0054
upon the Reserve Policy for deposit in the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund or the Rebate Fund, as applicable, moneys necessary for such purposes.

The Insurer has made a commitment to issue, simultaneously with the initial issuance of the Bonds, the Reserve Policy in the amount of the Reserve Requirement for deposit in the Reserve Account, effective as of the date of issuance of the Bonds. Under the terms of the Reserve Policy, the Insurer will unconditionally and irrevocably guarantee to pay the scheduled payments of principal of and interest on the Bonds that becomes due for payment but shall be unpaid by reason of nonpayment by the District, to the extent set forth in the Reserve Policy and in the Indenture.
“Reserve Requirement” means, as of the date of calculation: (a) with respect to the Bonds, an amount equal to the least of: (i) Maximum Annual Debt Service with respect to the Bonds; (ii) 125% of average Annual Debt Service on the then Outstanding Bonds; or (iii) ten percent (10%) of the initial outstanding principal amount of the Bonds; provided that the Reserve Requirement shall never exceed the amount established pursuant to the foregoing calculation at the time of issuance of the Bonds; and (b) with respect to such Parity Bonds, an amount equal to the least of: (i) Maximum Annual Debt Service with respect to such Parity Bonds; (ii) 125% of average Annual Debt Service on such Parity Bonds; or (iii) ten percent (10%) of the initial outstanding principal amount of such Parity Bonds; provided that the Reserve Requirement shall never exceed the amount established pursuant to the foregoing calculation at the time of issuance of such Parity Bonds.

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

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

The District has made certain covenants in the Indenture for the purpose of ensuring that the current maximum Special Tax rates and method of collection of the Special Taxes are not altered in a manner that would impair the District’s ability to collect sufficient Special Taxes to pay debt service on Bonds and Administrative Expenses when due, including the following:
(1) Beginning in Fiscal Year 2025-26 and continuing so long as any Bonds or Parity Bonds are Outstanding, the legislative body of the District covenants to levy the Special Tax in an amount sufficient, together with other amounts on deposit in the Special Tax Fund and available for such purpose, to pay: (i) the principal of and interest on the Bonds when due; (ii) the Administrative Expenses; and (iii) any amounts required to replenish the Reserve Account of the Special Tax Fund and any reserve account established in connection with the issuance of such Parity Bonds to the Reserve Requirement. The District further covenants that it will take no actions that would discontinue or cause the discontinuance of the Special Tax levy or the District’s authority to levy the Special Tax for so long as the Bonds are Outstanding. (2) To the maximum extent that the law permits it to do so, the District will not initiate proceedings to reduce the maximum Special Tax rates for the District. (3) In the event that any initiative is adopted by the qualified electors in the District which purports to reduce the maximum Special Tax below the levels specified in the Indenture or to limit the power of the District to levy the Special Taxes for the purposes set forth in the Indenture, the District will commence and pursue legal action in order to preserve its ability to comply with such covenants. 15 4920-1683-8817v5/022042-0054
Although the Special Taxes constitute liens on taxable parcels within the District, such taxes do not constitute a personal indebtedness of the owners of such property within the District. Moreover, other liens for taxes and assessments already exist on the property located within the District and other such liens could come into existence in the future in certain situations without the consent or knowledge of the City or the landowners therein. See Table 9 under the caption “THE DISTRICT” for a description of the direct and overlapping tax and assessment debt levied within the District. See also the captions “SPECIAL RISK FACTORS—Direct and Overlapping Debt” and “SPECIAL RISK FACTORS—Cumulative Burden of Parity Taxes and Special Assessments.” There is no assurance that property owners will be financially able to pay the annual Special Taxes or that they will pay such taxes even if they are financially able to do so, all as more fully described under the caption “SPECIAL RISK FACTORS—The Special Taxes are Not Personal Obligations of the Owners.”
Rate and Method of Apportionment of Special Taxes
General. The District is legally authorized and has covenanted to cause the levy of the Special Taxes in an amount determined according to a methodology, i.e., the Rate and Method, which the Board and the electors within the District have approved. The Rate and Method apportions the total amount of Special Taxes to be collected among the taxable parcels in the District as more particularly described below.

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

Assignment to Land Use Categories. 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, Taxable Property not classified as Approved Property, Undeveloped Property, Provisional Undeveloped Property that are not Exempt Property pursuant to the provisions of the Rate and Method and 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 March 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 March 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 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 16 4920-1683-8817v5/022042-0054
an increase in the levy of Special Tax on 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 Assigned Special Tax.

If additional moneys are needed to satisfy the Special Tax Requirement, the Special Tax shall 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 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. 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 shall 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 shall 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 for which an occupancy permit for private residential use has been issued 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% per Fiscal Year.

Within the District, all residential property will be classified as Developed Property for the Fiscal Year 2026-27 Special Tax levy.

Annual Debt Service for the Bonds has been structured so that the levy of the Assigned Special Tax on Residential Property that is Developed Property, and the levy of the Maximum Special Tax on Residential Property and Non-Residential Property that is Approved Property, 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 pursuant to the Rate and Method.

Table 5 below sets forth the Assigned Special Tax for Developed Property, the Maximum Special Tax for Approved Property, the projected Fiscal Year 2026-27 Special Tax levy and the percent of such levy based on land use type.
17 4920-1683-8817v5/022042-0054
TABLE 5
COMMUNITY FACILITIES DISTRICT NO. 2016-2 OF THE

CITY OF LAKE ELSINORE (CANYON HILLS)
ASSIGNED SPECIAL TAX RATES FOR FISCAL YEAR 2026-27
Land Use Type
Residential Floor
Area (sq. ft.)
Assigned Special
Tax Rates
Fiscal Year
2026-27(1)
Special Tax
Levy Rates
Fiscal Year
2026-27
Percent of
Assigned
Rate
No. of
Units
Aggregate
Estimated
Special Taxes
Fiscal Year
2026-27
Percent of
Total
Residential Property < 1,175 $1,616 $ 0 0.0% 0 $ 0 0.0% Residential Property 1,175-1,324 1,760 0 0.0 0 0 0.0
Residential Property 1,325-1,549 1,993 0 0.0 0 0 0.0
Residential Property 1,550-1,649 2,137 0 0.0 0 0 0.0
Residential Property 1,650-1,749 2,279 0 0.0 0 0 0.0
Residential Property 1,750-1,949 2,361 2,151 91.1 102 219,359 17.1 Residential Property 1,950-2,199 2,441 2,224 91.1 109 242,398 18.9 Residential Property 2,200-2,449 2,728 2,485 91.1 96 238,590 18.6 Residential Property 2,450-2,699 2,872 2,616 91.1 64 167,426 13.1 Residential Property 2,700-2,949 3,017 2,748 91.1 91 250,086 19.5 Residential Property > 2,950 3,302 3,008 91.1 54 162,445 12.7 Non-Residential Property N/A 0 0 0.0 0 0 0.0
Total 516 $ 1,280,303 100.0%

(1) Includes estimated Administrative Expenses of $35,000.

Source: Spicer Consulting Group, LLC.

Prepayment of Special Taxes. The Annual Special Tax obligation for an Assessor’s Parcel may be prepaid in full, or in part, provided that the terms set forth under the Rate and Method are satisfied. 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 E. Prepayments of Special Taxes will be applied to effect an extraordinary redemption of Bonds and Parity Bonds. See “THE BONDS — Redemption — Extraordinary Redemption of the Bonds from Special Tax Prepayments.” Estimated Debt Service Coverage. 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.

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.

Covenant to Foreclose
The net proceeds received following a judicial foreclosure sale of land within the District resulting from a landowner’s failure to pay the Special Taxes when due are included within the Special Taxes from which principal of and interest on the Bonds and any Parity Bonds are paid under the Indenture. 18 4920-1683-8817v5/022042-0054
Pursuant to Section 53356.1 of the CFD Act, in the event of any delinquency in the payment of any Special Tax or receipt by the District of Special Taxes in an amount which is less than the Special 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 CFD 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.

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—Bankruptcy and Foreclosure Delays.” Moreover, no assurances can be given that the real property subject to foreclosure and sale at a judicial foreclosure sale will be sold or, if sold, that the net proceeds of such sale will be sufficient to pay any delinquent Special Tax installment. Although the CFD Act authorizes the District to cause such an action to be commenced and diligently pursued to completion, the CFD Act does not impose on the District or the City any obligation to purchase or acquire any lot or parcel of property sold at a foreclosure sale if there is no other purchaser at such sale. The CFD Act provides that, in the case of a delinquency, the Special Tax will have the same lien priority as is provided for ad valorem taxes.

No Parity Bonds Except for Refunding Purposes
The District has covenanted in the Indenture that, except as described below, it will not issue any other obligations payable, as to principal or interest, from the Net Taxes which have, or purport to have, any lien upon the Net Taxes superior to or on a parity with the lien of the Bonds, other than Parity Bonds. Under the Indenture, the District may at any time after the issuance and delivery of the Bonds issue Parity Bonds payable from the Net Taxes and other amounts deposited in the Special Tax Fund (other than in the Administrative Expense Account therein) and secured by a lien and charge upon such amounts equal to the lien and charge securing the Outstanding Bonds and any other Parity Bonds theretofore issued under the Indenture or under any Supplemental Indenture; provided, however, that Parity Bonds may only be issued for the purpose of refunding all or a portion of the Bonds or any Parity Bonds then Outstanding and the conditions precedent in the Indenture are satisfied, including the requirement that the issuance of such Parity Bonds will result in a reduction of Annual Debt Service on the Bonds and any Parity Bonds to be Outstanding following the issuance of such Parity Bonds.
19 4920-1683-8817v5/022042-0054
See Appendix A under the caption “DEFEASANCE AND PARITY BONDS—Conditions for the Issuance of Parity Bonds and Other Additional Indebtedness” for a description of the conditions under which Parity Bonds may be issued.

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

Prepayment of Special Taxes
A property owner may prepay its Special Taxes and thereby cause a partial redemption of the Bonds and any Parity Bonds. See the captions “THE BONDS—Redemption—Extraordinary Redemption of the Bonds from Special Tax Prepayments” and “SPECIAL RISK FACTORS—Potential Early Redemption of Bonds from Prepayments.”
Under no circumstances will the Special Tax levied against any Assessor’s Parcel of Residential Property for which an occupancy permit for private residential use has been issued be increased as a consequence of delinquency or default by the owner of any other Assessor’s Parcel within the District by more than 10% per Fiscal Year.

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

The following information is not a complete summary of the terms of the Policy and reference is made to Appendix G for a specimen of the Policy.

Bond Insurance Policy
[TO COME]

THE DISTRICT
General
The District contains approximately 166 gross acres and approximately 72 net taxable acres, and is located in the southeastern portion of the City, north of Railroad Canyon Road and to the west of Canyon Lake. The property within the District was developed Pardee Homes into a neighborhood known as “Westridge.” Westridge was the eighth phase of the master-planned community in the City known as “Canyon Hills.” The property within the District contains 516 residential units, and community parks and other open 20 4920-1683-8817v5/022042-0054
space. The final building permit for a single family home within the District was issued in 202__ and the land within the District is fully developed.

Two neighborhood parks – Summit Park and Bark Park – are located within the District and serve the Westridge community. Summit Park includes amenities such as a swimming pool, basketball court, barbeques and picnic tables. Bark Park is a dog park with fenced areas, shade structures and benches.

The District was formed by the City pursuant to the CFD Act and constitutes a governmental entity separate and apart from the City. The CFD Act was enacted by the California legislature 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 CFD 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 CFD 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.

Historical Assessed Values
The following table sets forth assessed values within the District for the current and prior four Fiscal Years.

TABLE 6
COMMUNITY FACILITIES DISTRICT NO. 2016-2 OF THE

CITY OF LAKE ELSINORE (CANYON HILLS)

ASSESSED VALUATION HISTORY
FISCAL YEARS 2021-22 THROUGH 2025-26
Fiscal
Year
Land Assessed
Valuation
Structure Assessed
Valuation
Total Assessed
Valuation
2021-22 $48,119,396 $139,036,134 $187,155,530
2022-23 48,481,463 148,471,303 196,952,766
2023-24 52,591,673 184,445,980 237,037,653
2024-25 54,319,471 190,647,563 244,967,034
2025-26 57,238,772 196,461,797 253,700,569

Source: County of Riverside Assessor’s Office; Spicer Consulting Group, LLC. 21 4920-1683-8817v5/022042-0054
Major Property Ownership
The table below sets forth the property owner concentration for the District. No single individual owner of residential property owns more than four parcels or will be responsible for more than 1% of the Special Taxes levied within the District, with the largest property owner being responsible for

0.68% of the Special Taxes levied within the District in Fiscal Year 2026-27.

TABLE 7
COMMUNITY FACILITIES DISTRICT NO. 2016-2 OF THE

CITY OF LAKE ELSINORE (CANYON HILLS)
ESTIMATED VALUE-TO-LIEN FOR TOP 10 TAXPAYERS
Property Owner Parcels
Projected
Fiscal Year
2026-27
Special Tax
Percent of
Projected Total
Fiscal Year
2026-27
Special Tax
Fiscal Year
2026-27
Assessed Value
Estimated
Overlapping Land
Secured Bonded
Debt(1)
All Other
Overlapping Debt
Total
Outstanding
Debt
Value-to-Lien
Ratio
DELACERRA 1997 FAMILY TRUST DATED
01/17/1997
4 $ 8,676 0.68% $ 1,470,734 $ 131,695 $ 11,434 $ 143,129 10.28:1 INDIVIDUAL OWNER 2 4,636 0.36 996,984 70,373 6,110 76,483 13.04:1 INDIVIDUAL OWNER 1 3,008 0.23 510,224 45,665 3,965 49,630 10.28:1 INDIVIDUAL OWNER 1 3,008 0.23 704,958 45,665 3,965 49,630 14.20:1 INDIVIDUAL OWNER 1 3,008 0.23 508,630 45,665 3,965 49,630 10.25:1 INDIVIDUAL OWNER 1 3,008 0.23 543,426 45,665 3,965 49,630 10.95:1 INDIVIDUAL OWNER 1 3,008 0.23 518,783 45,665 3,965 49,630 10.45:1 INDIVIDUAL OWNER 1 3,008 0.23 469,365 45,665 3,965 49,630 9.46:1 INDIVIDUAL OWNER 1 3,008 0.23 656,500 45,665 3,965 49,630 13.23:1 INDIVIDUAL OWNER 1 3,008 0.23 506,329 45,665 3,965 49,630 10.20:1 Subtotal 14 $ 37,377 2.92% $ 6,885,933 $ 567,388 $ 49,262 $ 616,650 11.17:1 ALL OTHER INDIVIDUAL PROPERTY OWNERS 502 1,242,925 97.08 246,814,636 18,867,612 1,638,143 20,505,755 12.04:1 Totals 516 $1,280,303 100.00% $ 253,700,569 $19,435,000 $1,687,405 $ 21,122,405 12.01:1

(1) Excludes all other overlapping Bonded indebtedness applicable within the District.

Source: County of Riverside Assessor’s Office; Spicer Consulting Group, LLC. 22 4920-1683-8817v5/022042-0054
Delinquency History
The table below summarizes the historical Special tax levies and delinquencies for the District for the current and last five Fiscal Years.

