Agenda packet — Menifee City Council, August 2, 2023 (part 3 of 3)

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 99
Menifee Mayor and City Council
August 2, 2023
Page
582 of 729

7 4880-0345-9428/200299-0018

ARTICLE VI

MISCELLANEOUS
Section 6.1.Provisions of Original Bond Indenture in Effect. Except as expressly modified herein, all of the provisions of the Original Bond Indenture shall remain in full force and effect.

Section 6.2.Partial Invalidity. If any section, paragraph, sentence, clause or phrase of this First Supplement shall for any reason be held illegal, invalid or unenforceable, such holding shall not affect the validity of the remaining portions of this First Supplement. The District hereby declares that it would have entered into this First Supplement and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issuance of the 2023 Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses, or phrases of this First Supplement may be held illegal, invalid or unenforceable.

Section 6.3.Execution in Counterparts. This First Supplement 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 6.4.Governing Law. This First Supplement shall be construed and governed in accordance with the laws of the State of California applicable to contracts made and performed in such state.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 100
Menifee Mayor and City Council
August 2, 2023
Page
583 of 729

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IN WITNESS WHEREOF, COMMUNITY FACILITIES DISTRICT NO. 2021-1 (BANNER PARK) OF THE CITY OF MENIFEE has caused this First Supplement to Bond Indenture to be signed by an Authorized Representative of the District and Wilmington Trust, National Association in token of its acceptance of the trust created hereunder, has caused this First Supplement to Bond Indenture to be signed in its corporate name by its officers identified below, all as of the day and year first above written.

COMMUNITY FACILITIES DISTRICT NO. 2021-1
(BANNER PARK) OF THE CITY OF MENIFEE
By:

Mayor of the City of Menifee, acting as the
legislative body of Community Facilities
District No. 2021-1 (Banner Park) of the City of
Menifee
ATTEST:

Acting City Clerk of the City of Menifee,
acting as the legislative body of
Community Facilities District No. 2021-1
(Banner Park) of the City of Menifee

WILMINGTON TRUST, NATIONAL
ASSOCIATION, as Trustee
By:

Authorized Signatory
Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 101
Menifee Mayor and City Council
August 2, 2023
Page
584 of 729

A-1
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EXHIBIT A

FORM OF SPECIAL TAX BOND

UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE DISTRICT OR TRUSTEE FOR

REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO

SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY

TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

R-____ $___________

UNITED STATES OF AMERICA

STATE OF CALIFORNIA

COUNTY OF RIVERSIDE
COMMUNITY FACILITIES DISTRICT NO. 2021-1
(BANNER PARK) OF THE CITY OF MENIFEE
SPECIAL TAX BOND, SERIES 2023A
INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP:
% September 1, 20__ ________, 2023 58680W__
REGISTERED OWNER: CEDE & CO.

PRINCIPAL AMOUNT: __________________ DOLLARS
COMMUNITY FACILITIES DISTRICT NO. 2021-1 (BANNER PARK) OF THE CITY OF MENIFEE (the “District”) which was formed by the City of Menifee (the “City”) and is situated in the County of Riverside, State of California, FOR VALUE RECEIVED, hereby promises to pay, solely from certain amounts held under the Indenture (as hereinafter defined), to the Owner named above, or registered assigns, on the Maturity Date set forth above, unless redeemed prior thereto as hereinafter provided, the Principal Amount set forth above, and to pay interest on such Principal Amount from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication hereof, unless: (i) the date of authentication is an Interest Payment Date, in which event interest shall be payable from such date of authentication; (ii) the date of authentication is after a Record Date (as hereinafter defined) but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication; or (iii) the date of authentication is prior to the close of Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 102
Menifee Mayor and City Council
August 2, 2023
Page
585 of 729

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business on the first Record Date, in which event interest shall be payable from the Dated Date set forth above. Notwithstanding the foregoing, if at the time of authentication of this Bond interest is in default, interest on this Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment, interest on this Bond shall be payable from the Dated Date set forth above.

Interest will be paid semiannually on March 1, 2024 and each March 1 and September 1 thereafter (each an “Interest Payment Date”), at the Interest Rate set forth above, until the Principal Amount hereof is paid or made available for payment.

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

This Bond is one of a duly authorized issue of “Community Facilities District No. 2021-1 (Banner Park) of the City of Menifee Special Tax Bonds, Series 2023A” (the “Bonds”) issued in the aggregate principal amount of $_________ pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, being Section 53311 et seq. of the California Government Code (the “Act”) for the purpose of financing public improvements, funding a deposit to the reserve account and paying certain costs related to the issuance of the Bonds. The issuance of the Bonds and the terms and conditions thereof are provided for by a resolution adopted by the City Council of the City, acting in its capacity as the legislative body of the District (the “Legislative Body”), on August 2, 2023, and a Bond Indenture dated as of November 1, 2022 (the “Original Bond Indenture”), as supplemented and amended by the First Supplement to Bond Indenture, dated as of August 1, 2023 (the “First Supplement” and together with the Original Bond Indenture, the “Indenture”), each by and between the District and the Trustee, and this reference incorporates the Indenture herein, and by acceptance hereof the Owner of this Bond assents to said terms and conditions. The Indenture is adopted under and this Bond is issued under, and both are to be construed in accordance with, the laws of the State of California.

Pursuant to the Act and the Indenture, the principal of, premium, if any, and interest on this Bond are payable on a parity with the District’s Special Tax Bonds, Series 2022A, solely from the portion of the annual special taxes authorized under the Act to be levied and collected within the District (the “Special Taxes”) and certain other amounts pledged to the repayment of the Bonds as set forth in the Indenture. Any amounts for the payment hereof shall be limited to the Net Taxes pledged and collected or foreclosure proceeds received following a default in payment of the Special Taxes and other amounts deposited to the Special Tax Fund (other than the Administrative Expense Account therein) established under the Indenture, except to the extent that other provision for payment has been made by the Legislative Body, as may be permitted by law. The District has covenanted for the benefit of the owners of the Bonds that under certain circumstances described in the Indenture it will commence and diligently pursue to completion appropriate foreclosure proceedings in the event of delinquencies of Special Tax installments levied for payment of principal and interest on the Bonds.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 103
Menifee Mayor and City Council
August 2, 2023
Page
586 of 729

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

Redemption Date Redemption Price
%
The Bonds maturing on September 1, 2038 (the “20__ Term Bonds”) shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account established under the Original Bond Indenture, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20__ Term Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption price for each redeemed 20__ Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:

Term Bonds Maturing September 1, 20__
Redemption Dates
(September 1)
Redemption
Amount
*
_____________
* Maturity.

The Bonds maturing on September 1, 2038 (the “20__ Term Bonds”) shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account established under the Original Bond Indenture, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20__ Term Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption price for each redeemed 20__ Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 104
Menifee Mayor and City Council
August 2, 2023
Page
587 of 729

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4880-0345-9428/200299-0018
Term Bonds Maturing September 1, 20__
Redemption Dates
(September 1)
Redemption
Amount
*
_____________
* Maturity.

Term Bonds Maturing September 1, 20__
Redemption Dates
(September 1)
Redemption
Amount
*
_____________
* Maturity.

The Bonds are subject to special mandatory redemption as a whole or in part on a pro rata basis among maturities and by lot within a maturity, on any Interest Payment Date on or after March 1, 2024 and shall be redeemed by the Trustee, from Prepayments deposited to the Redemption Account pursuant to the Indenture, plus amounts transferred from the Reserve Account pursuant to the Indenture, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date:

Redemption Date Redemption Price
103%
102
101
100
Notice of redemption with respect to the Bonds to be redeemed shall be mailed to the registered owners thereof not less than 30 nor more than 45 days prior to the redemption date by first Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 105
Menifee Mayor and City Council
August 2, 2023
Page
588 of 729

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class mail, postage prepaid, to the addresses set forth in the registration books; provided, however, so long as the Bonds are registered in the name of the Nominee, such notice shall be given in such manner as complies with the requirements of the Depository. Neither a failure of the Owner hereof to receive such notice nor any defect therein will affect the validity of the proceedings for redemption. All Bonds or portions thereof so called for redemption will cease to accrue interest on the specified redemption date, provided that funds for the redemption are on deposit with the Trustee on the redemption date. Thereafter, the registered owners of such Bonds shall have no rights except to receive payment of the redemption price upon the surrender of the Bonds.

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

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

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

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

THE BONDS DO NOT CONSTITUTE GENERAL OBLIGATIONS OF THE CITY OR OF THE DISTRICT. NEITHER THE CITY NOR THE DISTRICT IS OBLIGATED TO LEVY OR

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

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

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

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

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

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

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 106
Menifee Mayor and City Council
August 2, 2023
Page
589 of 729

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4880-0345-9428/200299-0018
IN WITNESS WHEREOF, Community Facilities District No. 2021-1 (Banner Park) of the City of Menifee has caused this Bond to be dated the Dated Date, to be signed on behalf of the District by the Mayor of the City by his facsimile signature and attested by the facsimile signature of the Acting City Clerk of the City.

Mayor of the City of Menifee, acting as the legislative body of Community Facilities District No. 2021-1
(Banner Park) of the City of Menifee
ATTEST:

Acting City Clerk of the City of Menifee,
acting as the legislative body of Community
Facilities District No. 2021-1 (Banner Park) of
the City of Menifee
[FORM OF TRUSTEE’S CERTIFICATE
OF AUTHENTICATION AND REGISTRATION]
This is one of the Bonds described in the within-defined Indenture.

Dated: August __, 2023 WILMINGTON TRUST, NATIONAL
ASSOCIATION, as Trustee
By:

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

Acting City Clerk of the City
Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 107
Menifee Mayor and City Council
August 2, 2023
Page
590 of 729

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[FORM OF ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto whose tax identification number is ,
the within-mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s) attorney to transfer the same on the books of the Trustee with full power of substitution in the premises.

Dated:

Signature guaranteed:

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

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

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 108
Menifee Mayor and City Council
August 2, 2023
Page
591 of 729

Stradling Yocca Carlson & Rauth
Draft 06/05/23
1 4883-2275-0820/200299-0018

DISTRICT CONTINUING DISCLOSURE CERTIFICATE
THIS CONTINUING DISCLOSURE CERTIFICATE (this “Disclosure Certificate”) dated as of August 1, 2023 is executed and delivered by Community Facilities District No. 2021-1 (Banner Park) of the City of Menifee (the “District”) in connection with the issuance and delivery by the District of its $_______ Special Tax Bonds, Series 2023A (the “Bonds”). The Bonds are being issued pursuant to a Resolution of Issuance adopted on August 2, 2023, by the City Council of the City of Menifee, acting as the legislative body of the District, and the Bond Indenture, dated as of November 1, 2022, as supplemented and amended by the First Supplement to Bond Indenture, dated as of August 1, 2023 (together, the “Indenture”), by and between the District and Wilmington Trust, National Association, as trustee. The District covenants as follows:

Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate 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 and the Rate and Method of Apportionment, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report provided by the District pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Beneficial Owner” shall mean any person 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 purposes.
“City” shall mean the City of Menifee, County of Riverside, California. “Disclosure Representative” shall mean the Assistant City Manager of the City, or his or her designee, or such other officer or employee as the District shall designate in writing to the Dissemination Agent from time to time.
“Dissemination Agent” shall mean, initially, Spicer Consulting Group, LLC, or any successor Dissemination Agent designated in writing by the District and which has filed with the then current Dissemination Agent a written acceptance of such designation. “District” shall mean Community Facilities District No. 2021-1 (Banner Park) of the City of Menifee.
“EMMA” shall mean the Electronic Municipal Market Access System of the Municipal Securities Rulemaking Board, which can be found at www.emma.msrb.org, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission in the future system of the MSRB.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 109
Menifee Mayor and City Council
August 2, 2023
Page
592 of 729

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“Financial Obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term Financial Obligation shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule.
“Listed Events” shall mean any of the events listed in Section 5 of this Disclosure Certificate. “MSRB” shall mean the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org. “Official Statement” shall mean that certain Official Statement for the Bonds dated August __, 2023.
“Owners” shall mean the registered owners of the Bonds as set forth in the registration books maintained by the Trustee.
“Participating Underwriter” shall mean Stifel, Nicolaus & Company, Incorporated. “Rate and Method of Apportionment” shall mean that certain Rate and Method of Apportionment of Special Tax approved pursuant to the Resolution of Formation. “Resolution of Formation” shall mean the resolutions adopted by the City Council pursuant to which the City Council formed the District.
“Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. “State” shall mean the State of California.
“Trustee” shall mean Wilmington Trust, National Association or such other entity appointed by the District pursuant to the Indenture to act as the trustee under the Indenture.

Section 3. Provision of Annual Reports.
(a) Not later than March 1 of each year commencing March 1, 2024, the District shall, or shall cause the Dissemination Agent to provide to EMMA an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. If the Dissemination Agent is other than the District, then not later than 15 business days prior to the date referred to in the prior sentence hereof, the District shall provide the Annual Report (in a form suitable for filing with EMMA) to the Dissemination Agent. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the District, if any exist, 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.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 110
Menifee Mayor and City Council
August 2, 2023
Page
593 of 729

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(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, in a timely manner, a notice to EMMA of the failure to file the Annual Report 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 (ii) promptly after receipt of the Annual Report, file a report with the District certifying that the Annual Report has been provided to EMMA and the date it was provided. (e) Notwithstanding any other provision of this Disclosure Certificate, all filings shall be made in accordance with the MSRB’s EMMA system or in another manner approved under the Rule.

Section 4. Content of Annual Reports. The District’s Annual Report shall contain or include by reference the following:
(a) Financial Statements. The audited financial statements of the District for the prior fiscal year, if any have been prepared and which, if prepared, shall be prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the District’s audited financial statements, if any are prepared, are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.
(b) Financial and Operating Data. The Annual Report shall contain or incorporate by reference the following information:
(i) the principal amount of the Bonds outstanding as of the September 2 preceding the filing of the Annual Report;
Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 111
Menifee Mayor and City Council
August 2, 2023
Page
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(ii) the balance in each fund under the Indenture as of the September 2 preceding the filing of the Annual Report;
(iii) the aggregate assessed valuation of the Taxable Property within the District; (iv) any changes to the Rate and Method of Apportionment of Special Tax for the District approved or submitted to the qualified electors for approval prior to the filing of the Annual Report;
(v) a table setting forth the annual Special Tax delinquency rate within the District at June 30 of each fiscal year for which a delinquency exists, listing for each fiscal year, the total Special Tax levy, the amount delinquent and the percent delinquent; (vi) an update of the value-to-lien of the property within the District based on the assessed value and the Special Tax levy for the then current fiscal year, which update may be provided in a form similar to Table [2] in the Official Statement; provided that such update need not include overlapping special tax, assessment or general obligation indebtedness; and (vii) the status of any foreclosure actions being pursued by the District with respect to delinquent Special Taxes within the District. (c) Any or all of the items listed in (a) or (b) above may be included by specific reference to other documents, including official statements of debt issues of the District or related public entities, which have been submitted to EMMA or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB through EMMA. The District shall clearly identify each such other document so included by reference.

Section 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the District shall give, or cause the Dissemination Agent to give, notice to EMMA in a timely manner not in excess of ten (10) business days after the occurrence of any of the following events with respect to the Bonds:

1. principal and interest payment delinquencies;

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

3. unscheduled draws on credit enhancements reflecting financial difficulties;

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

5. adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds;

6. defeasances;

7. tender offers;
Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 112
Menifee Mayor and City Council
August 2, 2023
Page
595 of 729

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8. ratings changes; and

9. bankruptcy, insolvency, receivership or similar proceedings.

Note: for the purposes of the event identified in subparagraph (9), 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 obligated person, 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 obligated person.

10. default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the obligated person, any of which reflect financial difficulties.
(b) Additionally, the District shall give or cause the Dissemination Agent to give notice to EMMA in a timely manner not in excess of ten (10) business days after the occurrence of any of the following events with respect to the Bonds, if material:

1. mergers, consolidations, acquisitions, the sale of all or substantially all of the assets of the obligated persons or their termination;

2. appointment of a successor or additional fiscal agent or the change of the name of a fiscal agent;

3. nonpayment related defaults;

4. modifications to the rights of Bondholders;

5. bond calls;

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

7. incurrence of a Financial Obligation of the obligated person, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the obligated person, any of which affect security holders.
(c) In the event that the District’s fiscal year changes, the District shall report or shall instruct the Dissemination Agent to report such change in the same manner and to the same parties as Listed Events would be reported pursuant to this Section. (d) The District hereby agrees that the undertaking set forth in this Disclosure Certificate is the responsibility of the District, and the Dissemination Agent, if other than the District, shall not Item Title: 12.2
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6 4883-2275-0820/200299-0018
be responsible for determining whether the District’s instructions to the Dissemination Agent under this Section comply with the requirements of the Rule.

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

Section 7. Dissemination Agent. The District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent, if other than the District, shall not be responsible in any manner for the content of any notice or report prepared by the District pursuant to this Disclosure Certificate.

The initial Dissemination Agent shall be Spicer Consulting Group, LLC. The Dissemination Agent may resign by providing (i) thirty (30) days written notice to the District and the Trustee and (ii) upon appointment of a new Dissemination Agent hereunder.

Section 8. Amendment; Waiver.
(a) This Disclosure Certificate may be amended, by written agreement of the parties, without the consent of the Owners, and any provision of this Disclosure Certificate may be waived, if all of the following conditions are satisfied: (1) such amendment or waiver is made in connection with a change in circumstances that arises from a change in legal (including regulatory) requirements, a change in law, or a change in the identity, nature or status of the District or the type of business conducted thereby, (2) the undertakings in this Disclosure Certificate as so amended or waived would, in the opinion of a nationally recognized bond counsel, have complied with the requirements of the Rule as of the date of this Disclosure Certificate, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances, and (3) the amendment or waiver either (i) is approved by the Owners of the Bonds in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Owners or (ii) does not, in the determination of the District, materially impair the interests of the Owners or Beneficial Owners of the Bonds.
(b) To the extent any amendment to this Disclosure Certificate results in a change in the type of financial information or operating data provided pursuant to this Disclosure Certificate, the first Annual Report provided thereafter shall include a narrative explanation of the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.
(c) If an amendment is made to the basis on which financial statements are prepared, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Such comparison shall include a quantitative and, to the extent reasonably feasible, qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information.

Item Title: 12.2
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Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the District from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the District chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the District shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

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

Section 11. Duties, Immunities and Liabilities of Dissemination Agent. Where an entity other than the District is acting as the Dissemination Agent, the Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the District agrees to indemnify and save the Dissemination Agent and its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of their powers and duties hereunder, including the costs and expenses (including 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 shall be paid (i) compensation by the District for its services provided hereunder in accordance with a schedule of fees to be mutually agreed to; and (ii) all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the District pursuant to this Disclosure Certificate. The obligations of the District under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. No person shall have any right to commence any action against the Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Certificate. The Dissemination Agent shall not be liable under any circumstances for monetary damages to any person for any breach under this Disclosure Certificate.

Section 12. Notices. Any notices or communications to or among any of the parties to this Disclosure Certificate may be given as follows:

District: Community Facilities District No. 2021-1 (Banner Park) of the City of Menifee
City of Menifee
29844 Haun Road
Menifee, CA 92586
Attn: Assistant City Manager
Item Title: 12.2
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8 4883-2275-0820/200299-0018
Underwriter: Stifel, Nicolaus & Company, Incorporated
2121 Avenue of the Stars, Suite 2150
Los Angeles, CA 90067
Attn: Public Finance Department
Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s) to which subsequent notice or communications should be sent.

Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the District, the Trustee, 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 14. Merger. Any person succeeding to all or substantially all of the Dissemination Agent’s business shall be the successor Dissemination Agent without the filing of any paper or any further act.

This Disclosure Certificate is executed as of the date and year first set forth above.

COMMUNITY FACILITIES DISTRICT NO. 2021-1
(BANNER PARK) OF THE CITY OF MENIFEE
By:

Rochelle Clayton
Disclosure Representative
Item Title: 12.2
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1 $_________
COMMUNITY FACILITIES DISTRICT NO. 2021-1 (BANNER PARK)

OF THE CITY OF MENIFEE
SPECIAL TAX BONDS, SERIES 2023A

BOND PURCHASE AGREEMENT
________, 2023
City of Menifee
Community Facilities District No. 2021-1
(Banner Park)
29844 Haun Road
Menifee, California 92586
Ladies and Gentlemen:

Stifel, Nicolaus & Company, Incorporated, as underwriter (the “Underwriter”), acting not as a fiduciary or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Agreement (this “Purchase Agreement”) with Community Facilities District No. 2021-1 (Banner Park) of the City of Menifee (the “Community Facilities District”), which upon acceptance will be binding upon the Underwriter and the Community Facilities District. The agreement of the Underwriter to purchase the Bonds (as hereinafter defined) is contingent upon the Community Facilities District satisfying all of the obligations imposed upon them under this Purchase Agreement. This offer is made subject to the Community Facilities District’s acceptance by the execution of this Purchase Agreement and its delivery to the Underwriter at or before 11:59 P.M., local time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the Community Facilities District at any time prior to the acceptance hereof by the Community Facilities District. All capitalized terms used herein, which are not otherwise defined, shall have the meaning provided for such terms in the Bond Indenture, dated as of November 1, 2022, as supplemented by that certain First Supplement to Bond Indenture, dated as of August 1, 2023, (together, the “Indenture”) each by and between the District and Wilmington Trust, National Association, as trustee (the “Trustee”).

1. Purchase, Sale and Delivery of the Bonds.

Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein: (i) the Underwriter hereby agrees to purchase from the Community Facilities District and the Community Facilities District hereby agrees to sell to the Underwriter all (but not less than all) of the $_______ aggregate principal amount of the Community Facilities District No. 2021-1 (Banner Park) of the City of Menifee Special Tax Bonds, Series 2023A (the “Bonds”), dated the Closing Date (as hereinafter defined), bearing interest at the rates and maturing on the dates and in the principal amounts set forth in Exhibit A hereto. The purchase price for the Bonds shall be $________ (being 100% of the aggregate principal amount thereof, less a net original issue discount of $______ and less an Underwriter’s discount of $_______).

Item Title: 12.2
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2 The Underwriter agrees to make a bona fide public offering of all of the Bonds initially at the public offering prices (or yields) set forth in Exhibit A attached hereto and incorporated herein by reference. Subsequent to the initial public offering, the Underwriter reserves the right to change the public offering prices (or yields) as it deems necessary in connection with the marketing of the Bonds subject to Section 2 hereof, provided that the Underwriter shall not change the interest rates set forth in Exhibit A. The Bonds may be offered and sold to certain dealers at prices lower than such initial offering prices.

The Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of, and shall be payable from the Net Taxes as provided in the Indenture, the Preliminary Official Statement (as hereinafter defined), and the Mello-Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the Government Code of the State of California) (the “Community Facilities District Act”). The issuance of the Bonds has been duly authorized by the City Council of the City of Menifee (the “City”), as the legislative body for the Community Facilities District, pursuant to a resolution (the “Community Facilities District Resolution of Issuance”) adopted on ________, 2023.

The proceeds of the Bonds will be used to (i) finance certain public improvements needed with respect to the development of property located within the Community Facilities District, including public improvements to be owned by the City, water and sewer facilities to be owned and operated by the Eastern Municipal Water District and school facilities to be owned and operated by the Menifee Union School District; (ii) fund a reserve account for the Bonds and 2022 Bonds (defined below); and (iii) pay costs of issuance for the Bonds.

The Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of, and shall be payable from special taxes as provided in the Indenture (the “Special Taxes”). The Bonds are secured under the Indenture by a pledge of and lien upon Net Taxes on a parity with the District’s Special Tax Bonds, Series 2022A, which are currently outstanding in the aggregate principal amount of $5,375,000 (the “2022 Bonds”).

A. The Community Facilities District hereby acknowledges that the Underwriter is entering into this Purchase Agreement in reliance on the representations, warranties and agreements made by the Community Facilities District herein, and the Community Facilities District shall take all action necessary to enforce its rights hereunder for the benefit of the Underwriter and shall immediately notify the Underwriter if it becomes aware that any representation, warranty or agreement made by the Community Facilities District herein is incorrect in any material respect.

The Community Facilities District acknowledges and agrees that (i) the purchase and sale of the Bonds pursuant to this Purchase Agreement is an arm’s-length commercial transaction between the Community Facilities District and the Underwriter, (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as principal and not as the agent or fiduciary of the Community Facilities District, (iii) the Underwriter has not assumed an advisory or fiduciary responsibility in favor of the Community Facilities District with respect to (a) the offering of the Bonds or the process leading thereto (whether or not the Underwriter, or any affiliate of the Underwriter, has advised or is currently advising the Community Facilities District on other matters) or (b) any other obligations to the Community Facilities District with respect to the offering contemplated hereby, except the obligations expressly set forth in this Purchase Agreement or otherwise imposed by law, (iv) the Underwriter has financial interests that differ from those of the Item Title: 12.2
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3 Community Facilities District and (v) the Community Facilities District has consulted with their own legal, financial and other advisors to the extent they have deemed appropriate in connection with this transaction. The Community Facilities District acknowledges that it has previously provided the Underwriter with an acknowledgement of receipt of the required Underwriter disclosure under Rule G-17 of the Municipal Securities Rulemaking Board (“MSRB”). The Community Facilities District acknowledges and represents that it has engaged Urban Futures, Inc. as its municipal advisor (the “Municipal Advisor”) (as defined in Securities and Exchange Commission Rule 15Ba1) and will rely solely on the financial advice of Urban Futures, Inc. with respect to the Bonds.

B. Pursuant to the authorization of the Community Facilities District, the Underwriter has distributed copies of the Preliminary Official Statement dated _______, 2023, relating to the Bonds, which, together with the cover page, inside cover page and appendices thereto is herein called the “Preliminary Official Statement.” By its acceptance of this Purchase Agreement, the Community Facilities District hereby ratifies the use by the Underwriter of the Preliminary Official Statement, and the Community Facilities District agrees to execute a final official statement relating to the Bonds (including any supplements and/or amendments thereto, the “Official Statement”) which will consist of the Preliminary Official Statement with such changes as may be made thereto, with the approval of Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel (“Bond Counsel”), Stradling Yocca Carlson & Rauth, a Professional Corporation, Disclosure Counsel (“Disclosure Counsel”), and the Underwriter, and to provide copies thereof to the Underwriter as set forth herein. The Community Facilities District hereby authorizes and requires the Underwriter to use and promptly distribute, in connection with the offer and sale of the Bonds, the Preliminary Official Statement, the Official Statement and any supplement or amendment thereto. The Community Facilities District further authorizes the Underwriter to use and distribute, in connection with the offer and sale of the Bonds, the Indenture, the Continuing Disclosure Certificate executed by the Community Facilities District in connection with the Bonds (the “Continuing Disclosure Certificate”), this Purchase Agreement and all information contained herein, and all other documents, certificates and statements furnished by or on behalf of the Community Facilities District to the Underwriter in connection with the transactions contemplated by this Purchase Agreement.

C. To assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2-12(b)(5) (the “Rule”), the Community Facilities District will undertake pursuant to the Continuing Disclosure Certificate, in the form attached to the Official Statement as Appendix F, to provide annual reports and notices of certain enumerated events. A description of this undertaking is set forth in the Preliminary Official Statement and will also be set forth in the Official Statement.

