Menifee City Council
August 16, 2023

1 7
4 8
On June 21, 2023, the City Council authorized the rejection of all bids submitted through this competitive bidding process. Following City Council’s action, staff re-evaluated the construction documents and identified two potential cost-saving opportunities in the Scope of Work. The first included updating the Projects scope to only remove and replace non-compliant portions of ADA ramps. The second opportunity included incorporating a bid alternate line item for the use of a product known as Hyrap as an alternate to rubberized asphalt. Hyrap is a 100% sustainable asphalt product for paving which utilizes recycled materials to reduce oil consumption, reduce the use of petroleum products, and minimize mining operations, resulting in an overall reduction of greenhouse gases associated with the paving work. After updating the bid documents to reflect the changes above, staff administered a second competitive bid process and a bid opening was held on July 18, 2023, resulting in a total of seven bid submissions.

Following review of the bid submissions, staff determined that the changes to the ADA ramp scope had the largest impact in reducing the Projects’ cost. Staff also found that the alternate bid item for use of Hyrap generally exceeded the amount of the base bid item for rubberized asphalt.

Based on the available Projects budget and the new bid information received, award of the base bid items is recommended. The base bid amounts for the seven bids received on July 18, 2023, are summarized in Table 1 below.

Table 1 – Bid Result Summary
Firm Name Total Base Bid Amount Lowest Bidder
Engineers Estimate $2,300,000.00
Copp Contracting, Inc. $2,243,502.85 X
All American Asphalt $2,424,222.00
Hardy & Harper, Inc. $2,525,000.00
Wheeler Paving, Inc. $2,585,568.70
RJ Noble Company $2,585,887.75
Calmex Engineering, Inc. $2,689,445.80
Granite Construction Company $3,208,000.00
Staff reviewed the apparent lowest bid and determined that COPP Contracting, Inc. met the requirements for recommendation as the lowest responsive and responsible bidder. The total cost for construction services covered in the base bid is $2,243,502.85. Construction management and inspection services would be provided by City staff. Ancillary services such as materials testing and labor compliance services are currently being procured and would increase the total construction costs for the Project to $2,390,678. Existing project budgets are available to support the majority of the total anticipated construction costs and are summarized in Table 2 of the Fiscal Impact section of this Report. Prior project savings have been identified in an amount to support the remaining budget needed to complete the construction phase for the Projects. This information is also summarized in the Fiscal Impact section as Table 3.

If approved by the City Council, the tentative Projects schedule would be as follows:

Construction Start: August 2023
Construction End: November 2023
City Council Acceptance: December 2023
The timeline above assumes no delays due to weather or unforeseen conditions.

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 2
Menifee Mayor and City Council
August 16, 2023
Page
346 of 759

City of Menifee Staff Report
CIP 23-05 & 23-06 Copp Contracting, Inc Bid Award
August 16, 2023

1 7
4 8
Eastern Municipal Water District (EMWD) has identified existing water utilities that are in direct conflict with the proposed Project. EMWD owns and maintains all water and sewer appurtenances in this area and is therefore responsible for the costs associated with the adjustment or relocation of these water utilities. It is typical for the identified water utilities to be adjusted or relocated by the City’s contractor and reimbursed by EMWD upon completion of the Project. EMWD has identified 84 manholes and 96 water valves that would require adjusting to grade within the Project area. Total relocation costs are estimated to be $104,160, as identified on the Base Bid Schedule as items 11, 12, 13, 26, 27, and 28, and attached to the EMWD Utility Relocation Agreement. The actual total reimbursement cost will be determined upon completion of work. The Utility Relocation Agreement details the scope of the relocation efforts and mechanisms to reimburse the City for the work to relocate or adjust EWMD’s facilities.

Environmental Impact
The work proposed under this contract has been determined to be Categorically Exempt (“Existing Facilities”) under the California Environmental Quality Act (CEQA) and CEQA Guidelines, Section 15301. Class 1 consists of the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, or topographical features, involving negligible or no expansion of use beyond that existing at the time of the lead agency’s determination. The Project is for resurfacing the existing pavement and updating non-compliant ADA ramps. The Project is also exempt under the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. There is no possibility that the activity in question will have a significant effect on the environment because the proposed Project is occurring in an area that is already heavily disturbed and not environmentally sensitive.

STRATEGIC PLAN OBJECTIVE
Connectivity and Mobility

FISCAL IMPACT
The total anticipated fiscal impact for the construction phase is $2,390,678, which includes the cost of the Owner-Contractor Agreement with Copp Contracting, Inc. for construction services, as well as ancillary services such as materials testing and labor compliance. Existing project budgets from Fiscal Year (FY) 2022/2023 are available to cover a portion of the total anticipated construction costs as summarized in Table 2 on the following page. Staff have identified additional project savings from FY 2022/2023 to cover the remaining budget needed to complete the construction phase for the Projects, as identified in Table 3 on the following page. Funds from FY 2022/2023 would be carried over into FY 2023/2024.

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 3
Menifee Mayor and City Council
August 16, 2023
Page
347 of 759

City of Menifee Staff Report
CIP 23-05 & 23-06 Copp Contracting, Inc Bid Award
August 16, 2023

1 7
4 8
Table 2 – FY 2022/2023 Existing Project Funding
Fund Project Account Number Available Budget Anticipated Cost SB 1 Casa Blanca 201-4555-58152 $548,000 $548,000
SB 1 Willows/Lake
Ridge
201-4555-58153 $667,000 $667,000
Measure A Casa Blanca 220-4555-58152 $446,652 $446,652
Measure A Willows/Lake
Ridge
220-4555-58153 $41,852 $41,852
Total $1,703,504 $1,703,504
Table 3 – FY 2022/2023 Identified Project Funding
Fund Project Account Number Available Budget Anticipated Cost General PMP 100-4555-58011 $590,345 $464,929
General Fire Station
No. 68
100-4555-58101 $144,280 $144,280
General Menifee Rd
Resurfacing
100-4555-58122 $77,965 $77,965
Total $1,062,590 $687,174

ATTACHMENTS

1. Project Location Maps

2. Contract Services Agreement

3. Utility Relocation Agreement
Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 4
Menifee Mayor and City Council
August 16, 2023
Page
348 of 759