TABLE 8
COMMUNITY FACILITIES DISTRICT NO. 2016-2 OF THE

CITY OF LAKE ELSINORE (CANYON HILLS)

SPECIAL TAX LEVIES, DELINQUENCIES AND DELINQUENCY RATES FISCAL YEARS 2020-21 THROUGH 2025-26
Delinquencies as of May 1, 2026
Fiscal
Year
Amount
Levied
Parcels
Levied
Parcels
Delinquent
Amount
Delinquent
Percent
Delinquent
2020-21 $1,114,180 456 0 $ 0 0.00%
2021-22 1,136,464 456 1 1,105 0.10
2022-23 1,217,099 457 1 2,255 0.19
2023-24 1,324,285 457 1 2,300 0.17
2024-25 1,350,771 516 1 2,346 0.17
2025-26(1) 1,377,786 516 10 17,579 1.28

Source: County of Riverside Assessor’s Office; Spicer Consulting Group, LLC. 23 4920-1683-8817v5/022042-0054
Direct and Overlapping Debt
Set forth below is the statement of direct and overlapping debt (the “Debt Report”) for the District which excludes the issuance of the Bonds and the refunding of the 2018 Bonds and the 2022 Bonds. The table indicates that the assessed value of the developed property within the District is $253,700,569 for Fiscal Year 2025-26. The Debt Report has been derived from data assembled and reported to the District by Spicer Consulting Group, LLC. None of the District, the City or the Underwriter has independently verified the information in the Debt Report, and such parties do not guarantee its completeness or accuracy. [REMAINDER OF PAGE LEFT BLANK]

24 4920-1683-8817v5/022042-0054
TABLE 9
COMMUNITY FACILITIES DISTRICT NO. 2016-2 OF THE

CITY OF LAKE ELSINORE (CANYON HILLS)

DIRECT AND OVERLAPPING DEBT
AS OF MARCH 1, 2026
I. Fiscal Year 2025-26 Assessed Value (1) $253,700,569
II. Land Secured Bond Indebtedness
Outstanding Direct and
Overlapping Bonded Debt Type Issued Outstanding % Applicable Parcels in
the
District (3)
Amount
Applicable
Lake Elsinore RAD 2021-1 AD $10,390,000 $ 4,270,000 10.066% 516 $ 429,813 CFD 98-1 Temescal Valley Project CFD 25,890,013 18,866,328 6.666 516 1,257,593 City of Lake Elsinore, CFD No. 2016-2, 2026A CFD 23,126,480 19,435,000 100.000 516 19,435,000 Total Land Secured Bonded Debt (2) $ 21,122,405*
Authorized but Unissued Direct and
Overlapping Indebtedness Type Authorized Unissued % Applicable Parcels in
the
District (3)
Amount
Applicable
Lake Elsinore AD 93-1 AD $10,390,000 $ 0 10.066% 516 $ 0 CFD 98-1 Temescal Valley Project CFD 25,890,013 0 6.666 516 0 City of Lake Elsinore, CFD No. 2016-2, 2026A CFD 27,500,000 4,373,520 100.000 516 4,373,520 Total Unissued Land Secured Indebtedness (2) $ 4,373,520 TOTAL OUTSTANDING AND UNISSUED LAND SECURED INDEBTEDNESS $ 25,495,925* III. General Obligation Bond Indebtedness
Outstanding Direct and
Overlapping Bonded Debt Type Issued Outstanding % Applicable Parcels in
the
District (3)
Amount
Applicable
Metropolitan Water Debt Service GO $850,000,000 $ 16,045,000 0.154% 516 $ 24,675 Mt. San Jacinto Junior College GO 295,000,000 228,220,000 0.170 516 387,170 Lake Elsinore Unified School District Debt Service GO 98,915,000 82,670,000 1.271 516 1,051,092 Total Outstanding General Obligation Bonded Debt (2) $ 1,462,937 Authorized but Unissued Direct and
Overlapping Indebtedness Type Authorized Unissued % Applicable Parcels in
the
District (3)
Amount
Applicable
Metropolitan Water Debt Service GO $850,000,000 $ 0 0.154% 516 $ 0 Mt. San Jacinto Junior College GO 295,000,000 0 0.170 516 0 Lake Elsinore Unified School District Debt Service GO 303,000,000 204,085,000 1.271 516 2,594,799 Total Unissued General Obligation Indebtedness (2) $ 2,594,799 TOTAL OUTSTANDING AND UNISSUED GENERAL OBLIGATION INDEBTEDNESS $ 4,057,736 TOTAL OF ALL OUTSTANDING DIRECT AND OVERLAPPING BONDED DEBT $ 22,585,342* TOTAL OF ALL OUTSTANDING DIRECT AND UNISSUED DIRECT OVERLAPPING INDEBTEDNESS $ 29,553,661 IV. Ratios to Appraisal Value
Outstanding Land Secured Bonded Debt 12.01:1*
Total Outstanding Bonded Debt 11.23:1*

* Preliminary, subject to change.
(1) Assessed Value is based on the information provided from the Riverside County Assessor’s Equalized Roll as of January 1, 2025 and may not accurately reflect true market value.
(2) Spicer Consulting Group is not aware of any additional bonded debt for parcels in the District for the referenced Fiscal Year 2025-26 Issued, Outstanding and Authorized amounts are for the District. (3) All parcels have been subdivied into 516 individual parcels and have all been classified as developed property per the Rate and Method of Apportionment.
25 4920-1683-8817v5/022042-0054
Estimated Assessed Value-to-Lien Ratios
The table below sets forth the estimated assessed value-to-lien ratios for Developed Property within the District by various ranges based upon the principal amount of the Bonds and overlapping land-secured special tax and assessment debt.

TABLE 10
COMMUNITY FACILITIES DISTRICT NO. 2016-2 OF THE

CITY OF LAKE ELSINORE (CANYON HILLS)
VALUE-TO-LIEN STRATIFICATION FOR ALL PROPERTY*
Value-to-Lien
Category
No. of Parcels
of Developed
Property
% of
Developed
Property
Assessed
Value (1)
% of
Assessed
Value
Estimated
Fiscal Year
2026-27 Levy
Percent Share
of Estimated
Fiscal Year
2026-27 Levy The Bonds (2)
Percent Share
of the Bonds
All Other
Overlapping
Debt
Aggregate
Value-to-Lien
Less than 9.00:1 (3) 3 0.58% $ 754,475 0.30% $ 7,980 0.62% $ 121,140 0.62% $ 10,518 5.73:1

9.00:1 to 11.00:1 224 43.41 97,880,392 38.58 573,768 44.81 8,709,793 44.81 756,211 10.34:1

11.01:1 to 13.00:1 123 23.84 57,893,757 22.82 301,876 23.58 4,582,486 23.58 397,865 11.62:1

13.01:1 to 15.00:1 92 17.83 54,040,391 21.30 230,051 17.97 3,492,180 17.97 303,202 14.24:1 Greater than 15.00:1(3) 74 14.34 43,131,554 17.00 166,627 13.01 2,529,400 13.01 219,610 15.69:1 Totals 516 100.00% $253,700,569 100.00% $1,280,303 100.00% $19,435,000 100.00% $1,687,405 12.01:1

* Preliminary, subject to change.
(1) Assessed Value is based on the information provided from the Riverside County Assessor’s Equalized Roll as of January 1, 2025 and may not accurately reflect true market value. (2) Responsibility of the par amount has been allocated based on the estimated Fiscal Year 2026-27 Special Tax levy, with development status as of March 1, 2026, and preliminary bond sizing as provided by the Underwriter.
(3) The minimum value to lien in the less than 9.00:1 category is 4.35:1. The maximum value to lien in the Greater than 15.00:1 category is 17.05:1.

Source: County of Riverside Assessor’s Office; Spicer Consulting Group, LLC. 26 4920-1683-8817v5/022042-0054

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

The City 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 39 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.

The City operates under a council-manager form of government, with a five-member council. The City Council is responsible for, among other things, passing ordinances, adopting the budget, appointing committees, and hiring the City Manager. The City Manager is responsible for carrying out the policies and ordinances of the City Council, overseeing day-to-day City operations, and appointing the heads of various departments. The City Council is elected on a non-partisan basis. See Appendix F for certain demographic and economic information regarding the City.

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

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

Funds for the payment of the principal of and the interest on the Bonds are derived only from annual payments of Special Taxes. The amount of annual installments of Special Taxes that are collected could be insufficient to pay principal of and interest on the Bonds due to non-payment of such Special Taxes levied or due to insufficient proceeds received from a judicial foreclosure sale of land within the District following delinquency. The District’s legal obligations with respect to any delinquent Special Taxes are limited to:
(1) payments from the Reserve Account to the extent of funds and instruments on deposit therein; and (2) the institution of judicial foreclosure proceedings under certain circumstances with respect to any parcels for which Special Taxes are delinquent. See the caption “SECURITY FOR THE BONDS—Covenant to Foreclose.” The Bonds cannot be accelerated in the event of any default.

The obligation to pay Special Taxes does not constitute a personal obligation of the current or subsequent owners of the respective parcels which are subject to such liens. Enforcement of Special Tax payment obligations by the District is limited to judicial foreclosure in the Superior Court of California, County of Riverside. There is no assurance that any current or subsequent owner of a parcel that is subject to a Special Tax lien will be able to pay the amounts due or that such owner will choose to pay such amounts even though financially able to do so.
27 4920-1683-8817v5/022042-0054
The Special Taxes are Not Personal Obligations of the Owners An owner of a taxable parcel is not personally obligated to pay the Special Tax. Rather, the Special Tax is an obligation which is secured only by a lien against the taxable parcel. If the value of a taxable parcel is not sufficient, taking into account other liens imposed by public agencies, to secure fully the Special Tax, the District has no recourse against the owner and its only remedy is to pursue judicial foreclosure on the delinquent parcel. See the caption “SECURITY FOR THE BONDS—Covenant to Foreclose.” Potential Early Redemption of Bonds from Prepayments
Property owners within the District are permitted to prepay their Special Taxes at any time, and many owners have previously done so. Any additional prepayments of Special Taxes which are made after the date of issuance of the Bonds will result in a redemption of Bonds on the first March 1 or September 1 which is more than 30 days following the receipt of the prepayment. See the caption “THE BONDS—Redemption— Extraordinary Redemption of the Bonds from Special Tax Prepayments.” The resulting extraordinary redemption of Bonds that were purchased at a price greater than par could reduce the otherwise expected yield on such Bonds.

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 comparable residential property in the event of sale or foreclosure; (ii) changes in real estate tax rates and other operating expenses, government rules (including, without limitation, zoning laws and laws relating to threatened and endangered species and hazardous materials) and fiscal policies; and (iii) natural disasters (including, without limitation, earthquakes, fires and floods), which may result in uninsured losses.

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

Concentration of Ownership
No single individual owner of residential property owns more than two parcels or will be responsible for more than 1% of the Special Taxes levied within the District in Fiscal Year 2025-26, with the largest property owner responsible for 0.68% of the Special Taxes estimated to be levied within the District in Fiscal Year 2025-26. See the caption “THE DISTRICT—Major Property Ownership.” However, there may be subsequent transfers of ownership of the property within the District. Failure of the owners of property to pay the annual Special Taxes when due could result in a default in payments of the principal of and interest on the Bonds when due. Such risk may be greater or its consequence more severe when ownership is concentrated and may be expected to decrease as ownership is diversified.

Insufficiency of Special Taxes
Although the maximum amount of Special Taxes that may be levied in the District exceeds debt service due on the Bonds, the Special Taxes that are actually collected could be inadequate to make timely 28 4920-1683-8817v5/022042-0054
payment of debt service either because of nonpayment or because property becomes exempt from taxation as permitted in the Rate and Method.

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

In the event of significant delinquencies in the District causing a default in payment of debt service on the Bonds and depletion of all amounts and instruments on deposit in the Reserve Account, there would not be sufficient Special Tax Revenues to pay the full amount of annual debt service on the Bonds until the delinquent Special Taxes were collected through foreclosure action or otherwise. See the caption “— Bankruptcy and Foreclosure Delays” for a discussion of potential delays in foreclosure actions.

The CFD Act provides that, if any property within the District which is not otherwise exempt from the Special Tax is acquired by a public entity through a negotiated transaction, or by gift or devise, the Special Tax will continue to be levied on and enforceable against the public entity that acquired the property. In addition, the CFD Act provides that, if property which is subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property is to be treated as if it were a special assessment and be paid from the eminent domain award. The constitutionality and operation of these provisions of the CFD Act have not been tested in the courts.

If for any reason property which is subject to the Special Tax becomes exempt from taxation by reason of ownership by a nontaxable entity such as the federal government, or another public agency that asserts immunity from the Special Tax, subject to the limitation of the maximum Special Tax rates, the Special Taxes will be reallocated to the remaining properties within the District. This would result in the owners of such properties paying a greater amount of the Special Tax and could have an adverse effect on the timely payment of the Special Tax. Due to the problems of collecting taxes from public agencies, if a substantial portion of land within the District were to become owned by public agencies, collection of the Special Tax might become more difficult and could result in collections of the Special Tax which might not be sufficient to pay principal of and interest on the Bonds when due, and a default could occur with respect to the payment of such principal and interest. See the captions “—FDIC/Federal Government Interests in Properties” and “— Bankruptcy and Foreclosure” for a discussion of the policy of the Federal Deposit Insurance Corporation (the “FDIC”) regarding the payment of special taxes and assessments and limitations on the District’s ability to foreclose on the lien of the Special Taxes in certain circumstances.

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

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

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

Pursuant to Section 53321(d) of the Government Code of the State, the Special Tax levied against any parcel for which an occupancy permit for private residential use has been issued may not be increased as a consequence of delinquency or default by the owner of any other parcel within the District by more than 10% above the amount that would have been levied in such Fiscal Year had there never been any such delinquencies or defaults. Consequently, although the maximum Special Tax prescribed by the Rate and Method could be materially higher than the expected Special Tax levy in a given year, the Special Tax levy cannot be increased for residential property by more than 10% in such year. 29 4920-1683-8817v5/022042-0054
The levy of the Special Tax will rarely, if ever, result in a uniform relationship between the value of particular property and the amount of the levy of the Special Tax against such property. Thus, there will rarely, if ever, be a uniform relationship between the value of such property and the proportionate share of debt service on the Bonds, and certainly not a direct relationship.

Billing of Special Taxes
A special tax formula can result in a substantially heavier property tax burden being imposed upon properties within a community facilities district than elsewhere in a city or county, and this in turn can lead to problems in the collection of the special tax. In some community facilities districts (although not in the District), taxpayers have refused to pay the special tax and have commenced litigation challenging the special tax, the community facilities district and bonds issued by the community facilities district.

Under provisions of the CFD Act, the Special Taxes are to be billed to the properties within the District that were entered on the Assessment Roll of the County of Riverside Assessor by January 1 of the previous Fiscal Year. Such Special Tax installments are due and payable, and bear the same penalties and interest for non-payment, as do regular property tax installments. The Special Tax installment payments cannot be made separately from property tax payments. Therefore, the unwillingness or inability of a property owner to pay regular property tax bills may also indicate an unwillingness or inability to make regular property tax payments and installment payments of Special Taxes in the future. See the caption “SECURITY FOR THE BONDS—Covenant to Foreclose” for a discussion of the provisions that apply, and the procedures that the District is obligated to follow, in the event of delinquency in the payment of installments of Special Taxes.

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

The District has covenanted in the Indenture that it will not adopt any policy pursuant to Section 53341.1 of the CFD Act permitting the tender of Bonds in full or partial payment of any Special Taxes unless the District has first received a certificate from an Independent Financial Consultant that the acceptance of such a tender will not result in the District having insufficient Special Tax revenues to pay the principal of and interest on the Bonds when due.

Bankruptcy and Foreclosure Delays
Bankruptcy, insolvency and other laws generally affecting creditors’ rights could adversely impact the interests of owners of the Bonds in at least two ways. First, the payment of property owners’ taxes and the ability of the District to foreclose the lien of delinquent unpaid Special Taxes pursuant to its covenant to pursue judicial foreclosure proceedings set forth in the Indenture (see the caption “SECURITY FOR THE BONDS—Covenant to Foreclose”) may be limited by bankruptcy, insolvency or other laws generally affecting creditors’ rights (including the Soldiers and Sailors Civil Relief Act of 1940, which is discussed below) or by the laws of the State relating to judicial foreclosure. In addition, the prosecution of a foreclosure could be delayed for many reasons, including crowded local court calendars or lengthy procedural delays. 30 4920-1683-8817v5/022042-0054
Second, the United States Bankruptcy Code might prevent moneys on deposit in the Special Tax Fund from being applied to pay interest on the Bonds and/or to redeem Bonds if bankruptcy proceedings were brought by or against a landowner and if the court found that any of such landowner had an interest in such moneys within the meaning of Section 541(a)(1) of the United States Bankruptcy Code.

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

On July 30, 1992, the United States Court of Appeal, Ninth Circuit (the “Ninth Circuit”), issued its opinion in a bankruptcy case entitled In re Glasply Marine Industries (“Glasply”). In that case, the Ninth Circuit held that ad valorem property taxes levied by Snohomish County in the State of Washington after the date that the property owner filed a petition for bankruptcy were not entitled to priority over a secured creditor with a prior lien on the property. Although the court upheld the priority of unpaid taxes imposed before the bankruptcy petition, unpaid taxes imposed after the filing of the bankruptcy petition were declared to be “administrative expenses” of the bankruptcy estate, payable after all secured creditors. As a result, the secured creditor was able to foreclose on the property and retain all the proceeds of the sale except the amount of the pre-petition taxes.