D. Except as the Underwriter and the Community Facilities District may otherwise agree, the Community Facilities District will deliver to the Underwriter, at the offices of Bond Counsel in Newport Beach, California, or at such other location as may be mutually agreed upon by the Underwriter and the Community Facilities District, the documents hereinafter mentioned; and the Community Facilities District will deliver to the Underwriter through the facilities of The Depository Trust Company (“DTC”), the Bonds, in definitive form (all Bonds bearing CUSIP numbers), duly executed by the Community Facilities District and authenticated by the Trustee in the manner provided for in the Indenture and the Community Facilities District Act at 8:00 a.m. California time, on _________, 2023 (the “Closing Date”), and the Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in paragraph (A) of this Section by wire transfer, payable in federal or other immediately available funds (such delivery and Item Title: 12.2
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4 payment being herein referred to as the “Closing”). The Bonds shall be in fully registered book- entry form (which may be typewritten) and shall be registered in the name of Cede & Co., as nominee of DTC.

2. Establishment of Issue Price.

A. The Underwriter agrees to assist the Community Facilities District in establishing the issue price of the Bonds and shall execute and deliver to the Community Facilities District at Closing an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit C, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Community Facilities District and Bond Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds.

B. Except as otherwise set forth in Exhibit A attached hereto, the Community Facilities District will treat the first price at which 10% of each maturity of the Bonds (the “10% test”) is sold to the public as the issue price of that maturity (if different interest rates apply within a maturity, each separate CUSIP number within that maturity will be subject to the 10% test). At or promptly after the execution of this Purchase Agreement, the Underwriter shall report to the Community Facilities District the price or prices at which it has sold to the public each maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the Community Facilities District the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until the 10% test has been satisfied as to the Bonds of that maturity or until all Bonds of that maturity have been sold to the public.

C. The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Agreement at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in Exhibit A attached hereto, except as otherwise set forth therein. Exhibit A also sets forth, as of the date of this Purchase Agreement, the maturities, if any, of the Bonds for which the Underwriter represents that (i) the 10% test has been satisfied (assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement) and (ii) the 10% test has not been satisfied and for which the Community Facilities District and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Community Facilities District to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold-the-offering-price rule”). So long as the hold-the-offering-price rule remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following:

1. the close of the fifth (5th) business day after the sale date; or

2. the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.

The Underwriter shall promptly advise the Community Facilities District when it has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public, if that occurs prior to the close of the fifth (5th) business day after the sale date.

Item Title: 12.2
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5 D. The Underwriter confirms that:
(i) any selling group agreement and any third-party distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such third-party distribution agreement, as applicable:
(A)(i) to report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter and (ii) to comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter,
(B) to promptly notify the Underwriter of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below), and (C) to acknowledge that, unless otherwise advised by the dealer or broker-dealer, the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public.
(ii) any selling group agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer that is a party to a third-party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker-dealer that is a party to such third-party distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires.

E. The Community Facilities District acknowledges that, in making the representation set forth in this section, the Underwriter will rely on (i) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the requirements for establishing the issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the- offering-price rule, if applicable to the Bonds, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a third-party distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the requirements for establishing the issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in the third-party distribution agreement and the related pricing wires.

Item Title: 12.2
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6 F. The Underwriter acknowledges that sales of any Bonds to any person that is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below) shall not constitute sales to the public for purposes of this section.

Further, for purposes of this section:

1. “public” means any person other than an underwriter or a related party;

2. “underwriter” means (A) any person that agrees pursuant to a written contract with the Community Facilities District (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Bonds to the public);

3. a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (A) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (B) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (C) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other); and

4. “sale date” means the date of execution of this Purchase Agreement by all parties.

3. Representations, Warranties and Covenants of the Community Facilities District.

The Community Facilities District represents, warrants and covenants to the Underwriter on behalf of itself and the City that:

A. The City is duly organized and validly existing as a general law city under the Constitution and laws of the State of California and has duly authorized the formation of the Community Facilities District pursuant to resolutions duly adopted by the City Council (the “Community Facilities District Formation Resolution” and, together with the Community Facilities District Resolution of Issuance, the “Community Facilities District Resolutions”) and the Community Facilities District Act. The City Council, as the legislative body of the City and the Community Facilities District, has duly adopted the Community Facilities District Formation Resolution, and has caused to be recorded in the real property records of the County of Riverside, notice of special tax lien, and any required amendments thereof (collectively, the “Notice of Special Tax Lien”) (the Community Facilities District Formation Resolution and Notice of Special Tax Lien being collectively referred to herein as the “Formation Documents”), and has duly adopted the Community Facilities District Resolution of Issuance. Each of its Formation Documents remains in full force and effect as of the date hereof and has not been amended. The Community Facilities District is duly organized and validly existing as a Community Facilities District under the laws of the State of California. The Community Facilities District has, and at the Closing Date will have, as the case may be, full legal right, power and authority: (i) to execute, deliver and perform its Item Title: 12.2
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7 obligations under this Purchase Agreement, the Continuing Disclosure Certificate and the Indenture, and to carry out all transactions contemplated by each of such agreements; (ii) to issue, sell and deliver the Bonds as provided herein; and (iii) to carry out, give effect to and consummate the transactions contemplated by the Formation Documents, the Indenture, the Bonds, the Continuing Disclosure Certificate, this Purchase Agreement and the Official Statement.

This Purchase Agreement, the Indenture, the Bonds and the Continuing Disclosure Certificate are collectively referred to herein as the “Community Facilities District Documents.” B. The Community Facilities District and the City, as applicable, have each complied, and will at the Closing Date be in compliance in all material respects, with the Formation Documents and the Community Facilities District Documents, and any immaterial noncompliance by the Community Facilities District and the City, if any, will not impair the ability of the Community Facilities District and the City, as applicable, to carry out, give effect to or consummate the transactions contemplated by the foregoing. From and after the date of issuance of the Bonds, the Community Facilities District will continue to comply with the covenants of the Community Facilities District contained in the Community Facilities District Documents.

C. The information in the Preliminary Official Statement and in the Official Statement relating to the Community Facilities District and the Bonds (other than information under the captions “PROPERTY OWNERSHIP AND THE DEVELOPMENT,” and “UNDERWRITING,” Appendix D and Appendix G, information provided by Pulte Homes Home Company, LLC (the “Developer”), the Appraiser and the Special Tax Consultant (as such terms are defined herein) and statements pertaining to the book entry system, as to which no view is expressed), is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and, upon delivery and up to and including 25 days after the End of the Underwriting Period (as defined in paragraph (D) below), the Official Statement will be amended and supplemented so as to contain no misstatement of any material fact or omission of any statement necessary to make the statements contained therein, in the light of the circumstances in which such statements were made, not misleading.

D. Up to and including 25 days after the End of the Underwriting Period (as defined below), the Community Facilities District will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter, which consent will not be unreasonably withheld. The Community Facilities District will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise materially affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds. As used herein, the term “End of the Underwriting Period” means the later of such time as: (i) the Bonds are delivered to the Underwriter; or (ii) the Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Unless the Underwriter gives notice to the contrary, the End of the Underwriting Period shall be deemed to be the Closing Date. Any notice delivered pursuant to this provision shall be written notice delivered to the Community Facilities District at or prior to the Closing Date and shall specify a date (other than the Closing Date) to be deemed the “End of the Underwriting Period.” E. Except as described in the Preliminary Official Statement and Official Statement, the Community Facilities District is not, in any respect material to the transactions Item Title: 12.2
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8 referred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a party or is otherwise subject or bound, and the performance of its obligations under the Community Facilities District Documents and compliance with the provisions of each thereof, or the performance of the conditions precedent to be performed by the Community Facilities District pursuant to this Purchase Agreement, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a party or is otherwise subject or bound, in any manner which would materially and adversely affect the performance by the Community Facilities District of its obligations under the Community Facilities District Documents or the performance of the conditions precedent to be performed by the Community Facilities District pursuant to this Purchase Agreement.

F. Except as may be required under the “blue sky” or other securities laws of any jurisdiction, all approvals, consents, authorizations, elections and orders of, or filings or registrations with, any governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the Community Facilities District of its obligations under the Community Facilities District Documents, and the performance of the conditions precedent to be performed by the Community Facilities District pursuant to this Purchase Agreement, have been or will be obtained at the Closing Date and are or will be in full force and effect at the Closing Date.

G. The Community Facilities District Documents conform as to form and tenor to the descriptions thereof contained in the Official Statement.

H. The Bonds are payable from the Special Tax of the Community Facilities District, as set forth in the Indenture, the levy of which has been duly and validly authorized pursuant to the Community Facilities District Act and the Community Facilities District will covenant in the Indenture to levy the Special Taxes within the Community Facilities District in an amount which, together with other available funds, is required for the payment of the principal of, and interest on, the Bonds when due and payable, all as provided in the Indenture.

I. The Indenture creates a valid pledge of, first lien upon and security interest in, the Net Taxes, and in the moneys in the Special Tax Fund (other than the Administrative Expense Account) established pursuant to the Indenture, on the terms and conditions set forth in the Indenture.

J. Except as disclosed in the Preliminary Official Statement, there are, to the best of the Community Facilities District’s knowledge, no entities with outstanding assessment liens against any of the properties within the Community Facilities District or which are senior to or on a parity with the Special Taxes of the Community Facilities District referred to in paragraph (I) hereof.

K. The Preliminary Official Statement was deemed final by a duly authorized officer of the Community Facilities District prior to its delivery to the Underwriter, except for the omission of such information as is permitted to be omitted in accordance with paragraph (b)(1) of the Item Title: 12.2
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9 Rule. The Community Facilities District hereby covenants and agrees that, within seven (7) business days from the date hereof, or upon reasonable written notice from the Underwriter within sufficient time to accompany any confirmation requesting payment from any customers of the Underwriter, the Community Facilities District shall cause a final printed form of the Official Statement to be delivered to the Underwriter in sufficient quantity to comply with paragraph (b)(4) of the Rule and Rules G-12, G-15, G-32 and G-36 of the Municipal Securities Rulemaking Board.

L. At the time of acceptance hereof there is and as of the Closing there will be no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body (collectively and individually, an “Action”) pending (notice of which has been served on the Community Facilities District) or to the best knowledge of the Community Facilities District or the City threatened, in which any such Action: (i) in any way questions the existence of the Community Facilities District or the titles of the officers of the Community Facilities District to their respective offices; (ii) affects, contests or seeks to prohibit, restrain or enjoin the issuance or delivery of the Bonds or the payment or collection of Special Taxes or any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contests or affects the validity of the Community Facilities District Documents or the consummation of the transactions on the part of the Community Facilities District contemplated thereby; (iii) contests the exemption of interest on the Bonds from federal or State income taxation or contests the powers of the Community Facilities District which may result in any material adverse change relating to the financial condition of the Community Facilities District; or (iv) contests the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserts that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and as of the time of acceptance hereof there is and, as of the Closing Date, there will be no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) of this sentence.

M. Any certificate signed on behalf of the Community Facilities District by any officer or employee of the Community Facilities District authorized to do so shall be deemed a representation and warranty by the Community Facilities District to the Underwriter on behalf of itself and the Community Facilities District as to the statements made therein.

N. At or prior to the Closing the Community Facilities District will have duly authorized, executed and delivered the Continuing Disclosure Certificate in substantially the form attached as Appendix F to the Official Statement. Based upon a review of its previous undertakings, and except as disclosed in the Preliminary Official Statement, the Community Facilities District has not failed to comply in all respects with any previous undertakings with regard to the Rule to provide annual reports or notices of enumerated events in the last five years.

O. The Community Facilities District will apply the proceeds of the Bonds in accordance with the Indenture and as described in the Official Statement.

P. Until such time as moneys have been set aside in an amount sufficient to pay all then outstanding Bonds at maturity or to the date of redemption if redeemed prior to maturity, plus unpaid interest thereon and premium, if any, to maturity or to the date of redemption if redeemed prior to maturity, the Community Facilities District will faithfully perform and abide by all of the covenants, undertakings and provisions contained in the Indenture.

Item Title: 12.2
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10 Q. Between the date of this Purchase Agreement and the date of Closing, the Community Facilities District will not offer or issue any bonds, notes or other obligations for borrowed money not previously disclosed to the Underwriter.

The Community Facilities District hereby approves the preparation and distribution of the Official Statement, consisting of the Preliminary Official Statement with such changes as are noted thereon and as may be made thereto, with the approval of Bond Counsel, Disclosure Counsel and the Underwriter, from time to time prior to the Closing Date.

The execution and delivery of this Purchase Agreement by the Community Facilities District shall constitute a representation by the Community Facilities District to the Underwriter that the representations and warranties contained in this Section 3 with respect to the Community Facilities District are true as of the date hereof.

4. Conditions to the Obligations of the Underwriter. The obligation of the Underwriter to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the representations and warranties on the part of the Community Facilities District contained herein, to the accuracy in all material respects of the statements of the officers and other officials of the Community Facilities District made in any certificates or other documents furnished pursuant to the provisions hereof, to the performance by the Community Facilities District of its obligations to be performed hereunder at or prior to the Closing Date, and in reliance upon the representations and covenants of the Developer contained in the certificates delivered as of the Closing Date, and to the following additional conditions:

A. At the Closing Date, the Community Facilities District Resolutions and the Community Facilities District Documents shall be in full force and effect, and shall not have been amended, modified or supplemented, except as may have been agreed to in writing by the Underwriter, and there shall have been taken in connection therewith, with the issuance of the Bonds and with the Bonds, and with the transactions contemplated thereby, and by this Purchase Agreement, all such actions as, in the opinion of Bond Counsel, shall be necessary and appropriate.

B. At the Closing Date, except as described in the Official Statement, the City shall not be, in any respect material to the transactions referred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound, and the performance of the conditions precedent to be performed hereunder will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound, in any manner which would materially and adversely affect the performance of the conditions precedent to be performed by the City hereunder.

C. At the Closing Date, except as described in the Official Statement, the Community Facilities District shall not be, in any respect material to the transactions referred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or Item Title: 12.2
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11 regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a party or is otherwise subject or bound, and the performance by the Community Facilities District of its obligations under the Bonds, the Community Facilities District Resolutions, the Indenture, and any other instruments contemplated by any of such documents, and compliance with the provisions of each thereof, or the performance of the conditions precedent to be performed hereunder, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a party or is otherwise subject or bound, in any manner which would materially and adversely affect the performance by the Community Facilities District of its obligations under the Indenture, the Bonds or the performance of the conditions precedent to be performed by the Community Facilities District hereunder.

D. The information contained in the Official Statement is, as of the Closing Date and as of the date of any supplement or amendment thereto pursuant hereto, will be true and correct in all material respects and does not, as of the Closing Date or as of the date of any supplement or amendment thereto, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

E. Between the date hereof and the Closing Date, the market price or marketability, at the initial offering prices set forth on the inside cover page of the Official Statement, of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds, shall not have been materially adversely affected, in the judgment of the Underwriter (evidenced by a written notice to the Community Facilities District terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds), by reason of any of the following:

1. Legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America or recommended to the Congress by the President of the United States, the Department of the Treasury, the Internal Revenue Service, or any member of Congress, or favorably reported for passage to either House of Congress by any committee of such House to which such legislation had been referred for consideration, or a decision rendered by a court established under Article III of the Constitution of the United States of America or by the Tax Court of the United States of America, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Treasury Department of the United States of America or the Internal Revenue Service, with the purpose or effect, directly or indirectly, of imposing federal income taxation upon such interest as would be received by any owners of the Bonds beyond the extent to which such interest is subject to taxation as of the date hereof; or

2. Legislation introduced in or enacted (or resolution passed) by the Congress or an order, decree or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Item Title: 12.2
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12 Bonds, including any or all underlying arrangements, are not exempt from registration under or other requirements of the Securities Act of 1933, as amended, or that the Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligations of the general character of the Bonds, including any or all underlying arrangements, as contemplated hereby or by the Official Statement or otherwise is or would be in violation of the federal securities laws as amended and then in effect; or

3. A general suspension of trading on the New York Stock Exchange or other major exchange shall be in force, or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on any such exchange, whether by virtue of determination by that exchange or by order of the SEC or any other governmental authority having jurisdiction; or

4. The introduction, proposal or enactment of any amendment to the Federal or California Constitution or any action by any Federal or California court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the Community Facilities District, its property, income, securities (or interest thereon), the validity or enforceability of Special Taxes, or the ability of the Community Facilities District to issue the Bonds as contemplated by the Indenture and the Official Statement; or

5. Any event occurring, or information becoming known which, in the judgment of the Underwriter, makes untrue in any material respect any statement or information contained in the Preliminary Official Statement or in the Official Statement, or has the effect that the Preliminary Official Statement or the Official Statement contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; or

6. Any national securities exchange, the Comptroller of the Currency, or any other governmental authority, shall impose as to the Bonds, or obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, the Underwriter; or

7. There shall have occurred (1) an outbreak or escalation of hostilities or the declaration by the United States of a national emergency or war or (2) any other calamity or crisis in the financial markets of the United States or elsewhere or the escalation of such calamity or crisis; or

8. Except as disclosed in or contemplated by the Official Statement, any material adverse change in the affairs of the City or Community Facilities District shall have occurred; or

9. Any event or circumstance shall exist that either makes untrue or incorrect in any material respect any statement or information in the Official Statement (other than any statement provided by the Underwriter) or is not reflected in the Official Statement but should be reflected therein in order to make the statements therein, in the light of the circumstances under which they were made, not misleading and, in either such event, the Community Facilities District refuses to permit the Official Statement to be supplemented to supply such statement or information, or the effect of the Official Statement as so supplemented is to materially adversely affect the market price Item Title: 12.2
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13 or marketability of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; or

10. A general banking moratorium shall have been declared by federal or State authorities having jurisdiction and be in force; or

11. A material disruption in securities settlement, payment or clearance services affecting the Bonds shall have occurred; or

12. Any new restriction on transactions in securities materially affecting the market for securities (including the imposition of any limitation on interest rates) or the extension of credit by, or a charge to the net capital requirements of, underwriters shall have been established by the New York Stock Exchange, the SEC, any other federal or State agency or the Congress of the United States, or by Executive Order; or

13. A decision by a court of the United States shall be rendered, or a stop order, release, regulation or no-action letter by or on behalf of the SEC or any other governmental agency having jurisdiction of the subject matter shall have been issued or made, to the effect that the issuance, offering or sale of the Bonds, including the underlying obligations as contemplated by this Purchase Agreement or by the Official Statement, or any document relating to the issuance, offering or sale of the Bonds, is or would be in violation of any provision of the federal securities laws at the Closing Date, including the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Trust Indenture Act of 1939, as amended; or

14. Any proceeding shall have been commenced or be threatened in writing by the Securities and Exchange Commission against the City or the Community Facilities District; or

15. The commencement of any Action.

F. At or prior to the Closing Date, the Underwriter shall have received a counterpart original or certified copy of the following documents, in each case satisfactory in form and substance to the Underwriter:

1. The Official Statement, executed on behalf of the Community Facilities District by an authorized officer;

2. The Indenture, duly executed and delivered by the Community Facilities District and the Trustee;

3. The Community Facilities District Resolution, the Community Facilities District Documents and the Formation Documents, together with a certificate dated as of the Closing Date of the City Clerk to the effect that the Community Facilities District Resolutions are true, correct and complete copies of the ones duly adopted by the City Council;

4. The Continuing Disclosure Certificate executed and delivered by an authorized officer the Community Facilities District;

5. An unqualified approving opinion for the Bonds, dated the Closing Date and addressed to the Community Facilities District, of Bond Counsel, to the effect that the Item Title: 12.2
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14 Bonds are the valid, legal and binding obligations of the Community Facilities District and that the interest thereon is excluded from gross income for federal income tax purposes and exempt from personal income taxes of the State of California, in substantially the form included as Appendix C to the Official Statement, together with a letter of Bond Counsel, dated the Closing Date and addressed to the Underwriter, to the effect that such opinion addressed to the Community Facilities District may be relied upon by the Underwriter to the same extent as if such opinion was addressed to it;

6. A supplemental opinion or opinions, dated the Closing Date and addressed to the Underwriter, of Bond Counsel, to the effect that:
(i) this Purchase Agreement and the Continuing Disclosure Certificate have been duly authorized, executed and delivered by the Community Facilities District and, assuming due authorization, execution and delivery by the other parties thereto, as applicable, constitutes the legal, valid and binding obligations of the Community Facilities District and are enforceable in accordance with their terms, except to the extent that enforceability may be limited by moratorium, bankruptcy, reorganization, insolvency or other similar laws affecting creditors’ rights generally or by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases and by limitations on legal remedies against public agencies in the State;
(ii) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended;
(iii) the information contained in the Official Statement on the cover and under the captions “THE BONDS” (other than the caption “Debt Service Schedule”), “SOURCES OF PAYMENT FOR THE BONDS,” “TAX EXEMPTION” and “LEGAL OPINION” and in Appendices C and E to the Official Statement, are accurate insofar as such statements purport to summarize certain provisions of the Bonds, the Indenture, and Bond Counsel’s final approving opinion.

7. The letter of Disclosure Counsel, dated the Closing Date and addressed to the Community Facilities District and to the Underwriter, to the effect that, without having undertaken to determine independently the accuracy or completeness of the statements contained in the Official Statement, but on the basis of their participation in conferences with representatives of the Community Facilities District, the Special Tax Consultant and others, and their examination of certain documents, nothing has come to their attention which has led them to believe that the Preliminary Official Statement as of its date and the Official Statement as of its date and as of the Closing Date contained or contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except that no opinion or belief need be expressed as to any financial statements or other financial, statistical or engineering data or forecasts, numbers, charts, estimates, projections, assumptions, or expressions of opinion, any information about valuation, appraisals, absorption, archeological or environmental matters, or any information with respect to the City, or any information with respect to prior compliance by the Developer with continuing disclosure undertakings under the Rule or about DTC or the book-entry-only system);

8. A certificate dated the Closing Date and signed by an authorized representative of the Community Facilities District or an authorized designee, on behalf of the Item Title: 12.2
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15 Community Facilities District to the effect that: (i) the representations and warranties made by the Community Facilities District contained herein are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date; (ii) to the best knowledge of such officer, no event has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purpose for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; and (iii) the Community Facilities District has complied with all the agreements and satisfied all the conditions on its part to be satisfied under this Purchase Agreement, the Community Facilities District Resolutions, and the Community Facilities District Documents at or prior to the Closing Date;

9. An opinion of the City Attorney dated the date of Closing and addressed to the Underwriter and the City, to the effect that:
(i) The City is a municipal corporation and general law city, duly organized and existing under the Constitution and laws of the State of California; (ii) The Community Facilities District Resolutions have been duly adopted at meetings of the City Council, which were called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the Community Facilities District Resolutions are in full force and effect and have not been modified, amended, rescinded or repealed since the respective dates of their adoption; (iii) The Community Facilities District Documents and the Official Statement have been duly authorized, executed and delivered by the City and the Community Facilities District Documents constitute the legal, valid and binding obligations of the Community Facilities District enforceable against the Community Facilities District in accordance with their terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights, to the application of equitable principles where equitable remedies are sought and to the exercise of judicial discretion in appropriate cases; (iv) Except as may be stated in the Official Statement, there is no action, suit, proceeding or investigation before or by any court, public board or body pending (notice of which has been served on the City or the Community Facilities District) or, to such counsel’s knowledge, threatened wherein an unfavorable decision, ruling or finding would: (a) affect the creation, organization, existence or powers of the City, or the titles of its members and officers to their respective offices; or (b) affect the validity of the Community Facilities District Documents or restrain or enjoin the repayment of the Bonds or in any way contest or affect the validity of the Community Facilities District Documents or contest the authority of the Community Facilities District to enter into or perform its obligations under any of the Community Facilities District Documents, questions the right of the Community Facilities District to use Special Taxes levied within the Community Facilities District for the repayment of the Bonds or affects in any manner the right or ability of the Community Facilities District to collect the Special Taxes or pledge the Net Taxes levied within the Community Facilities District for the repayment of the Bonds;

10. A certificate dated the Closing Date from Kitty Siino & Associates, Inc. (the “Appraiser”) to the effect that: (i) the statements in the Official Statement provided by the Appraiser and all information supplied by it for use in the Official Statement were as of the date of the Official Statement and are as of the Closing Date true and correct, and do not contain any untrue Item Title: 12.2
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16 statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading and (ii) no events or occurrences have been ascertained by the Appraiser or have come to the Appraiser’s attention that would materially change the opinion set forth in the Appraisal Report;

11. A certificate dated the Closing Date from Spicer Consulting Group, LLC (the “Special Tax Consultant”) to the effect that: (i) the Special Tax if collected in the maximum amounts permitted pursuant to the Rate and Method of Apportionment of Special Taxes of the Community Facilities District as of the Closing Date would generate at least 110% of the annual debt service payable with respect to the Bonds and 2022 Bonds plus the Administrative Expenses Cap in each year, based on such assumptions and qualifications as shall be acceptable to the Underwriter; and (ii) the statements in the Official Statement provided by the Special Tax Consultant concerning Special Taxes in the Community Facilities District and all information supplied by it for use in the Official Statement were as of the date of the Official Statement and are as of the Closing Date true and correct, and do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;

12. Certified copies of the general resolution of the Trustee authorizing the execution and delivery of certain documents by certain officers of the Trustee, which resolution authorizes the execution of the Indenture and the authentication of the Bonds;

13. A certificate of the Trustee, dated the Closing Date, to the effect that:
(i) the Trustee is authorized to carry out corporate trust powers, and has full power and authority to perform its duties under the Indenture; (ii) the Trustee is duly authorized to execute and deliver the Indenture, to accept the obligations created by the Indenture and to authenticate the Bonds pursuant to the terms of the Indenture; (iii) no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Trustee that has not been obtained is or will be required for the authentication of the Bonds or the consummation by the Trustee of the other transactions contemplated to be performed by the Trustee in connection with the authentication of the Bonds and the acceptance and performance of the obligations created by the Indenture; and (iv) to the best of its knowledge, compliance with the terms of the Indenture will not conflict with, or result in a violation or breach of, or constitute a default under, any loan agreement, indenture, bond, note, resolution or any other agreement or instrument to which the Trustee is a party or by which it is bound, or any law or any rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over the Trustee or any of its activities or properties;

14. An opinion of counsel to the Trustee dated the Closing Date, addressed to the Underwriter, and the Community Facilities District to the effect that the Trustee is a national banking association duly organized and validly existing under the laws of the United States having full power and being qualified to enter into, accept and agree to the provisions of the Indenture, and that such documents has been duly authorized, executed and delivered by the Trustee, and, assuming due execution and delivery by the other parties thereto, constitutes the legal, valid and binding obligation of the Trustee, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors’ rights in general and except as such enforceability may be limited by the application of equitable principles if equitable remedies are sought;
Item Title: 12.2
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17 15. A certificate of the Community Facilities District dated the Closing Date, in a form acceptable to Bond Counsel and the Underwriter, that the Bonds are not arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended;

16. An opinion of counsel to the Developer, dated the date of the Closing, addressed to the Underwriter and the Community Facilities District, in form and substance acceptable to the Underwriter and Bond Counsel;

17. A Letter of Representations from the Developer, dated the date of the Preliminary Official Statement, substantially in the form attached hereto as Exhibit B;

18. A Closing Certificate of the Developer, dated the date of the Closing, substantially in the form attached as an exhibit to Exhibit B hereto or as such Closing Certificate may be modified with the approval of the Underwriter and Disclosure Counsel;

19. An opinion of Kutak Rock LLP, counsel to the Underwriter (“Underwriter’s Counsel”), dated the date of Closing and addressed to the Underwriter in form and substance acceptable to the Underwriter;

20. A certificate in form and substance required pursuant to the Indenture regarding the issuance of the Bonds as Additional Bonds on a parity with the 2022 Bonds; and

21. Such additional legal opinions, certificates, instruments and other documents as the Underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the Closing Date, of the material representations and warranties of the Community Facilities District contained herein, and of the statements and information contained in the Official Statement and the due performance or satisfaction by the Community Facilities District at or prior to the Closing of all agreements then to be performed and all conditions then to be satisfied by the Community Facilities District in connection with the transactions contemplated hereby and by the Indenture and the Official Statement.