WINCHESTER(UNINCORPORATED)

CANYON LAKE

TUPELO RD

STERN DR

BARNETT RD

CHEVY CHASE RDPEBBLEBEACH DR

GROSSE POINT DR

BETH DR

BYERS ST

VERONICA AV

PLEASANT VALLEY AVSADDLEBACK LN

NEW HUB DRAVENIDA DE CORTEZ

RIO VISTA DRBALDY PEAK DR

PARK AV

CITY AVBEREA RDMORNING BREEZE DRDORVAL CTCAMINO DELORES

WINTERHAWK RDKILLINGTON DRRIMCREEKPATH

CARMEL RD

FARMINGTON RDBYERS ST

VISTA WYCASA BONITA AV

CONEJO DRLAS FLORES DRJUANITA DRCONEJO DRBEVERLY DRCHEYENE CANYON VERMILLON LNESCALANTE RD

LA BERTHA LN

SAN JACINTO RD

MOUNTAIN VIEW PLCONNECTICUT DRHAMPSHIRE DRAVENIDA ESTRELLA

CANYON DRCANYON DR

SPRINGBOX WY

CLARK PLPALM DR

WAVERLY DREL RANCHO DRTHORNHILL DRPHOENIX WYPORTSMOUTH DRWORCHESTER RD WWORCHESTER RD E

PIPING ROCK RD

BRANDYWINE DR

THORTON AVTURFWOOD ST

GEARY ST

BYERS STWHEAT STAARON ALAN DRHILL ST

MEHAFFEY STBLUEBELL STCOMWELL ST

TROY LNNOVA LNSTAR DRMANTLE DRCALLE ELIMANO

PRESLEY ST

HILLCREST DRPARK

PALM DRNEVADA DR

CANYONHEIGHTSRDNEWPORT DR

BADGER CREEK LNCHERRYL DRCOOPERVIEW DRNARANJA DRPLATINO DR

HECHT RDCROSSHILL DRVISTA WYSCHIRMER DR

ASHDALE WYLA PINA DRTRENT DRDATIL DRMANZANA DRLA CRESTA DR

BIGGS LN

OREGON PL

DAKOTA DR

TEXAS LN

MONTANAN STCIRCLE DRCIRCLE DRKABIAN PKRANCHO DR

MOUNT VERNON PL

LODGE DR

LUCAS DRCOTTONTAIL DRWILLIAMS DRAVENIDA GAVIOTAPASEO DE LA PLAZA

PASEO ARROYOAVENIDA GAVIOTAAVENIDA DE LAS FLORES

PASEO VIVORA

WILD VIEW RDSTAGE COACH RDDERBY HILL

MOUNTAIN PARK DR

BYERS ST

HAWTHORNE STGEARY STMELVIN ST

MELVIN STNODTHFIELD LNROLLING HILLS DR

BARNES LNALDER STMELIDO STGEARY STDEBON ST
ILLINOIS AVE.WATSON RD.CASE RD.

CITY OFMENIFEECA

MAPES RD

SHERMAN RDWATSON RDANTELOPE RD

MENIFEE RD
(HWY 74)ETHANAC RDETHANAC RD

MCLAUGHLIN RDMCLAUGHLIN RDROUSE RDROUSE RD

MATTHEWS RD

MATTHEWS RD

MCCALL MCCALL BLVD

NEWPORT RDNEWPORT RD

HOLLAND RDHOLLAND RD

GARBANI RDGARBANI RD

BRIGGS RD

BRIGGS RD

BRIGGS RD

CHAMBERS AVE

RIDGEMOOR RDPOTOMAC DR

MURRIETA RD

MURRIETA RD

MURRIETA RD

BRADLEY RDMENIFEE RDCHERRYBLVDHILLSSUN

BLVDCITY SIMPSON RD

DOMENIGONI PKWY

MENIFEE RD

ANTELOPE RD

ENCANTO DRCHAMBERS AVE

RDLA PIEDRALA PIEDRARD

CRAIG AVEBRADLEY RD

SHERMAN RDHAUN RD

CORSON AVEEVANS RD
RD

PALOMAR RD

SHERMAN RDTRUMBLE RD

MAPES RD

WATSON RD

WICKERD RD

LAGUNA VISTA DR

LINDENBERGER

ANTELOPE RD

CRAIG AVE

ALICANTE DR

NORMANDY RD
215 FREEWAY
215 FREEWAYTALLY RD

ANTELOPE RD

GOETZ RD

GOETZ RD

GOETZ RD

GOETZ RD
MALAGA RD(HWY 74)

LA LADERA RDLINDERBERGER RD

VALEY BLVD

PALOMAR RD

EVANS RD

LAZY CREEK RD

HOLLAND RD

EVANS RD

BRADLEY RD
(HWY 74)

SUNSET AV

NEWPORT RD
BLVD
LN

WICKERD
PROJECT LOCATION #1CASA BLANCA (CIP 23-05)

MENIFEE RD

TRADEWINDS DR
PROJECT LOCATION #2WILLOWS/LAKE RIDGE (CIP 23-06)N

STOP STOPSTOP
KEY MAP-LOCATION #1N.T.S.

GRAND AVE.

CANNON DR.

GOLDEN HILL CT.

WILD SAGE CT.

CLIFF TOP CT.

SKEEN CT.

HUB CIR.

STOPSTOP STOP

STOPSTOP
STOP

STOPSTOPSTOP STOP
STOP
STOP
KEY MAP-LOCATION #2N.T.S.

LA PIEDRA RD.

WATERMILL LN.

MOON SHADOW DR.

MENIFEE RD.

BAYPORT LN.

MEADOW RUN PL.

BRIDEGE WATER LN.

MILL BRIDGE DR.

CRESCENT BEND CIR.

TEAL BROOK DR.

ROSE ISLE CT.

BAYPORT LN.

PIER POINTE CIR.

DOCKSIDE PL.

SHORE RIDGE DR.

BAYPOINTE CT.

SUN SET LAKE CIR.

SPINDRIFT CT.

WAVECREST CIR.

COVECREST CIR.

KEY MAP-LOCATION #1N.T.S.

BAVARIA DR.

EL PUENTE ST.

CORTE MAGDALENA
CANTERBURY ST.