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

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

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

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

Other laws generally affecting creditors’ rights or relating to judicial foreclosure may affect the ability to enforce payment of Special Taxes or the timing of enforcement of Special Taxes. For example, the Soldiers 31 4920-1683-8817v5/022042-0054
and Sailors Civil Relief Act of 1940 affords protections such as a stay in enforcement of the foreclosure covenant, a six-month period after termination of military service to redeem property sold to enforce the collection of a tax or assessment and a limitation on the interest rate on the delinquent tax or assessment to persons in military service if a court concludes that the ability to pay such taxes or assessments is materially affected by reason of such service.

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

The supremacy clause of the United States Constitution reads as follows: “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the contrary notwithstanding.”
The foregoing is generally interpreted to mean that, unless the United States Congress has otherwise provided, if a federal governmental entity owns a parcel that is subject to Special Taxes within the District but does not pay taxes and assessments levied on the parcel (including Special Taxes), the applicable State and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments.

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

FDIC. In the event that any financial institution making any loan which is secured by real property within the District is taken over by the FDIC, and prior thereto or thereafter the loan or loans go into default, resulting in ownership of the property by the FDIC, then the ability of the District to collect interest and penalties specified by State law and to foreclose the lien of delinquent unpaid Special Taxes may be limited.

The FDIC’s policy statement regarding the payment of state and local real property taxes (the “Policy Statement”) provides that property owned by the FDIC is subject to state and local real property taxes only if those taxes are assessed according to the property’s value, and that the FDIC is immune from real property taxes assessed on any basis other than property value. According to the Policy Statement, the FDIC will pay its property tax obligations when they become due and payable and will pay claims for delinquent property taxes as promptly as is consistent with sound business practice and the orderly administration of the institution’s affairs, unless abandonment of the FDIC’s interest in the property is appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law, to the extent that the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of 32 4920-1683-8817v5/022042-0054
fines or penalties and will neither pay nor recognize liens for such amounts. If any property taxes (including interest) on FDIC-owned property are secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay those claims. The Policy Statement further provides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC’s consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC’s consent.

The Policy Statement states that the FDIC generally will not pay non-ad valorem taxes, including special assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent that it purports to secure the payment of any such amounts. Special taxes imposed under the CFD Act and a special tax formula which determines the special tax due each year are specifically identified in the Policy Statement as being imposed each year and therefore covered by the FDIC’s federal immunity. The Ninth Circuit issued a ruling on August 28, 2001 in which it determined that the FDIC, as a federal agency, is exempt from CFD Act special taxes. With respect to property in the State that is owned by the FDIC on January 9, 1997 and that was owned by the Resolution Trust Company (the “RTC”) on December 31, 1995, or that became the property of the FDIC through foreclosure of a security interest held by the RTC on that date, the FDIC will continue the RTC’s prior practice of paying special taxes imposed pursuant to the CFD Act if the taxes were imposed prior to the RTC’s acquisition of an interest in the property. All other special taxes may be challenged by the FDIC.

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

Direct and Overlapping Debt
Neither the City nor the District have control over the amount of additional debt payable from taxes or assessments levied on all or a portion of the property within the District which may be incurred in the future by other governmental agencies having jurisdiction over all or a portion of the property within the District. Other public agencies may issue additional indebtedness on property within the District at any time. Furthermore, nothing prevents the owners of property within the District from consenting to or petitioning for the issuance of additional debt by other governmental agencies which would be secured by taxes on a parity with the Special Taxes or assessments which would be subordinate to the Special Taxes. Such consent may occur without the knowledge of the City or the District. To the extent that such indebtedness is payable from assessments, other special taxes levied pursuant to the CFD Act or taxes, such assessments, special taxes and taxes will be secured by liens on the property within the District.

Accordingly, the debt on the property within the District could increase, without any corresponding increase in the value of the property therein. The imposition of such additional indebtedness could reduce the value-to-lien ratio of property in the District and the willingness and ability of the property owners within the District to pay the Special Taxes when due. See the caption “—Cumulative Burden of Parity Taxes and Special Assessments.” Moreover, in the event of a delinquency in the payment of Special Taxes, no assurance can be given that the proceeds of any foreclosure sale of property with delinquent Special Taxes would be sufficient to pay the delinquent Special Taxes.

Natural Disasters
The market value of the property within the District, like all California communities, may be adversely affected by a variety of factors which may affect public and private improvements. Such additional 33 4920-1683-8817v5/022042-0054
factors include, without limitation, geologic conditions (such as earthquakes), topographic conditions (such as earth movements) and climatic conditions (such as droughts, fire hazard and floods).

With respect to geologic conditions, building codes require that some of these factors be taken into account in the design of private improvements of the parcels, and the County has adopted the Uniform Building Code standards with regard to seismic standards. Design criteria are established upon the basis of a variety of considerations and may change, leaving previously designed improvements unaffected by more stringent subsequently established criteria. In general, design criteria reflect a balance at the time of establishment between the present costs of protection and the future costs of lack of protection, based in part upon a present perception of the probability that the condition will occur and the seriousness of the condition should it occur. Consequently, neither the absence of nor the establishment of design criteria with respect to any particular condition means that the applicable governmental agency has evaluated the condition and has established design criteria in the situations in which such criteria are needed to preserve value, or has established such criteria at levels that will preserve value. To the contrary, the District expects that one or more of such conditions may occur and may result in damage to improvements of varying seriousness, that the damage may entail significant repair or replacement costs and that repair or replacement may never occur either because of the cost, because repair or replacement will not facilitate habitability or other use, or because other considerations preclude such repair or replacement. Under any of these circumstances, the actual value of the parcels may well depreciate or disappear, notwithstanding the establishment of design criteria for any such condition.

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.

In recent years, wildfires have caused extensive damage throughout the State, including within the County and the City. 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 particular, certain electrical operators in the State have seen their distribution/transmission lines cause billions of dollars in property damage and the loss of lives. In 2023, as in several prior years, for example, devastating wildfires burned in various communities in the State, causing wide-spread damage. In 2025, communities in Los Angeles County, including Pacific Palisades, Malibu and Altadena, experienced widespread devastation from wildfires causing losses of life, thousands of burned homes, and billions of dollars in property damage. Riverside County is also periodically subject to large-scale wildfires and is expected to be subject to wildfires in the future. In recent years, wildfires have burned hundreds of acres at a time and destroyed dozens of homes and structures in Riverside County. The District experience high winds known as Santa Ana winds which frequently accompany and magnify the intensity of wildfires. There is a risk of homes 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 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.

In 2024, the Airport Fire was a wildfire which burned approximately 23,526 acres in Orange and Riverside counties. The Airport Fire burned in the Santa Ana Mountains and resulted in the evacuation of approximately 6,000 residents of the City While no structures within the City were damaged as a result of such wildfire, nearby communities incurred property damage from the wildfire. No property in the City or the District were damaged by the Holy Fire or the Airport Fire. 34 4920-1683-8817v5/022042-0054
In March 2025, the California Department of Forestry and Fire Protection (“Cal Fire”) released an updated Fire Hazard Severity Zone map for the Southern California region. The Cal Fire Hazard Severity Zone maps evaluate fire hazard, which is defined as the likelihood and expected fire behavior over a 30 to 50- year period without considering mitigation measures such as home hardening, recent wildfire or fuel reduction efforts, as opposed to risk, which is the potential damage a fire can do to the area under existing conditions, accounting for any modifications such as fuel reduction projects, defensible space, and ignition resistant building construction. Pursuant to State law, the State Fire Marshal is mandated to classify the state responsibility areas where the state has financial responsibility for wildfire protection and prevention into Fire Hazard Severity Zones classified as “Moderate,” “High” or “Very High.” In areas designated as local responsibility areas, where local agencies have financial responsibility for wildfire protection and prevention, Cal Fire’s Fire Hazard Severity Zone maps make recommendations for the classification of Moderate, High or Very High Fire Hazard Severity Zones and the local agencies must adopt maps which either adopt Cal Fire’s recommendations or place the relevant areas in a higher classification. For more information on Cal Fire’s Fire Hazard Severity Zone maps, see the Cal Fire website. The District is located in an area which the Cal Fire 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 some or all of the District. As a result, a substantial portion of the property owners within some or all of the District may be unable or unwilling to pay the respective 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.

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

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

Hazardous Substances
A claim with regard to a hazardous substance on a parcel of land subject to any of the Special Taxes can result in a significant potential reduction in the value of the parcel. In general, the owners and operators of a parcel may be required by law to remedy conditions relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is well known, but State laws with regard to 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 because the prospective purchaser of such a parcel will, upon 35 4920-1683-8817v5/022042-0054
becoming the owner of such parcel, become obligated to remedy the condition just as the seller of such a parcel is obligated to remedy the condition.

Hazardous substance liabilities may arise in the future with respect to any of the parcels within the District resulting from the existence, currently, of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Additionally, such liabilities may arise from the method of handling such substance.

These possibilities could significantly affect the value of a parcel.

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

Cumulative Burden of Parity Taxes and Special Assessments Property within the District is subject to taxes imposed by public agencies that also have jurisdiction over the land within the District. See the caption “THE DISTRICT—Direct and Overlapping Debt.” The Special Taxes and any penalties thereon constitute a lien against the parcels of land on which they have been levied. Such lien is on a parity with all special taxes or assessments levied by other agencies and is co-equal to and independent of the lien for general property taxes, regardless of when they are imposed upon the same property.

Neither the City nor the District have control over the ability of other entities to issue indebtedness secured by ad valorem taxes, special taxes or assessments levied on all or a portion of the property within the District. In addition, the owners of the property within the District may, without the consent or knowledge of the City or the District, petition other public agencies to issue public indebtedness secured by ad valorem taxes, special taxes or assessments. The property within the District is subject to a number of overlapping tax and assessment liens, some of which secure outstanding indebtedness. See the caption “THE DISTRICT— Direct and Overlapping Debt.”
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 CFD 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 CFD Act, which generally provides that, if a special tax will not be apportioned in any tax year on residential property, the legislative body may provide that the vote 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.
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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 CFD 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 CFD Act, the proposed district included noncontiguous 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 CFD 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 CFD 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 CFD Act provides that any “action or proceeding to attack, review, set aside, void or annul the levy of a special tax…shall be commenced within 30 days after the special tax is approved by the voters.” Similarly, Section 53359 of the CFD Act provides that any action to determine the validity of bonds issued pursuant to the CFD Act 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 December 13, 2016. Based on Sections 53341 and 53359 of the CFD 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 B.

Proposition 218
An initiative measure commonly referred to as the “Right to Vote on Taxes Act” (the “Initiative”) was approved by the voters of the State of California at the November 5, 1996 general election. The Initiative added Article XIIIC and Article XIIID to the California Constitution. According to the “Title and Summary” of the Initiative prepared by the California Attorney General, the Initiative limits “the authority of local governments to impose taxes and property-related assessments, fees and charges.” The provisions of the Initiative continue to be interpreted by the courts. The Initiative could potentially impact the Special Taxes available to the Community Facilities Districts to pay the principal of and interest on the Bonds as described below.
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Among other things, Section 3 of Article XIII 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 Mello-Roos 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 Mello-Roos 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 Mello-Roos Act unless such legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt. On August 1, 1997, a bill was signed into law by the Governor of the State enacting Government Code Section 5854, which states that:

Section 3 of Article XIIIC of the California Constitution, as adopted at the November 5, 1996, general election, shall not be construed to mean that any owner or beneficial owner of a municipal security, purchased before or after that date, assumes the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of contractual rights protected by Section 10 of Article I of the United States Constitution.

Accordingly, although the matter is not free from doubt, it is likely that the Initiative has not conferred on the voters the power to repeal or reduce the Special Taxes if such reduction would interfere with the timely retirement of the Bonds.

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

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

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

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

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

Enforceability of the rights and remedies of the Owners of the Bonds, and the obligations incurred by the District, may become subject to the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or hereafter in effect, equity principles which may limit the specific enforcement under State law of certain remedies, the exercise by the United States of America of the powers delegated to it by the federal Constitution, the reasonable and necessary exercise, in certain exceptional situations, of the police powers inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose and the limitations on remedies against governmental entities in the State. See the captions “—Bankruptcy and Foreclosure Delays,” and “—FDIC/Federal Government Interests in Properties.”
Cybersecurity
The City, like many other public and private entities, 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.

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.
[Risks Associated with Bond Insurance]
[To come.]
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CONCLUDING INFORMATION
Underwriting
The Bonds are being purchased by Stifel, Nicolaus & Company, Incorporated (the “Underwriter”) pursuant to a Bond Purchase Agreement, dated the date hereof (the “Purchase Agreement”), by and between the Underwriter and the District. The Underwriter has agreed to purchase the Bonds at a price of $________ (being the aggregate principal amount thereof, [plus/less] a [net] original issue [premium/discount] of $______ and less an Underwriter’s discount of $_______). The 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 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.

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

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

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

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.

Legal Opinion; Legal Matters
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 & 40 4920-1683-8817v5/022042-0054
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.

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

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 taxexempt 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. 41 4920-1683-8817v5/022042-0054

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 TAXEXEMPT 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 (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 B.

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

Ratings
S&P Global Ratings (“S&P”) is expected to assign the Insured Bonds the rating of “___” based upon the delivery of the Policy by the Insurer at the time of issuance of the Insured Bonds. S&P has assigned the Bonds the underlying rating of “_____” without respect to the delivery of the Policy for the Insured Bonds.

There is also no assurance that the criteria required to achieve a rating on the Bonds will not change during the period that the Bonds remain outstanding. Any downward revision or withdrawal of such ratings may have an 42 4920-1683-8817v5/022042-0054
adverse effect on the market price of the Bonds. Such ratings reflect only the current views and current rating criteria of S&P (which views and rating criteria could change at any time), and an explanation of the significance of such ratings may be obtained from S&P. Generally, a rating agency bases its ratings on the information and materials that are furnished to it (which may include information and material from the City or the District that is not included in this Official Statement) and on investigations, studies and assumptions of its own.

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

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

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

Continuing Disclosure
Pursuant to a Continuing Disclosure Agreement, dated as of June 1, 2026 (the “Disclosure Agreement”), 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, 2026, 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 C — “FORM OF DISTRICT CONTINUING DISCLOSURE AGREEMENT.” 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 fiveyear 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 _____ [Update.] The City and its affiliated entities have made additional filings to provide certain of the previously omitted information.
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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.

Miscellaneous
All of the preceding summaries of the Indenture, applicable legislation, agreements and other documents are made subject to the provisions of such documents and legislation and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the District for further information in connection therewith.

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

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

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

COMMUNITY FACILITIES DISTRICT NO. 2016-2

OF THE CITY OF LAKE ELSINORE (CANYON
HILLS)
By:

City Manager of the City of Lake Elsinore
A-1
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APPENDIX A

SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
The following is a summary of selected provisions of the Indenture. This summary does not purport to be complete or definitive and is qualified in its entirety by reference to the full terms of the Indenture.

Purchasers of the Bonds are referred to the complete text of the Indenture, copies of which are available upon request from the Trustee.

B-1
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APPENDIX B

FORM OF BOND COUNSEL OPINION
Upon issuance of the Bonds, Stradling Yocca Carlson & Rauth LLP, Bond Counsel, proposes to render its final approving opinion in substantially the following form:
______, 2026
Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) Lake Elsinore, California
Re: $________ Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) 2026 Special Tax Refunding Bonds
Ladies and Gentlemen:

We have examined the Constitution and the laws of the State of California (the “State”), a certified record of the proceedings of the City of Lake Elsinore (the “City”) taken in connection with the formation of Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) (the “District”) and the authorization and issuance of the District’s 2026 Special Tax Refunding Bonds in the aggregate principal amount of $________ (the “Bonds”) and such other information and documents as we consider necessary to render this opinion. In rendering this opinion, we have relied upon certain representations of fact and certifications made by the City, the District, the initial purchaser of the Bonds and others. We have not undertaken to verify through independent investigation the accuracy of the representations and certifications relied upon by us.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Respectfully submitted,
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APPENDIX C

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

This Continuing Disclosure Agreement, dated as of June 1, 2026 (the “Disclosure Agreement”), is entered into by and between Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) (the “District”), and Spicer Consulting Group, LLC, as dissemination agent (the “Dissemination Agent”), in connection with the issuance by the District of its $______ 2026 Special Tax Refunding Bonds (the “Bonds”). The Bonds are being issued pursuant to a Bond Indenture, dated as of June 1, 2026 (the “Indenture”), by and between the District and Wilmington Trust, National Association, as trustee (the “Trustee”). The District and the Dissemination Agent hereby covenant and agree as follows:

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

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

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

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

Disclosure Representative. The term “Disclosure Representative” means the General Manager, the Chief Financial Officer/Treasurer or the Director of Financial Planning and Analytics of the City, or their designee, or such other officer or employee as the City shall designate in writing to the Dissemination Agent from time to time.