If the Community Facilities District shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds contained in this Purchase Agreement, or if the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds shall be terminated for any reason permitted by this Purchase Agreement, this Purchase Agreement shall terminate and neither the Community Facilities District nor the Underwriter shall be under any further obligation hereunder, except that the respective obligations of the Underwriter and the Community Facilities District set forth in Section 5 hereof shall continue in full force and effect.

5. Expenses. Whether or not the transactions contemplated by this Purchase Agreement are consummated, the Underwriter shall be under no obligation to pay, and the Community Facilities District shall pay only from the proceeds of the Bonds, or any other legally available funds of the City, or the Community Facilities District, but only as the Community Facilities District and such other party providing such services may agree, all expenses and costs of the Community Facilities District incident to the performance of its obligations in connection with the authorization, execution, sale and delivery of the Bonds to the Underwriter, including, without limitation, printing costs, rating agency fees and charges, initial fees of the Trustee, including fees and disbursements of its counsel, if any, fees and disbursements of Bond Counsel, Disclosure Counsel and other professional advisors employed by the City, costs of preparation, printing, signing, transportation, delivery and safekeeping Item Title: 12.2
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18 of the Bonds and for expenses (included in the expense component of the Underwriter’s discount) incurred by the Underwriter on behalf of the City’s employees which are incidental to implementing this Purchase Agreement, including, but not limited to, meals, transportation, lodging, and entertainment of those employees. The Underwriter shall pay all out-of-pocket expenses of the Underwriter, including, without limitation, advertising expenses, the California Debt and Investment Advisory Commission fee, CUSIP Services Bureau charges, regulatory fees imposed on new securities issuers and any and all other expenses incurred by the Underwriter in connection with the public offering and distribution of the Bonds, including fees and disbursements of Underwriter’s Counsel. Any meals in connection with or adjacent to meetings, rating agency presentations, pricing activities or other transaction-related activities shall be considered an expense of the transaction and included in the expense component of the Underwriter’s discount.

6. Notices. Any notice of other communication to be given to the Community Facilities District or the City under this Purchase Agreement may be given by delivering the same in writing to the City of Menifee, 29844 Haun Road, Menifee, California 92586, Attention: City Manager; any notice or other communication to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in writing to Stifel, Nicolaus & Company, Incorporated, 2121 Avenue of the Stars, Suite 2150, Los Angeles, California 90067, Attention: Public Finance Department.

7. Parties In Interest. This Purchase Agreement is made solely for the benefit of the Community Facilities District and Underwriter (including any successors or assignees of the Underwriter) and no other person shall acquire or have any right hereunder or by virtue hereof.

8. Survival of Representations and Warranties. The representations and warranties of the Community Facilities District under this Purchase Agreement shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing and regardless of any investigations made by or on behalf of the Underwriter (or statements as to the results of such investigations) concerning such representations and statements of the Community Facilities District and regardless of delivery of and payment for the Bonds.

9. Execution in Counterparts. This Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

10. No Prior Agreements. This Purchase Agreement supersedes and replaces all prior negotiations, agreements and understanding among the parties hereto in relation to the sale of the Bonds by the Community Facilities District.

11. Governing Law. This Purchase Agreement shall be governed by the laws of the State of California.

Item Title: 12.2
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12. Effective Date. This Purchase Agreement shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the Community Facilities District and shall be valid and enforceable as of the time of such acceptance.

Very truly yours,

STIFEL, NICOLAUS & COMPANY,

INCORPORATED
By:

Its: Authorized Officer
The foregoing is hereby agreed to and accepted as of the date first above written:

COMMUNITY FACILITIES DISTRICT
NO. 2021-1 (BANNER PARK) OF THE

CITY OF MENIFEE
By:

Authorized Officer
Time of Execution: _____________ p.m. California time
Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 135
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August 2, 2023
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A-1

EXHIBIT A
COMMUNITY FACILITIES DISTRICT NO. 2021-1 (BANNER PARK)

OF THE CITY OF MENIFEE
SPECIAL TAX BONDS, SERIES 2023A

MATURITY SCHEDULE
Maturity
(September 1)
Principal
Amount
Interest
Rate Yield Price
10% Test
Satisfied*
10% Test
Not
Satisfied
Subject to
Hold-The-
Offering-
Price Rule
(marked if
used)
2024
2025
2026
2027
2028
2029
2030
2031
2032
20__(T)
20__(T)
20__(T)
20__(T)
_________________
(T) Term Bond.
(C) Priced to optional call at [par] on September 1, 20___. * At the time of execution of this Purchase Agreement and assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 136
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B-1

EXHIBIT B
COMMUNITY FACILITIES DISTRICT NO. 2021-1 (BANNER PARK)

OF THE CITY OF MENIFEE
SPECIAL TAX BONDS, SERIES 2023A
LETTER OF REPRESENTATIONS – PULTE HOMES HOME COMPANY, LLC [POS Date]
City of Menifee
Community Facilities District No. 2021-1 (Banner Park)
29844 Haun Road
Menifee, California 92586
Stifel, Nicolaus & Company, Incorporated
2121 Avenue of the Stars, Suite 2150
Los Angeles, California 90067
Ladies and Gentlemen:

Reference is made to Community Facilities District No. 2021-1 (Banner Park) of the City of Menifee Special Tax Bonds, Series 2023A (the “Bonds”) and to the Bond Purchase Agreement to be entered into in connection therewith (the “Bond Purchase Agreement”). This Letter of Representations of Pulte Home Company, LLC (the “Letter of Representations”) is delivered pursuant to and in satisfaction of Section 4(F)(17) of the Bond Purchase Agreement. Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Bond Purchase Agreement.

The undersigned certifies and represents that he or she is duly authorized on behalf of Pulte Home Company, LLC, a Michigan limited liability company (the “Developer”), to execute and deliver this Letter of Representations in connection with the issuance, sale and delivery by Community Facilities District No. 2021-1 (Banner Park) of the City of Menifee (the “Community Facilities District”) of the Bonds. The Bonds are described in the Preliminary Official Statement dated the date hereof relating to the Bonds (the “Preliminary Official Statement”).

As used in this Letter of Representations, the term “Actual Knowledge of the Undersigned” means the knowledge that the undersigned currently has as of the date of this Letter of Representations or has obtained through (i) interviews with such current officers and responsible employees of the Developer and its Relevant Entities (or its members or agents) as the undersigned has reasonably determined are likely, in the ordinary course of their respective duties, to have knowledge of the matters set forth in this Letter of Representations, and/or (ii) review of documents reasonably available to the undersigned and which the undersigned reasonably deemed necessary for the undersigned to execute this Letter of Representations. The undersigned has not conducted any extraordinary inspection or inquiry other than such inspections or inquiries as are prudent and customary in connection with the ordinary course of the Developer’s current business and operations.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 137
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The undersigned has not contacted any individuals who are no longer employed by, or associated with, the Developer.

As used in this Letter of Representations, the term “Relevant Entity” of the Developer means any person presently directly or indirectly through one or more intermediaries controlling, controlled by or under common control with the Developer, and about whom information could be material to potential investors in their evaluation of the Community Facilities District and investment decision regarding the Bonds (i.e., such person’s assets or funds would materially affect the Developer’s ability to develop the Property as described in the Preliminary Official Statement or to pay the special taxes levied by the Community Facilities District (the “Special Taxes”) with respect to the portion of the Property then owned by the Developer (to the extent the responsibility of the Developer) prior to delinquency).

As used in this Letter of Representations, the term “Property” means the property currently owned by the Developer within the Community Facilities District as described in the Preliminary Official Statement.

The undersigned certifies that he or she is familiar with the facts herein certified and is authorized and qualified to certify the same as an authorized officer or representative of the Developer, and the undersigned, on behalf of the Developer, further certifies as follows:

1. The Developer is duly organized and validly existing under the laws of the State of Michigan and in good standing under the laws of the State of California, and has all requisite limited liability company right, power and authority: (i) to execute and deliver this Letter of Representations; and (ii) to undertake all of the transactions on its part described in the Preliminary Official Statement.

2. Except as otherwise described in the Preliminary Official Statement, the Developer is and the Developer’s current expectations are that the Developer shall remain the party responsible for the development of the Property. The Developer has not entered into an agreement for development or management of the Property by any other entity, except such subcontracts, consultant agreements and similar agreements for land development activities associated with the Developer’s development plan as are entered into in the ordinary course of business.

3. Except as disclosed in the Preliminary Official Statement, (i) no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body, is pending against the Developer (with proper service of process or proper notice to the Developer having been accomplished), or to the Actual Knowledge of the Undersigned, is overtly threatened in writing against the Developer, and (ii) neither the Developer nor, to the Actual Knowledge of the Undersigned, any of its Relevant Entities is currently in material default on any loans, lines of credit or other obligation to repay borrowed money, in each such case (a) which, if successful, or the result of which, is reasonably likely to materially and adversely affect the Developer’s ability to complete the development and sale of the Property as described in the Preliminary Official Statement or to pay the Special Taxes levied against the portion of the Property then owned by the Developer (to the extent the responsibility of the Developer) prior to delinquency, or (b) which challenges or questions the validity or enforceability of the Bonds.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 138
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B-3

4. As of the date of the Preliminary Official Statement, the information contained therein solely with respect to the Developer, its Relevant Entities, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Relevant Entities (including, if material to the Developer’s development plan or the Developer’s financing plan, loans of such Relevant Entities) as set forth under the section of the Preliminary Official Statement captioned “PROPERTY OWNERSHIP AND THE DEVELOPMENT” (excluding therefrom in all cases information regarding the Appraisal Report, market value ratios and annual special tax ratios, and information which is identified as having been provided by a source other than the Developer), is true and correct in all material respects and did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

5. Except as described in the Preliminary Official Statement, there are no material loans outstanding and unpaid and no material lines of credit of the Developer or its Relevant Entities, that are secured by an interest in the Property.

6. To the Actual Knowledge of the Undersigned, the Developer is not aware that any of the Property has a current liability with respect to the presence of a substance presently classified as hazardous under the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 or applicable California law or is adversely affected by the presence of endangered or threatened species or habitat for endangered or threatened species.

7. The Developer covenants that, while the Bonds or any refunding obligations related thereto are outstanding, the Developer and its Relevant Entities which it controls will not bring any action, suit, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency, public board or body, that in any way seeks to challenge or overturn the formation of the Community Facilities District, to challenge the adoption of the ordinance of the Community Facilities District levying Special Taxes within the Community Facilities District, to invalidate the Community Facilities District or any of the Bonds or any refunding bonds related thereto, or to invalidate the special tax liens imposed under Section 3115.5 of the Streets and Highways Code based on recordation of the notices of special tax lien relating thereto. The foregoing covenant shall not prevent the Developer and its Relevant Entities in any way from bringing any other action, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency, public board or body including, without limitation, (a) an action or suit contending that the Special Tax has not been levied in accordance with the methodologies contained in the Rate and Method of Apportionment of Special Taxes pursuant to which Special Taxes are levied, (b) an action or suit with respect to the application or use of the Special Taxes levied and collected or (c) an action or suit to enforce the obligations of the City and/or the Community Facilities District under the Community Facilities District Resolutions, the Indenture, or any other agreements among the Developer, any Relevant Entity, the City and/or the Community Facilities District or to which the Developer or any Relevant Entity is a party or beneficiary.

8. The Developer consents to the issuance of the Bonds. The Developer expects that the proceeds of the Bonds will be used as described in the Preliminary Official Statement.

9. The Developer intends to comply with the provision of the Mello-Roos Community Facilities District Act of 1982, as amended relating to the Notice of Special Tax described in Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 139
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B-4
Government Code Section 53341.5 in connection with the sale of the Property, or portions thereof.

10. To the Actual Knowledge of the Undersigned, the Developer and its Relevant Entities are able to pay their respective bills as they become due and no legal proceedings are pending against the Developer or any Relevant Entity (with proper service of process to the Developer or any Relevant Entity having been accomplished) or, to the Actual Knowledge of the Undersigned, threatened in writing in which the Developer or any Relevant Entity may be adjudicated as bankrupt or discharged from any and all of its respective debts or obligations, or granted an extension of time to pay its respective debts or obligations, or be allowed to reorganize or readjust its respective debts, or be subject to control or supervision of the Federal Deposit Insurance Corporation.

11. To the Actual Knowledge of the Undersigned, during the last five years, neither the Developer nor any current Relevant Entity has, during the period of its ownership, been delinquent to any material extent in the payment of any ad valorem property tax, special assessment or special tax on property in California owned by the Developer or any such Relevant Entity (during the period of their ownership) included within the boundaries of a community facilities district or an assessment district in California that (a) caused a draw on a reserve fund relating to such assessment district or community facilities district financing or (b) resulted in a foreclosure action being commenced against the delinquent Developer or Relevant Entity by a court filing. However, unpaid Special Taxes do not constitute a personal indebtedness of the Developer or any of its Relevant Entities, and there is no recourse against the Developer for the failure to pay the Special Taxes other than the filing of a foreclosure action.

12. The Developer has not filed for the reassessment of the assessed value of portions of the Property, other than in connection with the sale of homes to individual homebuyers.

13. To the Actual Knowledge of the Undersigned, there are no claims, disputes, suits, actions or contingent liabilities by and among the Developer, its Relevant Entities or any contractors working on the development of the Property which is reasonably likely to materially and adversely affect the Developer’s ability to develop the Property as described in the Preliminary Official Statement or to pay the Special Taxes levied against the portion of the Property then owned by the Developer (to the extent the responsibility of the Developer) prior to delinquency.

14. Based upon the current development plans, including, without limitation, the current budget and subject to economic conditions and risks generally inherent in the development of real property, including, but not limited to, the risks described in the Preliminary Official Statement under the section entitled “SPECIAL RISK FACTORS,” the Developer presently anticipates that it will have sufficient funds to complete the development of the Property as described in the Preliminary Official Statement and to pay the Special Taxes levied against the portion of the Property then owned by the Developer (to the extent the responsibility of the Developer) prior to delinquency and does not anticipate that the City or the Community Facilities District will be required to resort to a draw on the Reserve Account of the Special Tax Fund for payment of principal of or interest on the Bonds due to the Developer’s nonpayment of Special Taxes. However, neither the Developer nor any of its Relevant Entities are obligated to pay the Special Taxes or to make any additional capital contribution or loan to the Developer at any time, and the Developer reserves the right to change its respective development plan and financing Item Title: 12.2
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B-5
plan for the Property at any time without notice, and there is no recourse against the Developer for the failure to pay the Special Taxes other than the filing of a foreclosure action.

15. An appraisal of the taxable properties within the Community Facilities District, dated ________, 2023 (the “Appraisal Report”), with a date of value of June 12, 2023 (the “Date of Value”), was prepared by Kitty Siino & Associates, Inc. (the “Appraiser”). The Appraisal Report estimates the market value of the appraised taxable properties within the Community Facilities District as of the Date of Value. To Actual Knowledge of the Undersigned, all information submitted by, or on behalf of and authorized by, the Developer to the Appraiser and contained in the sections of the Appraisal Report highlighted in yellow or circled in Exhibit B attached hereto, was true and correct in all material respects as of the Date of Value.

16. If between the date hereof and the Closing Date any event relating to or affecting the Developer, its Relevant Entities, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Relevant Entities (including, if material to the Developer’s development plan or the Developer’s financing plan, loans of such Relevant Entities) shall occur of which the Developer has actual knowledge which would cause the information under the sections of the Preliminary Official Statement indicated in Paragraph 4 hereof, to contain an untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Developer shall notify the City, the Community Facilities District and the Underwriter and if in the opinion of counsel to the City or the Underwriter such event requires the preparation and publication of a supplement or amendment to the information described in the section of the Preliminary Official Statement referenced in Paragraph 4 hereof, the Developer shall reasonably cooperate with the City and the Community Facilities District in the preparation of an amendment or supplement to the Preliminary Official Statement in form and substance satisfactory to counsel to the City, the Community Facilities District and to the Underwriter.

17. The Developer agrees to deliver a Closing Certificate dated the date of issuance of the Bonds at the time of issuance of the Bonds in substantially the form attached as Exhibit A.

18. On behalf of the Developer, the undersigned has reviewed the contents of this Letter of Representations and has consulted with counsel to the Developer regarding the meaning of its contents. The undersigned acknowledges and understands that a variety of state and federal securities laws, including but not limited to the Securities Act of 1933 and Rule 10b-5 promulgated under the Securities Exchange Act of 1934, may apply to the Developer and that under some circumstances certification as to the matters set forth in this Letter of Representations, without additional disclosures or other action, may not fully discharge all duties and obligations of the Developer under such securities laws.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 141
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August 2, 2023
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B-6
The undersigned has executed this Letter of Representations solely in his or her capacity as an officer of the Developer and he or she will have no personal liability arising from or relating to this Letter of Representations. Any liability arising from or relating to this Letter of Representations may only be asserted against the Developer subject to the limitations and procedures set forth above.

PULTE HOME COMPANY, LLC,
a Michigan limited liability company
By: ________________________________________
[EXECUTION PAGE OF LETTER OF REPRESENTATIONS OF
PULTE HOMES HOME COMPANY, LLC]
Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 142
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August 2, 2023
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B-7

EXHIBIT A
COMMUNITY FACILITIES DISTRICT NO. 2021-1 (BANNER PARK)

OF THE CITY OF MENIFEE
SPECIAL TAX BONDS, SERIES 2023A

CLOSING CERTIFICATE OF

PULTE HOMES HOME COMPANY, LLC
[Closing Date]
City of Menifee
Community Facilities District No. 2021-1 (Banner Park)
29844 Haun Road
Menifee, California 92586
Stifel, Nicolaus & Company, Incorporated
2121 Avenue of the Stars, Suite 2150
Los Angeles, California 90067
Ladies and Gentlemen:

Reference is made to the above-captioned bonds (the “Bonds”) and to the Bond Purchase Agreement, dated [BPA Date] (the “Bond Purchase Agreement”), entered into in connection therewith. This Closing Certificate of Pulte Homes Home Company, LLC (the “Closing Certificate”) is delivered by Pulte Homes Home Company, LLC, a Michigan limited liability company (the “Developer”) pursuant to the Bond Purchase Agreement. Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Letter of Representations of Pulte Homes Home Company, LLC (the “Letter of Representations”), dated [POS Date], delivered by the Developer.

1. The Developer has received the final Official Statement relating to the Bonds, dated [BPA Date] (the “Official Statement”). To the Actual Knowledge of the Undersigned, each statement, representation and warranty made in the Letter of Representations is true and correct in all material respects on and as of the date hereof with the same effect as if made on the date hereof, except that all references therein to the Preliminary Official Statement shall be deemed to be references to the final Official Statement.

2. To the Actual Knowledge of the Undersigned (as defined in the Letter of Representations), no event has occurred since the date of the Preliminary Official Statement that has, in any material way, adversely affected:

Item Title: 12.2
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B-8
(i) the ability of the Developer to carry on its business as described in the Preliminary Official Statement;
(ii) the ability of the Developer to own, develop and sell the Property, as described in the Preliminary Official Statement; or
(iii) the ability of the Developer to pay Special Taxes on the Property (to the extent the responsibility of the Developer) prior to delinquency.

3. For the period through 25 days after the “end of the underwriting period” as defined in the Bond Purchase Agreement to mean the Closing Date unless the Underwriter gives notice to the contrary, if any event relating to or affecting the Developer, its Relevant Entities, the proposed development of the Property, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Relevant Entities (including, if material to the Developer’s development plan or the Developer’s financing plan, loans of such Relevant Entities) shall occur as a result of which it is necessary, in the opinion of the Underwriter or counsel to the City or the Community Facilities District, to amend or supplement the Official Statement in order to make the Official Statement not misleading in the light of the circumstances existing at the time it was delivered to a purchaser, the Developer shall reasonably cooperate with the City, the Community Facilities District and the Underwriter in the preparation and publication of a supplement or amendment to the information described in the section of the Official Statement referenced in Paragraph 4 of the Letter of Representations, in form and substance satisfactory to the Underwriter and counsel to the City and the Community Facilities District which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to a purchaser, not misleading.
[Remainder of Page Intentionally Left Blank; Signature Page Follows] Item Title: 12.2
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B-9
The undersigned has executed this Closing Certificate solely in his or her capacity as an authorized officer or representative of the Developer and he or she will have no personal liability arising from or relating to this Closing Certificate. Any liability arising from or relating to this Closing Certificate may only be asserted against the Developer.

PULTE HOME COMPANY, LLC,
a Michigan limited liability company
[FORM—DO NOT SIGN]
By: ________________________________________

[EXECUTION PAGE OF CLOSING CERTIFICATE OF
PULTE HOMES HOME COMPANY, LLC]
Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 145
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B-10

EXHIBIT B
COMMUNITY FACILITIES DISTRICT NO. 2021-1 (BANNER PARK)

OF THE CITY OF MENIFEE
SPECIAL TAX BONDS, SERIES 2023A

DEVELOPER PROVIDED INFORMATION IN APPRAISAL REPORT
See attached.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 146
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C-1

EXHIBIT C
$_______
COMMUNITY FACILITIES DISTRICT NO. 2021-1 (BANNER PARK)

OF THE CITY OF MENIFEE
SPECIAL TAX BONDS, SERIES 2023A

FORM OF ISSUE PRICE CERTIFICATE
The undersigned, on behalf of Stifel, Nicolaus & Company, Incorporated (“Stifel”) hereby certifies as set forth below with respect to the sale and issuance of the above-captioned bonds (the “Bonds”).

1.Sale of the General Rule Maturities. As of the date of this certificate, for each Maturity of the General Rule Maturities, the first price at which at least 10% of such Maturity was sold to the Public is the respective price listed in Schedule A.

2.Defined Terms.
(a)General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “General Rule Maturities.”
(b)Issuer means the Community Facilities District No. 2021-1 (Banner Park) of the City of Menifee.
(c)Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate maturities.
(d)Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter.

The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (e)Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).

The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Stifel’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder.

The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by Stradling Yocca Carlson & Rauth, a Professional Corporation in connection with rendering its opinion that the interest on the Item Title: 12.2
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Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.

STIFEL, NICOLAUS & COMPANY,

INCORPORATED
By:

Name:

By:

Name:

Dated: [Closing Date]
Item Title: 12.2
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SCHEDULE A

SALE PRICES OF THE GENERAL RULE MATURITIES
(To be attached)
Item Title: 12.2
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APPRAISAL REPORT

CITY OF MENIFEE
COMMUNITY FACILITIES DISTRICT NO. 2021-1
(2023 BONDS)

BANNER PARK BY PULTE HOMES

City of Menifee, Riverside County, California
(Appraiser’s File No. 2023-1281

Prepared For
City of Menifee
29844 Haun Road
Menifee, California 92586

Prepared By
Kitty Siino & Associates, Inc.
115 East Second Street, Suite 100
Tustin, California 92780

Item Title: 12.2
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August 2, 2023
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KITTY SIINO & ASSOCIATES, INC.

REAL ESTATE APPRAISERS & CONSULTANTS

July 13, 2023

Margarita Cornejo, Acting Chief Financial Officer

CITY OF MENIFEE
29844 Haun Road
Menifee, California 92586

Reference: Appraisal Report – City of Menifee
Community Facilities District No. 2021-1 (2023 Bonds)
Banner Park by Pulte Homes, Menifee, California

Dear Ms. Cornejo:

At the request and authorization of the City of Menifee, we have completed an Appraisal Report for Community Facilities District No. 2021-1 of the City of Menifee (“Menifee CFD No. 2021-1”). Menifee CFD No. 2021-1 encompasses a new home community known as Banner Park by Pulte Home Company LLC (“Pulte Homes”). Kitty Siino & Associates, Inc. appraised the subject site in 2022 for the first series of bonds while this appraisal relates to the second series of bonds. Banner Park consists of three product lines known as Heritage, Merit and Crest. The three product l ines are spread throughout all of Banner Park, which is covered by two tract maps (Tract Nos. 32102 and 32102- 1). Banner Park consists of a total of 256 detached homes situated on a minimum of 6,000 square foot lots. The subject 256 lots include 203 completed homes closed to individuals and 25 builder owned homes over 95 percent complete, including six models (one in escrow) and 19 production homes (16 in escrow and due to close upon completion) . There are an additional 25 homes under construction ( 24 in escrow) and three remaining lots (all in escrow).

The valuation method used in this report is the Sales Comparison Approach along with a mass appraisal technique as defined within this report. The fee simple estate of the subject property has been valued subject to the Menifee CFD No. 2021-1 special tax lien from both series of bonds . This report is written with the hypothetical condition that the subject property is enhanced by the improvements and/or fee credits to be funded by both series of bonds issued by Menifee CFD No. 2021- 1. As a result of our investigation, the concluded market value for the subject property is:

Banner Park by Pulte Homes

Pulte Homes Ownership (25 houses & 28 lots) $ 13,515,353 Individual Owners (203 houses) $ 118,809,238

Total Aggregate Value $ 132,324,591

The above values are stated subject to the Assumptions and Limiting Conditions of this report, the Appraiser’s Certification and as of June 12, 2023.

115 East Second Street, Suite 100, Tustin, California 92780 (714) 544-9978 - Phone, (714) 544-9985 – Fax, E-Mail: [email protected] Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 151
Menifee Mayor and City Council
August 2, 2023
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Margarita Cornejo

CITY OF MENIFEE
July 13, 2023
Page Two

Some supporting documentation concerning the data, reasoning and analyses may be retained in the appraiser’s files. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. This Appraisal Report is intended to comply with both the Uniform Standards of Professional Appraisal Practice (“USPAP” January 2020) and with the Appraisal Standards of the California Debt and Investment Advisory Commission (“CDIAC”). The appraiser is not responsible for unauthorized use of this report.

The appraised value contained within this report is being estimated with the hypothetical condition of the special tax lien of Menifee CFD No. 2021-1.

This letter of transmittal is part of the attached report, which sets forth the data and analyses upon which our opinion of value is, in part, predicated.

Respectfully submitted,

KITTY SIINO & ASSOCIATES, INC.