CAM PERLA

CALLE HABERIO
HACIENDA DR.

CALLE ACER

ALTA VISTA WAY
CIP 23-05 CASA BLANCA& CIP 23-06

WILLOW/LAKE RIDGE RESURFACING
Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 5
Menifee Mayor and City Council
August 16, 2023
Page
349 of 759

2905/031858-0001
19201719.4 a07/24/23

CITY OF MENIFEE

CONTRACT SERVICES AGREEMENT
CIP 23-05 & CIP 23-06 CASA BLANCA & WILLOWS/LAKE RIDGE COMMUNITY

RESURFACING PROJECT
THIS CONTRACT SERVICES AGREEMENT (“Agreement”) is made and effective this _________ day of ___________, 2023 by and between the CITY OF MENIFEE, a California municipal corporation, (“City”) and COPP CONTRACTING, INC., a California Corporation (“Contractor”). City and Contractor are sometimes hereinafter individually referred to as “Party” and hereinafter collectively referred to as the “Parties”.

City sought, by issuance of a Request for Proposals or Invitation for Bids, for the performance of the services defined and described particularly in this Agreement. Contractor, following submission of a proposal or bid for the performance of the services defined and described particularly in this Agreement, was selected by City to perform those services. Pursuant to the City of Menifee’s Municipal Code, City has authority to enter into this Agreement and the City Manager has authority to execute this Agreement. The Parties desire to formalize the selection of Contractor for performance of those services defined and described particularly in this Agreement and desire that the terms of that performance be as particularly defined and described herein.

SECTION 1. SERVICES.

1.1 Scope of Services. Subject to the terms and conditions set forth in this Agreement, Contractor shall provide to City the services described in the Scope of Services, attached hereto as Exhibit B, “Scope of Services” and incorporated herein by this reference (the “Services”).

Contractor will perform subsequent task orders as requested by the Contract Administrator (as defined below), in accordance with the Scope of Services. The Scope of Services incorporates Contractor’s scope of work or bid for the Services. In the event of a conflict in or inconsistency between the terms of this Agreement and Exhibit B, this Agreement shall prevail.

1.2 Term of Services. The term of this Agreement shall begin on August 16, 2023.

Unless earlier terminated in accordance with Section 8 of this Agreement, this Agreement shall continue in full force and effect until final written approval and acceptance of the work performed under this Agreement by the Contract Administrator. The time provided to Contractor to complete the Services required by this Agreement shall not affect City’s right to terminate this Agreement, as provided for in Section 8.

1.3 Standard of Performance.
a. Quality of Work. As a material inducement to City entering into this Agreement, Contractor represents and warrants that it has the qualifications, experience, and facilities necessary to properly perform the Services required under this Agreement in a thorough, competent, and professional manner, and is experienced in performing the Services contemplated herein. Contractor shall at all times faithfully, competently, and to the best of its ability, experience, and talent, perform all Services described herein. Contractor covenants that it shall Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 6
Menifee Mayor and City Council
August 16, 2023
Page
350 of 759

2905/031858-0001
19201719.4 a07/24/23 -2-
follow the highest professional standards in performing the Services required hereunder and that all materials will be of good quality, fit for the purpose intended. For purposes of this Agreement, the phrase “highest professional standards” shall mean those standards of practice recognized by one or more first-class firms performing similar work under similar circumstances, and to the sole satisfaction of the Contract Administrator.
b. Care of Work. Contractor shall adopt reasonable methods during the term of this Agreement to furnish continuous protection to the Services, and the equipment, materials, papers, documents, plans, studies, and/or other components thereof to prevent losses or damages, and shall be responsible for all such damages, to persons or property, until acceptance of the Services by City, except such losses or damages as may be caused by City’s own negligence. c. Safety. Contractor shall execute and maintain its work so as to avoid injury or damage to any person or property. In carrying out the Services, Contractor shall at all times be in compliance with all applicable local, state, and federal laws, rules and regulations, and shall exercise all necessary precautions for the safety of employees appropriate to the nature of the work and the conditions under which the work is to be performed. Safety precautions as applicable shall include, but shall not be limited to: (A) adequate life protection and life saving equipment and procedures; (B) instructions in accident prevention for all employees and subcontractors, such as safe walkways, scaffolds, fall protection ladders, bridges, gang planks, confined space procedures, trenching and shoring, equipment and other safety devices, equipment and wearing apparel as are necessary or lawfully required to prevent accidents or injuries; and (C) adequate facilities for the proper inspection and maintenance of all safety measures. d. Warranty. Contractor warrants all work under this Agreement (which for purposes of this Subsection 1.3 shall be deemed to include unauthorized work which has not been removed and any non-conforming materials incorporated into the work) to be of good quality and free from any defective or faulty material and workmanship. Contractor agrees that for a period of one (1) year (or the period of time specified elsewhere in this Agreement or in any guarantee or warranty provided by any manufacturer or supplier of equipment or materials incorporated into the work, whichever is later) after the date of final acceptance, Contractor shall within ten (10) days after being notified in writing by City of any defect in the work or non-conformance of the work to this Agreement, commence and prosecute with due diligence all work necessary to fulfill the terms of the warranty at Contractor’s sole cost and expense. Contractor shall act sooner as requested by City in response to an emergency. In addition, Contractor shall, at its sole cost and expense, repair and replace any portions of the work (or work of other contractors) damaged by Contractor’s defective work or which becomes damaged in the course of repairing or replacing defective work. For any work so corrected, Contractor’s obligation hereunder to correct defective work shall be reinstated for an additional one (1) year period, commencing with the date of acceptance of such corrected work. Contractor shall perform such tests as City may require to verify that any corrective actions, including, without limitation, redesign, repairs, and replacements comply with the requirements of this Agreement. All costs associated with such corrective actions and testing, including the removal, replacement, and reinstitution of equipment and materials necessary to gain access, shall be the sole responsibility of Contractor. All warranties and guarantees of subcontractors, suppliers, and manufacturers with respect to any portion of the work, whether express or implied, are deemed to be obtained by Contractor for the benefit of City, regardless of whether or not such warranties and guarantees have been transferred Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 7
Menifee Mayor and City Council
August 16, 2023
Page
351 of 759