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

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

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

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

Insurer. The term “Insurer” means [Insurer].

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

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

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

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

Section 3. Provision of Annual Reports.
(a) Not later than February 15 of each year commencing February 15, 2027, 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. The filing of the Official Statement shall serve as the first Annual Report. 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 C-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 Annual Report shall contain or include by reference the following:
(a) Financial Statements. The audited financial statements of the District, if any have been prepared, for the most recent Fiscal Year of the District then ended. If the audited financial statements are being prepared and are not available by the time that the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain any available unaudited financial statements, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.

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

The financial statements of the City shall be filed to the extent that the District does not prepare audited financial statements, but the financial statements of the City shall not be deemed to be the financial statements of the District unless such audited financial statements contain specific information as to the District, its revenues, expenses and account balances. If the City’s audited financial statements contain specific information as to the District, its revenues, expenses and account balances, the District’s Annual Report shall contain or incorporate by reference the City’s audited financial statements. If the City’s audited financial statements contain specific information as to the District, its revenues, expenses and account balances, but are not available at the time required for filing, unaudited financial statements of the City that contain specific information as to the District, its revenues, expenses and account balances shall be submitted with the Annual Report and the City audited financial statements shall be submitted once available. (b) Financial and Operating Data.
(i) (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 status of any judicial foreclosure proceedings initiated by the District as a result of the delinquency in the payment of special taxes and a summary of the results of foreclosure sales, if available;
(iv) 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; (v) An update of Tables 6 and 10 in the Official Statement as of the last day of the most recent completed Fiscal Year of the District, or a more recent date but only as to the most recently C-4
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completed Fiscal Year, provided that such update need not include overlapping special tax, assessment or general obligation indebtedness; and
(vi) The principal amount of prepayments of the Special Taxes with respect to the District for the preceding Fiscal Year.

Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the District, the City or related public entities, which have been submitted to EMMA or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The District shall clearly identify each such other document so included by reference.

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

1. principal and interest payment delinquencies;

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

3. unscheduled draws on credit enhancements reflecting financial difficulties;

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

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

6. tender offers;

7. defeasances;

8. ratings changes;

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

10. bankruptcy, insolvency, receivership or similar proceedings.

Note: For the purposes of the event identified in subparagraph (10), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the District, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the District.

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

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

2. modifications to the rights of Bond holders;

3. Bond calls;

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

5. non-payment related defaults;

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

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

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

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

Section 7. Dissemination Agent. The District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The C-6
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Dissemination Agent appointed by the District may resign by providing thirty (30) days written notice to the District, and upon appointment of a new Dissemination Agent hereunder.

Section 8. Amendment.
(a) This Disclosure Agreement may be amended, by written agreement of the parties, without the consent of the Owners if all of the following conditions are satisfied: (1) such amendment is made in connection with a change in circumstances that arises from a change in legal (including regulatory) requirements, a change in law, or a change in the identity, nature or status of the District or the type of business conducted thereby; (2) this Disclosure Agreement as so amended would have complied with the requirements of the Rule as of the date of this Disclosure Agreement, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; (3) the District shall have delivered to the Dissemination Agent an opinion of a nationally recognized bond counsel or counsel expert in federal securities laws, addressed to the District, to the same effect as set forth in clause (2) above; (4) the District shall have delivered to the Dissemination Agent an opinion of nationally recognized bond counsel or counsel expert in federal securities laws, addressed to the District, to the effect that the amendment does not materially impair the interests of the Owners or Beneficial Owners; and (5) the District shall have delivered copies of such opinion and amendment to the Participating Underwriter. (b) This Disclosure Agreement also may be amended by written agreement of the parties upon obtaining consent of the Owners in the same manner as provided in the Indenture for amendments to the Indenture with the consent of the Owners of the Bonds; provided that the conditions set forth in clauses (1), (2), (3) and (5) of section 8(a) have been satisfied.
(c) To the extent that any amendment to this Disclosure Agreement results in a change in the type of financial information or operating data provided pursuant to this Disclosure Agreement, the first Annual Report provided thereafter shall include a narrative explanation of the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided. (d) If an amendment is made to the basis on which financial statements are prepared, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Such comparison shall include a quantitative and, to the extent reasonably feasible, qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information.

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

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

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

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

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

If to the District: Community Facilities District 2016-2 (Canyon Hills) of the City of Lake Elsinore
c/o City of Lake Elsinore
130 S. Main Street
Lake Elsinore, California, 92530
Attention: City Manager
If to the Dissemination Agent: Spicer Consulting Group, LLC 41880 Kalmia Street, Suite 145
Murrieta, CA 92562
If to the Participating Underwriter: Stifel, Nicolaus & Company, Incorporated 2121 Avenue of the Stars, Suite 2150
Los Angeles, CA 90067
If to the Insurer: [Insurer]
Section 14. Severability. In case any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof.

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

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

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

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

COMMUNITY FACILITIES DISTRICT NO. 2016-2 OF

THE CITY OF LAKE ELSINORE (CANYON HILLS)
By:

Name:

Title:

SPICER CONSULTING GROUP, LLC, as Dissemination
Agent
By:

Name:

Title:

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APPENDIX D

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

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

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

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

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

To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts D-2
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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.

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.

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APPENDIX E

RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES
The following sets forth the Rate and Restated Rate and Method of Apportionment for the levy and collection of Special Taxes of Community Facilities District No. No. 2016-2 of the City of Lake Elsinore (the “District”). A Special Tax shall be levied on and collected in the District each Fiscal Year, in an amount determined through the application of the Rate and Restated Rate and Method of Apportionment described below. All of the real property in the District, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent, and in the manner herein provided.

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. 2016-2 (Canyon Hills) (“CFD No. 2016-2”). 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. 2016-2 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. 2016-2: 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 A 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. 2016-2 or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No. 2016-2 or any designee thereof of complying with disclosure requirements of the City, CFD No. 2016-2 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. 2016-2 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. 2016-2 for any other administrative purposes of CFD No. 2016-2, 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 E-2
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being levied, and (ii) that have not been issued a building permit on or before March 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.
“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 within CFD No. 2016-2 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. 2016-2” means Community Facilities District No. 2016-2 (Canyon Hills) established by the City under the Act.
“CFD No. 2003-2 IA B” means City of Lake Elsinore Community Facilities District No. 2003-2 IA B (Canyon Hills).
“CFD No. 2003-2 IA B Annual Special Tax” means the Annual Special Tax actually levied for CFD No. 2003-2 IA B.
“City” means the City of Lake Elsinore.

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“City Council” means the City Council of the City of Lake Elsinore, acting as the Legislative Body of CFD No. 2016-2, or its designee.
“Condominium Plan” means a condominium plan as set forth in the California Civil Code, Section 1352.
“County” means the County of Riverside.
“Developed Property” means all Assessor’s Parcels of Taxable Property 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) a Building Permit for new construction was issued on or before March 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.
“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 1352 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 the maximum Special Tax, determined in accordance with Section D below, that can be levied by CFD No. 2016-2 in any Fiscal Year on any 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 of Taxable Property for which a building permit(s) was 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 for Special Tax 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, Provisional Undeveloped Property, that the ratio of the actual Special Tax levy per Acre to the Maximum E-4
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Special Tax per Acre is the same for all Assessor’s Parcels of Undeveloped Property, Provisional Undeveloped Property.
“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 on an Assessor’s Parcel.
“Special Tax” means any of the special taxes authorized to be levied within CFD No. 2016-2 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 establish or 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) the collection or accumulation of funds for the acquisition or construction of facilities authorized by CFD No. 2016-2 provided that the inclusion of such amount does not cause an increase in the levy of Special Tax on Undeveloped Property as set forth in Step 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. 2016-2, 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 2017-2018 and for each subsequent Fiscal Year, upon determination by the CFD Administrator that the Assessor’s Parcels within CFD No. 2016-2 are no longer required to pay the CFD No. 2003-2 IA B Annual Special Tax, the City Council shall levy Special Taxes on all Taxable Property, up to the applicable Maximum Special Tax to fund the Special Tax Requirement; provided that in no event shall the City Council levy the Special Tax on the Taxable Property in the District so long as such Taxable Property is subject to the levy of Special Taxes by CFD 2003-2 IA B.

C. ASSIGNMENT TO LAND USE CATEGORY FOR SPECIAL TAX
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Each Fiscal Year, beginning with Fiscal Year 2017-2018, each Assessor’s Parcel within CFD No. 2016-2 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 NonResidential 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.

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 Property 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 Property shall be subject to an Assigned Special Tax. The Assigned Special Tax applicable to an Assessor's Parcel of Developed Property for Fiscal Year 2017-2018 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 1,175 sq. ft $1,352.47

2. Single Family Residential Property RU 1,175 sq. ft to 1,324 sq. ft $1,472.54

3. Single Family Residential Property RU 1,325 sq. ft to 1,549 sq. ft $1,667.82

4. Single Family Residential Property RU 1,550 sq. ft to 1,649 sq. ft $1,787.89

5. Single Family Residential Property RU 1,650 sq. ft to 1,749 sq. ft $1,906.65

6. Single Family Residential Property RU 1,750 sq. ft to 1,949 sq. ft $1,975.26

7. Single Family Residential Property RU 1,950 sq. ft to 2,199 sq. ft $2,042.55

8. Single Family Residential Property RU 2,200 sq. ft to 2,449 sq. ft $2,282.70

9. Single Family Residential Property RU 2,450 sq. ft to 2,699 sq. ft $2,402.77

10. Single Family Residential Property RU 2,700 sq. ft to 2,949 sq. ft $2,524.16

11. Single Family Residential Property RU Greater than 2,949 sq. ft $2,762.99

12. Multifamily Property RU N/A $791.69

13. Non-Residential Property Acre N/A $6,597.39
On each July 1, commencing July 1, 2018, 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.

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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 be $2,483 per unit. This Backup Special Tax has been established based on the land use configurations shown on the Final Map. 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 $17,307 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 $17,307 per Acre.

The Backup Special Tax shall not apply to Multifamily Residential Property, or NonResidential Property.

On each July 1, commencing July 1, 2018, 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 $17,307 per Acre.

On each July 1, commencing July 1, 2018, 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 $17,307 multiplied by the Acreage of such Assessor’s Parcel.

On each July 1, commencing July 1, 2018, 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
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Commencing Fiscal Year 2017-2018 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 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 on each Assessor's Parcel of Developed Property whose 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 102.01 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 102.01 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 102.01 Acres will be classified as Provisional Undeveloped Property, and will be subject to Special Tax pursuant to Step Five in Section E.

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G. PREPAYMENT OF SPECIAL TAX
The following additional definitions apply to this Section G:
“CFD Public Facilities” means $19,195,434 expressed in 2017 dollars, which shall increase by the Construction Inflation Index on July 1, 2018, 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. 2016-2, 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.
“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 under CFD No. 2016-2.
“Construction Inflation Index” means the annual percentage change in the Engineering NewsRecord Building Cost Index for the city of Los Angeles, 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 city of Los Angeles.
“Future Facilities Costs” means the CFD Public Facilities minus public facility costs available to be funded through existing construction or escrow accounts or 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 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 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):

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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.

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 or Property Owner’s Association 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”).

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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 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
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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 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 Amount for the Assessor’s Parcel and that a portion of the Special Tax obligation equal to the remaining percentage (1.00 - F) of Special Tax obligation will continue 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 2057-2058 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. 2016-2 Bonds have been paid; (ii) all authorized facilities of CFD No. 2016-2 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. 2016-2 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. 2016-2 may collect Special Tax 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.

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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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Exhibit A
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APPENDIX F

INFORMATION CONCERNING THE CITY OF LAKE ELSINORE

AND COUNTY OF RIVERSIDE
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 Description
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 39 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 historic population of the City, the County and the State is shown below.

POPULATION ESTIMATES
City of Lake Elsinore, Orange County and the State of California 2021-2025(1)
Year City of Lake Elsinore
County of
Riverside State of California
2021 71,038 2,423,069 39,369,530
2022 72,025 2,435,510 39,179,680
2023 72,714 2,467,690 39,228,444
2024 73,079 2,491,037 39,420,663
2025 73,783 _2,495,640 39,529,101

(1) January 1 data.

Source: California State Department of Finance, Demographic Research Unit., E-4 Population Estimates for Cities, Counties, and the State, 2011-2020, with 2010 Census Benchmark and E-4 Population Estimates for Cities, Counties, and the State, 2021-2025, with 2020 Census Benchmark.

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Building Activity
The following tables summarize building permits and valuations for the City and the County during calendar years 2020 through 2024.

BUILDING PERMITS AND VALUATIONS
City of Lake Elsinore
2020-2024
(Dollars in Thousands)
2020 2021 2022 2023 2024
Valuation (In $000’s)
Residential $18,865 $57,331 $28,674 $59,916 $228,663
Nonresidential 8,588 48,549 25,889 38,932 12,251
Total Valuation(1) $27,453 $105,880 $54,563 $98,848 $240,914 New Dwelling Units (#)
Single-Family 17 31 36 37 540
Multifamily 6 154 6 18 4
Total: 23 185 42 55 544

(1) Total may not add up due to rounding.

Source: Construction Industry Research Board.

BUILDING PERMIT VALUATIONS
County of Riverside
2020-2024
(Dollars in Thousands)
2020 2021 2022 2023 2024
Valuation (In $000’s)
Residential $3,071,183 $2,262,642 $2,921,113 $3,306,086 $2,650,676 Non-residential 1,153,778 1,543,998 1,701,618 1,676,498 1,436,924 Total* $4,224,961 $3,806,640 $4,622,731 $4,982,584 $4,087,600 New Dwelling Units (#):

Single family 8,443 7,360 8,863 8,894 6,882
Multiple family 723 1,126 2,861 6,428 2,275
Total 9,166 8,486 11,724 15,322 9,157
* Totals may not add to sums because of rounding.

Source: Construction Industry Research Board.

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Employment
The following table summarizes the labor force, employment and unemployment figures over the past five years for the City, the County, the State of California and the United States.

CIVILIAN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT
City of Lake Elsinore, Orange County, and the State of California 2020-2024(1)
Labor Force Employment Unemployment
Unemployment
Rate
2020
City of Lake Elsinore 33,800 30,600 3,200 9.5%
County of Riverside 1,100,500 988,600 111,900 10.2
State of California 18,956,600 17,039,800 1,916,800 10.1 2021
City of Lake Elsinore 34,800 32,400 2,400 6.8%
County of Riverside 1,119,000 1,036,100 82,900 7.4
State of California 18,954,600 17,564,900 1,389,700 7.3 2022
City of Lake Elsinore 35,500 34,200 1,400 3.8%
County of Riverside 1,140,000 1,091,800 48,700 4.3
State of California 19,218,300 18,393,900 824,400 4.3
2023
City of Lake Elsinore 36,200 34,600 1,600 4.4%
County of Riverside 1,165,500 1,110,100 55,400 4.8
State of California 19,471,000 18,551,800 919,200 4.7
2024
City of Lake Elsinore 36,600 34,900 1,800 4.9%
County of Riverside 1,181,300 1,118,600 62,700 5.3
State of California 19,644,100 18,600,900 1,043,100 5.3

(1) Data is based on annual averages, unless otherwise specified, and is not seasonally adjusted.

Source: California Employment Development Department, Labor Force and Unemployment Rate for Cities and Census Designated Places. March 2024 Benchmark
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Industry
The following table summarizes employment figures by industry for the Riverside-San BernardinoOntario Metropolitan Statistical Area, which is located entirely within the County.