Kitty S. Siino, MAI
California State Certified General
Real Estate Appraiser (AG004793)
Item Title: 12.2
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TABLE OF CONTENTS

Assumptions and Limiting Conditions............................................................................... i Hypothetical Condition .................................................................................................... iii Extraordinary Assumption ............................................................................................... iii Aerial Photo of Menifee CFD No. 2021-1 ........................................................................ iv Purpose of the Appraisal ................................................................................................ 1 The Subject Property ...................................................................................................... 1 Intended Use of the Report ............................................................................................ 1 Definitions ...................................................................................................................... 2 Property Rights Appraised ............................................................................................. 4 Effective Date of Value ................................................................................................... 4 Date of Report ................................................................................................................ 4 Scope of Appraisal ........................................................................................................ 5 Regional Area Map.......................................................................................................... 7 County of Riverside Area Description ............................................................................. 8 Menifee Area Map ......................................................................................................... 16 City of Menifee Description ........................................................................................... 17 Immediate Surroundings ............................................................................................... 20 Community Facilities District No. 2021-1 ....................................................................... 22 Subject Property Descriptions ....................................................................................... 25 Riverside County Housing Market ................................................................................. 32 Highest and Best Use Analysis ..................................................................................... 42 Valuation Analyses and Conclusions ............................................................................ 46 Appraisal Report Summary ........................................................................................... 66 Appraiser’s Certification ............................................................................................... 67

ADDENDA
CFD No. 2021-1 Boundary Map
Tract Maps No. 32102 and 32102-1
Cal Fire Hazard Map
Discounted Cash Flow Analysis
Residential Land Sales Map and Summary Chart
Improved Residential Sales Map and Summary Chart
Appraiser’s Qualifications
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ASSUMPTIONS AND LIMITING CONDITIONS

1. This report might not include full discussions of the data, reasoning and analyses that were used in the appraisal process to develop the appraiser’s opinion of value. Some supporting documentation concerning the data, reasoning and analyses may be retained in the appraiser’s files. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. The appraiser is not responsible for unauthorized use of this report.

2. No responsibility is assumed for legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated in this report.

3. The property is appraised subject to the special tax lien of both series of bonds for Menifee CFD No. 2021-1.

4. Responsible ownership and competent property management are assumed unless otherwise stated in this report.

5. The information furnished by others is believed to be reliable, however, no warranty is given for its accuracy.

6. All engineering is assumed to be correct. Any plot plans and illustrative material used in this report are included only to assist the reader in visualizing the property and may not be to scale.

7. It is assumed that there are no hidden or unapparent conditions of the property, subsoil or structures that would render it more or less valuable. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required to discover them.

8. It is assumed that there is full compliance with all applicable federal, state and local environmental regulations and laws unless otherwise stated in this report.

9. It is assumed that all applicable zoning and use regulations and restr ictions have been complied with, unless nonconformity has been stated, defined and considered in this appraisal report.

10. It is assumed that all required licenses, certificates of occupancy or other legislative or administrative authority from any local, st ate or national governmental or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report are based.

11. Any sketch included in this report may show approximate dimensions and is included only to assist the reader in visualizing the properties. Maps and exhibits found in this report are provided for reader reference purposes only. No guarantee regarding accuracy is expressed or implied unless otherwise stated in this report. No surv ey has been made for the purpose of this report.

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12. It is assumed that the utilization of the land and improvements are within the boundaries or property lines of the property described and that there is no encroachment or trespass unless otherwise stated in this report.

13. The appraiser is not qualified to detect hazardous waste and/or toxic materials. Any comment by the appraiser that might suggest the possibility of the presence of such substances should not be taken as confirmation of the presence of hazardous waste and/or toxic materials. Such a determination would require investigation by a qualified expert relating to asbestos, urea- formaldehyde foam insulation or other potentially hazardous materials that may affect the value of the property. The appraiser’s value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value unless otherwise stated in this report. No responsibility is assumed for any environmental conditions or for any expert ise or engineering knowledge required to discover them. The appraiser’s descriptions and resulting comments are the result of the routine observations made during the appraisal process.

14. Proposed improvements , if any, are assumed to be completed in a good workmanlike manner in accordance with the submitted plans and specifications.

15. The distribution, if any, of the total valuation in this report between land and improvements applies only under the stated program of utilization. The separate allocations for land and buildings , if any, must not be used in conjunction with any other appraisal and are invalid if so used.

16. The Americans with Disabilities Act (“ADA”) became effective on January 26, 1992.

The appraiser has made no specific compliance survey and analysis of the property to determine whether they conform to the various detailed requirements of the ADA, nor is the appraiser a qualified expert regarding the requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the ADA. If so, this fact could have a negative effect upon the value of the property. Since the appraiser has no direct evidence relating to this issue, a possible noncompliance with requirements of the ADA in estimating the value has not been considered.

17. It is assumed there are no environmental concerns that would slow or thwart development of the subject property and that the soils are adequate to support the highest and best use conclusion.

18. Possession of this report, or a copy thereof, does not carry with it the right of publication. It may not be used for any purpose by any person other than the party to whom it is addressed without the written consent of the appraiser, and in any event, only with proper qualification and only in its entirety. Permission is given for this appraisal to be published as a part of the Official Statement or similar document in association with the Menifee CFD No. 2021-1 Special Tax Bonds.

Item Title: 12.2
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HYPOTHETICAL CONDITION

1. It is assumed that all improvements and/or benefits to the subject properties, which are to be funded by the Menifee CFD No. 2021-1 Special Tax Bond proceeds, are completed and in place or have accrued to the property.

EXTRAORDINARY ASSUMPTION

1. It is an extraordinary assumption that the reported sales and remaining land development costs as received from the builders are true and accurate. We have reviewed both the sales and cost information and they appear reasonable. However, we are not experts in cost estimating and if the cost estimates change, it may change the value conclusions.

2. It is an extraordinary assumption that the City of Menifee does not stop development or closing of homes within the subject due to the delay in the development of the park or offsite improvements within Menifee CFD No. 2021-1. The original condition states the park needs to be completed by the time the 200th certificate of occupancy is obtained; however, the city has approved several minor condition changes which, upon the builder completing certain items, the number of certificates of occupancy will be increased to 226 homes. At this time, these conditions have not held up any closings of homes and per the builder, with the newly approved changes, they are not anticipating any closings will be held up. It is the appraiser’s understanding that there are no other conditions which can hold up certificate of occupancies on the total 256 units.

3. It is an extraordinary assumption that all issues related to the very high fire zone designation from Cal Fire’s fire Resource Assessment Program are resolved. It is the appraiser’s understanding that there was a mild spec difference in the roof underlayment for approximately 60 of the closed homes which affected portions of the roof and windows. It is the appraiser’s understanding that all window retrofits have been completed and approximately one- half of the roof retrofits have been completed.

Item Title: 12.2
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Item Title: 12.2
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PURPOSE OF THE APPRAISAL

The purpose of this appraisal report is to estimate the value of the fee simple interest of the subject property, subject to the special tax lien of both series of the Menifee CFD No. 2021-1 Special Tax Bonds.

THE SUBJECT PROPERTY

The subject property consists of 256 proposed single-family homes which are encompassed within Tract Map Nos. 32102 and 32102 -1. The two tracts are being developed into a community known as Banner Park, which is divided into three product lines that are spread throughout the two tracts: Heritage at Banner Park, Merit at Banner Park, and Crest at Banner Park. All three product lines are being built and sold by Pulte Homes. Of the total 256 proposed homes, 24 7 have been sold and 203 of those have closed to individuals . Each tract’s lots physical status and ownership are detailed as follows:

Tract and Lot Numbers
No.

Lots

Ownership

Condition
Banner Park by Pulte Homes (Tract Nos. 32102 and 32102-1) Lots 1-27, 55-64, 66-79, 88-124 of
Tract 32102; Lots 1-115 of Tract
32102-1
203 Individuals Completed Homes
Lots 116-117, 119-120, 130-131 of
Tract 32102-1
6 Pulte Model Homes (1 in escrow)
Lots 45-54, 65, 80-87 of Tract 32102 19 Pulte Over 95% Complete (16 in escrow)
Lots 28-44 of Tract 32102; Lots 121-
128 of Tract 32102-1
25 Pulte Under Construction (24 in
escrow)
Lots 118, 129, 132 of Tract 32102-1 3 Pulte Finished Lots (3 in escrow) TOTAL 256

INTENDED USE OF THE REPORT

It is the appraiser’s understanding that the client, the City of Menifee, will utilize this report in disclosure documents associated with selling bonds for Menifee CFD No. 2021-1 and that this report is to be included in the Official Statement or similar document to be Item Title: 12.2
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distributed in connection with the offering of the bonds. It is the appraiser’s understanding that there are no other intended uses of this report.

DEFINITIONS

Market Value
The term “Market Value” as used in this report is defined as:
"The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

1. buyer and seller are typically motivated;

2. both parties are well informed or well advised, and each acting in what he or she considers his or her own best interest;

3. a reasonable time is allowed for exposure in the open market;

4. payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and

5. the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.”
1 Inherent in the Market Value definition is exposure time or the time the property would have had to have been exposed on the open market prior to the appraisal in order to sell at the concluded values. In the case at hand and considering current market conditions the exposure time for each of the builder-owned lots and houses in bulk or for an individually owned home is under one year.

Minimum Market Value
The term “Minimum Market Value” as used in this report is defined as:
“The base market value of a home. That is, most buyers purchase some upgrades, options and/or lot premiums when purchasing a new home. The sales price for the new home typically includes the base price for the plan, plus any upgrades, options or lot premiums, less concessions, if any, which were given or paid for by the builder. The concluded minimum market value

1 The Appraisal of Real Estate, 13th Edition
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is for the base value of the plan only, not taking into consideration any upgrades, options or premiums.”
Mass Appraisal
The term “Mass Appraisal” as used in this report is defined as:
“The process of valuing a universe of properties as of a given date using standard methodology employing common data and allowing for statistical testing”2

In the case at hand, the statistical testing included reviewing all original builder sales , reviewing the Multiple Listing Service for re-sales and current escrows (if any) and determining the actual range of sales and escrow prices for each plan type which is utilized in the valuation process.

Hypothetical Condition
The term “Hypothetical Condition” is defined by USPAP as:
“That which is contrary to what exists but is supposed for the purpose of the analysis”

The Hypothetical Condition within this report is that subject property is enhanced by the improvements and/or fee credits to be funded by both series of bonds issued by Menifee CFD No. 2021-1.

Extraordinary Assumption
The term “extraordinary assumption” is defined by USPAP as:
“An assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser’s opinions or conclusion”

There are t hree extraordinary assumptions in this report . The first is that the reported sales information and remaining land development cost information, as received from the builder, are true and accurate. We have reviewed the sales information and verified samples against public record information; however, all sales have not been verified through public record. I n addition, w e have reviewed the costs and they appear reasonable; however, we are not experts in the field of cost estimating. It should be noted

2 USPAP 2020-2021 Edition
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that these costs were relied upon in the valuation of the subject properties and if the actual costs differ, it could alter the value conclusions.

The second extraordinary assumption is that the City will not stop or slow development or closing of homes within the project due to the delay in the development of the park or offsite improvements. The original condition states the park needs to be completed by the time the 200th certificate of occupancy is obtained; however, the city has approved several minor condition changes which, upon the builder completing certain items, the number of certificates of occupancy will be increased to 226 homes. At this time, these conditions have not held up any closings of homes and per the builder, with the new approved changes, they are not anticipating any closings will be held up. The construction delays on the park and offsites were due to slow approval of park plans along with the rainy season slowing the construct ion of the park. It appears the City is working with the builder. It is the appraiser’s opinion this would not affect the value of the lots as the City has been working with the builder throughout this process . It is the appraiser’s understanding that ther e are no other conditions which may hold up certificates of occupancy on the total 256 units.

The final extraordinary assumption is that all issues related to the very high fire zone designation from Cal Fire’s fire Resource Assessment Program are resolved. It is the appraiser’s understanding that there was a mild spec difference in the roof underlayment for approximately 60 of the closed homes which affected portions of the roof and windows. It is the appraiser’s understanding that all window retr ofits have been completed and approximately one-half of the roof retrofits have been completed.

PROPERTY RIGHTS APPRAISED

The property rights being appraised are of a fee simple interest, subject to easements of record and Menifee CFD No. 2021- 1. The definition of “fee simple estate” is defined by USPAP as:
“absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.”

Item Title: 12.2
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EFFECTIVE DATE OF VALUE

The subject property is valued as of June 12, 2023.

DATE OF REPORT

The date of this report is July 13, 2023.

SCOPE OF APPRAISAL

As previously stated, the purpose of this appraisal is to report the appraiser ’s best estimate of the market value for the subject properties. This appraisal will be presented in the following format:

• County of Riverside Description
• City of Menifee Description
• Immediate Surroundings
• Brief Description of Menifee CFD No. 2021-1
• Subject Property Descriptions
• Riverside County Housing Market Discussion
• Highest and Best Use Analysis
• Valuation Procedures, Analyses and Conclusions
• Appraisal Report Summary

The subject property consists of 256 proposed single- family ho uses. There are 203 homes completed and closed to individuals, six models (one in escrow), 19 homes over 95 percent complete ( 16 in escrow), 25 homes under construction (24 in escrow) and three remaining finished lots (three in escrow). In valuing the subject property, the value estimates will be based upon the highest and best use conclusion using the Sales Comparison Approach. The Sales Comparison Approach to value is defined as:
“…a set of procedures in which a value indication is derived by comparing the property being appraised to similar properties that have been sold recently, then applying appropriate units of comparison and making adjustments to the sale prices of the comparables based on the elements of compari son. The sales comparison approach may be used to value improved properties, vacant land, or land being considered as though vacant; it is the most common and preferred method of land valuation when an adequate supply of comparable sales is available.”
3 3Dictionary of Real Estate Appraisal, 4th Edition, 2002 Item Title: 12.2
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In the Sales Comparison Approach, market value is estimated by comparing properties similar to the subject property that have recently been sold, are listed for sale or are under contract. Neither a cost or income approach was utilized as they were not considered necessary to arrive at credible results.

The due diligence of this appraisal assignment included the following:

1. Compiled demographic information and related that data to the subject propert ies to perform a feasibility/demand analysis.

2. Gathered and analyzed information on the subject marketplace, reviewed several real estate brokerage publications on historical and projected growth in the subject market and researched the micro and macroeconomics within Riverside County and the Menifee area.

3. Inspected the subject property between June 1, 2023, and June 15, 2023.

4. Had the property flown for an aerial photograph on June 17, 2023.

5. Interviewed r epresentatives from the builder to obtain available information on the subject property.

6. Reviewed Preliminary Title Reports on the majority of the subject properties.

7. Reviewed the Menifee Village Specific Plan regarding entitlements and allowances on the subject site.

8. Searched the area for relevant comparable new home residential projects, including sales prices and concessions and interviewed representatives from each comparable neighborhood.

9. Reviewed sales brochures and sales information on each of the subject neighborhood.

10. Reviewed actual builder sales information on all closed homes and current escrows for the subject neighborhood.

11. Reviewed Multiple Listing Service (“MLS”) information on re-sales and current listings of existing homes within Menifee CFD No. 2021-1.

12. Inspected the subject propert y for any for-sale or property listing signs that may not be listed on the MLS yet.

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REGIONAL AREA MAP

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COUNTY OF RIVERSIDE AREA DESCRIPTION

Location
The subject property is located in the southern portion of Riverside County (the “County”) northeast of the merging of Interstate 15 (“I-15”) and Interstate 215 (“I-215”) and east of the community of Menifee Lakes, on the east side of I-215. The area is located near the eastern boundary of the City of Menifee (the “City”).

The County encompasses approximately 7,300 square miles, and includes large expanses of undeveloped deserts, valleys, canyons, and mountains. The County is a major beneficiary of outward urban pressure from Orange and Los Angeles Counties as well as growth from San Diego County to the south. Although located at the periphery of most urban activity in Southern California, Rivers ide County, particularly the western area, has been a major growth area and is perceived by most observers as an area expected to continue to grow. Riverside and San Bernardino Counties are considered distinct from Los Angeles and Orange Counties , and belong to the same Metropolitan Statistical Area (“MSA”). This area, consisting of San Bernardino and Riverside Counties, is commonly referred to as the Inland Empire.

Transportation
The subject property is situated northeast of I-15 and east of I-215, on the north side of Domenigoni Parkway (Newport Road) at Lindenberger Road. The I-15 is approximately

8.5 miles southwest of the subject and travels in a northerly/southerly direction, providing access to Barstow and Nevada to the north and San Diego to the south. Interstate 215 is approximately two miles west of the subject, travels in a northerly/southerly direction within the County, branching off from I-15 and heading generally north where it parallels I-15 to the east and merges back into I-15 approximately 40 miles northwest of the subject in San Bernardino County. Highway 74 is approximately 3.5 miles north and provides access to the west into Orange County on what is also known as Ortega Highway. In addition, the 60 Freeway runs in an eas t-west direction approximately 1 7 miles north of the subject providing access into Los Angeles County to the west and merges with Interstate 10 to the east, which provides access across California and into Arizona.

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The County is served by Amtrak and Metrolink as well as several rail freight lines. The Ontario International Airport provides regional air service and is located approximately 36 miles northwest of the subject property , while the Orange County Airport is located approximately 42 miles west, and the San Diego International Airport is located about 66 miles south. In addition, the County has extensive trucking corridors along the previously referred to interstates, highways, and state freeways.

Population
The County has experienced population growth for several decades and is anticipated to continue to do so in the foreseeable future. Per the California Department of Finance, the July 1, 2022 County population was 2.438 million, representing a one- year increase of

0.28 percent. This compares to an average annual growth rate over the past thirteen years of about 0.8 percent, and an average annual growth rate of approximately 2.5 percent for the previous eighteen- year period. It should be noted however, Calif ornia’s overall population decreased 0.54 percent during the past year. Current State projections for Riverside County suggest the population is anticipated to reach approximately 2.728 million by 2030, indicating an average annual increase of approximately 1.6 percent over the next seven years. The current growth of 0.28 percent is lower than the previous twelve-year annual average of about 0.8 percent likely due to the COVID pandemic disruption, and significantly lower than the previous 18- year average (2.5 percent) likely due to the Great Recession. The future growth is predicted assuming a more stable market than was seen prior to the Great Recession.

Economy
The U.S. economy is experiencing challenging times due to reactions from the COVID recession. T hese economic challenges include significant inflation, increasing interest rates, banks’ instability and reaching an agreement on the debt ceiling. During COVID, the Federal, State, County and City Governments (“Governments”) originally shut down non-essential businesses and areas where social gatherings occur in order to slow the spread of the virus. This created a strain on small and large businesses alike. Restaurants and hotels were hit hard and travel reduced drastically as citizens were urged to stay home. Layoffs occurred with reports of 40 million people filing for unemployment the first Item Title: 12.2
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few months of the pandemic. The Governments attempted to curtail the job losses and hardships with the approval of over 5.6 trillion in COVID relief to our nation. In addition, the Federal Reserve Board (“Board”) reduced interest rates and started quantitative easing by buying bonds. This legislation helped shore up the U.S. economy; however, due to the significant amount of new money introduced into the economy, inflation began occurring at a rate not seen for 40 years. As of April 2023, the national inflation rate was

4.9 percent, down from 6.0 percent in February and down from the peak in June 2022 of

9.1 percent. This compares to a 1.24 annual percent rate for 2020 and an average of 1.74 percent annual rate for the previous ten years. Whether it is a result of the Russian/Ukraine war, supply chain issues due to COVID or from the additional money entering the economy, inflation is hitting Americans hard.

In an effort to curb inflation, the Federal Reserve Board began raising interest rates. Since March 2022, there have been ten interest rate increases rising the Federal Funds Rate (“FRR”) from 0.25 – 0.50 percent to 5.0 – 5.25 percent. While these increases appeared to help slow inflation, the quick, significant increases have strained bank balance sheets.

Three major banks have failed in the past three months with the government taking unprecedented action to help shore them up. At the most recent Board meeting (J une 14, 2023) they paused the increases; however, additional minimal increases are expected later in the year. In addition to causing bank instability, the FRR increases over the past 15 months increased a typical 30- year fixed mortgage rate from 2.98 perc ent as of November 10, 2021, to 7.08 percent as of November 10, 2022; however, the rate has dropped to 6. 69 percent as of June 15, 2023 (per Federal Reserve Economic Data- St.

Louis). This steep increase has significantly affected the real estate market.

The COVID disruption to the economy also caused extreme volatility in the stock market with the Dow Jones Industrial Average (“DJIA”) dropping from 29,398 in February 2020 to 19,174 in March, 2020, a drop of 37 percent. The Government interventions resulte d in a bounce back in the DJIA to 27,111 by June 2020 with the stock market then climbing up to an all-time high of 36,799 in January 2022. In February 2022, Russia began invading Ukraine which caused volatility in world economics followed by U.S. inflation, interest rate increases and instability in the U.S. due to the debt ceiling being reached. All of these Item Title: 12.2
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factors caused a drop in the DJIA of nearly seven percent from January 2022 to June 15, 2023 (3 4,455). The nation’s debt limit can only be increased through government approvals. The current partisanship in our government caused a stand- off in increasing the debit limit which was in danger of being reached, and the stock market’s volatility throughout May due to this stand-off was evident. However, a deal was reached in early June (before the deadline), and the stock market should start showing less volatility.

The significant increase in mortgage rates over the past year is just one part of the puzzle affecting the impact of new housing on the broader economy. Additional risks include homebuilders trying to find balanced inventory levels, supply chain issues, both wage and price increases, and persistent inflation. Over the past 25 years, the Inland Empire economy has had significant cycles with home prices almost doubling from 1995 to 2005, then falling by over 50 percent during the Great Recession, taking prices back to 2002 levels. Home values appeared to hit bottom in 2009 then remained essentially flat for two to three years with the majority of the Inland Empire housing market seeing an improvement beginning in mid- 2012. Contrary to homebuilder’s original thoughts of a slowdown due to the pandemic, new home buyers stepped up in the spring of 2020 and new home sales were significantly higher during the second half of 2020 versus the previous year and continued extremely strong throughout 2021. This exceptional activity in new home sales was the one bright spot in the COVID recession and is thought to be due to several factors, including: a tight supply of re-sale homes; historically low interest rates; millennials finally buying homes; and, the work from home factor which began during the pandemic and allowed residents to live in more suburban areas without long commutes. As rates began increasing in early 2022, there was a significant slowdown in sales and softening of prices with the Inland Empire with year over year decreases in sales as of May 2023 of more than 20 percent. The high mortgage rates have significantly slowed existing homeowners from moving. The limited availability of existing homes on the market has resulted in new homes capturing a much larger percentage of the total home sales; however, new home sales are also down year over year.

While most jobs have come back, job losses were significant during the COVID recession with the Nation’s unemployment rate going from 3.5 percent in February 2020 to 14.4 Item Title: 12.2
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percent in April 2020, with the April 2023 National unemployment rate at 3.1 percent (Employment Development Department, not seasonall y adjusted). The Congressional Budget Office (“CBO”) Forecast for the U.S. Economy (published February 2023) stated real GDP growth will come to a halt in 2023 then will average 2.4 percent from 2024 to 2027 and then 1.8 percent between 2028 to 2033. The C BO states they expect unemployment rates to rise through early 2024 reflecting the slowdown in economic growth. In summation, for 2023 the CBO projects stagnant output, rising unemployment, gradually slowing inflation and interest rates to remain at or above their current levels.

They believe that in 2023 non- interest spending will substantially exceed revenues with rising interest rates driving up the cost of borrowing which results in the government debt steadily increasing. Over the long term, they suggest changes in fiscal policy to address the rising costs of interest and mitigate other adverse consequences of high and rising debt.

The unemployment rate for the MSA was estimated at 4.1 percent (as of April 2023 per the Employment Development Department). This reflects a decrease from the peak during the Great Recession of 15.1 percent in 2010 and a decrease from the peak during COVID of 14.9 percent. As of April 2023, Riverside County’s unemployment rate was 4.1 and San Bernardino County also had a 4.1 percent unemployment rate. The current unemployment rate for the MSA of 4.1 percent is slightly lower than the California rate at

4.3 percent and higher than the April 2023 National rate of 3.1 percent. Below is a table comparing Riverside County’s unempl oyment rate to the unemployment rates of the surrounding counties as of April 2023.

Jurisdiction As of Unemployment Rate*
Los Angeles County Apr-2023 4.5%
Riverside County Apr-2023 4.1%
San Bernardino County Apr-2023 4.1%
Orange County Apr-2023 3.0%
San Diego County Apr-2023 3.3%
Source: State of California E.D.D.; *Not Seasonally Adjusted

The latest UCLA Anderson Forecast (“Forecast”) was issued March 15, 2023 and stated that the potential action by the Federal Reserve will determine whether the nation Item Title: 12.2
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continues to grow or experiences a mild, short-lived recession in 2023. They believe the economy is at a recession- related fork in the road with one path leading to continued economic growth (although slower than the recent 2.4 percent growth rate) and the other would lead to a mild short -lived recession. Whether the economy slips into recession or not will depend largely on inflation stickiness and the additional action the Federal Reserve takes to bring down inflation. The Forecast states that if the Federal Reserve moderates its aggressive tightening, economic growth is expected to slow to 2.3 percent growth in first quarter 2023; 1.8 percent in 2 nd quarter and 1.0 percent growth for the second half of 2023. If the Federal Reserve keeps aggressively tightening, a mild recession will occur with the economy contracting beginning in the third quarter 2023 and deepening in the fourth quarter 2023 and the first quarter 2024 followed by the beginning of a rebound. The Forecast states under both scenarios, inflation will still be elevated but will be more persistent in the recession scenario requiring tighter monetary policy. They believe both outcomes will include persi stent inflation with the no -recession scenario resulting in lower inflation and thus, more moderate monetary policy.

The UCLA Forecast for California is more positive than the overall Nation due to a strong demand for defense goods, labor saving equipment and software. In the no- recession scenario unemployment rate averages by year are estimated at 4.0 percent for 2023, 3.9 percent for 2024 and 3.6 percent for 2025. In the recession scenario, unemployment rate averages are expected to be 4.3 percent for 2 023, 4.8 percent for 2024 and 3.7 percent for 2025. Under both scenarios the California Forecast projects housing permits to grow to 150,000 in 2025 in spite of the higher interest rates. The fact that the California housing market is not overbuilt will offset the decrease in the housing market. Overall, the Forecast believes that California will have a more moderate slowing or, in the case of a recession, a milder downturn than the U.S. overall.

As a final indicator of overall economic activity for the region, we have reviewed the rise and fall of TEUs (Twenty-foot Equivalent Units – i.e., containers) being processed in the local ports. This is especially important for the Inland communities, as it represents much of the growth in development of west coast distribution centers and warehouses in the Inland Empire linked to supply -chain nodes in the Pacific Rim. The chart below shows Item Title: 12.2
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TEU activity at the Port of Long Beach. Generally, there has been increases since 2009 with the exception of a slight dip in 2016 and again in 2019 which ended with a 5.6 percent downturn. The 2022 calendar year saw a decrease of 2.6 percent from the previous year.