2905/031858-0001
19201719.4 a07/24/23 -3-
or assigned to City by separate agreement and Contractor agrees to enforce such warranties and guarantees, if necessary, on behalf of City. In the event that Contractor fails to perform its obligations under this Section, or under any other warranty or guaranty under this Agreement, to the reasonable satisfaction of City, City shall have the right to correct and replace any defective or non-conforming work and any work damaged by such work or the replacement or correction thereof at Contractor’s sole expense. Contractor shall be obligated to fully reimburse City for any expenses incurred hereunder upon demand.
e. Skilled and Trained Workforce. Contractor, for itself and its subcontractors at every tier, hereby provides an enforceable commitment to comply with California Public Contract Code section 2600 et seq., which requires use of a skilled and trained workforce to perform all work on the agreements that fall within an apprenticeable occupation in the building and construction trades.
f. Inspection and Final Acceptance. The Services shall be performed to the satisfaction of City. City may inspect and accept or reject any of Contractor’s work under this Agreement, during performance and/or when completed. City shall reject or finally accept Contractor’s work within forty five (45) days after submitted to City. City shall accept work by a timely written acceptance, otherwise work shall be deemed to have been rejected. City’s acceptance shall be conclusive as to such work except with respect to latent defects, fraud, and such gross mistakes as amount to fraud. Acceptance of any work by City shall not constitute a waiver of any of the provisions of this Agreement including, but not limited to, Section 4 and Section 5, pertaining to insurance and indemnification, respectively.

1.4 Assignment of Personnel. Contractor shall assign only competent personnel to perform the Services. Contractor shall make every reasonable effort to maintain the stability and continuity of Contractor’s staff and subcontractors, if any, assigned to perform the Services.

Contractor shall notify City of any changes in Contractor’s staff and subcontractors, if any, assigned to perform the Services, prior to and during any such performance. In the event that City, in its sole discretion, at any time during the term of this Agreement, desires the reassignment of any such persons, Contractor shall, immediately upon receiving notice from City of such desire of City, reassign such person or persons.

1.5 Time. Time is of the essence in the performance of this Agreement. Contractor shall devote such time to the performance of the Services pursuant to this Agreement as may be reasonably necessary to satisfy Contractor’s obligations hereunder. Contractor shall commence the Services pursuant to this Agreement upon receipt of a written notice to proceed and shall perform all Services within the time period(s) established in the Scope of Services. When requested by Contractor, extensions to the time period(s) specified in the Scope of Services may be approved in writing by the Contract Administrator but not shall not exceed one hundred eighty (180) days cumulatively.

1.6 Force Majeure. The time period(s) specified in the Scope of Services for performance of the Services rendered pursuant to this Agreement shall be extended because of any delays due to unforeseeable causes beyond the control and without the fault or negligence of Contractor, including, but not restricted to, acts of God or of the public enemy, unusually severe weather, fires, earthquakes, floods, epidemics, quarantine restrictions, riots, strikes, freight Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 8
Menifee Mayor and City Council
August 16, 2023
Page
352 of 759

2905/031858-0001
19201719.4 a07/24/23 -4-
embargoes, wars, litigation, and/or acts of any governmental agency, including City, if Contractor shall within ten (10) days of the commencement of such delay notify the Contract Administrator in writing of the causes of the delay. The Contract Administrator shall ascertain the facts and the extent of delay, and extend the time for performing the Services for the period of the enforced delay when and if in the sole judgment of the Contract Administrator such delay is justified. The Contract Administrator’s determination shall be final and conclusive upon the Parties to this Agreement. In no event shall Contractor be entitled to recover damages against City for any delay in the performance of this Agreement, however caused, Contractor’s sole remedy being extension of this Agreement pursuant to this Section.

1.7 Suspension of Services. The City Engineer of City (“Engineer”) shall have the authority to suspend the Services, wholly or in part, for such period as the Engineer may deem necessary, due to unsuitable weather or to such other conditions as are considered unfavorable for the suitable prosecution of the Services, or for such time as the Engineer may deem necessary due to the failure on the part of Contractor to carry out orders given or to perform any provisions of the Services. Contractor shall immediately comply with the written order of the Engineer to suspend the Services wholly or in part and shall not resume the Services until ordered to do so in writing by the Engineer. Such suspension shall be without liability to Contractor on the part of City. In the event a suspension of work is ordered because of failure on the part of Contractor to carry out orders given or to perform any provisions of the Services, such suspension of the Services shall not relieve Contractor of responsibility to complete the Services within the time limit set forth herein and shall not be considered cause for extension of the time for completion and, further, such suspension of the Services shall not entitle Contractor to any additional compensation.

1.8 Familiarity with Work and Worksite. By executing this Agreement, Contractor warrants that Contractor (i) has thoroughly investigated and considered the Services, (ii) has carefully considered how the Services should be performed, and (iii) fully understands the facilities, difficulties, and restrictions attending performance of the Services. If the Services involve work upon any site, Contractor warrants that Contractor has or will investigate the site and is or will be fully acquainted with the conditions there existing, prior to commencement of the Services hereunder. Should Contractor discover any latent or unknown conditions, which will materially affect the performance of the Services hereunder, Contractor shall immediately inform City of such fact and shall not proceed until written instructions are received from the Contract Administrator.

1.9 Further Responsibilities of the Parties. Both Parties agree to use reasonable care and diligence to perform their respective obligations under this Agreement. Both Parties agree to act in good faith to execute all instruments, prepare all documents, and take all actions as may be reasonably necessary to carry out the purposes of this Agreement. Unless otherwise specified in this Agreement, neither Party shall be responsible for the service of the other.

1.10 Special Requirements. Additional terms and conditions of this Agreement, if any, which are made a part hereof are set forth in the “Special Requirements” attached hereto as Exhibit A and incorporated herein by this reference. In the event of a conflict between the provisions of Exhibit A and any other provisions of this Agreement, the provisions of Exhibit A shall govern.

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 9
Menifee Mayor and City Council
August 16, 2023
Page
353 of 759

2905/031858-0001
19201719.4 a07/24/23 -5-
SECTION 2. COMPENSATION.