RIVERSIDE-SAN BERNARDINO-ONTARIO MSA

INDUSTRY EMPLOYMENT & LABOR FORCE - BY ANNUAL AVERAGE
2020 2021 2022 2023 2024
Civilian Labor Force 2,073,400 2,108,400 2,140,500 2,180,300 2,209,100 Civilian Employment 1,868,300 1,951,600 2,049,900 2,078,100 2,093,800 Civilian Unemployment 205,100 156,700 90,700 102,300 115,300 Civilian Unemployment Rate 9.9% 7.4% 4.2% 4.7% 5.2%
Total Farm 14,100 13,700 13,800 13,200 13,400
Total Nonfarm 1,495,800 1,575,100 1,660,200 1,680,000 1,699,600 Goods Producing 202,200 207,700 216,300 215,300 213,600 Mining and Logging 1,300 1,400 1,500 1,500 1,600
Construction 104,900 110,100 114,700 115,400 115,900
Manufacturing 96,000 96,100 100,000 98,500 96,100
Service Providing 1,293,700 1,367,400 1,443,900 1,464,700 1,486,000 Trade, Transportation and Utilities 406,900 443,200 464,900 457,900 455,700 Wholesale Trade 65,600 67,400 69,500 68,900 68,400
Retail Trade 168,800 177,000 181,000 183,000 182,300
Transportation, Warehousing and Utilities 172,500 198,800 214,400 206,000 205,000 Information 12,400 12,500 13,000 13,300 12,800
Financial Activities 44,100 45,200 46,000 44,900 44,100 Professional and Business Services 152,100 166,600 173,900 164,400 161,300 Educational and Health Services 248,800 254,300 267,900 287,800 312,500 Leisure and Hospitality 141,300 160,200 180,900 187,600 186,400 Other Services 40,200 43,600 47,400 49,400 51,000
Government 248,000 242,000 250,000 259,300 262,200
Total, All Industries 1,509,900 1,588,800 1,674,000 1,693,200 1,713,000

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 C.

Source: State of California, Employment Development Department, Industry Employment & Labor Force by Annual Average, March 2025 Benchmark..

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Largest Employers
The following table presents the largest employers in the County as of June 30, 2025.

LARGEST EMPLOYERS
County of Riverside
(as of June 30, 2025)
Rank Name of Business Employees Type of Business

1. County of Riverside 25,345 County Government

2. Amazon 14,317 Online Retailer

3. State of California 8,398 State Government

4. Wal-Mart 7,523 Supermarket

5. Riverside Unified School District 6,562 School District

6. Moreno Valley Unified School District 6,306 School District

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

8. Stater Brothers Market 5,145 Supermarket

9. University of California, Riverside 5,137 University

10. Eisenhower Medical Center 4,971 Medical Center

Source: County of Riverside Comprehensive Annual Financial Report for the year ending June 30, 2025.

The following table presents the largest employers in the City as of June 30, 2025.

LARGEST EMPLOYERS
City of Lake Elsinore
2025
Name of Business
Number of
Employees Type of Business
Lake Elsinore Unified School District 2,379 Education
M&M Framing 480 Services
Stater Bros. (3 stores) 330 Supermarket
Costco Wholesale 286 Retail
Walmart Superstore #2077 285 Retail
Lake Elsinore Hotel & Casino 248 Lodging & Casino
Riverside County – Department of Public
Social Services 211 Government Agency
Elsinore Valley Municipal Water District 181 Government Agency The Home Depot 160 Retail
City of Lake Elsinore 136 Public

Source: City of Lake Elsinore Comprehensive Annual Financial Report, Year Ended June 30, 2025.

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Income
The following tables show the personal income and per capita personal income for the County, State of California and United States from 2020 through 2024.

PERSONAL INCOME
County of Riverside, State of California, and United States 2020-2024
(Dollars in Thousands)
Year County of Riverside California United States
2020 $115,415 $2,770,489 $19,613,059
2021 126,651 3,019,216 21,484,168
2022 127,576 3,021,645 22,144,814
2023 133,563 3,182,779 23,577,208
2024 142,697 3,400,237 24,897,613

Source: U.S. Department of Commerce, Bureau of Economic Analysis.

PER CAPITA PERSONAL INCOME(1)
County of Riverside, State of California, and United States 2020-2024
Year County of Riverside California United States
2020 $47,600 $70,100 $59,151
2021 51,584 77,134 64,692
2022 51,449 77,196 66,298
2023 53,350 81,196 70,002
2024 56,404 86,232 73,204

(1) Per capita personal income is the total personal income divided by the total mid-year population estimates of the U.S.

Bureau of the Census. All dollar estimates are in current dollars (not adjusted for inflation).

Source: U.S. Department of Commerce, Bureau of Economic Analysis.

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Sales Taxes
The following table shows taxable transactions in Lake Elsinore by type of business during calendar years 2021 through 2025.

City of Lake Elsinore
Taxable Transactions
(Dollars in thousands)
2021 2022 2023 2024 2025
Motor Vehicle and Parts Dealers $ 167,802 $ 169,087 $ 160,329 $ 140,279 $ 135,373 Home Furnishings and Appliance Stores 41,506 40,225 44,767 50,743 45,203 Building Material and Garden Equipment
and Supplies Dealers
148,510 151,097 140,619 137,733 135,897
Food and Beverage Stores 85,038 97,499 98,234 95,898 115,568 Gasoline Stations 114,029 154,179 141,774 137,017 105,508 Clothing and Clothing Accessories Stores 44,928 44,366 42,303 38,797 39,444 General Merchandise Stores 93,014 93,343 91,789 89,229 83,270 Food Services and Drinking Places 212,309 233,098 251,190 257,866 260,442 Other Retail Group 146,858 146,147 137,737 106,726 102,569 Total Retail and Food Services $ 1,053,995 $ 1,129,042 $ 1,108,742 $ 1,054,229 $ 1,057,603 All Other Outlets $ 468,972 $ 542,017 $ 418,698 $ 428,270 $ 411,332 Total All Outlets $ 1,522,967 $ 1,671,059 $ 1,527,440 $ 1,482,559 $ 1,468,935

Source: California Department of Tax and Fee Administration, Taxable Sales – Cities by Type of Business (Taxable Table 4).

The history of taxable transactions in the County from 2021 through 2025 is shown in the following table.

TAXABLE SALES
County of Riverside
2021-2025
Year Total Permits
Total Outlets
Taxable Transactions
2021 264,439 $55,535,195,689
2022 265,660 62,117,152,865
2023 270,392 61,331,274,090
2024 280,169 60,826,952,633
2025 284,599 60,788,218,255

Source: California Department of Tax and Fee Administration, Taxable Sales – Counties by Type of Business (Taxable Table 3).

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[APPENDIX G
SPECIMEN MUNICIPAL BOND INSURANCE POLICY]
Stradling Yocca Carlson & Rauth
Draft of 5/12/26
4898-2354-5505v4/022042-0054

BOND INDENTURE
By and Between
COMMUNITY FACILITIES DISTRICT NO. 2016-2 OF THE CITY OF LAKE ELSINORE (CANYON HILLS)
and

WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Trustee
Relating to
$_________
COMMUNITY FACILITIES DISTRICT NO. 2016-2

OF THE CITY OF LAKE ELSINORE
(CANYON HILLS)
2026 SPECIAL TAX REFUNDING BONDS
Dated as of June 1, 2026
Table of Contents
Page
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ARTICLE I

DEFINITIONS
Section 1.1. Unless the context otherwise requires, the following terms shall have the following meanings: ......................................................................................................1

ARTICLE II

GENERAL AUTHORIZATION AND BOND TERMS
Section 2.1. Amount, Issuance, Purpose and Nature of Bonds and Parity Bonds...........................12 Section 2.2. Type and Nature of Bonds and Parity Bonds..............................................................12 Section 2.3. Equality of Bonds and Parity Bonds and Pledge of Net Taxes...................................13 Section 2.4. Description of Bonds; Interest Rates...........................................................................13 Section 2.5. Place and Form of Payment.........................................................................................15 Section 2.6. Form of Bonds and Parity Bonds ................................................................................15 Section 2.7. Execution and Authentication .....................................................................................16 Section 2.8. Bond Register ..............................................................................................................16 Section 2.9. Registration of Exchange or Transfer..........................................................................16 Section 2.10. Mutilated, Lost, Destroyed or Stolen Bonds or Parity Bonds.....................................17 Section 2.11. Validity of Bonds and Parity Bonds............................................................................17 Section 2.12. Book Entry System......................................................................................................18 Section 2.13. Initial Depository and Nominee ..................................................................................20

ARTICLE III

CREATION OF FUNDS AND APPLICATION OF PROCEEDS
Section 3.1. Creation of Funds; Application of Proceeds................................................................20 Section 3.2. Deposits to and Disbursements from Special Tax Fund..............................................22 Section 3.3. Administrative Expenses Account of the Special Tax Fund .......................................22 Section 3.4. Interest Account and Principal Account of the Special Tax Fund ..............................23 Section 3.5. Redemption Account of the Special Tax Fund............................................................23 Section 3.6. Reserve Account of the Special Tax Fund ..................................................................24 Section 3.7. Rebate Fund.................................................................................................................25 Section 3.8. Surplus Fund................................................................................................................28 Section 3.9. Costs of Issuance Fund ................................................................................................29 Section 3.10. Construction Fund .......................................................................................................29 Section 3.11. Investments..................................................................................................................29

ARTICLE IV

REDEMPTION OF BONDS AND PARITY BONDS
Section 4.1. Redemption of Bonds..................................................................................................31 Section 4.2. Selection of Bonds and Parity Bonds for Redemption ................................................32 Section 4.3. Notice of Redemption..................................................................................................33 Section 4.4. Partial Redemption of Bonds or Parity Bonds.............................................................34 Section 4.5. Effect of Notice and Availability of Redemption Money ...........................................34 Table of Contents
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ARTICLE V

COVENANTS AND WARRANTY
Section 5.1. Security........................................................................................................................35 Section 5.2. Covenants ....................................................................................................................35

ARTICLE VI

AMENDMENTS TO INDENTURE
Section 6.1. Supplemental Indentures or Orders Not Requiring Bondowner Consent ...................38 Section 6.2. Supplemental Indentures or Orders Requiring Bondowner Consent ..........................39 Section 6.3. Notation of Bonds or Parity Bonds; Delivery of Amended Bonds or Parity Bonds...........................................................................................................................40

ARTICLE VII

TRUSTEE
Section 7.1. Trustee .........................................................................................................................41 Section 7.2. Removal of Trustee .....................................................................................................42 Section 7.3. Resignation of Trustee.................................................................................................42 Section 7.4. Liability of Trustee ......................................................................................................42 Section 7.5. Merger or Consolidation..............................................................................................45

ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.1. Events of Default.........................................................................................................46 Section 8.2. Remedies of Owners....................................................................................................46 Section 8.3. Application of Revenues and Other Funds After Default ...........................................47 Section 8.4. Power of Trustee to Control Proceedings....................................................................48 Section 8.5. Appointment of Receivers...........................................................................................48 Section 8.6. Non-Waiver .................................................................................................................48 Section 8.7. Limitations on Rights and Remedies of Owners.........................................................48 Section 8.8. Termination of Proceedings.........................................................................................49 Section 8.9. Control by Bond Insurer Upon Default .......................................................................49

ARTICLE IX

DEFEASANCE AND PARITY BONDS
Section 9.1. Defeasance...................................................................................................................49 Section 9.2. Conditions for the Issuance of Parity Bonds and Other Additional Indebtedness ................................................................................................................51

ARTICLE X

MISCELLANEOUS
Section 10.1. Cancellation of Bonds and Parity Bonds.....................................................................53 Section 10.2. Execution of Documents and Proof of Ownership......................................................53 Section 10.3. Unclaimed Moneys......................................................................................................54 Table of Contents
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Section 10.4. Provisions Constitute Contract ....................................................................................54 Section 10.5. Future Contracts ..........................................................................................................54 Section 10.6. Further Assurances......................................................................................................55 Section 10.7. Severability..................................................................................................................55 Section 10.8. Notices.........................................................................................................................55 Section 10.9. Execution in Several Counterparts..............................................................................55 Section 10.10. OFAC Compliance ......................................................................................................55 EXHIBIT A FORM OF 2026 SPECIAL TAX REFUNDING BOND..........................................A-1 EXHIBIT B REQUISITION FOR DISBURSEMENT OF PROJECT COSTS............................B-1

4898-2354-5505v4/022042-0054

BOND INDENTURE
THIS BOND INDENTURE, dated as of June 1, 2026 (the “Indenture”), by and between COMMUNITY FACILITIES DISTRICT NO. 2016-2 OF THE CITY OF LAKE ELSINORE (CANYON HILLS) (the “District”) and WILMINGTON TRUST, NATIONAL ASSOCIATION, as trustee (the “Trustee”), governs the terms of the Bonds and any Parity Bonds issued in accordance herewith from time to time.

RECITALS
A. The City Council of the City of Lake Elsinore (the “legislative body of the District” or the “The City”), as the legislative body of the District, has previously undertaken proceedings and declared the necessity for the District to issue bonds pursuant to the terms and provisions of the MelloRoos 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 certain resolutions adopted by the legislative body of the District and an election held on December 13, 2006 authorizing the levy of a special tax and the issuance of bonds by the District, the District was authorized to issue bonds for one or more series, pursuant to the Act, in an aggregate principal amount not to exceed $27,500,000.

C. The District previously issued the $19,745,000 Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) Special Tax Bonds, Series 2018 (the “2018 Bonds”) for the purpose of financing certain public facilities within the District.

D. The District previously issued the $1,411,480 Community Facilities District No. 2016- 2 of the City of Lake Elsinore (Canyon Hills) Subordinate Special Tax Bonds, Series 2022 (the “2022 Bonds”) for the purpose of financing certain public facilities within the District.

E. The legislative body of the District has determined to redeem the outstanding 2018 Bonds and the outstanding 2022 Bonds through the issuance of its $_________ 2026 Special Tax Refunding Bonds (the “Bonds”).

F. The District has determined that all requirements of the Act for the issuance of the Bonds have been satisfied.

In order to establish the terms and conditions upon and subject to which the Bonds are to be issued, and in consideration of the promises and the mutual covenants contained herein and 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 such term is defined herein) which may be issued hereunder from time to time, as follows:

ARTICLE I

DEFINITIONS
Section 1.1. Unless the context otherwise requires, the following terms shall have the following meanings:
2 4898-2354-5505v4/022042-0054
“Account” means any account created pursuant to this Indenture. “Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Sections 53311 et seq. of the California Government Code.
“Administrative Costs” means reasonable charges, fees, costs, losses, liabilities and expenses that the Bond Insurer may pay or incur, including, but not limited to, reasonable fees and expenses of the Bond Insurer’s agents, attorneys, accountants, consultants, appraisers and auditors and reasonable costs of investigations, in connection with the administration (including waivers and consents, if any), enforcement, defense, exercise or preservation of any rights and remedies in respect of this Indenture and any other document executed in connection with the Bonds. “Administrative Expenses” means the administrative costs with respect to the calculation and collection of the Special Taxes, including all attorneys’ fees and other costs related thereto, the fees and expenses of the Trustee, any fees and related costs for credit enhancement for the Bonds or any Parity Bonds which are not otherwise paid as Costs of Issuance, any costs related to the District’s compliance with state and federal laws requiring continuing disclosure of information concerning the Bonds and the District, and any other costs otherwise incurred by the City staff on behalf of the District in order to carry out the purposes of the District as set forth in the Resolution of Formation and any obligation of the District hereunder.
“Administrative Expenses Account” means the account by that name created and established in the Special Tax Fund pursuant to Section 3.1.
“Administrative Expenses Cap” means an amount equal to $35,000 for the first Bond Year, increasing by 2% per annum for each subsequent Bond Year, or such lesser amount as may be designated in written instructions from an Authorized Representative of the City. “Alternative Credit Instrument” has the meaning given for such term as provided in Section