April 2023 was running 20 percent below April of 2022 (6 56,049 versus 820,718 total TEUs). It should be noted that Spring 2022 was a time when the back-up at the ports was still occurring due to supply chain issues. Per the Orange County Register (“Lack of product demand hurts drivers,” October 31, 2022) consumer demand cooled in mid-2022 leaving fewer TEUs needing to be driven from the ports. They are stating shipments have slowed due to American demand finally waning after the pandemic coupled with some major retailers bypassing the California ports for East C oast ports to avoid a possible upheaval by West Coast dockworkers as they negotiate a new contract. It appears that the slowdown in work for the dray operators (drivers who ship containers in and out of the ports) may be resulting from a slowdown in overall TEU demand.

Government

A Board of Supervisors oversees the County as the governing body of the County, certain County special districts, and the County Housing Authority. The Supervisors enact ordinances and resolutions, adopt the annual budget, approve contracts, and appropriate funds, determine land use zoning for unincorporated areas, and appoint certain County

4.0 5.0

6.0 7.0

8.0 9.0

10.0 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 TEU's (millions)
Year
Port of Long Beach TEUs
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officers and members of various boards and commissions. The Board of Supervisors is elected from five different districts within the County.

Education
Menifee Union School District (TK through 8th) and the Perris Union High School District (9th through 12th) serve the subject area. The Menifee Union School District operates one preschool, eleven elementary schools and three middle schools. Perris Union High School District covers a larger area than Menifee and operates four high schools, three alternative high schools and one alternative middle school to serve the greater Perris area including Menifee. Higher education is available within an hour’s drive at the University of California campuses at Riverside and Irvine or California State University campuses in San Bernardino, San Marcos, Fullerton, and Pomona along with several additional private colleges. The closest community college is Mt. San Jacinto College.

Conclusion
Population in the County has increased over the past 30 years with predictions for continued population growth even though the State is reported to be losing population.

The Nation’s economy has been slowing after the Board increased the FRR five percent to fight historical inflation which began during COVID. One bright spot during COVID was housing with the region’s relative affordability and low interest rates, coupled with the rising prices in the coastal m arket and the need for new housing, set up a new housing boom. Current concerns for the Inland Empire economy include stubborn inflation, the high prices of homes, higher interest rates, supply chain issues, recent bank failures along with the Russian invasion of Ukraine, which are all creating volatility in both local and global financial markets. A possible light recession is forecast for later this year. What effect the recent bank failures will have on the economy is unknown at this tim e. In conclusion, the County is expected to continue to grow in population due to its Southern California location, the availability of land and the relatively lower land and housing prices in comparison to adjacent Orange, Los Angeles, and San Diego Counties.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 172
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MENIFEE AREA MAP

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CITY OF MENIFEE DESCRIPTION

The subject property is located near the eastern border of the City, which is located in the southwestern portion of the County. Menifee became a city in October 2008 after voting to incorporate. Menifee was the 26 th city within the County of Riverside and is located along both sides of I -215 between Murrieta and Perris. The City includes the diverse lifestyle communities of Menifee, Sun City, Quail Valley, and portions of Romoland. The City is bordered by unincorporated lands and the City of Murrieta to the south, the cities of Lake Elsinore and Canyon Lake to the west, the City of Perris, area of Winchester and unincorporated lands to the north and unincorporated lands (portion known as the French Valley) to the east.

In the 1960s, early development of the Menifee Valley began when the concept of an active retirement community was envisioned for Sun City. Since that time the Menifee Valley has grown substantially. At incorporation in 2008, the City of Menifee had a total population of 60,000 residents. The Menifee Valley includes some portions of Romoland that are not included within the city limits. Although this area currently serves as a bedroom community for the workforces of North San Diego County, Temecula, Riverside, Corona and Orange County, economic development groups are in the process of recruiting future quality employers to relocate in the Menifee Valley. There have been several new commercial developments on the I -215 corridor south of McCall Bo ulevard including major shopping centers at the Newport Road off ramp, the Menifee Town Center west of the off ramp and an additional shopping center at Clinton Keith Road. Per the City of Menifee Economic Development website, there are 28 commercial projects under active construction and an additional 17 commercial projects either under review or in the plan review process.

Between 1990 and 2003, there was an extraordinary growth rate of 48 percent in the community of Menifee. The population is estimate d at 106,627 as of January 2022 per the Department of Finance (most recent available), representing a growth of 2.9 percent year-over-year. This compares to the Riverside County past year’s growth of 0.28 percent from July 2021 to July 2022. The City’s higher growth rate than the County is due to the wide expanses of land available for development within the City, and because of the Item Title: 12.2
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planned communities such as Audie Murphy Ranch (recently built -out), Banner Park (subject), Quartz Ranch, Shadow Mountain, future development Legado (near I-215 and McCall) and Remington Place (recently sold out), as well as single new home tracts.

In the past 15 years Menifee has had exceptional growth in the commercial and retail sector. Prior to the Great Recession several shopping centers were either constructed or planned. Included are the Town Center Marketplace, which is anchored by Aldi Market, Pet Smart and several national restaurants (located at the southwest corner of Haun and Newport Roads), and the popular Menif ee Countryside Marketplace, which is anchored by Target, Lowe’s, Kohls, Ulta, TJ Maxx, Best Buy and Home Goods along with numerous restaurants (located at the southeast corner of Haun and Newport Roads). The Town Center Specific Plan (“TCSP”) includes 170-acres of mixed use with a proposed City Hall, a Fairfield Inn & Suites by Marriott on Town Center Drive, along with several recently closed out new home neighborhoods including: Camden Place by Taylor Morrison; The Townes; Union Place and The Village by Lennar; and Artesa, a large upscale apartment project. Prior to the COVID pandemic shutdowns, the Krikorian theaters were under construction within TCSP along with a Krikorian retail center planned adjacent to the theaters. However, the shutdown of the economy stopped construction. The theater has been caught in litigation for three years with contractor lawsuits. Aside from the Krikorian theater, other new commercial development is back underway with both Center Pointe (retail northwest of the theaters) and Menifee Plaza (retail northeast of theaters), which front Newport Road, opening. Along the north side of Newport at Haun Road is a newer commercial area that houses the Menifee Union School District’s administration building, the existing City Hall, a Post Office, and several national chain restaurants.

The Menifee community also benefits from its proximity to Diamond Valley Lake, which was dedicated on March 18, 2000 and initially filled by the end of 2002. Diamond Valley Lake is located approximately five miles east of the City and is a 13,000- acre site with a 4,500-acre reservoir for boating and fishing. There is no swimming, water skiing or personal watercraft allowed in Diamond Valley Lake. The reservoir contains 800,000 acre-feet (260 billion gallons) of water and is owned by the Metropolitan Water District.

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Access to Diamond Valley Lake is via Newport Road, which becomes Dom enigoni Parkway east of I-215, and State Route 79, which was completed in 2008.

Land prices in the Menifee area have been historically lower than prices in the Murrieta and Temecula areas. As housing prices increased in the early 2000s, the price difference narrowed between Menifee and Murrieta/Temecula, however, there is still a var iance.

The price difference appears to be due to the Murrieta/Temecula area being along the I - 15 corridor, which commands a premium due to easier commuting to adjacent counties.

Menifee is located along the I -215 corridor, which creates a slightly longer commute to employment centers.

As discussed under the economy section under County of Riverside Area Description, new home sales had prospered during the COVID pandemic and Menifee is no exception.

Per the June 4, 2023, Ryness Report (a new home sales tracking and research company), there are 49 new home projects currently selling in the South Riverside submarket with 27 of the 47 new home projects located in Menifee. The average year to date sales rate per project for the week ending June 4, 2023, in the South Riverside submarket was 4.4 homes per month which is similar to the average 2021 sales rate per project was 4.3 sales per month.

In summary, the future growth of Menifee should continue. There are a significant number of new residential projects in Menifee, both currently selling and planned in the area.

Housing is less expensive than the Murrieta/Temecula neighboring communities which is attractive to homebuyers as price points are important in today’s Inland Empire housing market. Diamond Val ley Lake is another asset to the Menifee Valley area. The lower land prices and the availability of land for development combine to make Menifee an excellent candidate for future growth.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 176
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IMMEDIATE SURROUNDINGS

The subject property is located in the eastern portion of the City of Menifee, specifically on the north side of Domenigoni Parkway at Lindenberger Road. Access into the community is considered to be very good via I-215 (nearest highway) and is also possible via I-15. Banner Park is surrounded by existing residential homes to the immediate north, west, and south, and vacant lands to the east, northeast, and southeast. Past the existing residential lands to the west is the Menifee Lakes Country Club and Golf Course while to the southwest is the newer area of Menifee Lakes which was built in the 2000s. To the south and southeast past the vacant lands adjacent to the subject is the Tierra Shores residential community, which is centered around a small lake. Past the vacant lands to the east is a recently closed out new home community known as Winchester Ridge, built, and sold by D.R. Horton. The subject’s vicinity is home to several actively selling new housing developments, as northeast up Leon Road is KB Home’s Olivebrook, and further east on Domenigoni Parkway is TriPointe’s Outlook community followed by Lennar at Prairie Crossing. Southwest of the subject , past some vacant lands and existing residential, is the Menifee Lakes with surrounding residential community along with the new, currently selling Rockport Ranch by Lennar . Banner Park’s main entrance is off of Domenigoni Parkway via Lindenberger Road, and the secondary future entrance will be via Falcon Hill Drive from Olive Avenue, on the northern portion of the subject.

The immediate surrounding existing residential homes to the north and west of the subject were built in the early-2000s, and some of them with golf course frontage. The subject is served by Menifee Union School District and Perris Union High School District. Banner Park residents will attend: Heritage High School (about three miles north of the subject), Hans Christensen Middle School (three miles northwest of subject) and Southshore Elementary School (1.5 miles south of the subject).

Shopping is easily accessible to the community. Approximately one-quarter mile west on Newport Road is The Shoppes at the Lakes, a neighborhood center anchored by Stater Brothers. Within two miles at the I-215 and Newport Road intersection, which houses the Menifee Countryside Marketplace, Menifee Town Center, and Menifee Lakes Plaza.

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Menifee Town Center (at the southeast corner of Newport Road and I -215) includes a Ralphs Grocery Store, Dollar Tree, Living Spaces, Ross Dress for Less, Shell Gas Station and a multitude of dining options. Menifee Lakes Plaza (northeast corner of Newport Road and I -215) is anchored by an LA Fitness and includes a smaller neighborhood market (Barons Market), a salon, Raising Cane’s Chicken Fingers, The Coffee Bean and Tea Leaf, Blaze Pizza and more. On the west side of the I-215 at the southwest corner of Newport Road and I -215 is Menifee Countryside Marketplace which includes Target , Lowes Home Improvement, Kohl’s Best Buy, Boot Barn, and a wide selection of dining options. Approximately 11 miles south of the subject is Promenade Temecula, a major shopping mall anchored by Macy’s and JC Penney. The mall is located off I-15 near the intersection of where the I -15 and the I -215 merge. In addition to shopping and entertainment, the subject is approximately six miles northeast of the Loma Linda University Medical Center.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 178
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August 2, 2023
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We have reviewed the Community Facilities District Report for the City of Menifee CFD No. 2021- 1 (Banner Park) prepared by Spicer Consulting Group dated June 2, 2021 (“Report”). Per the Report the subject property is identified as Menifee CFD No. 2021-1 and includes 80.58 gross acres (the recorded tract map shows an engineered 76.44 gross acres which is what is used in this report) proposed for 256 single family detached homes.

Per the Report the Community Facilities District may pay for facilities which may include all amounts necessary to eliminate any fixed special assessment liens or to pay, repay, or defease any obligation to pay or any indebtedness secured by any tax, fee, charge or assessment levied, provide for the purchase, construction, expansion or rehabilitation for any real or other tangible property with an estimated useful life of five years or longer, which is necessary to meet increased demands placed upon local agencies as a result of development and/or rehabilitation occurring within Menifee CFD No. 2021-1.

The types of facilities to be financed with the proceeds of special taxes and bonds issued by CFD No. 202 1-1 consist of the construction, purchase, modification, expansion, rehabilitation and/or improvement of (1) park, roadway, traffic, administration and general government facilities, fire and safety, law enforcement and other public facilities of the City, including the foregoing public facilities which are included in the City’s fee programs with respect to such facilities and authorized to be financed under the Mello -Roos Community Facilities Act of 1982, as amended (the “City Facilities”); (ii) water and sewer facilities of Eastern Municipal Water District (“EMWD”) including, without limitation , the acquisition of capacity in the sewer system and/or water sys tem of EMWD and facilities including EMWD water and sewer capacity and connection fee programs (the “Water District Facilities”); (iii) interim and permanent school facilities of Menifee Union School District, including classrooms, multi-purpose facilities, administration and auxiliary space at school facilities, athletic fields, playgrounds and recreational facilities and improvements thereto, landscaping, access roadways, drainage, sidewalks and gutters and utility lines, furniture, equipment and technology, including technology upgrades and mobile devices and infrastructure therefore, with a useful life of at least five years at such school facilities (the “School Facilities”); and (iv) electrical utility undergrounding and dry utilities (the “Utilities”) (and together, with the City Facilities, Water Facilities and School Item Title: 12.2
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Facilities, the “Facilities”), and all appurtenances and appurtenant work in connection with the foregoing Facilities, including the cost of engineering, planning, designing, materials testing, coordination, construction staking, construction management and supervision for such Facilities. In addition, Incidental Expenses to be paid from bond proceeds and/or special taxes include (a) the cost of engineering, planning and designing the Fac ilities; and (b) all costs to form the District, issuance of the bonds , the determination of the amount of special taxes to be levied and costs otherwise incurred in order to carry out the authorized purposes of the District; and (c) any other expenses incidental to the construction acquisition, modification, rehabilitation, completion and inspection of the Facilities. The cost estimate of facilities including incidental expenses, to be financed through the issuance of CFD No. 2021-1 Bonds is estimated to be $10,748,819 based on 2021-22 current year dollars. The costs are estimated as follows:

Description Est. Eligible
Costs
Bond Allocation
City of Menifee Fees
Law Enforcement $59,136 $59,136
Fire Facilities $157,184 $157,184
Circulation $1,195,520 $1,195,520
General Government $261,376 $261,376
Public Use Facilities $39,424 $39,424
Parks – Land $55,040 $55,040
Parks – Improvements $169,216 $169,216
City Facilities $387,379 $387,379
Subtotal – City of Menifee Fees $2,324,275 $2,324,275
City of Menifee Facilities
Backbone Street Improvements $699,324 $699,324
Intract Street Improvements $1,584,539 $1584,539
Tract/Intract Storm Drain Improvements $1,640,205 $1,246,527 City 5-Acre Park $1,500,000 $0
Dry Utilities $653,154 $0
Subtotal City of Menifee Facilities $6,077,222 $3,531,044 Eastern Municipal Water District
Sewer Financial Participation Charge $745,984 $745,984
Sewer Treatment Plant Capacity Fee $1,520,128 $1,520,128 Water Financial Participation Fee $1,408,256 $1,408,256 Water Supply Development Fee $76,800 $76,800
1” Meter Drop-In Fee $96,512 $96,512
Irrigation Meter Drop-In Fee $149,820 $149,820
Total Eastern Municipal Water District $3,997,500 $3,997,500 Menifee Union School District
School Fees $896,000 $896,000
Total Eligible Fees/Improvements $13,294,997 $10,748,819 Incidental Financing Costs $1,776,181
Total Funded by Bond Proceeds $12,525,000
Total Fees/Improvements Funded by Developer $2,546,178 The difference between the eligible costs and the bond proceeds will be paid by the developer.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 180
Menifee Mayor and City Council
August 2, 2023
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It should be noted that the above cost estimate was per the CFD Report and based on 2021/2022 current dollars and amounts were allocated based upon estimated bond sizing and may change based upon market conditions at the time of bond issuance.

The Menifee CFD No. 2021-1 bonds are anticipated to be sold in two series. The first series was sold in October 2022 in the amount of $5,307,165.85. This appraisal is for the second series of bonds . Per the current sources and uses of funds (dated July 5 , 2023), the bond par amount is estimated at $6,325,000 and a net premium of $17,851 with $5,508,505 in project fund deposits, $548,958 in debt service reserve fund and $285,388 in cost of issuance and underwriter’s discount (all amounts subject to change).

A copy of the Menifee CFD No. 2021-1 boundary map is located in the Addenda for your review.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 181
Menifee Mayor and City Council
August 2, 2023
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SUBJECT PROPERTY DESCRIPTION

The subject property consists of 256 proposed single-family homes being developed into the community known as Banner Park. There are three product lines within Banner Park:

Merit, Heritage and Crest. Each product line is mixed throughout the entire community, which spans two tract maps. Banner Park in its entirety is des cribed below, and the site plan below shows each product line distinguished by various colors.

Location: Northwest side of Domenigoni Parkway at Lindenberger Road, City of Menifee, California.

Legal Description: Lots 1-124 of Tract 32102 and Lots 1-132 of Tract 32102-1 located in City of Menifee, County of Riverside, California.

Owner of Record: Individual owners as to
Lots 1-27, 55-64, 66-79, 88-124 of Tract 32102;
Lots 1-115 of Tract 32102-1, and Pulte Homes as to all remaining lots.

Three-Year
Sales History: Pulte Home Company, LLC purchased the subject property from Diamond Brothers Five Partnership , LP for $ 9,200,000 per public record. The site was undeveloped with a final map recorded at the time of sale. The sale closed in three takedowns: November 19 , 2020, for the first 86 lots, November 17 , 2021 for the second takedown of 85 lots, and July 1, 2022 for the third takedown of 85 Item Title: 12.2
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lots. Out of the total 256 homes, 203 have closed escrow to individual homeowners with closing dates between December 27, 2021 and May 17, 2023.

Assessor’s Parcel
Numbers: 340-630-001 through-009; 340-631-001 through -034; 340-640-001 through -028; 340-641-001 through -019; 340-650-001 through -034; 340-651-001 through -008; 340-660-001 through -040; 340-661-001 through -034; 340-670-001 through -006; 340-671-001 through -044.

Property Taxes: We have reviewed 2022 property taxes (most recent available per the County Assessor’s website) on a sample property within Banner Park (APN 340-631-029). The property has an assessed value of $697,307 and the total property taxes are $ 12,451.50. Included in the total tax amount is the basic l evy of $ 6,973.07, MUSD Debt Service of $ 432.60, Perris Union High School Debt Service of $617.74, City of Menifee CFD 2021- 1 charges of $3,112.02 along with $741.66 for maintenance services along with miscellaneous charges of $574.61. This equates to an o verall tax rate of 1.79 percent based on assessed value.

Flood Zone: Per the County of Riverside a flood plain review is not required . Per FEMA the subject is located on Map Number 06065C2060H dated August 18, 2014 and is within Zone X – outside of the 0. 2 percent annual chance floodplain.

Size and Shape: The subject property is roughly triangular in shaped and contains

76.44 gross acres and 56.119 net acres per Tract Maps 32102 and 32102-1. The differences in gross versus net acres is due to a community park site (Lot 136 32102- 1 which encompasses 4.859 acres) and several large open space sites which include natural drainage (Lots 133, 137, 138 and 141 of Tract 32102-1 totaling 5.53 acres) along with smaller open space areas, set -back areas, and internal streets within both tract maps. It should be noted that the open space and park acreage, while located within Menifee CFD No. 2101-1, will not be taxed, and thus are not included in this valuation.

Zoning: Per the City of Menifee Zoning Map, the subject property is shown as SP Zone which refers to the Menifee Village Specific Plan. Per the Menifee Specific Plan No. 158 Amendment No. 5, which was adopted January 11, 2005, the subject is known as Planning Areas 4-1 and 4-2 which are both designated for medium density residential (allows for 2-5 dwelling units per acre) and a maximum of 269 units.

Entitlements: The subject property is covered by two tract maps: 32102 and 32102-

1. Tract No. 32102 was recorded September 30, 2020, and subdivides 32.81 acres into 124 single family detached lots with a minimum lot size of 6,000 square feet. Tract No. 32102- 1 was also recorded on September 30, 2020, and subdivides 43.63 gross acres Item Title: 12.2
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into 132 single family detached lots with a minimum lot size of 6,000 square feet, as well as open space lots and a park site. Copies of the Tract Maps are located within the Addenda of this report.

The recorded tract maps allow for 256 single family detached lots on the 76.44 gross acres which equates to 3.3 dwelling units per acre, within the allowed zoning requirement.

Topography: The topography is generally flat, and currently the subject property is at street level of the surrounding streets. The lands have been developed into single-family detached lots. Drainage appears to be within an engineered street drainage system with additional drainage throughout the open space and park site within the Tract Map.

Soils Condition: We have reviewed an Update Geotechnical Report for Tract 32102 prepared by Leighton and Associates, Inc. and dated April 29, 2020.

The report concludes that, in their opinion, the overall site appears suitable for the intended use provided their recommendations are properly incorporated during the design and construction phases of development. It is an assumption in this report that the soil is adequate to support the highest and best use conclusion and that all recommendations made within the soil’s reports were adhered to during construction. This is supported by existing development on the subject lands.

Seismic
Conditions: It is our assumption that the property is not located within the Alquist Priolo Earthquake Study Zone.

Environmental
Concerns: We have not received any envir onmental reports on the subject property. This appraisal assumes that there are no environmental issues that would slow or thwart development of the site. This is supported by existing development on the subject lands which were overseen by City inspectors.

Cal Fire Hazard
Designation: A portion of the subject property is in a very high fire zone (VHFZ) per Cal Fire’s Fire Resource Assessment Program. Within the VHFZ some additions to the roof and window construction were needed.

Per Pulte representatives, this was not an issue with wor kmanship, it was a mild spec difference on the roof underlayment for homes within the VHFZ versus not within the VHFZ. This affected about 60 homes within Banner Park. Pulte has completed the retrofit on all of the windows and is now completing the retrofi t on the roofs on the affected homes. A portion of the map showing the subject area is shown in the Addenda.

Easements/
Encumbrances: We have reviewed a Preliminary Title Report prepared by First American Title Company as Order No. 5049088 -A dated July 8, 2022, which covers Tract 32102-1. The report is summarized below Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 184
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Item Nos. 1 through 5 pertains to property taxes and special assessments on the property including CFD 2017- 1 (City maintenance CFD) and CFD 2021- 1 (subject CFD). Item Nos. 6, 7, 14 thru 19, 25 through 27 and 30, 31 and 33 refer to easements on the site. Item No. 8 states the property is within the Santa Ana Watershed Benefit Assessment Area. Item No. 9 refers to the School Mitigation Agreement. Item No. 10 is in regard to a Memorandum of Agreement and two substitutions. Item No. 11 refers to the Water Quality Management Plan on the site. Item No. 12 pertains to matters shown or disclosed by Tract Map 32102-1 stating Lot 136 is a park, lots 133-135 and 137 – 145 are open space and an easement on Lot 65 for maintenance purposes. Item No. 13 refers to abutters’ rights to surrounding street s. Item Nos. 20 and 21 refer to the environmental constraint notes on the Tract Map. Item No. 22 is in regard to the Agreement for water service. Item Nos. 23 and 24 refer to the effect of two documents (Resolution No. 2021- 064 and 065) which annexed two parcels of land within Improvement District No.

U-35 of EMWD (not shown on title report). Item No. 28. Pertains to the CC & Rs recorded on the property. Item No. 29 refers to the Master Dispute Resolution Declaration recorded on the property.

Item Nos. 32 and 34 refer to Easements, Covenants and Conditions contained in the deed from Pulte Home Company to Banner Park Community Association. Item No. 35 refers to the rights of the public in any portion of land lying within a road, street, alley or highway .

Item No. 36 refers to water rights.

It is an assumption in this report that the subject property is free and clear of any liens and/or encumbrances with the exception of Menifee CFD No. 2021-1 and the other aforementioned special assessments.

Utilities: All normal utilities serve the subject site by the following companies:
• Electrical: Southern California Edison Company
• Natural Gas: The Gas Company
• Sewer/Water: Eastern Municipal Water District
• Schools: Menifee Union School District /
Perris Union High School District

Streets/Access: There are various access routes to the subject property via I -215 or via I-15, although I -215 is much closer to the subject. From I -215, head east on Newport Road approximately two miles to
Lindenberger Road. Newport Road turns into Domenigoni Parkway west of the subject . Banner Park is accessible from Domenigoni Parkway via Lindenberger Road. The site sits on the north side of Domenigoni Parkway and on both sides of Lindenberger Road. The models are located near the Lindenberger Road entrance to the community on Laurel Court (north of Falcon Hill Drive). From I -15, head east on Railroad Canyon Road (turns into Newport Road at City Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 185
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limits, and then into Domenigoni Parkway east of I -215) to Lindenberger Road (approximately ten miles).

I-215 is a major Southern California Freeway beginning at the I-15 in Murrieta in Southern Riverside County and providing access north through Riverside and into San Bernardino where it combines with I- 15 once again.

I-15 is a major north/south freeway, which provides access to both international borders with Mexico and Canada.

Newport Road is a major commercial arterial through the City of Menifee with on/off ramps to I-215. West of the Freeway at the City limits Newport Road becomes Railroad Canyon Road providing access into the Cities of Canyon Lake and Lake Elsinore. East of the Freeway Newport Road becomes Domenigoni Parkway and provides access into the area of Hemet and to Diamond Valley Lake, a large reservoir in Riverside County.

Lindenberger Road is a small north/south road that starts at Domenigoni Parkway (at the subject) and goes north, providing access through residential neighborhoods and into the Heritage Lake neighborhood.

Internal streets within Banner Park include: Lindenberger Road, Bayberry Street, Bolivian Circle, Blueridge Court, Falc on Hill Drive, Laurel Court, Juniper Court, Canary Wood Court, Purpleheart Court, Pumpwood Court, Incense Court, Mangrove Circle , Whitewood Street, Chestnut Street, Twinberry Circle, Crape Myrtle Street and Tulipwood Street.

Current Condition: The subject property has been developed into 256 single-family lots with a minimum lot size of 6 ,000 square feet . The lots are in a finished condition with streets complete and utilities stubbed to each lot. There are 203 completed homes owned by individuals, 25 homes over 95 percent complete (including the six models), 25 homes under construction (less than 95 percent complete) and three finished lots.

Costs: Per Pulte representatives, there are $ 4,734,000 in remaining land development costs and fees which are net of CFD reimbursements.

These costs includ e remaining, grading, sewer/water/storm drain, final cap in- tract streets/sidewalks, offsite street, parks, landscaping/walls-/common areas, utilities , consultants , and remaining fees. These are associated with the Pulte owned property only which equates to $89,320.75 per lot ($4,734,000 divided by 53 builder-owned homes and lots). These remaining land development costs will be considered in the valuation section later within the report.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 186
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August 2, 2023
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HOA Amounts: Per Pulte representatives, the monthly HOA is expected to be $79 per month at build out.