2.1 Contract Amount. City hereby agrees to pay Contractor a sum not to exceed Two Million Two Hundred Forty Three Thousand Five Hundred Two Dollars and Eighty Five Cents ($2,243,502.85) notwithstanding any contrary indications that may be contained in Contractor’s proposal or bid, for the Services to be performed and reimbursable costs incurred under this Agreement. This compensation may be administratively adjusted pursuant to Section

8.4 herein. In the event of a conflict between this Agreement and Exhibit B, regarding the amount of compensation, this Agreement shall prevail. City shall pay Contractor for the Services rendered pursuant to this Agreement at the time and in the manner set forth herein. The payments specified in this Section 2 shall be the only payments from City to Contractor for the Services rendered pursuant to this Agreement. Contractor shall submit all invoices to City in the manner specified herein.

2.2 Method of Compensation. The method of compensation may include: (i) a lump sum payment upon completion, (ii) payment in accordance with specified tasks or the percentage of completion of the Services, (iii) payment for time and materials based upon Contractor’s rates as specified in the Scope of Services, provided that time estimates are provided for the performance of subtasks, or (iv) such other methods as may be specified in the Scope of Services. In no event shall compensation exceed the amount set forth in Subsection 2.1.

2.3 Invoices. Contractor shall submit invoices monthly during the term of this Agreement, based on the cost for the Services performed and reimbursable costs incurred prior to the invoice date. The invoice shall detail charges for all necessary and actual expenses by the following categories: labor (by sub-category), travel, materials, equipment, supplies, and sub- contractor contracts. Subcontractor charges shall also be detailed by such categories. Invoices shall contain:
a. Serial identifications of progress bills; i.e., Progress Bill No. 1 for the first invoice, etc.;
b. The beginning and ending dates of the billing period; c. A “Task Summary” containing the original contract amount, the amount of prior billings, the total due this period, the balance available under this Agreement, and the percentage of completion;
d. At City’s option, for each item in each task, a copy of the applicable time entries or time sheets shall be submitted showing the name of the person performing the Services, the hours spent by each person, a brief description of the Services, and each reimbursable expense; e. The total number of hours of work performed under this Agreement by Contractor and each employee, agent, and subcontractor of Contractor performing the Services hereunder necessary to complete the Services described in Exhibit B; f. Receipts for expenses to be reimbursed;
g. The Principals’ signatures.

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 10
Menifee Mayor and City Council
August 16, 2023
Page
354 of 759

2905/031858-0001
19201719.4 a07/24/23 -6-
Invoices shall be submitted to:

City of Menifee
Attn: Accounts Payable
29844 Haun Road
Menifee, CA 92586

2.4 City Payment of Invoices. City shall independently review each invoice submitted by Contractor to determine whether the work performed and expenses incurred are in compliance with the provisions of this Agreement. City will use its best efforts to cause Contractor to be paid within thirty (30) days of receipt of Contractor’s correct and undisputed invoice. In the event any charges or expenses are disputed by City, the original invoice shall be returned by City to Contractor for correction and resubmission. Pursuant to California Public Contract Code Section 20104.50, Contractor is notified that for public works Services, City’s failure to pay undisputed and properly submitted invoices within thirty (30) days shall be subject to interest at the legal rate set forth in Code of Civil Procedure Section 685.010. Any invoice for public works Services determined not to be a proper invoice suitable for payment shall be returned to the Contractor as soon as practicable, but not later than seven (7) days, after receipt. An invoice returned pursuant to the foregoing shall be accompanied by a writing stating the reasons why the invoice is not proper.

2.5 Retention of Funds, Final Payment.
a. Contractor hereby authorizes City, in the sole discretion of the Contract Administrator, to retain and deduct from any amount payable to Contractor not exceeding five percent (5%) of the total compensation. The retained funds shall be paid to Contractor within sixty (60) days after final acceptance of the Services by the City and after Contractor has furnished City with full release of all undisputed payments under this Agreement. In the event there are any claims specifically excluded by Contractor from the operation of the release, City may retain proceeds of up to one hundred fifty percent (150%) of the amount in dispute. The failure of City to exercise such right to deduct or to withhold shall not, however, affect the obligations of Contractor to insure, indemnify, and protect City as provided in this Agreement. b. Notwithstanding Paragraph a, California Public Contract Code Section 22300 permits the substitution of securities for any retention monies withheld by City for public works Services. At the request and expense of Contractor, securities equivalent to the monies withheld shall be deposited with City, or with a state or federally chartered bank in California as the escrow agent, who shall then pay such monies to Contractor. City retains the sole discretion to approve the bank selected by Contractor to serve as escrow agent. Upon satisfactory completion of the Services, the securities shall be returned to Contractor. Securities eligible for investment shall include those listed in Government Code Section 16430. Contractor shall be the beneficial owner of any securities substituted for monies withheld and shall receive any interest thereon. In the alternative, under California Public Contract Code Section 22300, Contractor may request City to make payment of earned retention monies directly to the escrow agent at the expense of Contractor. Also at Contractor’s expense, Contractor may direct investment of the payments into securities, and Contractor shall receive interest earned on such investment upon the same conditions as provided for securities deposited by Contractor. Upon satisfactory completion of the Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 11
Menifee Mayor and City Council
August 16, 2023
Page
355 of 759

2905/031858-0001
19201719.4 a07/24/23 -7-
Services, Contractor shall receive from the escrow agent all securities, interest and payments received by escrow agent from City pursuant to the terms of California Public Contract Code Section 22300.

2.6 Total Payment. City shall not pay any additional sum for any expense or cost whatsoever incurred by Contractor in rendering the Services pursuant to this Agreement. City shall make no payment for any extra, further, or additional service pursuant to this Agreement. In no event shall Contractor submit any invoice for an amount in excess of the maximum amount of compensation provided above either for a task or for the entirety of the Services performed pursuant to this Agreement, unless this Agreement is modified in writing prior to the submission of such an invoice.

2.7 Hourly Fees. Fees for the Services performed by Contractor on an hourly basis shall not exceed the amounts shown on the fee schedule included with Exhibit B.

2.8 Reimbursable Expenses. Reimbursable expenses are included within the maximum amount of this Agreement. Reimbursable expenses not listed in Exhibit B must be approved in advance by the Contract Administrator, in his or her sole discretion. Contractor shall not be entitled to any additional compensation for the attendance of meetings reasonably deemed necessary by City for the execution of the Services.