3.6 hereof.
“Alternative Penalty Account” means the account by that name created and established in the Rebate Fund pursuant to Section 3.1.
“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 Representative of the City” means the Mayor, City Manager, Assistant City Manager, or City Clerk of the City or any other officer or employee of the City authorized by the City Council or by an Authorized Officer to undertake the action referenced in this Agreement as required to be undertaken by an Authorized Officer, acting on behalf of the District. [“Bond Insurer” means ___________, or any successor thereto.] “Bond Counsel” means an 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. 3 4898-2354-5505v4/022042-0054
“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. “Bondowner” or “Owner” means the person or persons in whose name or names any Bond or Parity Bond is registered on the Bond Register.
“Bonds” means the Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) 2026 Special Tax Refunding Bonds issued under this Indenture. “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.
“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, or the city where the corporate trust office of the Trustee is located is required or authorized by law, regulation or executive order to close or to remain closed, or a day on which the New York Stock Exchange or the payment system of the Federal Reserve System is not operational. “Certificate of an Authorized Representative” means a written certificate executed by an Authorized Representative of the City.
“City” means the City of Lake Elsinore, County of Riverside, California. “City Council” means the City Council of the City.
“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. “Construction Fund” means the fund by that name established pursuant to Section 3.1. “Continuing Disclosure Agreement” means the Continuing Disclosure Agreement, dated as of the date of this Indenture, by and between the District and the Dissemination Agent named therein, as amended.
“Costs of Issuance” means the costs and expenses incurred in connection with the issuance and sale of the Bonds or any Parity Bonds, including the acceptance and initial annual fees and expenses of the Trustee, 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 and all other related fees and expenses, as set forth in a Certificate of an Authorized Representative of the City.
“Costs of Issuance Fund” means the fund by that name established pursuant to Section 3.1. “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. 4 4898-2354-5505v4/022042-0054
“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.
“District” means Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) established pursuant to the Act and the Resolution of Formation. “Escrow Agent” means Wilmington Trust, National Association, as escrow agent under the Escrow Agreement.
“Event of Default” means an event described in Section 8.1. “Federal Securities” means any of the following, which shall in all circumstances be noncallable: (a) Treasuries; and (b) evidence of ownership of proportionate interests in future interest and principal payments on Treasuries held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are not available to any person claiming through the custodian or to whom the custodian may be obligated.
“Fiscal Year” means the period beginning on July 1 of each year and ending on June 30 of the following year.
“Governmental Authority” means any governmental or quasi-governmental entity, including any court, department, commission, board, bureau, agency, administration, central bank, service, district or other instrumentality of any governmental entity or other entity exercising executive, legislative, judicial, taxing, regulatory, fiscal, monetary or administrative powers or functions of or pertaining to government, or any arbitrator, mediator or other person with authority to bind a party at law.
“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: (a) is in fact independent and not under the domination of the District; (b) does not have any substantial interest, direct or indirect, in the District; and (c) is not connected with the District as a member, officer or employee of the District, but who may be regularly retained to make annual or other reports to the District.
“Indenture” means this Bond Indenture, together with any Supplemental Indenture approved pursuant to Article 6.
“Insolvency Proceeding” means any proceeding by or against the District under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law.
[“Insured Bonds” means the Bonds maturing on September 1, 20__ through 20__, inclusive.] “Interest Account” means the account by that name created and established in the Special Tax Fund pursuant to Section 3.1.
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“Interest Payment Date” means September 1, 2026 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 following Business Day. “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: (a) 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 (b) 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” means Moody’s Investors Service, Inc., and its successors and assigns. “Net Taxes” means Special Taxes less amounts set aside to pay Administrative Expenses not to exceed the Administrative Expenses Cap.
“Nominee” means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant to Article II.
“Ordinance” means Ordinance No. 2017-1366 adopted by the City Council on January 10, 2017, providing for the levying of the Special Tax.
“Outstanding” or “Outstanding Bonds and Parity Bonds” means all Bonds and Parity Bonds theretofore issued by the District, except: (a) Bonds and Parity Bonds cancelled or surrendered for cancellation in accordance with Section 10.1; (b) Bonds and Parity Bonds for the payment or redemption of which moneys shall have been 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 (c) Bonds and Parity Bonds that have been surrendered to the Trustee for transfer or exchange pursuant to Section 2.9 or for which a replacement has been issued pursuant to Section 2.10. “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” 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. “Permitted Investments” means:
(a) Federal Securities;
(b) Bonds, debentures, notes or other evidence issued or guaranteed by any of the following federal agencies and provided that such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): (i) U.S. Export-Import Bank (Direct obligations or fully guaranteed certificates of beneficial ownership); (ii) Farmers Home Administration (Certificates of beneficial ownership); (iii) Federal Financing Bank; (iv) Federal Housing Administration Debentures; (v) General Services Administration Participation certificates; (vi) Government National Mortgage Association (guaranteed 6 4898-2354-5505v4/022042-0054
mortgage-backed bonds or guaranteed pass-through obligations); (vii) U.S. Maritime Administration (Guaranteed Title XI financing); and (viii) U.S. Department of Housing and Urban Development (Project Notes, Local Authority Bonds, New Communities Debentures – United States government guaranteed debentures and U.S. Public Housing Notes and Bonds – United States government guaranteed public housing notes and bonds);
(c) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non-full faith and credit United States government agencies (stripped securities are only permitted if they have been stripped by the agency itself): (i) Federal Home Loan Bank System (Senior debt obligations); (ii) Federal Home Loan Mortgage Corporation (Participation Certificates and Senior debt obligations); (iii) Federal National Mortgage Association (Mortgage-backed securities and senior debt obligations); (iv) Student Loan Marketing Association (Senior debt obligations); (v) Resolution Funding Corporation obligations; and (vi) Farm Credit System (Consolidated systemwide bonds and notes);
(d) Money market mutual funds that constitute “Government Funds” under Rule 2a-7 promulgated by the Securities and Exchange Commission and that are registered under the Federal Investment Company Act of 1940 the shares of which are registered under the Federal Securities Act of 1933, and having a rating in the highest investment category granted thereby from Standard & Poor’s or Moody’s, with a minimum of $500 million in assets under management, including funds for which the Trustee or its affiliates receive and retain a fee for services provided to the fund, whether as a custodian, transfer agent, investment advisor or otherwise; (e) Certificates of deposit (including those placed by a third party pursuant to a separate agreement between the District and the Trustee) secured at all times by collateral described in clauses (a) and/or (b) above. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks of which the short-term obligations are rated A-1 or better and P1 or better by Moody’s or Standard & Poor’s, respectively, which may include the Trustee and its affiliates. The collateral must be held by a third party and the Trustee on behalf of the Owners of the Bonds must have a perfected first security interest in the collateral; (f) Certificates of deposit (including those placed by a third party pursuant to a separate agreement between the District and the Trustee), demand deposits, savings accounts, deposit accounts, time deposits, other deposit products, trust funds, trust accounts, interest bearing deposits, overnight bank deposits, interest-bearing money market accounts, bankers acceptances or money market deposits which are insured by Federal Deposit Insurance Corporation, including BIF and SAIF; or
(g) Investment agreements with domestic or foreign banks, insurance companies other than a life or property casualty insurance company, or corporations the long-term debt or claims paying ability of which or, in the case of a guaranteed corporation, the long-term debt of the guarantor, or, in the case of a monoline financial guaranty insurance company, claims paying ability or financial strength, of the guarantor is rated in at least the AA category by Standard & Poor’s and Moody’s; provided that, by the terms of the investment agreement:
(i) interest payments are to be made to the Trustee at times and in amounts as necessary to pay debt service on the Bonds (if the funds invested pursuant to the investment agreement are from the Reserve Account);
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(ii) the invested funds are available for withdrawal without penalty or premium, upon not more than seven (7) days’ prior notice; (iii) the investment agreement shall provide that it is the unconditional and general obligation of, and is not subordinated to any other obligation of, the provider thereof; (iv) the District and the Trustee receive the opinion of domestic counsel (which opinion shall be addressed to the District) that such investment agreement is legal, valid, binding and enforceable upon the provider in accordance with its terms and of foreign counsel (if applicable) in form and substance acceptable, and addressed to, the District; (v) the investment agreement shall provide that if during its term: (1) the provider’s rating by either Standard & Poor’s or Moody’s falls below AA- or Aa3, respectively, the provider shall, at its option, within ten (10) Business Days after the provider’s receipt of a written request from the Trustee to satisfy the foregoing, either: (I) collateralize the investment agreement by delivering or transferring in accordance with the applicable state and federal laws (other than by means of entries on the provider’s books) to the District, the Trustee or a third party acting solely as agent therefor (the “Holder of the Collateral”) collateral free and clear of any third-party liens or claims, the market value of which collateral is maintained at one hundred five percent (105%) of securities identified in clauses (a) and (b) of this definition; or (II) assign the investment agreement and all of its obligations thereunder to, or enter into a repurchase agreement or such other agreement with, a financial institution that is mutually acceptable to the provider and the District which is rated either in the first or second highest category by Standard & Poor’s and Moody’s; and (2) the provider’s rating by either Standard & Poor’s or Moody’s is withdrawn or suspended or falls below A- or A3, respectively, the provider must, at the direction of the District or the Trustee, within ten (10) days of receipt of such direction, repay the principal of and accrued but unpaid interest on the invested funds, in either case with no penalty or premium to the District or the Trustee; (vi) the investment agreement shall provide and an opinion of counsel shall be rendered, in the event that collateral is required to be pledged by the provider under the terms of the investment agreement at the time such collateral is delivered, that the Holder of the Collateral has a perfected first priority security interest in the collateral, any substituted collateral and all proceeds thereof (in the case of bearer securities, this shall mean that the Holder of the Collateral is in possession of such collateral); and
(vii) the investment agreement shall provide that if during its term: (1) the provider shall default in its payment obligations, the provider’s obligations under the investment agreement shall, at the direction of the District or the Trustee, be accelerated and amounts invested and accrued but unpaid interest thereon shall be paid to the District or the Trustee, as appropriate; and (2) the provider shall become insolvent, not pay its debts as they become due, be declared or petition to be declared bankrupt, etc., the provider’s obligations shall automatically be accelerated and amounts invested and accrued but unpaid interest thereon shall be paid to the District or the Trustee, as appropriate;
(h) Commercial paper rated, at the time of purchase, Prime - 1 by Moody’s and A1 or better by Standard & Poor’s having original maturity of not more than 180 days issued by a domestic corporation having assets in excess of $500 million; 8 4898-2354-5505v4/022042-0054
(i) Bonds or notes issued by any state or municipality which are rated by Moody’s or Standard & Poor’s in one of the two highest rating categories assigned by them; (j) Federal funds or bankers acceptances with a maximum term of 270 days of any bank which has an unsecured, uninsured and unguaranteed obligation rating of Prime - 1 or A3 or better by Moody’s and A-1 or better by Standard & Poor’s; (k) Repurchase agreements that satisfy the following criteria:
(i) Repurchase agreements must be between the District or the Trustee and a dealer bank or securities firm which is: (1) A primary dealer on the Federal Reserve reporting dealer list which is rated A or better by two of the following Standard & Poor’s, Moody’s, or Fitch Ratings; or (2) A domestic bank or a domestic branch of a foreign bank rated A or above by two of the following:

Standard & Poor’s, Moody’s or Fitch Ratings; or (3) Corporations the long-term debt or claims paying ability of which, or in the case of a guaranteed corporation, the long-term debt of the guarantor, or, in the case of a monoline financial guaranty insurance company, claims paying ability or financial strength, is rated in at least the double A category by Standard & Poor’s and Moody’s; and (ii) The written agreement must include the following: (1) Securities which are acceptable for transfer are: (I) direct obligations of the United States government; or (II) obligations of federal agencies backed by the full faith and credit of the United States of America (or the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation; (2) The collateral must be delivered to the Trustee (if the Trustee is not supplying the collateral) or a third party acting as agent for the Trustee (if the Trustee is supplying the collateral) before or simultaneous with payment (perfection by possession of certificated securities); and (3) (I) The securities must be valued weekly, marked-to-market at current market price plus accrued interest; (II) The value of the collateral must be at least equal to one hundred five percent (105%) of the amount of money transferred by the Trustee to the dealer, bank or security firm under the agreement plus accrued interest. If the value of the securities held as collateral is reduced below one hundred five percent (105%) of the value of the amount of money transferred by the Trustee, then additional acceptable securities and/or cash must be provided as collateral to bring the value of the collateral to one hundred five percent (105%); provided, however, that if the securities used as collateral are those of the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, then the value of the collateral must be at least equal to one hundred five percent (105%) of the amount of money transferred by the Trustee; and (III) A legal opinion must be delivered to the District and the Trustee that the repurchase agreement meets the requirements of California law with respect to the investment of public funds; and (IV) Should the provider’s rating by either Standard & Poor’s or Moody’s be withdrawn or suspended or fall below Aor A3, respectively, the provider must, at the direction of the District or the Trustee (acting at the direction of the District), within ten (10) days of receipt of such direction, repay the principal of and accrued but unpaid interest on the invested funds, in either case with no penalty or premium to the District or the Trustee;
(l) the Local Agency Investment Fund in the State Treasury of the State of California as permitted by the State Treasurer pursuant to Section 16429.1 of the California Government Code;
(m) forward delivery agreements or forward purchase and sale agreements with a domestic or foreign bank or corporation the long-term debt or claims paying ability of which, or in the case of a guaranteed corporation, the long-term debt of the guarantor, or, in the case of a monoline 9 4898-2354-5505v4/022042-0054
financial guaranty insurance company, claims paying ability or financial strength, of the guarantor is rated at least in the A category by Standard & Poor’s and Moody’s; provided that, by the terms of the agreement; the underlying investment property consists of those investments which are listed in (a), (b), (c) and (h) above; and
(n) the City’s pooled investment fund invested pursuant to the City’s investment policy.
“Person” means natural persons, firms, corporations, partnerships, associations, trusts, public bodies and other entities.
[“Policy” means the Municipal Bond Insurance Policy No. ________ issued by the Bond Insurer that guarantees the scheduled payment of principal of and interest on the Insured Bonds when due.]
“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 Rate and Method.
“Principal Account” means the account by that name created and established in the Special Tax Fund pursuant to Section 3.1.
“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” means those public facilities described in the Resolution of Formation which were acquired or constructed within and outside of the District with the proceeds of the 2018 Bonds and the 2022 Bonds, 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” 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 to pay any other “incidental expenses” of the District, as such term is defined in the Act. “Rate and Method” means the Rate and Method of Apportionment of Special Tax for the District approved by the qualified electors of the District at the December 13, 2016 election. “Rating Agency” means Moody’s and Standard & Poor’s, or both, as the context requires. “Rebate Account” means the account by that name created and established in the Rebate Fund pursuant to Section 3.1.
“Rebate Fund” means the fund by that name established pursuant to Section 3.1 in which there are established the Accounts described in Section 3.1.
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“Rebate Regulations” means any final, temporary or proposed Regulations promulgated under Section 148(f) of the Code.
“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” means the account by that name created and established in the Special Tax Fund pursuant to Section 3.1.
“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” means the Blanket Representation Letter from the District to the Depository as described in Article II.
“Reserve Account” means the account by that name created and established in the Special Tax Fund pursuant to Section 3.1.
[“Reserve Policy” means Municipal Bond Debt Service Reserve Insurance Policy No. 2026- _______ issued by the Bond Insurer for deposit into the Reserve Account.] “Reserve Requirement” means, as of the date of calculation: (a) with respect to the Bonds, an amount equal to the least of: (i) Maximum Annual Debt Service with respect to the Bonds; (ii) 125% of average Annual Debt Service on the then-Outstanding Bonds; or (iii) ten percent (10%) of the initial outstanding principal amount of the Bonds; provided that the Reserve Requirement shall never exceed the amount established pursuant to the foregoing calculation at the time of issuance of the Bonds; and (b) with respect to such Parity Bonds, an amount equal to the least of: (i) Maximum Annual Debt Service with respect to such Parity Bonds; (ii) 125% of average Annual Debt Service on such Parity Bonds; or (iii) ten percent (10%) of the initial outstanding principal amount of such Parity Bonds; provided that the Reserve Requirement shall never exceed the amount established pursuant to the foregoing calculation at the time of issuance of such Parity Bonds. “Resolution of Formation” means Resolution No. 2016-143 adopted by the City Council of the City on December 13, 2006, pursuant to which the City formed the District. “Responsible Officer,” means, when used with respect to the Trustee, any managing director, president, vice president, senior associate, associate or other officer of the Trustee within the Principal Office of the Trustee (or any successor corporate trust office) customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred at the corporate trust office specified in Section 10.8 because of such person’s knowledge of and familiarity with the particular subject and having direct responsibility for the administration of this Indenture.
“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) and any annual sinking fund payment schedule to retire any Parity Bonds that are designated as Term Bonds.
“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 11 4898-2354-5505v4/022042-0054
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 Fund” means the fund by that name created and established pursuant to Section 3.1.
“Special Taxes” means the taxes authorized to be levied by the District on property within the District in accordance with the Ordinance, the Resolution of Formation, the Act, the Rate and Method, and the voter approval obtained at the December 13, 2006 special election in the District, including any scheduled payments and any Prepayments thereof, and the net proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and penalties and interest thereon.
“Standard & Poor’s” means S&P Global Ratings, a Standard & Poor’s Financial Services LLC business, and its successors and assigns.
“Supplemental Indenture” means any supplemental indenture amending or supplementing this Indenture.
“Surplus Fund” means the fund by that name created and established pursuant to Section 3.1. “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” means, with reference to a Permitted Investment, a Permitted 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. “Term Bonds” means any term maturities of an issue of Parity Bonds as specified in a Supplemental Indenture.
“Treasuries” means non-callable direct obligations of the United States of America, including United States Treasury Notes, Certificates and Bonds and State and Local Government Series. “Trustee” means Wilmington Trust, National Association, a national banking association duly organized and existing under and by virtue of the laws of the United States, having a principal corporate trust office in Los Angeles, California, and its successors or assigns, or any other bank, national banking association 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” means Stifel, Nicolaus & Company, Incorporated, as the underwriter of the Bonds.
“Verification Report” has the meaning given for such term as provided in Section 9.1 hereof. “2018 Bonds” means the Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) Special Tax Bonds, Series 2018 issued on August 1, 2018 in the original aggregate principal amount of $19,745,000.
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“2018 Bonds Escrow Agreement” means the Escrow Agreement (2018 Bonds), dated as of the date of this Indenture, by and between the Escrow Agent and the District. “2018 Bonds Escrow Fund” means the fund by that name established under the 2018 Bonds Escrow Agreement.
“2022 Bonds” means the Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) Subordinate Special Tax Bonds, Series 2022 issued on May 27, 2022 in the original aggregate principal amount of $1,411,480.
“2022 Bonds Escrow Agreement” means the Escrow Agreement (2022 Bonds), dated as of the date of this Indenture, by and between the Escrow Agent and the District. “2022 Bonds Escrow Fund” means the fund by that name established under the 2022 Bonds Escrow Agreement.