Improvement
Description: Tracts 32102 and 32102 -1 are being marketed as Banner Park by Pulte Homes. Banner Park features three product lines, which are dispersed throughout the two tracts: Heritage, Merit and Crest. All three product lines at Banner Park grand opened July of 2021 and each product line includes three floor plans for a total of nine floor plans within the subject. The nine floor plans range in size from 2,191 to 3,237 square feet, and feature one to two stories and two- to three- car garages. Two of the plans are considered to be “next generation” homes which include a separate living area for a multi -generational family. The home exteriors feature front yard landscaping with sprinkler timer, Schlage front door hardware with a 6-panel front entry door, two hose bibs and a rain diverter at the entry. Interiors include vinyl and carpet flooring throughout, bullnose corners, two- panel interior doors, p rewiring for ceiling fans at owner’s suite, loft (per plan), family room and patios. Programmable wifi -enabled thermostats, tankless water heaters, high performance windows, and energy efficient gas furnaces are also included, with solar system prewiring (panel size per plan, standard lease with option to purchase). Gourmet kitchens include maple style cabinetry in two stain color choices, slab granite countertops with 6-inch backsplash, Whirlpool stainless steel appliances , undermount stainless steel sinks, eat in -islands and walk in pantries (per plan). The owner’s suites include walk in closets, dual sinks and separate soaking tubs and showers. Pulte advertises their Smart Home Technology which includes two port outlets with one CAT6 and one RG6 outlet in family rooms, prewiring for future wireless access points, and USB outlets in the kitchen.

All homes appear to be in excellent condition with no
visible depreciation.

We have reviewed sales information from the builder which included 247 sales, with 203 home closings from December 2, 2021, through May 17, 2023. Actual closed sales prices have ranged from $532,690 to $802,051. Per our review of the local Multiple Listing Service, there was one resale of a home within Banner Park and per our inspection there were no homes listed for resale. Original base pricing at grand opening in July of 2021 ranged from $535,990 to $619,990, while the latest base sales prices range from $ 553,990 to $645 ,990. The houses which are over 95 percent complete are detailed on the following page.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 187
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August 2, 2023
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Banner Park by Pulte Homes

Plan

Bd/Ba
Floors/
Parking
Sq.

Ft.

Ind.

Owned
Bldr.

Owned
Heritage Plan 1 (H1) 3 / 2 1 / 2 2,191 29 3*
Heritage Plan 2 (H2) 3 / 2.5 1 / 2 2,311 20 0
Heritage Plan 3 (H3) 3 / 2.5 1 / 3 2,462 21 1*
Merit Plan 1 (M1) 4 / 2.5 2 / 2 2,391 18 3*
Merit Plan 2 (M2) 4 / 2.5 2 / 2 2,654 17 1
Merit Plan 3 (M3) 5 / 3 2 / 2 2,824 29 2*
Crest Plan 1 (C1) 4 / 2.5 2 / 3 2,845 17 5*
Crest Plan 2 NG (C2) 5 / 3.5 2 / 3 3,047 23 5*
Crest Plan 3 NG (C3) 5 / 3.5 2 / 3 3,237 29 5*
Total 203 25
*One of each plan is a model home. In addition to the above there are 25 homes under construction (less than 95 percent complete) and three additional finished lots. ”NG” stands for next generation home with separate quarters for a multi- generational family.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 188
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August 2, 2023
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RIVERSIDE COUNTY HOUSING MARKET

In analyzing the County’s housing market, population growth and economic conditions need to first be considered.

Population
The County population grew at a 0.28 percent increase between July 2021 and July 2022 (per the Department of Finance). This compares to an average annual growth rate over the past ten years of about 0.9 percent, and an average annual growth rate of approximately 2.5 percent for the previous eighteen- year period. The slowdown in population growth is similar to other Southern California counties during this time period and is thought to be due to the Great Recession and the disruption from COVID.

Predictions are for the County to grow at an average annual rate of 1.5 percent over the next eight years. This equates to an increase of approximately 36,000 residents per year, suggesting the need for about 10,000 homes per year within the County. The COVID influence is still unknown on the County’s population growth. New home sales in most cities in the County in 2020 through 2022 were higher than the coastal communities due to affordability, the work from home factor, and the fact that millennials are finally entering the housing market. These factors may increase actual County population growth in 2023.

Economic Conditions
Over the past twenty-five years the Inland Empire has seen various cycles in the housing market. The Great Recession impacted the Inland Empire significantly and resulted in a longer recovery period than that of other Southern California regions. The rise and then fall of housing prices in the Inland Empire between 2004 and 2009 was considerably steeper than almost anywhere in the State. Unfortunately, this meant that the people who bought near the peak of the market likely faced significant negative equity. After essentially remaining flat for a few years, housing prices began to increase in late 2012 through January 2020. Once the COVID pandemic hit in March 2020, the economy entered what is now known as the COVID Recession. The housing market slowed down significantly early on, but by May 2020, new homes were going under contract and selling at well above average absorption rates from May 2020 through Spring of 2022 in the Item Title: 12.2
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region. Since May 2022, the new home market has seen a slowdown in absorption rates due to the increasing interest rates, the high prices of homes, and the high rate of inflation which is shaking consumer confidence.

Economic growth in the Inland Empire was strong generally between 2015 (after the Great Recession), and until the economic shutdow n due to COVID. The second half of 2020 and all of 2021 saw economic growth, however the first two quarters of 2022 saw GDP shrinking while the third and fourth quarters saw minimal growth with the advanced estimate for the year 2022 at 2.1 percent. The most recent unemployment rate for the County is 4.1 percent (per the April 2023 EDD report). The end of 2022 saw lower unemployment rates than the County’s pre-COVID unemployment rate in February 2020 of 4.0 percent, however the first quarter of 2023 has shown unemployment rising. While unemployment rates are near historical lows, the inflation factor is significantly affecting the economy.

The housing market played a large role in the past two recessions. In the Great Recession, due to increased interest rates and rising home prices between June 2004 and mid-2006, the market reaction was to create non-conventional financing alternatives, such as sub- prime and non- conventional mortgages, to artificially maintain the boom housing market of 2004 and 2005. By 2007, the housing market saw a shake- up due to the problems in the sub- prime and non-conventional mortgage markets, which played a role in the 2008 upheaval of Wall Street and contributed significantly to the U.S. economic downturn of the Great Recession. D ue to stricter income verification on new loans and the lack of available credit, coupled with job losses and declining home prices, sales of new homes slowed for the next few years and essentially remained flat until mid- 2012 when home prices began a steady climb.

During the COVID recession, new home sales were one of the brightest spots in both the local and national economies. While new home sales slowed in March and April 2020 due to the onset of the COVID pandemic, both sales and prices increased significantly throughout COVID until spring 2022 when interest rate increases began affecting the home-buying market. The rising interest rates alone did not seem to slow sales in Spring Item Title: 12.2
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2022. However, a combination of increasing home prices and falling consumer confidence, added to the significant interest rate increases slowed new home sales significantly in late 2022 and the beginning of 2023.

Per the Zonda National Economic and Housing Market Update in May 2023, the rate of growth of new home sales is of f from recent highs but up from pre- pandemic numbers which suggests a healthy market. Per their survey of over 300 new -home builders, the builders are stating sales are continuing but report they had to adjust pricing and incentives to “find the market”. In the January 2023 survey, 50 percent of builders surveyed were lowering their prices and the remaining 50 percent stated their pricing was flat. In May, the survey resulted in 40 percent of the builders stating their pricing was flat and 60 percent of builders stating they were increasing pricing. This is a very different dynamic which is partly due to seasonality, partly due to builder’s readjusting concessions (interest rate buy-downs) and partly due to price changes. The larger public homebuilders are typically offering significant rate buy-downs in order to keep absorption rates which is reportedly costing between $ 30,000 to $100,000 in incentives. The builders are attempting to find the “sweet spot” in incentives. Per Zonda a combination of price cuts of between 10-15 percent combined with a rate buy down is obtaining the best results in the marketplace.

Home loan mortgage rates have been and are still playing a huge part in the housing market. The Board held mortgage rates at all -time lows after the Great Recession and again after the COVID Recession in an attempt to assist the housing market’s recovery.

Low rates helped home sales during this time. However, first-time buyers are now having a hard time entering the housing market due to rising prices and rising interest rates. Per FRED, the average 30-year fixed mortgage has gone from 2.65 percent in January 2021 to 7.08 percent as in October 2022 with a decrease since then with current rates at 6. 69 percent as of June 15, 2023. Mortgage applications had been spiking in late 2020 and 2021 due to the low rates and the fear rates were going to start ticking up, which began happening in March 2022. The Board has increased the rate ten times in the past 15 months which increased the FRR from 0-0.25 percent to 5.00– 5.25 percent. At the latest Board meeting in mid-June, they paused the increases for the month and suggested there Item Title: 12.2
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may be additional increases later this year. The FRR increases are supposed to help slow the high inflation rate in the Nation which appears to be occurring as the latest reports are showing inflation in April 2023 at 4.9 percent, down from a high of 9.1 percent in June 2022.

While new home builders slowed production as sales slowed in 2022, the spring of 2023 has brought optimism to builders once again. Sales were up month over month as buyers adjusted to higher mortgage rates and the existing home inventory is at all -time lows.

Existing homeowners that are locked into a 3 percent mortgage are not moving up due to the current 6+ percent rates. This is creating a supply issue for existing homes. New home sales are benefiting from this supply issue as in some cases, the only option for homebuyers are new homes. Per Zonda, historically new homes capture 10-13 percent of all home sales; however, due to the limited supply of existing homes currently on the market, new homes are capturing well over 30 percent of all home sales in t he Inland Empire.

Residential Land Development
While there had been little land development going on in most of the Inland Empire during the Great Recession years 2008-2011, the second half of 2012 saw a resurgence in the more coveted areas of the Inland Empire. The increase in housing prices since 2012 combined with the limited availability of supply made land development feasible once again for homebuilders. It is thought that the increase in regulations, which has significantly increased the timeline f or processing entitlements, has limited the master developers’ further entitlement of developable land in California. While prior to the recession it was not unusual to see numerous large master-planned communities selling lots to builders, there are few currently available in the subject area. The majority of land sales over the past few years include single tracts of land with maps ready to record or a public builder buying a larger piece of land but develops the land for its own use, such as Banner Park by Pulte (the subject), Cimarron Ridge by Pulte, Quartz Ranch by Lennar or Rockport Ranch by Lennar, all located in Menifee.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 192
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August 2, 2023
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Land sales in the Inland Empire slowly grew from 2012 up to a peak in 2017, with 2018 and 2019 showing lower land transactions. Once home sales exploded in May 2020, land sales followed with a significant number of residential land sales to builders in the Inland Empire during the second half of 2020 and throughout 2021. In late 2021 and early 2022, prior to the FRR inc reases, builders were paying significantly more for residential land that was ready to develop as demand was up and supply was shrinking. The beginning of 2022 continued with strong residential land sales until May when sales began to fall sharply. According to Zonda’s survey of builders regarding residential land purchases, as of January 2023 only 2 percent of builders surveyed were “full steam ahead”, almost 40 percent were pausing transactions or bidding lower on land transactions. As of March 2023, these percentages have changed drastically with 13 percent stating they are going “full steam ahead” and 62 percent moving “cautiously forward”. The increase in optimism from new home builders outlook since January is partially due to the extreme slowdown of existing home inventory.

New Home Sales and Pricing
We have researched new single- family homes within the subject’s market in order to reflect residential trends. It should be noted these sales numbers and prices pertain to new home sales while later in this section we discuss existing home sales. In reviewing new home sales in the Inland Empire market area, per the June 4, 2023, Ryness Report, the year-to-date average sales rate (4.1 sales per month) is approximately 19 percent lower than the same time p eriod of the previous year ( 5.1 sales per month). New home sales rates started to level off in late Spring 2022, likely due to the increase in mortgage interest rates. As rates go down, purchasing power becomes larger, which gives new home buying a boost. However, the flip side is that as interest rates rise, purchasing power becomes lower and therefore fewer people are able to purchase new homes. Along with home sales comes a demand for appliances, furniture, building materials and services such as insurance, mortgage services, inspections, interior designers, and landscapers, all contributing to the area economy.

When comparing the June 4, 2023, Inland Empire Ryness Report to one year prior, there are 53 additional projects (197 in June 2022 and 250 in June 2023) and sales are nearly Item Title: 12.2
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20 percent lower year-to-date than the previous year. This does not appear to be due to limited inventory as there are additional projects, but rather because of an actual slowdown in sales activity, likely due to the increase in interest rates. It should be noted that current sales rates are being compared to early 2022, which was a hugely successful time for the housing market, prior to the shifting market of Spring of 2022. To put this in perspective, when comparing year to date average new home sales from June 2022 to June 2023, average sales numbers in the Inland Empire are down 19 percent (per the Ryness Report dated June 4, 2023); however, when comparing average new home sales from 2019 (prior to the pandemic) to June 2023, sales are actually a little stronger (3.5 sales per month per project average in 2019 versus 4.1 sales per month year -to-date average in June 2023). This increase over 2019 suggests new home buyers can weather the higher mortgage rates.

New single -family home pricing (combines both attached and detached) in the Inland Empire has also seen changes. The median new home price in the Inland Empire changed from the peak value of $437,200 in the third quarter of 2006 to $268,155 in early 2009 (decrease of 39 percent) while the current Inland Empire median new home price is $525,000 which is down from a record high of $646,000 in July 2022 per Zonda’s latest market report (Riverside-San Bernardino-Ontario, CA CBSA April 2023). This reflects an increase of over 95 percent from the bottom of the cycle and an increase of more than 20 percent over its peak during the Great Recession, however a decrease from the 2022 peak of 18.7 percent. In reality this decrease is actually larger as builders are buying down interest rates which costs the builder at times, up to $100,000, however, the amount is not reflected in the new home sales price. New home sale prices fluctuate based on the land value and competition more than on the cost of building the home. While finishes and sizes of homes can change, the basic costs on a per square foot basis typically do not fluctuate as much as land values, however, there have been inflationary increases in construction costs adding to this increase.

Within our search for the most comparable actively selling new home communities, we searched the subject’s city of Menifee as well as neighboring region of Winchester.

Because Banner Park is located so close to the eastern boundary of the City of Menifee, Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 194
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August 2, 2023
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some of the new home communities in Winchester are more comparable to the subject than others located within the city limits. The Menifee/Winchester area is currently home to many actively selling new home communities, thus, we focused on those with the most similar product and that were nearest in proximity to the subject. Our search for similar new home projects to the subject area resulted in fifteen new home projects (including the subject’s three product lines) with base pricing ranging from $469 ,000 to $786,740.

The subject’s most recent base pricing falls within the range, spanning from $553,990 to $645,990.

Existing Homes Sales and Pricing

While the previous section looked at new home sales and pricing, this section refers to existing homes in Riverside County. According to the California Association of Realtors’ most recent data, within overall Southern California, the median price paid for an existing single-family home in April 2023 ($785,000) reflects an increase of 1.9 percent from the previous month, but a decrease of 6.2 percent year -over-year from $837,000 in April 2022. Existing home sales in Southern California overall were down 37.4 percent year - over-year as of April 2023. The overall Southern California numbers compare to Riverside County with $615,000 as the median price paid for an existing home in the County in April 2023, up 0.5 percent since March 2023, but down 2.4 percent on a year -over-year basis ($630,000). Sales of existing homes in the County were down 35.5 percent year -over- year due to the limited supply of existing homes along with higher mortgage rates and higher home prices. Below is a table showing the sales and prices for the Southern California area by County per the California Association of Realtors.

Southern California Existing Home Sales
County
April
2023
March
2023
April
2022
Price
MTM %
Change
Price YTY
% Change
Sales YTY
% Change
Los Angeles $738,520 $718,370 $801,680 2.8% -7.9% -37.6% Orange $1,225,000 $1,250,000 $1,325,000 -2.0% -7.5% -39.7% Riverside $615,000 $612,000 $630,000 0.5% -2.4% -35.5%
San Bernardino $450,000 $475,000 $495,000 -5.3% -9.1% -37.9% San Diego $930,000 $915,000 $975,000 1.6% -4.6% -36.9%
Ventura $885,500 $849,000 $955,000 4.3% -7.3% -37.4%
Southern Calif. $785,000 $770,000 $837,000 1.9% -6.2% -37.4% Source: California Association of Realtors

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 195
Menifee Mayor and City Council
August 2, 2023
Page
678 of 729

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Based on April 2023 median existing homes prices, in comparison to the majority of the surrounding counties, Riverside County has a definite price advantage. The “Riverside County Advantage” (price difference between Riverside and surrounding counties) is $123,520 as compared to Los Angeles County, $270,500 as compared to Ventura County, $315,000 as compared to San Diego County and $610,000 as compared to Orange County. That is, in April 2023, the median priced home in Riverside County was $610,000 less, or almost one- half of the median priced home in Orange County ($1,225,000). However, San Bernardino County has a $165,000 price advantage over Riverside County. Typically, as the price advantage widens, homebuyers are more open to commuting to further out areas. With the current work -from-home concept, the suburban areas have seen more growth which put pressure on home prices in the Inland Empire. It is important to note that June of 2022 was the first month where the majority of Southern California counties showed median price decreases from the previous month.

And more recently, March 2023 was the first month since summer of 2022 where the majority of Southern California counties are showing median price increases month to month. Most counties were seeing substantial month- to-month median price increases from 2020 to 2022, and the widespread decrease from mid- 2022 to early-2023 appears to have been a sign that the market turned, and the pricing run up had come to an end.

The increase in pricing beginning in March is thought to be due to limited supply coupled with buyers’ acceptance of higher rates along with builders including rate buy downs along with other concessions.

In a separate attempt to capture the neighborhood specific price changes, the resale activity of existing homes in the subject area has been reviewed. The number of sales and sale prices of existing homes within market areas in the immediate area of the subject are shown in the table on the following page.

ZIP Code/Community
Name
Border
To
Subject
Sales of
Homes
Apr. 2023
Sales %
Change
from
Apr. 2022
Apr. 2023
Price
Median
Price %
Change
from Apr.
2022
Apr.
2023
PSF
Median
92584 (Subject ZIP) Subject 215 -29.5% $580,000 -4.9% $273 92586 (Sun City) North 117 -24.5% $365,000 -3.9% $302
92587 (Canyon Lake) Northwest 50 -51.0% $620,000 -2.7% $303 92532 (Lake Elsinore) West 67 -44.6% $578,182 -3.6% $217 92596 (Winchester) East 146 -4.6% $602,327 -6.3% $251
92563 (Murrieta Hot Springs) Southeast 178 -41.8% $635,000 -5.2% $290 92595 (Wildomar) Southwest 56 -52.5% $601,500 -7.5% $264 92562 (Murrieta/La Cresta) South 179 -45.9% $612,000 -4.5% $304 Source: Redfin.com Housing Market Trends April 2023
Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 196
Menifee Mayor and City Council
August 2, 2023
Page
679 of 729

The median home price of a detached resale home in the subject’s immediate market area is $580,000, which is mid-way in the range of average resale detached home prices in the subject’s surrounding area. The above price fluctuations from year-to-year relate to the California Association of Realtors overall Riverside County detached home resale price decrease of 2.4 percent year-over-year and 35.5 percent sales decrease from April 2022 to 2023.

Banner Park Sales, Pricing and Competition
Banner Park opened for sale in July 2021 with opening base pricing ranging from $535,990 to $ 619,990. The most recent base pricing at Banner Park ranged from $553,990 to $645,990 which suggests appreciation from 2.7 to 6.3 percent in total over the past 23 months, depending on floorplan. Base pricing actually rose higher than what it currently is in the summer of 2022, but came down as interest rates rose and sales softened in late 2022 and early 2023. Actual closed prices, including options, upgrades, and premiums, have ranged from $532,690 to $802,051. Within the subject, Pulte has closed 203 homes to individuals between December 27, 2021, and May 17, 2023, with an additional 44 homes in escrow. The total of 247 sales equates to an overall absorption rate of 10.7 sales per month. When looking at each product line individually, the absorption has been as follows: 3.8 sales per month at Heritage, 3.1 sales per month at Merit, and 3.9 sales per month at Crest. These are considered to be average absorption rates for the subject marketplace, but slightly weaker than the Inland Empire’s overall average sales rate. According to the Ryness Report dated June 4, 2023, there are currently 49 new home projects in the South Riverside submarket which includes the communities of Winchester, Menifee, Lake Elsinore, and the French V alley. The 49 projects include 27 projects within Menifee, which include the subject three communities.

The average absorption rate within the 49 South Riverside communities’ year to date per the June 4, 2023, Ryness Report is 4.4 sales per month. The subject sales rates in the

3.1 to 3.9 sales per month range compares slightly lower than the overall average in the area. However, it is interesting to note that the three subject communities essentially compete against each other with a 10.7 total sales rate per month across all projects.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 197
Menifee Mayor and City Council
August 2, 2023
Page
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Summary
Riverside County had seen substantial increases in pricing since 2012 with most areas, including the subject, showing astronomical increases from mid-2020 through early 2022.

While existing home sales were down when COVID began in spring/early summer 2020, new home sales subsequently shot up due to the existing home market supply being constrained and interest rates hitting all -time lows. In mid -2022 a slowdown in sales occurred as interest rates climbed to upwards of seven percent. Current rates in the mid- six percent range seem to be becoming accepted as builders work through various incentives to keep sales going. The South Riverside new-home submarket is performing slightly stronger than the Inland Empire market as a whole. The subject market area saw an increase in pricing consistent with most of Southern California throughout 2020 and 2021 and appeared to be continuing in the beginning of 2022. The past year has seen sales slow and prices lowering; however, the past couple months have seen new home builders’ optimism return as new home absorption is generally increasing. Despite uncertainty hitting the market due to rising interest rates and inflation, most observers agree that the Riverside County housing market is healthy and population growth is still estimated to occur in the area. It is believed that as the population continues to increase, housing growth will also continue, despite a slowdown.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 198
Menifee Mayor and City Council
August 2, 2023
Page
681 of 729

HIGHEST AND BEST USE ANALYSIS

The highest and best use is a basic concept in real estate valuation due to the fact that it represents the underlying premise (i.e., land use) upon which the estimate of value is based. In this report, the highest and best use is defined as:
"the reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value”
4 Proper application of this analysis requires the subject properties to first be considered “As If Vacant” in order to identify the “ideal” improvements in terms of use, size and timing of development. The existing improvements (if any) are then compared to the “ideal” improvements to determine if the use should be continued, altered or demolished preparatory to redevelopment of the site with a more productive or ideal use.

“As If Vacant”
In the following analysis, we have considered the sites probable uses, or those uses which are physically possible; the legality of use, or those uses which are allowed by zoning or deed restrictions; the financially feasible uses, or those uses which generate a positive return on investment; and the maximally productive us es, or those probable permissible uses which combine to give the owner of the land the highest net return on value in the foreseeable future.

Physically Possible Uses
The subject property consists of 76.44 gross acres within two tract maps, located on the north side of Domenigoni Parkway at Lindenberger Road. Domenigoni Parkway is known as Newport Road to the west of the subject and is a heavily traveled east/west arterial road through Menifee with access from both I-15 (Railroad Canyon Road) and I-215. The site has been graded with the subject property developed into 256 single-family detached lots. The site is surrounded by existing residential homes to the north, west and south and vacant lands to the east, northeast and southeast . We have reviewed a soils report on the subject property however we have not received any environmental reports to

4 The Appraisal of Real Estate, 11th Edition
Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 199
Menifee Mayor and City Council
August 2, 2023
Page
682 of 729

_________________________________________________________________________________________________________ Menifee CFD No. 2021-1(2023 Bonds) – Banner Park by Pulte Homes (Menifee, CA) Kitty Siino & Associates, Inc. Page 43
review. It is an assumption in this report that the soil is adequate to support the highest and best use conclusion and that there are no environmental issues which would slow or thwart development of the site. This is evidenced by City approvals along with City inspectors on site during construction. An engineered drainage system appears to have been designed to alleviate any potential flooding problems and to control project water runoff. All standard utilities serve the subject property. The site has good access via I-15 to Railroad Canyon Road which turns into Newport Road in the City of Menifee and then into Domenigoni Parkway closer to the subject, and very good access via I-215 to Newport Road/Domenigoni Parkway and east to the subject. There are regional shopping centers within two miles of the subject site.

Based on the physical analysis, the size, access, and topography make the subject property physically suited for numerous types of development; however, the grading and development that has occurred on the site along with the surrounding uses, suggests single-family residential use.

Legality of Use
The subject property is located within the City of Menifee, the entity responsible for land use and zoning regulation. Per the current Zoning Map, the subject properties are shown as SP (Specific Plan). The property is entitled under SP 158 (Menifee Village Specific Plan, Amendment No. 5). Per the current Specific Plan and approved tract maps, the subject property has an allowed 256 residential dwelling units. Recorded Tract Map Nos. 32102 and 32102-1 cover the subject and allow for 256 single-family lots with a minimum lot size of 6,000 square feet. The approved mapping is consistent with the current zoning on the property. Based on the legality of use analysis, the type of development for which the subject property can be utilized is narrowed to residential use. This is consistent with the findings of the physically possible uses.

Feasibility of Development
The third and fourth considerations in the highest and best use analysis are economic in nature, i.e., the use that can be expected to be most profitable. As discussed under the Inland Empire Housing Market section earlier within this report, the residential land market showed strong increases in both sales and pricing in 2020 and 2021, while the second Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 200
Menifee Mayor and City Council
August 2, 2023
Page
683 of 729

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half of 2022 and the beginning of 2023 saw a slowdown in sales as interest rates have risen substantially. The last couple months have seen builders’ optimism return as sales continue in the new housing projects.

Within Menifee CFD No. 2021-1, out of 256 proposed houses, there have been 247 home sales including 203 home closings. All structures appear to be in excellent condition with no physical depreciation apparent. Within the new home market in Menifee and Winchester, we found 1 5 projects (including the subject’s three product lines ) to be comparable to the subject property. Until recently, homebuilding had not been able to keep up with the demand during COVID due to the low interest rates, millennials entering the home buying market and the work from home factor all adding to the demand.

However, the recent rise in mortgage rates in an attempt to rein i n inflation is slowing sales in the area. The Menifee housing market is priced slightly higher when compared to the nearby cities of Wildomar and Lake Elsinore, however lower than neighboring Murrieta and Temecula. Population growth is still occurring in the area and will continue to create the need for housing.

Based on the above analysis, the highest and best use for the subject property appears to be for single-family detached residential development at the right price points.

Maximum Productivity
Based on the market activity of residential lands in the immediate area, we have concluded there is a need/demand for residential lands.

Highest and Best Use Conclusion – “As If Vacant”
The final determinant of highest and best use, as vacant , is the interaction of the previously discussed factors (i.e., physical, legal, financial feasibility and maximum productivity considerations). Based upon the foregoing analysis, it is our opinion that the highest and best use for the subject property “As if Vacant” is for residential development.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 201
Menifee Mayor and City Council
August 2, 2023
Page
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Highest and Best Use – “As Improved”
The subject property consists of the neighborhood of Banner Park being built by Pulte Homes in the City of Menifee. Banner Park consists of 256 proposed detached homes situated on lots with a minimum size of 6,000 square feet and spread across three product lines (or a total of nine floorplans). Banner Park began selling in July of 2021 and features homes ranging in size from 2,191 to 3,237 square feet with most recent base pr icing ranging from $553,990 to $645,990. The increase from opening base prices have ranged from 2.7 to 6.3 percent per floorplan. There have been 247 sales within Banner Park resulting in an average sales rate of 10.7 sales per month. It’s important to note that this absorption rate is for all three product lines, and when looking at each product line specifically, the subject’s absorption rate ranged between 3.1 sales per month (Merit) to

3.9 sales per month ( Crest). Our search within the subject area found twelve projects considered to be comparable to the subject with similar sized homes and similar product types. The average sales rates within these projects range from 2.9 to 8.3 sales per month. While there are two outlying projects performing far above the market (Cheyenne and Rock Meadows at Olivebrook, both of which recently opened, thus doesn’t reflect an absorption history), the vast majority are selling well with sales rates in the 2.9 and 4.6 sales per month range. Our search of the Multiple Listing Service and on- site inspection revealed one closed resale and no resale listings within the subject neighborhood.