2.9 Payment of Taxes. Contractor is solely responsible for the payment of employment taxes incurred under this Agreement and any federal or state taxes.

2.10 Payment upon Termination. In the event that City or Contractor terminates this Agreement pursuant to Section 8, City shall compensate Contractor for all outstanding costs and reimbursable expenses incurred for Services satisfactorily completed and for reimbursable expenses as of the date of written notice of termination. Contractor shall maintain adequate logs and timesheets in order to verify costs and reimbursable expenses incurred to that date.

2.11 No Waiver. Payment to Contractor for Services performed pursuant to this Agreement shall not be deemed to waive any defects in work performed by Contractor.

SECTION 3. FACILITIES AND EQUIPMENT.

3.1 Contractor Provides Facilities and Equipment. Except as otherwise provided, Contractor shall, at its sole cost and expense, provide all facilities and equipment necessary to perform the services required by this Agreement. In no event shall City be required to furnish any facility or equipment that may involve incurring any direct expense.

3.2 Utility Relocation. Where applicable, pursuant to California Government Code Section 4215, City is responsible for removal, relocation, or protection of existing main or trunkline utilities to the extent such utilities were not identified in the invitation for bids or specifications. City shall reimburse Contractor for any costs incurred in locating, repairing damage not caused by Contractor, and removing or relocating such unidentified utility facilities.

Contractor shall not be assessed liquidated damages for delay arising from the removal or relocation of such unidentified utility facilities.

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 12
Menifee Mayor and City Council
August 16, 2023
Page
356 of 759

2905/031858-0001
19201719.4 a07/24/23 -8-

3.3 Trenches or Excavations. Pursuant to California Public Contract Code Sections 6705 and 7104, in the event the work included in this Agreement requires excavations more than four (4) feet in depth, the following shall apply.
a. Contractor shall promptly, and before the following conditions are disturbed, notify City, in writing, of any: (1) material that Contractor believes may be material that is hazardous waste, as defined in Section 25117 of the Health and Safety Code, that is required to be removed to a Class I, Class II, or Class III disposal site in accordance with provisions of existing law; (2) subsurface or latent physical conditions at the site different from those indicated by information about the site made available to bidders prior to the deadline for submitting bids; or (3) unknown physical conditions at the site of any unusual nature, different materially from those ordinarily encountered and generally recognized as inherent in work of the character provided for in this Agreement.
b. If the Services involve an estimated expenditure in excess of Twenty-Five Thousand Dollars ($25,000) for the excavation of any trench or trenches five (5) feet or more in depth, Contractor shall submit for acceptance by the City Engineer, in advance of excavation, a detailed plan showing the design of shoring, bracing, sloping, or other provisions to be made for worker protection from the hazard of caving ground during the excavation of such trench or trenches. If such plan varies from the shoring system standards, the plan shall be prepared by a registered civil or structural engineer.
c. City shall promptly investigate the conditions, and if it finds that the conditions do materially so differ, or do involve hazardous waste, and cause a decrease or increase in Contractor’s cost of, or the time required for, performance of any part of the work shall issue an order or amendment for additional services pursuant to Subsection 8.4 or 8.5 of this Agreement. d. If a dispute arises between City and Contractor whether the conditions materially differ, or involve hazardous waste, or cause a decrease or increase in Contractor’s cost of, or time required for, performance of any part of the work, Contractor shall not be excused from any scheduled completion date provided for by this Agreement, but shall proceed with all work to be performed under this Agreement. Contractor shall retain any and all rights provided either by contract or by law which pertain to the resolution of disputes and protests between the Parties.

SECTION 4. INSURANCE AND BOND REQUIREMENTS.

Before beginning any work under this Agreement, Contractor, at its own cost and expense, shall procure the types and amounts of insurance listed below and provide certified copies of insurance policies and original endorsements, indicating that Contractor has obtained or currently maintains insurance that meets the requirements of this Section and which is satisfactory, in all respects, to City. Contractor shall also deliver the payment and performance bonds required by this Section 4 with City. Contractor shall maintain the insurance policies required by this Section throughout the term of this Agreement. The cost of such insurance shall be included in Contractor’s compensation. Contractor shall not allow any subcontractor, Contractor or other agent to commence work on any subcontract until Contractor has obtained all insurance required herein for the subcontractor(s) and provided evidence thereof to City, and has delivered the required bonds to City. Verification of the required insurance shall be submitted and made part of this Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 13
Menifee Mayor and City Council
August 16, 2023
Page
357 of 759

2905/031858-0001
19201719.4 a07/24/23 -9-
Agreement prior to execution. Contractor acknowledges the insurance policy must cover inter- insured suits between City and other insureds. Contractor agrees that the requirement to provide insurance shall not be construed as limiting in any way the extent to which Contractor may be held responsible for the payment of damages to any persons or property resulting from Contractor’s activities or the activities of any person or persons for which Contractor is otherwise responsible nor shall it limit Contractor’s indemnification liabilities as provided in Section 5. Insurance or bonds required by this Agreement shall be satisfactory only if issued by companies qualified to do business in California, rated “A” or better in the most recent edition of Best Rating Guide, The Key Rating Guide, or in the Federal Register, and only if they are of a financial category Class VII or better, unless such requirements are waived by the Contract Administrator in the Contract Administrator’s sole discretion. If this Agreement continues for more than three (3) years duration, or in the event the Contract Administrator determines that the Services to be performed under this Agreement creates an increased or decreased risk of loss to City, Contractor agrees that the minimum limits of the insurance policies and the performance bond required by Section 4 may be changed accordingly upon receipt of written notice from the Contract Administrator; provided that Contractor shall have the right to appeal a determination of increased coverage by the Contract Administrator to the City Council of City within ten (10) days of receipt of notice from the Contract Administrator.