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 $_________ shall be issued for the purpose of refunding the outstanding 2018 Bonds and the outstanding 2022 Bonds, financing certain Project Costs funding a reserve fund for the Bonds and paying Costs of Issuance. 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 Expenses Account of the Special Tax Fund). 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 of the District in accordance with the Act.

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 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 neither 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 Expenses 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 Expenses 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 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 Expenses 13 4898-2354-5505v4/022042-0054
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. Neither the members of the City Council of the City 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 and 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 pledge and lien upon the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Reserve Account, which shall only secure the Bonds, and the Administrative Expenses Account), without priority for number, date of the Bonds or Parity Bonds, date of sale, date of execution or date of delivery, and the payment of the interest on and principal of the Bonds and any Parity Bonds and any premiums upon the redemption thereof shall be exclusively paid from the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expenses Account), which are hereby set aside for the payment of the Bonds and any Parity Bonds. Amounts in the Special Tax Fund (other than the Administrative Expenses Account therein) 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 remains Outstanding, amounts in the Special Tax Fund 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 Construction Fund, the Costs of Issuance Fund or the Administrative Expenses 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: (a) subject to the limitations contained hereunder, the redemption prior to maturity of any Bonds or Parity Bonds subject to call and redemption, and the 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 (b) 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 shall be initially issued in the form of a single certificated fully registered bond for each maturity.

The Bonds shall be designated “Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) 2026 Special Tax Refunding Bonds.” The Bonds shall be dated as of their Delivery Date and shall mature and be payable on September 1 in the years and in the aggregate 14 4898-2354-5505v4/022042-0054
principal amounts and shall be subject to and shall bear interest at the rates set forth in the table below payable on each Interest Payment Date:

Maturity Date
(September 1) Principal Amount Interest Rate
__________
The District and the Trustee may treat and consider the person in whose name each Bond is registered in the Bond Register as the holder and absolute owner of such Bond for the purpose of payment of principal, 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 on the Bonds only to or upon the order of the respective Owners or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the District’s obligations with respect to payment of principal of, premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. No person other than an Owner shall receive a certificated Bond evidencing the obligation of the District to make payments of principal, premium, if any, and interest pursuant to this Indenture.

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.
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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. 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: (a) such date of authentication is an Interest Payment Date, in which event interest shall be payable from such date of authentication; (b) the date of authentication is after a Record Date but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication; or (c) the date of authentication is prior to the close of business on the first Record Date occurring after the issuance of such Bond 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 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 on the applicable Interest Payment Date by first class mail, postage prepaid, to such Bondowner at his or her address as it appears on the Bond Register. In addition, upon a request in writing received by the Trustee on or before the applicable Record Date from an Owner of $1,000,000 or more in principal amount of the Bonds or of any issue of Parity Bonds, payment shall be made on the Interest Payment Date by wire transfer in immediately available funds to an account designated in writing by such Owner. Notwithstanding the foregoing, as long as the Depository is the Owner of all or part of the Bonds or Parity Bonds, said interest payments shall be made to the Depository in accordance with the procedures of such Depository, which as of the date of this Indenture are by wire transfer in immediately available funds.

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 set forth in 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, are 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.
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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 of the City, or any duly appointed deputy City Clerk, in their capacity as officers of the City, and the seal of the City (or a facsimile thereof) may be impressed, imprinted, engraved or otherwise reproduced thereon, and attested by the signature of the City Clerk of the City. 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 to 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 that bear a certificate of authentication in the form set forth in Exhibit A shall be entitled to any right or benefit under this Indenture, and no Bond 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 written 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, 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 thereof 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 Bondowner as it appears in the Bond Register for any and all purposes. It shall be the duty of the Bondowner to give written notice to the Trustee of any change in the Bondowner’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 Principal Office of the Trustee, accompanied by delivery of a written instrument of transfer in a form acceptable to the Trustee and duly executed by the Bondowner or his or her duly authorized attorney.

The transferor shall also provide or cause to be provided to the Trustee all information necessary to allow the Trustee to comply with any applicable tax reporting obligations, including without limitation any cost basis reporting obligations under Internal Revenue Code Section 6045. The Trustee may rely on the information provided to it and shall have no responsibility to verify or ensure the accuracy of such information.

Bonds or Parity Bonds may be exchanged at the Principal 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 Bondowner requesting such 17 4898-2354-5505v4/022042-0054
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: (a) Bonds or Parity Bonds for a period of 15 days next preceding any selection of the Bonds or Parity Bonds to be redeemed; or (b) any Bonds or Parity Bonds chosen for redemption.

Prior to any transfer of the Bonds outside the book-entry system (including, but not limited to, the initial transfer outside the book-entry system) the transferor shall provide or cause to be provided to the Trustee all information necessary to allow the Trustee to comply with any applicable tax reporting obligations, including without limitation any cost basis reporting obligations under Internal Revenue Code Section 6045, as amended. The Trustee shall conclusively rely on the information provided to it and shall have no responsibility to verify or ensure the accuracy of such information.

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. If any Bond or Parity Bond is 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 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 refunding of the 2018 Bonds and the 2022 Bonds, 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 refunding of the 2018 Bonds and the 2022 Bonds or upon the performance by any Person of such Person’s 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 of California shall be conclusive evidence of their validity and of the regularity of their issuance.
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Section 2.12. Book Entry System.
(a) Election of Book Entry System. Prior to the issuance of the Bonds and any Parity Bonds, the District may provide that such Bonds and Parity Bonds shall be initially issued as book entry bonds. If the District shall elect to deliver any Bonds or Parity Bonds in book entry form, then the District shall cause the delivery of a separate single fully registered bond (which may be typewritten) for each maturity date of such Bonds or Parity Bonds in an authorized denomination corresponding to that total principal amount of the Bonds or Parity Bonds designated to mature on such date. Upon initial issuance, the ownership of each such Bond or Parity Bond shall be registered in the Bond Register in the name of the Nominee, as nominee of the Depository, and ownership of the Bonds or Parity Bonds, or any portion thereof may not thereafter be transferred except as provided in subsection (e).

With respect to book entry Bonds or Parity Bonds, the District and the Trustee shall have no responsibility or obligation to any Participant or to any person on behalf of which such a Participant holds an interest in such book entry 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 book entry bonds; (ii) the delivery to any Participant or any other person, other than an Owner as shown in the Bond Register, of any notice with respect to book entry bonds, including any notice of redemption; (iii) the selection by the Depository and its Participants of the beneficial interests in book entry bonds to be redeemed in the event that the District redeems the Bonds or Parity in part; (iv) the payment by the Depository or any Participant or any other person, of any amount of principal of, premium, if any, or interest on book entry bonds; or (v) any consent given or other action taken by the Depository as Bondowner. The District and the Trustee may treat and consider the person in whose name each book entry bond is registered in the Bond Register as the absolute Owner of such book entry bond for the purpose of payment of principal of, premium and interest on such Bond or Parity Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond or Parity Bond, for the purpose of registering transfers with respect to such Bond or Parity Bonds, and for all other purposes whatsoever. The Trustee shall pay all principal of, premium, if any, and interest on the Bonds or Parity Bonds only to or upon the order of the respective Owner, as shown in the Bond Register, or such Owner’s respective attorney duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the District’s obligations with respect to payment of principal of, premium, if any, and interest on the Bonds or Parity Bonds to the extent of the sum or sums so paid. No person other than an Owner, as shown in the Bond Register, shall receive a Bond or Parity Bond evidencing the obligation to make payments of principal of, premium, if any, and interest on the Bonds or Parity Bonds. Upon delivery by the Depository to the District and the Trustee, 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 the Indenture shall refer to such nominee of the Depository. (b) Delivery of Representation Letter. In order to qualify the book entry bonds for the Depository’s book entry system, the District and the Trustee (if required by the Depository) shall execute and deliver to the Depository a Representation Letter. The execution and delivery of a Representation Letter shall not in any way impose upon the District or the Trustee any obligation whatsoever with respect to persons having interests in such book entry bonds other than the Owners, as shown on the Bond Register. By executing a Representation Letter, the Trustee shall agree to take all action necessary at all times so that the Trustee will be in compliance with all representations of the Trustee in such Representation Letter. In addition to the execution and delivery of a Representation 19 4898-2354-5505v4/022042-0054
Letter, the District and the Trustee shall take such other actions, not inconsistent with the Indenture, as are reasonably necessary to qualify book entry bonds for the Depository’s book entry program. (c) Selection of Depository. In the event that: (i) the Depository determines not to continue to act as securities depository for book entry bonds; or (ii) the District determines that continuation of the book entry system is not in the best interest of the beneficial owners of the Bonds, the Parity Bonds or the District, then the District will discontinue the book entry system with the Depository. If the District determines to replace the Depository with another qualified securities depository, the District shall prepare or direct the preparation of a new single, separate, fully registered bond for each of the maturity dates of such book entry bonds, registered in the name of such successor or substitute qualified securities depository or its Nominee as provided in subsection (e). If the District fails to identify another qualified securities depository to replace the Depository, then the Bonds or Parity Bonds shall no longer be restricted to being registered in such Bond Register in the name of the Nominee, but shall be registered in whatever name or names the Owners transferring or exchanging such Bonds or Parity Bonds shall designate, in accordance with the provisions of this Indenture. (d) Payments To Depository. Notwithstanding any other provision of the Indenture to the contrary, so long as all Outstanding Bonds or Parity Bonds are held in book entry form and registered in the name of the Nominee, all payments of principal of, redemption premium, if any, and interest on such Bonds or Parity Bonds and all notices with respect thereto shall be made and given, respectively to the Nominee, as provided in the Representation Letter or as otherwise instructed by the Depository and agreed to by the Trustee notwithstanding any inconsistent provisions herein. (e) Transfer of Bonds to Substitute Depository.
(1) The Bonds shall be initially issued as provided in Section 2.1.

Registered ownership of such Bonds, or any portions thereof, may not thereafter be transferred except:
(i) to any successor of the Depository or its nominee, or of any substitute depository designated pursuant to clause (ii) below (a “Substitute Depository”); provided that any successor of the Depository or Substitute Depository shall be qualified under any applicable laws to provide the service proposed to be provided by it; (ii) to any Substitute Depository, upon: (I) the resignation of the Depository or its successor (or any Substitute Depository or its successor) from its functions as depository; or (II) a determination by the District that the Depository (or its successor) is no longer able to carry out its functions as depository; provided that any such Substitute Depository shall be qualified under any applicable laws to provide the services proposed to be provided by it; or (iii) to any person as provided below, upon: (I) the resignation of the Depository or its successor (or any Substitute Depository or its successor) from its functions as depository; or (II) a determination by the District that the Depository or its successor (or Substitute Depository or its successor) is no longer able to carry out its functions as depository. (2) In the case of any transfer pursuant to clauses (i) or (ii) of subsection (1), upon receipt of all Outstanding Bonds by the Trustee, together with a written request of the District to the Trustee designating the Substitute Depository, a single new Bond, which the District shall prepare or cause to be prepared, shall be issued for each maturity of Bonds then Outstanding, registered in the name of such successor or such Substitute Depository or their Nominees, as the case may be, all 20 4898-2354-5505v4/022042-0054
as specified in such written request of the District. In the case of any transfer pursuant to clause (iii) of subsection (1), upon receipt of all Outstanding Bonds by the Trustee, together with a written request of the District to the Trustee, new Bonds, which the District shall prepare or cause to be prepared, shall be issued in such denominations and registered in the names of such persons as are requested in such written request of the District, subject to the limitations of Section 2.1; provided that the Trustee shall not be required to deliver such new Bonds within a period of less than sixty (60) days from the date of receipt of such written request from the District.
(3) In the case of a partial redemption or an advance refunding of any Bonds evidencing a portion of the principal maturing in a particular year, the Depository or its successor (or any Substitute Depository or its successor) shall make an appropriate notation on such Bonds indicating the date and amounts of such reduction in principal, in form acceptable to the Trustee, all in accordance with the Representation Letter. The Trustee shall not be liable for such Depository’s failure to make such notations or errors in making such notations and the records of the Trustee as to the Outstanding principal amount of such Bonds shall be controlling. (4) The District and the Trustee shall be entitled to treat the person in whose name any Bond is registered as the Owner thereof for all purposes of the Indenture and any applicable laws, notwithstanding any notice to the contrary received by the Trustee or the District; and the District and the Trustee shall not have responsibility for transmitting payments to, communicating with, notifying, or otherwise dealing with any beneficial owners of the Bonds. Neither the District nor the Trustee shall have any responsibility or obligation, legal or otherwise, to any such beneficial owners or to any other party, including the Depository or its successor (or Substitute Depository or its successor), except to the Owner of any Bonds, and the Trustee may rely conclusively on its records as to the identity of the Owners of the Bonds.

Section 2.13. Initial Depository and Nominee. The initial Depository under this Article 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:
(1) The Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) 2026 Special Tax Refunding Bonds 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 Expenses Account). (2) The Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) 2026 Special Tax Refunding Bonds Rebate Fund (the “Rebate Fund”) (in which there shall be established a Rebate Account and an Alternative Penalty Account). 21 4898-2354-5505v4/022042-0054
(3) The Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) 2026 Special Tax Refunding Bonds Costs of Issuance Fund (the “Costs of Issuance Fund”).
(4) The Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) 2026 Special Tax Refunding Bonds Surplus Fund (the “Surplus Fund”). (5) The Community Facilities District No. 2016-2 of the City of Lake Elsinore (Canyon Hills) 2026 Special Tax Refunding Bonds Construction Fund (the “Construction Fund”).

The amounts on deposit in the foregoing funds, accounts and subaccounts shall be held by the Trustee and the Trustee shall invest and disburse the amounts in such funds, accounts and subaccounts in accordance with the provisions of this Article 3 and shall disburse investment earnings thereon in accordance with the provisions of Section 3.11 hereof. The Trustee may, in its discretion, establish temporary funds or accounts in its books and records to facilitate such transfers.