The sales rate within the subject communities and the competitive projects in the immediate area suggest there is demand for new homes in the current market at the right price points. All of the homes are of good design and appear to be of good quality workmanship. Based on the subject neighborhood’s sales rates, it is our conclusion that the highest and best use for the subject property is for the continued use, as improved.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 202
Menifee Mayor and City Council
August 2, 2023
Page
685 of 729

VALUATION ANALYSIS AND CONCLUSIONS

The Sales Comparison Approach will be used to value the subject property. This approach compares similar properties that have recently sold or are in escrow. In determining the value for the property, a unit of comparison needs to be addressed. For single-family detached lots, the lots are typically sold on a finished lot basis. That is, the sales price is determined by the finished lot value and then the remaining costs to develop the property to a finished lot condition are taken into account in the sales price. Therefore, in determining the current market value for the residential lands, the current condition of the lots will be considered. In the case of the existing home valuations , a single home sale is the unit of comparison. In determining the value for each existing house, a base value will be concluded for each plan which will be considered a minimum market value as most buyers typically purchase some premiums, upgrades or options which increase the price of the home.

The valuation will be presented as follows. First, a discussion of the single- family detached lot market data will be given. Each of the comparable market data (on a finished lot basis) will be detailed along with a comparison discussion of their relationship to the subject property. The remaining land development costs and land development fees will be taken into consideration. This analysis will be followed by a finished lot value conclusion for the subject . Houses which are under construction (under 95 percent complete) will be v alued on the basis of a finished lot rather than attribute value to a partially complete improvement. In the case of the completed (over 95 percent complete) builder-owned models and production units, the homes will be valued using the Sales Comparison Approach to value to conclude on a retail base value for each plan, followed by a Discounted Cash Flow (“DCF”) Analysis due to the “bulk” or single ownership. The DCF will take into account the fair market value of the completed homes (utilizing the Sales Com parison Approach), any remaining land development costs and fees, the marketing and carrying costs associated with selling off the homes, a profit due to the developer of the homes, and a discount rate reflecting both the risk associated with selling off the homes along with the time value of money during the estimated absorption period.

In the case of individually owned homes, a concluded base value will be used for each Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 203
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August 2, 2023
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plan and a mass appraisal technique will be addressed. In determining the concluded base value, new home sales in the area will be reviewed and compared with sales of the subject completed homes using standard methodology and statistical testing. In addition, any resales will be taken into consideration. All of the value conclusions will take into consideration improvements funded by both series of the Menifee CFD No. 2021- 1 Special Tax Bonds and their lien. A summary of the final value conclusions will be reported at the end of this valuation section.

Market Data Discussion – Detached Residential Lots

Within Banner Park there are a total of 203 individually owned homes, 25 homes over 95 percent complete (including six model homes), 25 homes under construction, and three remaining finished lots. The 25 homes under construction (under 95 percent complete) will be valued on the basis of a finished lot rather than attribute value to a partially completed house; therefore, 28 lots will be valued. The lots within Banner Park contain a minimum of 6,000 square feet.

We have searched the area and found the eight transactions summarized in the Addenda to be most comparable to the subject property. The transactions are reported both on a purchase price basis and a “finished lot” basis when available. The actual purchase price is typically less, depending on the condition of the land (lots) at the time the property was acquired. Although some of the transactions refer to the land being in a finished or nearly finished condition, these transactions consist of land with physically finished lots with development impact and other fees remaining to be paid in order to be considered a true “finished lot.” Below are the details of each of the comparable land sales along with a discussion of each transaction in relationship to the subject lands.

Land Sale No. 1 refers to the most recent closed residential land transaction in the area.

Pulte Group purchased the site within the master plan of Stratford Ranch in Perris, about ten miles north of the subject property in the City of Perris. The land was unimproved with an approved final map for 90 lots with a minimum lot size of 6,000 square feet. Stratford Ranch includes 400+ acres of mixed-use land being developed by Mission Pacific who is selling off tracts to builders with Richmond American and Pulte purchasing land in the Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 204
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August 2, 2023
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master plan along with IDI purchasing an industrial site for a logistics center. Pulte purchased the 90 lots for $4,906,130 or $54,513 per lot based on a reported estimated finished lot price of $225,000 assuming a similar CFD. In comparison to the subject site, this site is considered to be inferior in location (the Perris median price home is $488,000 which is over seven percent less than the Menifee median pri ce home of $525,000), similar in lot size and, slightly inferior in condition. The subject lots are in a finished condition while this land was unimproved at time of sale. While finishing costs are taken into consideration, there is additional risk associ ated with the grading and development of the raw land.

Land Sale No. 2 refers to the most recent sale within Menifee with D.R. Horton purchasing 446 lots known as Canterwood Phase 1 located at the southeast corner of Holland Road and Leon Road about two miles southeast of the subject site. D.R. Horton purchased the 446 lots from Ambient with the closing occurring in April 2022. They paid $6,000,000 or $13,453 per lot based on an estimated finished lot price of $175,000 per brokers familiar with the transac tion. The significant development costs include street improvements to the site along with drainage and significant grading which will include import on the property. D.R. Horton is advertising their Sycamore and Juniper communities on the site along with Willow Pointe at Canterwood, all stating “coming soon” on their websites. The finished lot price assum es a similar CFD on this transaction. In comparison to the subject property, this site is considered to be inferior in condition. While the finishing costs are anticipated, the raw nature of the site along with the drainage and import needed creates a significant amount of risk in the grading and development of the site.

Land Sale No. 3 refers to the purchase of 220 single family detached lots with a minimum lot size of 6,000 square feet located less than one mile northeast of the subject site at the southeast corner of La Ventana Road and Simpson Road in the Winchester area of unincorporated Riverside County. Forestar (in a related purchase to D.R. Hort on) purchased the 220 lots from Rancon in April 2022 for $8,000,000 or for $36,364 per lot based on a reported finished lot cost of $213,000. The land was essentially level, in an unimproved condition with an approved final map at time of sale. The reporte d finished Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 205
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August 2, 2023
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lot price reflects a proposed CFD on the property similar to the subject’s CFD. In comparison to the subject property, this location is considered to be inferior due to condition and lot size. The site was sold in an unimproved condition, thus t here is risk associated with the development of the site.

Land Sale No. 4 refers to the sale of the property known as Rockport Ranch which is located at the southwest corner of Old Newport and Briggs Road less than one mile south of the subject site, also within the City of Menifee. Lennar purchased the 79-acre property which is entitled for 305 lots, including a mix of cluster lots and conventional single-family lots ranging from 5,000 to 6,500 square foot. The new community will be gated and include amenities of two lakes, a pool, park, social club and open space areas and will include a CFD similar to the subject property. Lennar purchased the site from the Abacherli Family for $5,500,000 which equates to $18,033 per lot based on reported finished lot prices ranging from $181,000 for the cluster lots, $205,000 for the 5,000 square foot lots, $208,000 for the 6,000 square foot lots and $213,000 for the 6,500 square foot lots. The high development costs are due to the requirement of the lakes and amenities within the project. The property sold in an unimproved condition with an approved tentative tract map. The community will have a similar CFD as the subject with similar overall tax rates. In comparison to the subject property, this transaction is considered to be similar in location however inferior due to the raw land nature of this site.

While costs are taken into account in our analysis, the risk associated with the development of the site is not.

Land Sale No. 5 refers to the purchase of the north a nd final phase of the Braverde master planned community in Winchester. Global Investment Pool entitled and sold the property located along the north side of Wickerd Road, just west of Leon about three miles south of the subject. The lots were in a partiall y finished condition at time of sale.

Richmond American Homes purchased the first phase of Braverde in November 2020 for $33,334,000 or $133,336 per lot based on a reported finished lot of $185,000. They then purchased the second phase in November 2021 (Land Sale No. 4) for $41,685,876 or $159,716 per lot based on a reported finished lot price of $215,000. It is believed the increase is due to the appreciation in the subject market between November 2020 and Item Title: 12.2
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August 2, 2023
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November 2021. Braverde has a similar CFD to the s ubject property. In comparison to the subject property, these lots are considered to be similar.

Land Sale No. 6 refers to the sale of 129 single family detached lots located southwest of Domenigoni Parkway and Rice Road in Winchester about 2.5 miles east of the subject property. D.R. Horton purchased the 6,000 square foot lots in an unimproved condition with approved mapping from SR Conestoga LLC for $5,600,000 or $42,411 per lot based on a reported finished lot price of $202,000. The property is located within a planned CFD with similar overall proposed tax rates to the subject property. D.R. Horton is now selling their community known as North Sky on the site with pricing from $585,000 to the mid- $600,000. In comparison to the subject property this location is considered to be slightly inferior (further out for commuters), and the condition of the lands was inferior at time of sale as it was unimproved land at time of sale. While costs are considered, there is risk associated with the grading of a site.

Land Sale No. 7 refers to the purchase of 756 lots known as Cimarron Ridge, located about 4.5 miles northwest of the subject property at the northwest corner of Valley Boulevard and Chambers Avenue in Menifee. The site was entitled and mass graded prior to the Great Recession then sat for many years due to both the economy and the hilly nature of the site, which inc reased the cost of land development on the site. The recent appreciation in the marketplace made the property once again feasible to develop.

Pulte Homes has purchased the 756 lots, ranging in size from 5,000 to 10,000 square feet, from Van Daele Homes. Van Daele rough graded the property prior to sale along with mapping the site. Pulte purchased the site in July 2021 for $47,000,000 or $62,169 per lot based on a reported finished lot price of $185,000, assuming a similar CFD to the subject. It appears some remapping was completed prior to grading. In comparison to the subject property this site is inferior in number of lots (this would be considered a bulk sale which would suggest a discount) and in condition. While finishing costs are considered, there is risk associated with developing raw land.

Land Sale No. 8 pertains to the May 2021 closing of 175 single family detached lots with a minimum lot size of 6,000 square feet, located northwest of Scott Road and Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 207
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August 2, 2023
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Lindenberger Road in Menifee, about 3.5 miles south of the subject property. Meritage Homes purchased the site in an unimproved condition with an approved tentative tract map for $7,200,000 or $41,143 per lot based on an estimated finished lot amount of $170,000 assuming a similar CFD on the property. The site is generally level at surrounding streets; however, Lindenberger Road was unpaved at the site increasing the land development costs. While this transaction closed in May 2021, it was negotiated approximately two years prior. Meritage Homes is now selling their Sumac Ridge neighborhood on the site with pricing from $560,000 to $650,000. In comparison to the subject property this site is considered inferior in date of negotiation and unpaved access and the raw land condition of the site (risk associated with the development).

The chart below summarizes the considerations used in adjusting the market data to the subject lot.

Data
No.

Location
Date of
Sale Lot Size Finished
Lot Price Comparison to Subject
1 Perris 11/22 6,000 $225,000 Inferior – Condition, Location 2 Menifee 4/22 5,000-
7,000 $175,000 Inferior – Condition
3 Winchester 4/22 6,000 $213,000 Inferior – Condition
4 Menifee 12/21 Cluster –
5,500
$181,000 -
$213,000 Inferior – Condition & Lot Size
5 Winchester 10/21 5,000 –
7,000 $215,000
6 Winchester 8/21 6,000 $202,000 Inferior – Condition
7 Menifee 7/21 5,000 –
10,000 $185,000 Inferior – No. of Lots & Condition
8 Menifee 5/21 6,000 $170,000 Inferior – Condition and Date of Negotiation

The market data has an overall finished lot range from $170,000 to $225,000. Data No. 1, at the high end of the range, refers to the most recent sale in an inferior location. When reviewing the sales, there is a clear appreciation shown betw een May 2021 and November 2022. When pairing Data Numbers 3 and 6 it suggests there was a 5 percent increase between August 2021 and April 2022. When pairing Data Nos. 4 (large lots only) and Data No. 8, it suggests there was a 25 percent increase between May 2021 and December 2021. The largest lots within Data No. 4 and Data No. 5 which sold in a finished lot condition based on $213,000 and $215,000 respectively, are considered to be the Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 208
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_________________________________________________________________________________________________________ Menifee CFD No. 2021-1(2023 Bonds) – Banner Park by Pulte Homes (Menifee, CA) Kitty Siino & Associates, Inc. Page 52
most similar to the subject property, however this transaction clos ed in December 2021.

The decrease in housing prices in the past few months due to the significant increase in interest rates suggests that residential land prices would also decrease, however we have not seen that in the market data yet. While residential land transactions in the Menifee area have slowed and some stopped, we do not have evidence of a decrease in pricing at this time. The latest sale occurred in November 2022 for a property in an inferior location in Perris. The above market data is considered to be good. In addition to the above land sales, we have information on a confidential escrow on lands across Newport Avenue from the subject which are anticipated to close in August 2023. While the amount is confidential, the price was negotiated over three years ago, prior to a substantial amount of appreciation in the subject marketplace. We have included it due to the proximity to the subject.

Value Conclusion – Residential Lots

Based on the above analysis the value conclusion for the subject builder-owned lots in a finished condition is $225,000. The “as is” value is calculated as follows:

28 Lots x $225,000 $ 6,300,000
Less: Remaining Costs (28 x $89,320.75) (2,500,981)
Current Value for Remaining 28 Lots $ 3,799,019

Retail House Valuations

Due to the single ownership of multiple houses by the various builders within the subject property including model homes and production homes over 95 percent complete, a Discounted Cash Flow (“DCF”) analysis is needed in order to arrive at a bulk value for the homes within the subject neighborhood that are builder owned. First, a retail value for each plan will be concluded followed by a DCF for the builder -owned homes, which will take into account the absorption time to sell off the houses, the costs assoc iated with selling off the homes and any remaining land development costs owed by the builder. The resulting revenue will be discounted using an appropriate rate to determine the builder - owned bulk value. This DCF analysis will be followed by a reporting of the concluded values for the individually owned homes using the concluded base retail value for each Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 209
Menifee Mayor and City Council
August 2, 2023
Page
692 of 729

_________________________________________________________________________________________________________ Menifee CFD No. 2021-1(2023 Bonds) – Banner Park by Pulte Homes (Menifee, CA) Kitty Siino & Associates, Inc. Page 53
plan with a separate check of the analysis utilizing a mass appraisal technique based on actual sales prices of the homes and considering any re-sale market data.

Banner Park consists of 203 individually owned homes, six model homes (one in escrow), 19 production homes over 95 complete (16 in escrow), 25 homes under construction (24 in escrow), and three additional finished lots ( three in escrow). The finished lots along with the homes under construction have been valued above. The 25 builder-owned homes over 95 percent complete (including six model homes) are being addressed in this section with a separate valuation for each plan.

Below is a summary of the floor plans within Banner Park . A listing of the improved residential comparable properties is located in the Addenda of this report. All of the improved residential properties are located within the Menifee and Winchester marketplace. Our search of the subject property and the local Multiple Listing Service (MLS) has resulted in one resale and no current resale listings within Banner Park.

Banner Park by Pulte Homes

Plan

Bd/Ba
Floors/
Parking
Sq.

Ft.

Ind.

Owned
Bldr.

Owned
Heritage Plan 1 (H1) 3 / 2 1 / 2 2,191 29 3*
Heritage Plan 2 (H2) 3 / 2.5 1 / 2 2,311 20 0
Heritage Plan 3 (H3) 3 / 2.5 1 / 3 2,462 21 1*
Merit Plan 1 (M1) 4 / 2.5 2 / 2 2,391 18 3*
Merit Plan 2 (M2) 4 / 2.5 2 / 2 2,654 17 1
Merit Plan 3 (M3) 5 / 3 2 / 2 2,824 29 2*
Crest Plan 1 (C1) 4 / 2.5 2 / 3 2,845 17 5*
Crest Plan 2 (C2) 5 / 3.5 2 / 3 3,047 23 5*
Crest Plan 3 (C3) 5 / 3.5 2 / 3 3,237 29 5*
Total 203 25
*One of each plan is a model home. In addition to the above there are 25 homes under construction (less than 95 percent complete) and three additional finished lots.

The most appropriate new home comparable data for Heritage Plan H1 (Stella) are shown below.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 210
Menifee Mayor and City Council
August 2, 2023
Page
693 of 729

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. H1 3 / 2 1 / 2 2,191 --
1 H2 3 / 2.5 1 / 2 2,311 $245.34
4 4 3 / 2 1 / 2 1,927 $259.98
5 3 4 / 2 1 / 2 2,026 $259.62
5 4 4 / 2 1 / 2 2,035 $250.61
8 2 3 / 2 1 / 2 1,950 $261.93
8 3 4 / 2 1 / 2 2,201 $246.10
11 1 3 / 2.5 1 / 2 2,290 $255.02
15 1 3 / 2 1 / 2 1,939 $267.31

All new home comparables are located within Menifee. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $245.34 to $267.31 per square foot with generally the smaller sized homes at the high-end of the price per square foot range and the largest sized home at the low-end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. Heritage Plan H1 has a current base asking price of $252.85 per square foot. There have been 29 closings of Plan H1 with sales prices ranging from $243.13 to $293.32 per square foot. There are currently 12 escrows of Plan H1 with a price range of $258.50 to $289.82 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan. All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Heritage Plan H1 has a base current market v alue of $245.00 per square foot. This calculates as follows:
2,191 sf x $245.00 = $536,795

The most appropriate new home comparable data for Heritage Plan H2 (Verona) are shown below.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 211
Menifee Mayor and City Council
August 2, 2023
Page
694 of 729

_________________________________________________________________________________________________________ Menifee CFD No. 2021-1(2023 Bonds) – Banner Park by Pulte Homes (Menifee, CA) Kitty Siino & Associates, Inc. Page 55
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. H2 3 / 2.5 1 / 2 2,311 --
1 H1 3 / 2 1 / 2 2,191 $252.85
1 H3 3 / 2.5 1 / 3 2,462 $238.01
2 M1 4 / 2.5 2 / 2 2,391 $240.06
5 5 4 / 2 1 / 2 2,378 $230.44
5 6 4 / 2 1 / 2 2,387 $225.38
8 4 3 / 2 1 / 2 2,287 $242.52
11 1 3 / 2.5 1 / 2 2,290 $255.02
11 2 3 / 2.5 1 / 2 2,490 $246.18
15 1 3 / 2 1 / 2 1,939 $267.31

All new home comparables are located within Menifee. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $225.38 to $267.31 per square foot. Generally, the smaller sized homes are at the high-end of the price per square foot range and the larger sized homes at the lower end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. Heritage Plan H2 has a current base asking price of $245.34 per square foot. There have been 20 closings of Plan H2 with a sales price range of $235.82 to $282.86 per square foot. There are four escrows of Plan H2 with a sales price range of $253.08 to $266.77 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan. All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Heritage Plan H2 has a base current market value of $24 0.00 per square foot. This calculates as follows:
2,311 sf x $240.00 = $554,640

The most appropriate new home comparable data for Heritage Plan H3 (Parklane) are shown below.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 212
Menifee Mayor and City Council
August 2, 2023
Page
695 of 729

_________________________________________________________________________________________________________ Menifee CFD No. 2021-1(2023 Bonds) – Banner Park by Pulte Homes (Menifee, CA) Kitty Siino & Associates, Inc. Page 56
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. H3 3 / 2.5 1 / 3 2,462 --
1 H2 3 / 2.5 1 / 2 2,311 $245.34
2 M1 4 / 2.5 2 / 2 2,391 $240.06
5 5 4 / 2 1 / 2 2,378 $230.44
5 6 4 / 2 1 / 2 2,387 $225.38
11 2 3 / 2.5 1 / 2 2,490 $246.18
11 3 3 / 2.5 1 / 2 2,610 $229.11
14 1 4 / 3 1 / 2 2,527 $242.18
15 1 3 / 2 1 / 2 1,939 $267.31
15 2 5 / 3.5 1 / 2 2,752 $222.94

All new home comparables are located within Menifee. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $222.94 to $267.31 per square foot with generally the smaller sized homes at the high-end of the price per square foot range and the larger sized homes at the lower end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. He ritage Plan H3 has a current base asking price of $238.01 per square foot. There have been 21 closings of Plan H3 with sales prices ranging from $231.59 to $281.73 per square foot. There is one current escrow of a Plan H3 with a price of $266.24 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan. One Heritage Plan 3 has resold in June 2023 for $605,000 or $245.74 per square foot. The home was originally sold in April 2022 for $666,000 or $270.51 per square foot reflecting a decrease of a little over nine percent.

All the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Heritage Plan H3 has a base current market value of $23 0.00 per square foot. This calculates as follows:

2,462 sf x $230.00 = $566,260

The most appropriate new home comparable data for Merit Plan M1 (Pathmaker) are shown below.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 213
Menifee Mayor and City Council
August 2, 2023
Page
696 of 729

_________________________________________________________________________________________________________ Menifee CFD No. 2021-1(2023 Bonds) – Banner Park by Pulte Homes (Menifee, CA) Kitty Siino & Associates, Inc. Page 57
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. M1 4 / 2.5 2 / 2 2,391 --
1 H2 3 / 2.5 1 / 2 2,311 $245.34
1 H3 3 / 2.5 1 / 3 2,462 $238.01
4 5 4 / 2.5 2 / 2 2,519 $220.72
7 3 4 / 3 2 / 2 2,419 $224.94
10 1 4 / 3 2 / 2 2,480 $234.67
12 1 3 / 2.5 2 / 2 2,370 $230.80
13 2 4 / 3 2 / 2 2,320 $240.95

All new home comparables are located within Menifee. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $220.72 to $245.34 per square foot with generally the smaller sized homes at the high-end of the price per square foot range and the larger sized homes at the lower end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. Merit Plan M1 has a current base asking price of $240.06 per square foot. There have been 18 closings of Plan M1 with sales prices ranging from $236.65 to $279.55 per square foot. There are two current escrows of Plan M1 with prices ranging from $250.03 to $253.62 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan. All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Merit Plan M1 has a base current market value of $235 per square foot. This calculates as follows:

2,391 sf x $235.00 = $561,885

The most appropriate new home comparable data for Merit Plan M2 (Brinnon) are shown below.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 214
Menifee Mayor and City Council
August 2, 2023
Page
697 of 729

_________________________________________________________________________________________________________ Menifee CFD No. 2021-1(2023 Bonds) – Banner Park by Pulte Homes (Menifee, CA) Kitty Siino & Associates, Inc. Page 58
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. M2 4 / 2.5 2 / 2 2,654 --
2 M3 5 / 3 2 / 2 2,824 $213.88
3 C1 4 / 2.5 2 / 3 2,845 $213.00
4 6 4 / 2.5 2 / 2 2,537 $211.27
7 4 4 / 3 2 / 2 2,590 $226.31
9 1 3 / 2.5 2 / 2 2,780 $219.78
10 2 4 / 3 2 / 2 2,730 $223.44
12 2 3 / 2.5 2 / 2 2,680 $211.19
13 3 4 / 3 2 / 2 2,541 $224.71
13 4 4 / 3 2 / 2 2,771 $210.75
15 3 4 / 2.5 2 / 2 2,835 $216.22

All new home comparables are located within Menifee. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new homes comparables have a base price range from $210.75 to $226.31 per square foot with generally the smaller sized homes at the high-end of the price per square foot range and the larger sized homes at the lower end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. Merit Plan M2 has a current base asking price of $221.93 per square foot. There have been 17 closings of Plan M2 with a sales price range of $209.72 to $249.56 per square foot. There are three current escrows of Plan M2 with a sales price range of $239.53 to $242.94 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan. All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Merit Plan M2 has a base current market value of $218.00 per square foot. This calculates as follows:
2,654 sf x $218.00 = $578,572

The most appropriate new home comparable data for Merit Plan M3 (Visionary) are shown below.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 215
Menifee Mayor and City Council
August 2, 2023
Page
698 of 729

_________________________________________________________________________________________________________ Menifee CFD No. 2021-1(2023 Bonds) – Banner Park by Pulte Homes (Menifee, CA) Kitty Siino & Associates, Inc. Page 59
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. M3 5 / 3 2 / 2 2,824 --
2 M2 4 / 2.5 2 / 2 2,654 $221.93
3 C1 4 / 2.5 2 / 3 2,845 $213.00
9 1 3 / 2.5 2 / 2 2,780 $219.78
9 2 3 / 2.5 2 / 2 2,910 $215.12
10 2 4 / 3 2 / 2 2,730 $223.44
10 3 5 / 3.5 2 / 2 2,940 $211.56
13 4 4 / 3 2 / 2 2,771 $210.75
13 5 5 / 3 2 / 2 2,948 $203.19
14 2 4 / 3 2 / 3 2,992 $207.89
15 3 4 / 2.5 2 / 2 2,835 $216.22

All new home comparables are located within Menifee. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $203.19 to $223.44 per square foot. Generally, the smaller sized homes are at the high-end of the price per square foot range and the larger sized homes at the lower end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. Merit Plan M3 has a current base asking price of $213.88 per square foot. There have been 29 closings of Plan M3 with a sales price range of $206.16 to $252.38 per square foot. There are two escrows of Plan M3 with a sales price range of $210.27 to $223.11 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan. All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Merit Plan M3 has a base current market value of $2 10.00 per square foot. This calculates as follows:
2,824sf x $210.00 = $593,040

The most appropriate new home comparable data for Crest Plan C1 (Preston) are shown below.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 216
Menifee Mayor and City Council
August 2, 2023
Page
699 of 729

_________________________________________________________________________________________________________ Menifee CFD No. 2021-1(2023 Bonds) – Banner Park by Pulte Homes (Menifee, CA) Kitty Siino & Associates, Inc. Page 60
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. C1 4 / 2.5 2 / 3 2,845 --
2 M3 5 / 3 2 / 2 2,824 $213.88
3 C2 (NG) 5 / 3.5 2 / 3 3,047 $208.40
4 7 5 / 3 2 / 2 2,874 $199.37
9 1 3 / 2.5 2 / 2 2,780 $219.78
9 2 3 / 2.5 2 / 2 2,910 $215.12
10 3 5 / 3.5 2 / 2 2,940 $211.56
13 4 4 / 3 2 / 2 2,771 $210.75
13 5 5 / 3 2 / 2 2,948 $203.19
14 2 4 / 3 2 / 3 2,992 $207.89
15 3 4 / 2.5 2 / 2 2,835 $216.22

All new home comparables are located within Menifee. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $199.37 to $219.78 per square foot. Generally, the smaller sized homes are at the high-end of the price per square foot range and the larger sized homes at the lower end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. Crest Plan C1 has a current base asking price of $213.00 per square foot. There have been 17 closings of Plan C1 with a sales price range of $220.41 to $258.25 per square foot. There are five escrows of Plan C1 with a sales price range of $225.91 to $242.52 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan. All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Crest Plan C1 has a base current market value of $21 0.00 per square foot. This calculates as follows:
2,845 sf x $210.00 = $597,450

The most appropriate new home comparable data for Crest Plan C2 (Stafford) are shown below.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 217
Menifee Mayor and City Council
August 2, 2023
Page
700 of 729