4.1 Workers’ Compensation. Contractor shall, at its sole cost and expense, maintain Statutory Workers’ Compensation Insurance and Employer’s Liability Insurance for any and all persons employed directly or indirectly by Contractor pursuant to the provisions of the California Labor Code. Statutory Workers’ Compensation Insurance and Employer’s Liability Insurance shall be provided with limits of not less than ONE MILLION DOLLARS ($1,000,000.00) per accident, ONE MILLION DOLLARS ($1,000,000.00) disease per employee, and ONE MILLION DOLLARS ($1,000,000.00) disease per policy. In the alternative, Contractor may rely on a self- insurance program to meet those requirements, but only if the program of self-insurance complies fully with the provisions of the California Labor Code. Determination of whether a self-insurance program meets the standards of the California Labor Code shall be solely in the discretion of the Contract Administrator. The insurer, if insurance is provided, or Contractor, if a program of self- insurance is provided, shall waive all rights of subrogation against City and its officers, officials, employees, and authorized volunteers for loss arising from the Services performed under this Agreement. Pursuant to California Labor Code Section 1860, Contractor is required to secure the payment of compensation to Contractor’s employees. Pursuant to California Labor Code Section 1861, Contractor hereby submits to City the following:

I am aware of the provisions of Section 3700 of the California Labor Code which require every employer to be insured against liability for workers' compensation or to undertake self-insurance in accordance with the provisions of that code, and I will comply with such provisions before commencing the performance of the work of this contract.

Contractor Initial: _______

4.2 Commercial General and Automobile Liability Insurance. a. General Requirements. Contractor, at its own cost and expense, shall maintain commercial general and automobile liability insurance for the term of this Agreement in Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 14
Menifee Mayor and City Council
August 16, 2023
Page
358 of 759

2905/031858-0001
19201719.4 a07/24/23 -10-
an amount not less than ONE MILLION DOLLARS ($1,000,000.00) per occurrence, combined single limit coverage, for risks associated with the Services contemplated by this Agreement, TWO MILLION DOLLARS ($2,000,000.00) general aggregate, and TWO MILLION DOLLARS ($2,000,000.00) products/completed operations aggregate. If a Commercial General Liability Insurance or an Automobile Liability Insurance form or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the Services to be performed under this Agreement or the general aggregate limit shall be at least twice the required occurrence limit. Such coverage shall include but shall not be limited to, protection against claims arising from bodily and personal injury, including death resulting therefrom, and damage to property resulting from the Services contemplated under this Agreement, including the use of hired, owned, leased, and non-owned automobiles. b. Minimum Scope of Coverage. Commercial general coverage shall be at least as broad as Insurance Services Office Commercial General Liability occurrence form CG 0001. Automobile coverage shall be at least as broad as Insurance Services Office Automobile Liability form CA 0001 Code 2, 8, and 9 including “any auto” and endorsement CA 0025 or equivalent). No endorsement shall be attached limiting the coverage. c. Additional Requirements. Each of the following shall be included in the insurance coverage or added as a certified endorsement to the policy:
(i) The insurance shall cover on an occurrence or an accident basis, and not on a claims-made basis.
(ii) The policy must cover inter-insured suits and include a “Separation of Insureds” or “severability” clause which treats each insured separately. (iii) The insurance must be maintained for at least one (1) year following the completion of the Services or the expiration or termination of this Agreement. (iv) Any failure of Contractor to comply with reporting provisions of the policy shall not affect coverage provided to City and its officers, employees, agents, and volunteers.

4.3 Professional Liability Insurance.
a. General Requirements. Contractor, at its own expense, shall maintain professional liability insurance appropriate to Contractor’s profession. This coverage may be written on a “claims made” basis, and must include coverage for contractual liability. The professional liability insurance required by this Agreement must be endorsed to be applicable to claims based upon, arising out of, or related to the Services performed under this Agreement. The insurance must be maintained for at least five (5) consecutive years following the completion of the Services or the expiration or termination of this Agreement. During this additional five (5)- year period, Contractor shall annually and upon request of City submit written evidence of this continuous coverage.
b. Claims-Made Limitations. The following provisions shall apply if the professional liability coverage is written on a claims-made form:

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 15
Menifee Mayor and City Council
August 16, 2023
Page
359 of 759

2905/031858-0001
19201719.4 a07/24/23 -11-
(i) The retroactive date of the policy must be shown and must be no later than the commencement of the Services.
(ii) If coverage is canceled or not renewed and it is not replaced with another claims-made policy form with a retroactive date that precedes the Effective Date of this Agreement, Contractor must provide extended reporting coverage for a minimum of five (5) years after the expiration or termination of this Agreement or the completion of the Services. Such continuation coverage may be provided by one of the following: (1) renewal of the existing policy; (2) an extended reporting period endorsement; or (3) replacement insurance with a retroactive date no later than the commencement of the Services under this Agreement. City shall have the right to exercise, at Contractor’s sole cost and expense, any extended reporting provisions of the policy, if Contractor cancels or does not renew the coverage.
(iii) A copy of the claim reporting requirements must be submitted to City prior to the commencement of the Services under this Agreement.

4.4 Pollution Liability Insurance. Contractor, at its own expense, shall maintain pollution liability insurance written on a per occurrence for bodily injury, personal injury and property damage. The policy of insurance shall be in an amount not less than ONE MILLION DOLLARS ($1,000,000.00) per pollution incident and ONE MILLION DOLLARS ($1,000,000.00) in the general aggregate. The policy shall apply to any incidents at or from any location on which Contractor performs the Services under this Agreement. The insurance must be maintained for at least one (1) year following the completion of Contractor’s services or the expiration or termination of this Agreement.

4.5 All Policies Requirements.
a. Verification of Coverage. Prior to beginning the Services under this Agreement, Contractor shall furnish City with certificates of insurance, additional insured endorsement or policy language granting additional insured status complete certified copies of all policies, including complete certified copies of all endorsements. All copies of policies and certified endorsements shall show the signature of a person authorized by that insurer to bind coverage on its behalf. The certificate of insurance must include the following reference: CIP 23- 05 & CIP 23-06 CASA BLANCA & WILLOWS/LAKE RIDGE COMMUNITY RESURFACING PROJECT. The name and address for additional insured endorsements, certificates of insurance and notice of cancellation is: City of Menifee, 29844 Haun Road, Menifee, CA 92586. City must be endorsed as an additional insured for liability arising out of ongoing and completed operations by or on behalf of Contractor. b. Notice of Reduction in or Cancellation of Coverage. Contractor shall provide written notice to City within ten (10) working days if: (1) any of the required insurance policies is terminated; (2) the limits of any of the required polices are reduced; or (3) the deductible or self insured retention is increased. In the event any of said policies of insurance are cancelled, Contractor shall, prior to the cancellation date, submit new evidence of insurance in conformance with this Section 4 to the Contract Administrator.