In connection with the issuance of any Parity Bonds, the Trustee, at the direction of an Authorized Representative of the City, 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 received by the Trustee in the amount of $_________ (representing the initial aggregate principal amount of the Bonds of $_________, [plus/less] $_________ of [net original issue premium/discount], less $_________ of Underwriter’s discount and less $_________ paid directly to the Bond Insurer by the Underwriter) shall be received on behalf of the District and deposited and transferred as follows:
(1) $_________ shall be transferred to the Costs of Issuance Fund to pay the Costs of Issuance of the Bonds;
(2) $_________ shall be transferred to the Escrow Agent for deposit in the 2018 Bonds Escrow Fund.
(3) $_________ shall be transferred to the Escrow Agent for deposit in the 2022 Bonds Escrow Fund.
(4) $_________ shall be transferred to the Reserve Account, the Reserve Requirement, and will be credited to the Reserve Account as provided in Section 3.6 hereof. (5) $_________ shall be transferred to the Construction Fund. [The Trustee shall deposit in the Reserve Account the Reserve Policy, which amount represents the Reserve Requirement as of the Closing Date of the Bonds and will be credited to the various accounts in the Reserve Account as provided in Section 3.6 hereof.] The Trustee may, in its discretion, establish temporary funds, accounts or subaccounts 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 the portion of any Prepayment to be deposited in the Redemption Account as specified in a Certificate of an Authorized Representative, 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 Expenses Account of the Special Tax Fund up to the Administrative Expenses Cap;
(2) the Interest Account of the Special Tax Fund;
(3) the Principal Account of the Special Tax Fund;
(4) the Redemption Account of the Special Tax Fund;
(5) the Reserve Account of the Special Tax Fund and any reserve account established in connection with the issuance of any Parity Bonds; (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) Upon the 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 has been paid or provided for and any amounts owed to the Trustee have been paid in full, moneys in the Special Tax Fund and any accounts therein may be used by the District for any lawful purpose.

Section 3.3. Administrative Expenses Account of the Special Tax Fund. The Trustee shall transfer from the Special Tax Fund and deposit in the Administrative Expenses Account of the Special Tax Fund from time to time amounts necessary to make timely payment of Administrative Expenses as set forth in a Certificate of an Authorized Representative of the City; provided, however, that, except as set forth in the following sentence, the total amount transferred in a Bond Year 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 and any reserve account established in connection with the issuance of such Parity Bonds to the Reserve Requirement, all as determined by the District. Notwithstanding the foregoing, amounts in excess of the Administrative Expenses Cap may be transferred to the Administrative Expenses Account to the extent necessary to collect delinquent Special Taxes, as directed in writing by an Authorized Representative of the City. Moneys in the Administrative Expenses Account of the Special Tax Fund may be invested in any Permitted Investments as directed in writing by an Authorized Representative of the City and shall be disbursed as directed in a Certificate of an Authorized Representative.
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Section 3.4. Interest Account and Principal Account of the Special Tax Fund. The principal of (including any Sinking Fund Payment) and interest due on the Bonds and any Parity Bonds until maturity, other than principal due upon redemption under Sections 4.1(a) and (c), shall be paid by the Trustee from the Principal Account and the Interest Account of the Special Tax Fund, respectively. For the purpose of assuring that the payment of principal of (including any Sinking Fund Payment) and interest on the Bonds and any Parity Bonds will be made when due, after making 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, 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 any reserve account established in connection with any Parity Bonds) are inadequate to make the foregoing transfers, then any deficiency shall be made up by an immediate transfer from the Reserve Account and any reserve account established in connection with the issuance of any Parity Bonds:
(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 that 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 shall equal the principal payment (including any Sinking Fund Payment) due on the Bonds and any Parity Bonds maturing on such September 1 and any principal payment due on a previous September 1 which remains unpaid. Moneys in the Principal Account shall be used for the payment of the principal (including any Sinking Fund Payment) of such Bonds and any Parity Bonds as the same become due at maturity.

Section 3.5. Redemption Account of the Special Tax Fund. (a) After making the deposits to the Administrative Expenses Account, the Interest Account and the Principal Account of the Special Tax Fund pursuant to Sections 3.3 and 3.4, 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 Expenses Account therein) may be applied to optionally redeem Bonds and Parity Bonds only if immediately following such redemption the amount in the Reserve Account and any reserve account established in connection with the issuance of such Parity Bonds will equal the Reserve Requirement, as determined by the District. (b) Prepayments deposited to the Redemption Account shall be applied on the redemption date established pursuant to Section 4.1(c) for the use of such Prepayments to the payment of the principal of, premium, and interest on the Bonds and Parity Bonds to be redeemed with such Prepayments.
(c) Moneys set aside in the Redemption Account shall be used solely for the purpose of redeeming Bonds and Parity Bonds, shall be applied on or after the redemption date to the payment of 24 4898-2354-5505v4/022042-0054
principal of and premium, if any, on the Bonds or Parity Bonds to be redeemed upon presentation and surrender (if required) of such Bonds or Parity Bonds and, in the case of an optional redemption or an extraordinary redemption from Prepayments, to pay the interest thereon; provided, however, that in lieu or partially in lieu of such call and redemption, moneys deposited in the Redemption Account may be used to purchase Outstanding Bonds or Parity Bonds in the manner 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 an extraordinary redemption, the premium applicable at the next following call date according to the premium schedule established pursuant to Sections 4.1(a) or 4.1(c), 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 Policy shall be drawn upon solely for the purpose of paying the principal of, including Sinking Fund Payments, and interest on the Bonds when due in the event that the moneys in the Interest Account and the Principal Account of the Special Tax Fund are insufficient therefor or moneys in the Redemption Account of the Special Tax Fund are insufficient to make a Sinking Fund Payment when due, and for the purpose of making any required transfer to the Rebate Fund pursuant to Section 3.7 upon written direction from the District. If the amounts in the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund are insufficient to pay the principal of, including Sinking Fund Payments, or interest on any Bonds when due, or amounts in the Special Tax Fund are insufficient to make transfers to the Rebate Fund when required, the Trustee shall draw upon the Reserve Policy for deposit in the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund or the Rebate Fund, as applicable, moneys necessary for such purposes. The Reserve Requirement will be satisfied by the Reserve Policy and the Reserve Policy will initially be satisfied with the deposit from proceeds of the Bonds pursuant to Section 3.1(b) hereof. The prior written consent of the Bond Insurer shall be a condition precedent to the deposit of any credit instrument provided in lieu of a cash deposit into the Reserve Account, if any. Amounts on deposit in the Reserve Account shall be applied solely to the payment of debt service due on the Bonds.

The following provisions govern the Reserve Policy and the Reserve Account:
(a) The District shall repay the Bond Insurer any draws under the Reserve Policy and pay all related Administrative Costs that the Bond Insurer may pay or incur. Interest shall accrue and be payable on such draws and Administrative Costs from the date of payment by the Bond Insurer at the Late Payment Rate.

Repayment of draws and payment of Administrative Costs and interest accrued thereon at the Late Payment Rate (collectively, the “Policy Costs”) shall commence in the first month following each draw and each such monthly payment shall be in an amount at least equal to 1/12th of the aggregate of Policy Costs related to such draw.

Amounts in respect of Policy Costs paid to the Bond Insurer shall be credited first to interest due, then to the expenses due and then to principal due. As and to the extent that payments are made 25 4898-2354-5505v4/022042-0054
to the Bond Insurer on account of principal due, the coverage under the Reserve Policy will be reinstated by a like amount, subject to the terms of the Reserve Policy.

All cash and investments in the Reserve Account and the Surplus Fund shall be transferred to the Special Tax Fund for payment of the debt service on the Insured Bonds before any drawing may be made on the Reserve Policy or on any alternative credit instrument on deposit in the Reserve Account in lieu of cash (each, an “Alternative Credit Instrument”).

Payment of any Policy Cost shall be made prior to replenishment of any cash amounts. Draws on all Alternative Credit Instruments (including the Reserve Policy) on which there is available coverage shall be made on a pro-rata basis (calculated by reference to the available coverage under each such Alternative Credit Instrument) after applying all available cash and investments in the Reserve Account. Payment of Policy Costs and reimbursement of amounts with respect to other Alternative Credit Instruments shall be made on a pro-rata basis prior to replenishment of any cash drawn from the Reserve Account. For the avoidance of doubt, “available coverage” means the coverage then available for disbursement pursuant to the terms of the applicable Alternative Credit Instrument without regard to the legal or financial ability or willingness of the provider of such instrument to honor a claim or draw thereon or the failure of such provider to honor any such claim or draw.
(b) Draws on the Reserve Policy may only be used to make payments of principal of and interest on the Bonds (and for the avoidance of doubt, not any other obligations of the District, whether issued on parity with the Bonds, or otherwise).
(c) If the District shall fail to pay any Policy Costs in accordance with the requirements of paragraph (a) above, the Bond Insurer shall be entitled to exercise any and all legal and equitable remedies available to it, including those provided under this Indenture other than: (i) acceleration of the maturity of the Bonds; or (ii) remedies which would adversely affect Bondowners. (d) In order to secure the District’s payment obligations with respect to the Policy Costs, there is hereby granted and perfected in favor of the Bond Insurer a security interest (subordinate only to that of the Bondowners) in all revenues and collateral pledged as security for the Bonds. (e) The Trustee shall ascertain the necessity for a claim upon the Reserve Policy in accordance with the provisions of paragraph (a) above and shall provide notice to the Bond Insurer in accordance with the terms of the Reserve Policy at least five (5) Business Days prior to each date upon which interest or principal is due on the Bonds. Where deposits are required to be made by the District with the Trustee to the debt service fund for the Bonds more often than semi-annually, the Trustee shall give notice to the Bond Insurer of any failure of the District to make timely payment in full of such deposits within two (2) Business Days of the date due.
(f) The Reserve Policy shall expire on the earlier of the date that the Bonds are no longer outstanding and the final maturity date of the Bonds.

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 Alternative Penalty Account therein. All money at any time deposited in the 26 4898-2354-5505v4/022042-0054
Rebate Account or the Alternative 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 Alternative 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. (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 every fifth 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 City, 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 subsection (a)(1)(i) 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 City, 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 City, 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.
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In the event that, prior to the time that any payment is 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) 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 prepared and signed by the District, or shall be made in such other manner as provided under the Code. The Trustee may rely conclusively upon the District’s determinations, calculations and certifications required by this Section. The Trustee shall have no responsibility to independently make any calculation or determination or to review the District’s calculations hereunder. (2) Alternative 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 City, shall deposit an amount in the appropriate subaccounts of the Alternative 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 Alternative Penalty Account equals the amount of 1½% Penalty due and payable to the United States Treasury determined as provided in subsection (a)(2)(i). 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 Alternative Penalty Account exceeds the amount required to be on deposit therein to make the payments required by subsection (a)(2)(iii), the Trustee, at the written direction of an Authorized Representative of the City, may withdraw the excess from the applicable subaccount of the Alternative 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 City, to the United States Treasury, out of amounts in a subaccount of the Alternative 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 that any payment is required to be made from a subaccount of the Alternative 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 Alternative 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, prepared and signed by the District, or shall be made in such other manner as provided under the Code.
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(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 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 and the Trustee 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, in addition to any opinions required by the Trustee under Section 6.3 hereof.

Section 3.8. Surplus Fund. After making the transfers required by Sections 3.3, 3.4, 3.5,

3.6 and 3.7, as soon as practicable after each September 1, and in any event prior to each October 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 of the City 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). Moneys deposited in the Surplus Fund will be transferred by the Trustee at the direction of an Authorized Representative of the City: (a) 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; (b) to the Reserve Account in order to replenish the Reserve Account to the Reserve Requirement; (c) to the Administrative Expenses Account of the Special Tax Fund to pay Administrative Expenses to the extent that the amounts on deposit in the Administrative Expenses Account of the Special Tax Fund are insufficient to pay Administrative Expenses; (d) to the Construction Fund to pay Project Costs; or (e) 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 will notify the Trustee in a Certificate of an Authorized Representative and the Trustee will 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 Permitted 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 and corporations under the Code) or in Permitted 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 29 4898-2354-5505v4/022042-0054
interest on the Bonds or any Parity Bonds which were issued on a tax-exempt basis for federal income tax purposes.

Section 3.9. Costs of Issuance Fund. The moneys in the Costs of Issuance Fund shall be disbursed by the Trustee pursuant to a Certificate of an Authorized Representative of the City, and any balance therein shall be transferred by the Trustee to the Interest Account as directed in writing by an Authorized Representative of the City or 90 days following the issuance of the Bonds, whichever is earlier. The Costs of Issuance Fund shall thereafter be closed.

Section 3.10. Construction Fund.
(a) The moneys in the Construction Fund shall be applied exclusively to pay the Project Costs. Amounts for Project Costs shall be disbursed by the Trustee from the Construction Fund, 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 Construction Fund may be transferred to another Account or Accounts therein pursuant to a Certificate of an Authorized Representative of the District. (b) 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 Construction Fund 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 Construction Fund 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 Construction Fund.

The Trustee shall be under no duty or obligation to analyze or verify any documentation supporting such disbursements or transfers, but shall hold and provide to Bondowners upon request such documentation relating to disbursements or transfers, solely as a repository for the benefit of Bondowners.

Section 3.11. Investments. Moneys held in any of the funds, Accounts and subaccounts under this Indenture shall be invested at the written direction of the District in accordance with the limitations set forth below only in Permitted Investments which shall be deemed at all times to be a part of such funds, Accounts and subaccounts. Any loss resulting from such Permitted Investments shall be credited or charged to the fund, Account or subaccount from which such investment was made, and any investment earnings on a fund, Account or subaccount shall be applied as follows:
(i) investment earnings on all amounts deposited in the Construction Fund, the Costs of Issuance Fund, the Special Tax Fund, the Surplus Fund and the Rebate Fund and each Account therein (other than the Reserve Account of the Special Tax Fund) shall be deposited in those respective funds and Accounts; and (ii) investment earnings on all amounts deposited in the Reserve Account shall be deposited therein to be applied as set forth in Section 3.6. Moneys in the funds, Accounts and subaccounts held under this Indenture may be invested by the Trustee as directed in writing (filed by the District with the 30 4898-2354-5505v4/022042-0054
Trustee two (2) Business Days in advance of the making of the investment) from time to time, in Permitted Investments subject to the following restrictions:
(a) Moneys in the Construction Fund shall be invested in Authorized Investments which will by their terms mature, or in the case of an Investment Agreement are available without penalty, as close as practicable to the date the District estimates the moneys represented by the particular investment will be needed for withdrawal from the Construction Fund. Notwithstanding anything herein to the contrary, amounts in the Construction Fund three years after the Delivery Date for the Bonds and the proceeds of each issue of Parity Bonds issued on a tax-exempt basis which are remaining on deposit in the Construction Fund on the date which is three years following the date of issuance of such issue of Parity Bonds shall be invested by the District only in Authorized Investments the interest on which is excluded 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 from which such proceeds were derived, unless in the opinion of Bond Counsel such restriction is not necessary to prevent interest on the Bonds or any Parity Bonds which were issued on a tax-exempt basis for federal income tax purposes from being included in gross income for federal income tax purposes.
(b) Moneys in the Costs of Issuance Fund and the Interest Account, the Principal Account and the Redemption Account of the Special Tax Fund shall be invested only in Permitted Investments which will by their terms mature, or in the case of an investment agreement are available for withdrawal without penalty, on such dates so as to ensure the payment of principal of, premium, if any, and interest on the Bonds and any Parity Bonds as the same become due. (c) Moneys in the Reserve Account of the Special Tax Fund may be invested only in Permitted Investments which, taken together, have a weighted average maturity not in excess of five years; provided that such amounts may be invested in an investment agreement to the later of the final maturity of the Bonds or any Parity Bonds so long as such amounts may be withdrawn at any time, without penalty, for application in accordance with Section 3.6; and provided that no such Permitted Investment of amounts in the Reserve Account allocable to the Bonds or an issue of Parity Bonds shall mature later than the respective final maturity date of the Bonds or the issue of Parity Bonds, as applicable.
(d) Moneys in the Rebate Fund shall be invested only in Permitted Investments of the type described in clause (a) of the definition thereof which by their terms will mature, as nearly as practicable, on the dates such amounts are needed to be paid to the United States Government pursuant to Section 3.7, or in Permitted Investments of the type described in clause (g) of the definition thereof. (e) In the absence of written investment directions from the District, the Trustee shall hold such moneys uninvested.

Lake Elsinore City CouncilMay 26, 2026

Lake Elsinore City Council
May 26, 2026