_________________________________________________________________________________________________________ Menifee CFD No. 2021-1(2023 Bonds) – Banner Park by Pulte Homes (Menifee, CA) Kitty Siino & Associates, Inc. Page 61
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. C2 5 / 3.5 2 / 3 3,047 --
3 C1 4 / 2.5 2 / 3 2,845 $213.00
3 C3 (NG) 5 / 3.5 2 / 3 3,237 $199.56
9 3 3 / 2.5 2 / 3 3,020 $215.56
9 4 4 / 2.5 2 / 2 3,040 $204.27
10 3 5 / 3.5 2 / 2 2,940 $211.56
12 3 4 / 2.5 2 / 2 3,040 $193.09
13 5 5 / 3 2 / 2 2,948 $203.19
14 2 4 / 3 2 / 3 2,992 $207.89
15 3 4 / 2.5 2 / 2 2,835 $216.22
15 4 5 / 3.5 2 / 2 3,146 $211.70

All new home comparables are located within Menifee. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $199.37 to $216.22 per square foot. Generally, the smaller sized homes are at the high-end of the price per square foot range and the larger sized homes at the lower end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. Crest Plan C2 has a current base asking price of $208.40 per square foot. There have been 23 closings of Plan C2 with a sales price range of $208.92 to $258.27 per square foot. There are seven escrows of Plan C2 with a sales price range of $209.63 to $241.84 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan. All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Crest Plan C2 has a base current market value of $205 .00 per square foot. This calculates as follows:
3,047 sf x $205.00 = $624,635

The most appropriate new home comparable data for Crest Plan C3 (Rosemount) are shown below.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 218
Menifee Mayor and City Council
August 2, 2023
Page
701 of 729

_________________________________________________________________________________________________________ Menifee CFD No. 2021-1(2023 Bonds) – Banner Park by Pulte Homes (Menifee, CA) Kitty Siino & Associates, Inc. Page 62
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. C3 5 / 3.5 2 / 3 3,237 --
3 C2 (NG) 5 / 3.5 2 / 3 3,047 $208.40
9 3 3 / 2.5 2 / 3 3,020 $215.56
9 4 4 / 2.5 2 / 2 3,040 $204.27
9 5 4 / 3.5 2 / 3 3,510 $190.31
12 3 4 / 2.5 2 / 2 3,040 $193.09
14 3 5 / 3.5 2 / 3 3,247 $198.64
15 4 5 / 3.5 2 / 2 3,146 $211.70

All new home comparables are located within Menifee. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $190.31 to $215.56 per square foot. Generally, the smaller sized homes are at the high-end of the price per square foot range and the larger sized homes at the lower end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. Crest Plan C3 has a current base asking price of $199.56 per square foot. There have been 29 closings of Plan C3 with a sales price range of $208.18 to $247.78 per square foot. There are eight current escrows of Plan 3C with a sales price range of 209.10 to $239.80 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan. All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Crest Plan C3 has a base current market value of $198.00 per square foot. This calculates as follows:
3,237 sf x $198.00 = $640,926

Builder-Owned Retail Values – Banner Park by Pulte Homes

Within Banner Park there are 19 remaining builder-owned homes, over 95 percent complete (16 of which are in escrow), and six build-owned model homes (one of which is in escrow). Per interviews with builders, upgrades, and landscape/hardscape of up to $100,000 are installed in the model homes, however, the builders generally consider this a marketing cost and do not anticipate recovering this investment on a dollar -for-dollar Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 219
Menifee Mayor and City Council
August 2, 2023
Page
702 of 729

_________________________________________________________________________________________________________ Menifee CFD No. 2021-1(2023 Bonds) – Banner Park by Pulte Homes (Menifee, CA) Kitty Siino & Associates, Inc. Page 63
basis. Based on historical information, home sizes and fixtures, actual model home sales within the subject area and the current real estate market, a consideration of a $50,000 premium has been included with each of the model homes. As concluded above, the retail base value conclusions for the builder -owned homes within Banner Park are calculated as follows:

Plan H1 (3 x $536,795) $ 1,610,385
Plan H2 (0 x $554,640) 0
Plan H3 (1 x $566,260) 566,260
Plan M1 (3 x $561,885) 1,685,655
Plan M2 (1 x $578,572) 578,572
Plan M3 (2 x $593,040) 1,186,080
Plan C1 (5 x $597,450) 2,987,250
Plan C2 (5 x $624,635) 3,123,175
Plan C3 (5 x $640,926) 3,204,630
Model Upgrades (6x 50,000) 300,000
Retail Value $15,242,007

Absorption Period
In order to arrive at an absorption period for the builder-owned homes in the subject, the absorption rate for each product line along with the surrounding developments have been reviewed. Banner Park opened for sale in July of 2021. There have been 247 sales since then, suggesting an average absorption of 10.7 sales per month (or from 3.1 to 3.9 sales per month per product line) which is considered to be good. Seventeen of the 25 builder- owned homes are in escrow. Taking into consideration the product, current escrows, current market conditions and the concluded sales prices, it is the appraiser’s opinion that the 25 builder-owned homes will be absorbed within a five-month period at the concluded values.

Remaining Costs
As discussed under the property description section there are $89 ,320.75 in remaining land development costs and fees per lot associated with the builder-owned property. For the 25 builder-owned homes, this equates to $2,233,019 ($89,320.75 x 25) in remaining costs. For the purposes of this analysis, we are assuming the remaining costs will be spread evenly over the five-month absorption period.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 220
Menifee Mayor and City Council
August 2, 2023
Page
703 of 729

_________________________________________________________________________________________________________ Menifee CFD No. 2021-1(2023 Bonds) – Banner Park by Pulte Homes (Menifee, CA) Kitty Siino & Associates, Inc. Page 64
Expenses
In determining an expense rate, several builders in the subject area have been interviewed as to their expenses on selling existing inventory. Expenses include marketing and general administrative costs. These costs typically range from six to ten percent depending on varying factors such as absorption period, intensity of marketing, etc. Eight percent has been estimated for marketing expenses for the home and two percent for general and administrative costs for a total of ten percent.

Profit
Several interviews with merchant builders in the area were conducted in order to determine an appropriate profit percentage for the subject properties. In the early 2000s, developers typically attempted to achieve a 10 to 12 percent profit based on gross sales proceeds. During the early 1990s recession, this range was lowered consider ably to six to 10 percent with some builders drastically lowering their profit potential in order to maintain their work force. As the market improved, so did the profits. A ten percent profit is considered appropriate in the analysis for this project.

Discount Rate
In selecting a discount rate, the following was completed:

1. Interviews with merchant builders in the Menifee area

2. Review of current market conditions including current market rates as well as yields reflected in other markets (i.e., municipal bonds, corporate bonds, etc.)

3. The quality, construction, historical sales, and product on the subject property

The homes within Banner Park began selling in July 2021 with the product being well received in the marketplace. Based on the sales ra te within the subject project, the competition, current market conditions, the product and location, a 10 percent discount rate is considered appropriate for this analysis.

Discounted Cash Flow Summary
The discounted revenue (see DCF Analyses in addenda) for the builder -owned homes within Banner Park is $9,716,334.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 221
Menifee Mayor and City Council
August 2, 2023
Page
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_________________________________________________________________________________________________________ Menifee CFD No. 2021-1(2023 Bonds) – Banner Park by Pulte Homes (Menifee, CA) Kitty Siino & Associates, Inc. Page 65
Banner Park – Total Builder-Owned Property Value
The builder-owned lands within Banner Park consists of six models along with 19 production homes over 95 percent complete and 28 lots, 25 which are under construction (under 95 percent complete) owned by Pulte. The final valuation of the builder- owned property is:
28 Lots $ 3,799,019
25 Houses 9,716,334
Total Pulte Ownership $ 13,515,353

Banner Park – Individual Owned Homes Valuation Conclusion There are 203 individually owned homes within the subject. Based on the concluded value for each plan, the individually owned homes within Banner Park are:

Plan H1 (29 x $536,795) $ 15,567,055
Plan H2 (20 x $554,640) 11,092,800
Plan H3 (21 x $566,260) 11,891,460
Plan M1 (18 x $561,885) 10,113,930
Plan M2 (17 x $578,572) 9,835,724
Plan M3 (29 x $593,040) 17,198,160
Plan C1 (17 x $597,450) 10,156,650
Plan C2 (23 x $624,635) 14,366,605
Plan C3 (29 x $640,926) 18,586,854
Total Individual Owned $118,809,238

In an additional review, we have reviewed the original builder sales prices for the homes within the subject . Closings for the 2 03 homes occurred between December 2021 and June 12, 2023. The reported closing prices by the builder for the individually owned homes total $131,519,126. The builder’s reported prices include premiums, upgrades and purchased options as well as taking into consideration the concessions given by the builder. The subject project opened in July 2021 with pricing increasing into early 2022 while rates were low. As rates rose in 2022 and early 2023, pricing softened with builder giving more concessions. Many of the subject homes were sold during 2021, prior to mortgage rates increasing and the softening of prices. The above valuation is for the minimum market value as it takes into consideration the base plan price only and does not take into account any options, premiums or upgrades which were purchased by the buyers. Typically, the actual sales prices are higher than the base pricing due to the purchase of options and upgrades. I t is our conclusion that the original builder’s sales prices further substantiate the concluded minimum market value for the individually owned homes.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 222
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August 2, 2023
Page
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APPRAISAL REPORT SUMMARY

The appraisal assignment was to value the subject property which consists of lands within Menifee CFD No. 2021- 1 proposed for 256 single-family detached homes on minimum 6,000 square foot lots, being built out into the community known as Banner Park in the City of Menifee , Riverside County. The neighborhood is being built and sold by Pulte Homes, and includes three different product lines (Heritage, Merit and Crest) distributed throughout two tracts. Banner Park opened for sale in July of 2021 and is currently selling.

Out of the total 256 proposed homes, 2 03 are completed and have closed to individuals with an additional 44 homes in escrow. The remainder of the lots range from completed model homes to production homes, over 95 percent complete to homes under construction to finished lots. We have reviewed the builder sales and reviewed the areas Multiple Listing Service along with a physical inspection with one home resold and no re- sale listings found.

The subject property was valued using the Sales Compar ison Approach to value and a mass appraisal technique. A minimum value was determined for the existing homes by concluding at a base value for each plan. The valuation took into account the improvements/benefits to be funded by both series of Menifee CFD No. 2021 -1 bond proceeds along with the Menifee CFD No. 2021- 1 special tax lien. As a result of our investigation, the concluded market value for the subject property is shown below.

Banner Park by Pulte Homes

Pulte Homes Ownership (25 houses & 28 lots) $ 13,515,353 Individual Owners (203 houses) $ 118,809,238

Total Aggregate Value $ 132,324,591

The above values are stated subject to the Assumptions and Limiting Conditions of this report, the Appraiser’s Certification and as of June 12, 2023.

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 223
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August 2, 2023
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The appraiser certifies that to the best of his knowledge and belief:

1. The statements of fact contained in this report are true and correct.

2. The reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, unbiased, professional analyses, opinions and conclusions.

3. The appraiser has no present or prospective interest in the property that is the subject of this report, and no personal interest or bias with respect to the parties involved.

4. The appraiser’s compensation is not contingent upon t he reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result or the occurrence of a subsequent event.

5. This appraisal was not based on a requested minimum valuation, a specific valuation or the approval of a loan.

6. Analyses, opinions and conclusions were developed, and this report was prepared, in conformity with the Uniform Standards of Professional Appraisal Practice.

7. Kitty Siino has made a personal inspection of the property that is the subject of this report.

8. Kitty Siino has performed appraisal services on the subject property in the past three years. An appraisal was completed in 2022 on the property for the first series of bonds.

This appraisal relates to the second series of bonds.

9. No other appraisers have provided significant professional assistance to the persons signing this report.

10. The reported analyses, opinions and conclusions were developed, and this report was prepared, in conformity with the requirements of the Appraisal Institute’s Code of Professional Ethics and Standards of Professional Appraisal Practice, which include the Uniform Standards of Professional Appraisal Practice.

11. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

12. As of the date of this report, Kitty Siino has completed the requirements of the continuing education program of the Appraisal Institute.

Kitty S. Siino, MAI
State Certified General
Real Estate Appraiser (AG004793)
Item Title: 12.2
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Menifee Mayor and City Council
August 2, 2023
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ADDENDA
Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 225
Menifee Mayor and City Council
August 2, 2023
Page
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MENIFEE CFD NO. 2021-1

BOUNDARY MAP
Item Title: 12.2
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August 2, 2023
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August 2, 2023
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TRACT MAP NOS. 32102 & 32102-1
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CAL FIRE - FIRE HAZARD MAP

Item Title: 12.2
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August 2, 2023
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Cal Fire - Fire Hazard Map

Item Title: 12.2
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August 2, 2023
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DISCOUNTED CASH FLOW ANALYSIS

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 233
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August 2, 2023
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Banner Park 2023 Builder-Owned Houses Discounted Cash Flow Analysis

MONTH Months MONTH 1 MONTH 2 MONTH 3 MONTH 4 MONTH 5 TOTAL 5 INCOME:

Retail Sales 15,242,007 $3,048,401 $3,048,401 $3,048,401 $3,048,401 $3,048,401 $15,242,007

TOTAL INCOME $3,048,401 $3,048,401 $3,048,401 $3,048,401 $3,048,401 $15,242,007

EXPENSES:

Remaining Costs ($446,603) ($446,604) ($446,604) ($446,604) ($446,604) ($2,233,019) Marketing & Carrying Expenses 10% ($304,840) ($304,840) ($304,840) ($304,840) ($304,840) ($1,524,201) Profit 10% ($304,840) ($304,840) ($304,840) ($304,840) ($304,840) ($1,524,201)

TOTAL EXPENSES ($1,056,283) ($1,056,284) ($1,056,284) ($1,056,284) ($1,056,284) ($5,281,420)

NET CASH FLOW $1,992,118 $1,992,117 $1,992,117 $1,992,117 $1,992,117 $9,960,587 Discount Factor 10% 0.9917 0.9835 0.9754 0.9673 0.9594

DISCOUNTED CASH FLOW $1,975,654 $1,959,326 $1,943,133 $1,927,074 $1,911,148 $9,716,334

CUMULATIVE DISCOUNTED $1,975,654 $3,934,980 $5,878,113 $7,805,187 $9,716,334 $9,716,334

CASH FLOW

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 234
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August 2, 2023
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RESIDENTIAL LAND SALES MAP
& SUMMARY CHART

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 235
Menifee Mayor and City Council
August 2, 2023
Page
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FINISHED LOT LAND SALES SUMMARY MAP

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 236
Menifee Mayor and City Council
August 2, 2023
Page
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FINISHED LOT LAND SALES SUMMARY CHART

Data
No. Location / APN / Buyer / Seller Sales #
Lots Lot Size Sales Price /
Est.

Finished Comments Date Price per Lot Lot Price
1 Stratford Ranch, Evans Road and
Ramona Expressway, Perris /
302-150-049 / Pulte Group /
Mission Pacific
11 / 22 90 6,000
$4,906,130
$225,000
Closed with an approved
Final Map in an
unimproved condition. $54,513
2 Canterwood Phase 1, SEC
Holland Road and Leon Road,
Menifee / 466-310-026 / D.R.

Horton / Ambient
4 / 22 446 5,000-
7,000
$6,000,000
$175,000
Closed with an approved
Final Map in an
unimproved condition.

Extensive offsites needed
(increased risk).
$13,453
3 La Ventana, N. of Olive Avenue
and La Ventana Road, Winchester
/ 461-460-008 / Forestar (D.R
Horton OBS partner) / Rancon
4 / 22 220 6,000
$8,000,000
$213,000
Closed with a recorded
Final Map in an
unimproved condition. $36,364
4 Rockport Ranch, SWC of Briggs
Road and Old Newport Road,
Menifee / 364-190-004 / Lennar /
Abacherli Family
12 / 21 305 Cluster –
6,500
$5,500,000 / $181,000 -
$213,000
Closed in an unimproved
condition with an approved
tentative tract map. $18,033
5 Braverde North, S of Garbani
Road and La Ventana Lane,
Menifee / 466-210-029 / Richmond
American / IHP
10 / 21 261 5,000 –
7,000
$41,685,876 / $215,000
Closed with an approved
Final Map in a Finished
Lot Condition
$159,716
6 Domenigoni/Rice / SW of
Domenigoni Parkway and Rice
Road, Winchester / 461-383-023 /
D.R. Horton / SR Conestoga LLC
8 / 21 129 6,000
$5,600,000 / $202,000
Closed in unimproved
condition with a Recorded
final map. $43,411
7 Cimarron Ridge, NWC of Valley
Boulevard & Chambers Avenue,
Menifee / 330-220-016 / Pulte
Homes / Van Daele Homes
7 / 21 756 5,000 -
10,000
$47,000,000 / $185,000
Closed in rough graded
condition with an approved
final map.
$62,169
Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 237
Menifee Mayor and City Council
August 2, 2023
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8 Parkside, NW of Scott Road &
Lindenberger Road, Menifee /
372-160-006 / Meritage Homes /
KGK Riverside Properties
5 / 21 175 6,000 -
10,000
$7,200,000 / $170,000
Closed in unimproved
condition with an approved
tentative tract map.
$41,143
Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 238
Menifee Mayor and City Council
August 2, 2023
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IMPROVED RESIDENTIAL SALES MAP
& SUMMARY CHART

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 239
Menifee Mayor and City Council
August 2, 2023
Page
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IMPROVED RESIDENTIAL SALES MAP

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 240
Menifee Mayor and City Council
August 2, 2023
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IMPROVED RESIDENTIAL SALES SUMMARY CHART

Data
No.

Project Name
Location/Developer Plan Room
Count
Floors/
Parking
Size
(SF)
Lot Size or
Density /
Absorption
Base
Sales
Price
Price/SF
1 Heritage at Banner Park /
Domenigoni Pkwy and Lindenberger
Road, Menifee / Pulte Homes
H1 3 / 2 1 / 2 2,191 7,900 sf lots $553,990 $252.85
H2 3 / 2.5 1 / 2 2,311 3.1 sales/mo $566,990 $245.34
H3 3 / 2.5 1 / 3 2,462 $585,990 $238.01
2 Merit at Banner Park / Domenigoni
Pkwy and Lindenberger Road,
Menifee / Pulte Homes
M1 4 / 2.5 2 / 2 2,391 6,000 sf lots $573,990 $240.06
M2 4 / 2.5 2 / 2 2,654 2.9 sales/mo $588,990 $221.93
M3 5 / 3 2 / 2 2,824 $603,990 $213.88
3 Crest at Banner Park / Domenigoni
Pkwy and Lindenberger Road,
Menifee / Pulte Homes
C1 4 / 2.5 2 / 3 2,845 6,500 sf lots $605,990 $213.00
C2 (NG) 5 / 3.5 2 / 3 3,047 3.4 sales/mo $634,990 $208.40 C3 (NG) 5 / 3.5 2 / 3 3,237 $645,990 $199.56
4 Cheyenne at Olivebrook / Leon
Road and Olive Avenue, Winchester
/ KB Home
1 3 / 2 1 / 2 1,383 $482,990 $349.23
2 3 / 2 1 / 2 1,551 $479,990 $309.47
3 3 / 2 1 / 2 1,771 4,000 sf lots $490,990 $277.24
4 3 / 2 1 / 2 1,927 8.3 sales/mo $500,990 $259.98
5 4 / 2.5 2 / 2 2,519 $555,990 $220.72
6 4 / 2.5 2 / 2 2,537 $535,990 $211.27
7 5 / 3 2 / 2 2,874 $572,990 $199.37
8 5 / 3 2 / 2 2,882 $556,990 $193.27
5 Rock Meadows at Olivebrook / Leon
Road and Olive Avenue, Winchester
/ KB Home
1 3 / 2 1 / 2 1,470 $490,990 $334.01
2 3 / 2 1 / 2 1,751 $491,990 $280.98
3 4 / 2 1 / 2 2,026 6,000 sf lots $525,990 $259.62
4 4 / 2 1 / 2 2,035 5.6 sales/mo $509,990 $250.61
5 4 / 2 1 / 2 2,378 $547,990 $230.44
6 4 / 2 1 / 2 2,387 $537,990 $225.38
6 Opal Skye at Outlook / SE of
Domenigoni & Leon Road,
Winchester / TriPointe Homes
5 3 / 2 2 / 2 1,882 8,500 sf lots $469,000 $249.20
6 3 / 2 2 / 2 2,054 4.1 sales/mo $474,000 $230.77
7 4 / 3 2 / 2 2,193 $482,000 $219.79
Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 241
Menifee Mayor and City Council
August 2, 2023
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7 Prairie Crossing Meadow View /
Domenigoni Pkwy and Prarie
Crossing Dr, Winchester / Lennar
1 3 / 2.5 2 / 2 1,823 $496,810 $272.52
2 4 / 3 2 / 2 2,203 5,500 sf lots $529,880 $240.53
3 4 / 3 2 / 2 2,419 4.3 sales/mo $544,130 $224.94
4 4 / 3 2 / 2 2,590 $586,130 $226.31
8 Prairie Crossing Night Sky /
Domenigoni Pkwy and Prarie
Crossing Dr, Winchester / Lennar
1 3 / 2 1 / 2 1,678 $494,980 $294.98
2 3 / 2 1 / 2 1,950 5,500 sf lots $510,770 $261.93
3 4 / 2 1 / 2 2,201 4.6 sales/mo $541,670 $246.10
4 3 / 2 1 / 2 2,287 $554,635 $242.52
9 Legacy at Braverde / Wickerd Road
and El Centro Lane, Menifee /
Richmond American
1 3 / 2.5 2 / 2 2,780 $610,990 $219.78
2 3 / 2.5 2 / 2 2,910 7,200 sf lots $625,990 $215.12
3 3 / 2.5 2 / 3 3,020 2.9 sales/mo $650,990 $215.56
4 4 / 2.5 2 / 2 3,040 $620,990 $204.27
5 4 / 3.5 2 / 3 3,510 $667,990 $190.31
10 Heritage at Braverde / Wickerd
Road and El Centro Lane, Menifee /
Richmond American
1 4 / 3 2 / 2 2,480 5,000 sf lots $581,990 $234.67
2 4 / 3 2 / 2 2,730 3.3 sales/mo $609,990 $223.44
3 5 / 3.5 2 / 2 2,940 $621,990 $211.56
11 Liberty at Braverde / Wickerd Road
and El Centro Lane, Menifee /
Richmond American
1 3 / 2.5 1 / 2 2,290 6,500 sf lots $583,990 $255.02
2 3 / 2.5 1 / 2 2,490 3.6 sales/mo $612,990 $246.18
3 3 / 2.5 1 / 2 2,610 $597,990 $229.11
12 Seasons Elevated at Braverde /
Wickerd Road and El Centro Lane,
Menifee / Richmond American
1 3 / 2.5 2 / 2 2,370 5,500 sf lots $546,990 $230.80
2 3 / 2.5 2 / 2 2,680 3.5 sales/mo $565,990 $211.19
3 4 / 2.5 2 / 2 3,040 $586,990 $193.09
13 Sage at Sumac Ridge / NE of Scott
Road and Menifee Road, Menifee /
Meritage Homes
1 4 / 2.5 1 / 2 1,910 $551,000 $288.48
2 4 / 3 2 / 2 2,320 6,000 sf lots $559,000 $240.95
3 4 / 3 2 / 2 2,541 4.1 sales/mo $571,000 $224.71
4 4 / 3 2 / 2 2,771 $584,000 $210.75
5 5 / 3 2 / 2 2,948 $599,000 $203.19
14 Cedar at Sumac Ridge / NE of Scott
Road and Menifee Road, Menifee /
Meritage Homes
1 4 / 3 1 / 2 2,527 7,000 sf lots $612,000 $242.18
2 4 / 3 2 / 3 2,992 3.0 sales/mo $622,000 $207.89
3 5 / 3.5 2 / 3 3,247 $645,000 $198.64

Item Title: 12.2
Community Facilities District 2021-1 (Banner Park), Issuance of Special Tax Bonds, Series 2023A Item Page Number: 242
Menifee Mayor and City Council
August 2, 2023
Page
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15 South Shore at Rockport Ranch /
SWC of Old Newport Road and
Briggs Road Menifee / Lennar
1 3 / 2 1 / 2 1,939 $518,315 $267.31
2 5 / 3.5 1 / 2 2,752 6,000 sf lots $613,520 $222.94
3 4 / 2.5 2 / 2 2,835
Grand
Opening $612,995 $216.22
4 (NG) 5 / 3.5 2 / 3 3,146 $666,005 $211.70
5 (NG) 7 / 4.5 2 / 3 4,134 $786,740 $190.31

Item Title: 12.2
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August 2, 2023
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APPRAISER’S QUALIFICATIONS

Item Title: 12.2
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August 2, 2023
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QUALIFICATIONS OF KITTY S. SIINO, MAI

Education

Bachelor of Arts in Business Administration, Financial Investments, California State University, Long Beach, California (1980)

Post-Graduate Study, Real Estate Development, University of California, Irvine, California

Appraisal Institute Classes: Uniform Standards of Professional Appraisal Practice, A & B; Appraisal Principles; Appraisal Procedures; Basic Income Capitalization; Advanced Income Capitalization; Narrative Report Writing; Advanced Applications, Case Studies.

Successfully completed all classes in addition to successfully completing the writing of a Demonstration Report and taking the Comprehensive Exam. Became a Member of the Appraisal Institute in December 1996. Have completed over 100 hours of continuing education through the Appraisal Institute every five years.

Employment

1988 - Present:

Self-Employed Real Estate Appraiser. Duties include the appraisal of various types of properties such as commercial, retail, industrial and vacant land. More complex assignments include easements, right-of-ways and special assessment districts. From 1996 to present, specialized in special assessment districts and community facilities districts appraisals for public entities, including Jurupa Community Services District, Corona Norco Unified School District, City of Corona, City of Chula Vista, City of San Marcos and City of Moreno Valley.

1986-1988:

Project Manager of Development for Ferguson Partners, Irvine, California. Duties included land acquisitions; review of fee appraisals and valuations; analysis of proposed development; planning and design; and management of development, construction and lease-up. The types of properties developed were commercial and industrial. Duties ranged from raw, vacant site development through property management of recently developed projects.

1981 - 1986
Manager of Finance, Construction for Community Development Division, The Irvine Company, Irvine, California. Duties included originating and managing a newly formed division of finance to bridge between the accounting functions and project management functions. Worked with analysis and budgets for Community Development Division. Coordinated with cities in forming new Assessment Districts and Community Facilities Districts to finance major infrastructure improvements.

Types of properties were apartments and single- family residential lots on a for sale basis to apartment and homebuilders.

1980 - 1981
Investment Counselor, Newport Equity Funds, Newport Beach, California. Duties included obtaining private financing for residential properties, working with appraisals of properties and analyzing the investments.

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Licenses
Real Estate Sales Person, State of California, 1980
Certified General Appraiser, State of California (#AG004793)

Organizations
MAI #11145 - The Appraisal Institute

Public Financing
CASTOFF Meetings, 2006, 2007, 2008, 2009, 2010, 2011, 2013, 2014, 2015, 2016, 2017, 2018, 2019 and 2022
Speaker, Mello- Roos & Special Assessment Financing, UCLA Extension Publi c Policy Program, February 2009, and March 2011
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Menifee City CouncilAugust 2, 2023

Menifee City Council
August 2, 2023