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 16
Menifee Mayor and City Council
August 16, 2023
Page
360 of 759

2905/031858-0001
19201719.4 a07/24/23 -12-
c. Additional Insured; Primary Insurance. City and its officers, employees, agents, and authorized volunteers shall be covered as additional insureds with respect to each of the following: liability arising out of the Services performed by or on behalf of Contractor, including the insured’s general supervision of Contractor; products and completed operations of Contractor, as applicable; premises owned, occupied, or used by Contractor; and automobiles owned, leased, or used by Contractor in the course of providing the Services pursuant to this Agreement. The coverage shall contain no special limitations on the scope of protection afforded to City or its officers, employees, agents, or authorized volunteers. The insurance provided to City as an additional insured must apply on a primary and non-contributory basis with respect to any insurance or self-insurance program maintained by City. Additional insured status shall continue for one (1) year after the expiration or termination of this Agreement or completion of the Services.

A certified endorsement must be attached to all policies stating that coverage is primary insurance with respect to City and its officers, officials, employees, and volunteers, and that no insurance or self-insurance maintained by City shall be called upon to contribute to a loss under the coverage. The insurer is deemed hereof to waive all rights of subrogation and contribution it may have against City, its officers, employees, agents, authorized volunteers, and their respective insurers.
d. Deductibles and Self-Insured Retentions. Contractor shall obtain the written approval of City for the self-insured retentions and deductibles before beginning any of the Services. During the term of this Agreement, only upon the prior express written authorization of the Contract Administrator, Contractor may increase such deductibles or self-insured retentions with respect to City, its officers, employees, agents, and volunteers. The Contract Administrator may condition approval of an increase in deductible or self-insured retention levels with a requirement that Contractor procure a bond guaranteeing payment of losses and related investigations, claim administration, and defense expenses that is satisfactory in all respects to each of them.
e. Subcontractors. Contractor shall include all subcontractors as insureds under its policies or shall furnish separate certificates and certified endorsements for each subcontractor. All coverages for subcontractors shall be subject to all of the requirements stated herein.
f. Variation. The Contract Administrator may, but is not required to, approve in writing a variation in the foregoing insurance requirements, upon a determination that the coverage, scope, limits, and forms of such insurance are either not commercially available, or that City’s interests are otherwise fully protected.

4.6 Payment and Performance Bonds. Concurrently with execution of this Agreement, Contractor shall deliver to City a payment (labor and materials) bond and a performance bond, each in the sum of the amount of this Agreement, in the forms provided by the City Clerk, which secure the faithful performance of this Agreement. The bonds shall contain the original notarized signature of an authorized officer of the surety and affixed thereto shall be a certified and current copy of his power of attorney. The bonds shall be unconditional and remain in force during the entire term of this Agreement and shall be null and void only if Contractor promptly and faithfully performs all terms and conditions of this Agreement. Payment and performance bonds shall be Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 17
Menifee Mayor and City Council
August 16, 2023
Page
361 of 759

2905/031858-0001
19201719.4 a07/24/23 -13-
secured from a surety company rated Grade “A” or better in the most recent edition of Best Rating Guide, The Key Rating Guide, or in the Federal Register, and only if they are of a financial category Class VII or better, unless such requirements are waived by the Contract Administrator due to unique circumstances, and shall be authorized to write such bonds in the State of California. Contractor shall pay all bond premiums, costs, and incidentals. Pursuant to California Public Contract Code Section 22300, substitution of eligible equivalent securities for any moneys withheld to ensure performance under this Agreement may be permitted at the request and expense of Contractor. Without limiting the foregoing, Contractor understands that Civil Code Section 9550 requires a payment bond for all public works contracts involving an expenditure of more than Twenty-Five Thousand Dollars ($25,000).

4.7 Remedies. In addition to any other remedies at law or equity City may have if Contractor fails to provide or maintain any insurance policies or policy endorsements to the extent and within the time herein required, City may, at its sole option, exercise any of the following remedies, which are alternatives to other remedies City may have and are not the exclusive remedy for Contractor’s breach:
a. Obtain such insurance and deduct and retain the amount of the premiums for such insurance from any sums due under this Agreement; b. Order Contractor to stop work under this Agreement or withhold any payment that becomes due to Contractor hereunder, or both stop work and withhold any payment, until Contractor demonstrates compliance with the requirements hereof; and/or c. Terminate this Agreement.

SECTION 5. INDEMNIFICATION.

5.1 Indemnification for Professional Liability. Where the law establishes a professional standard of care for performance of the Services, to the fullest extent permitted by law, Contractor shall indemnify, protect, defend (with counsel selected by City), and hold harmless City and any and all of its officers, employees, officials, volunteers, and agents from and against any and all claims, losses, costs, damages, expenses, liabilities, liens, actions, causes of action (whether in tort, contract, under statute, at law, in equity, or otherwise) charges, awards, assessments, fines, or penalties of any kind (including costs and expenses incurred by City and reasonable consultant and expert fees and expenses of investigation, costs of whatever kind and nature and, if Contractor fails to provide a defense for City, the legal costs of counsel retained by City) and any judgment (collectively, “Claims”) to the extent same are caused in whole or in part by any negligent or wrongful act, error, or omission of Contractor, its officers, agents, employees, or subcontractors (or any entity or individual that Contractor shall bear the legal liability thereof) in the performance of professional services under this Agreement.

5.2 Indemnification for Other than Professional Liability. Other than in the performance of professional services and to the full extent permitted by law, Contractor shall indemnify, protect, defend (with counsel selected by City), and hold harmless City, and any and all of its officers, employees, officials, volunteers, and agents from and against any and all Claims, where the same arise out of, are a consequence of, or are in any way attributable to, in whole or in Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 18
Menifee Mayor and City Council
August 16, 2023
Page
362 of 759

2905/031858-0001
19201719.4 a07/24/23 -14-
part, the performance of this Agreement by Contractor or by any individual or entity for which Contractor is legally liable, including but not limited to officers, agents, employees or subcontractors of Contractor. Contractor will promptly pay any judgment rendered against City, its officers, agents, or employees for any such Claims arising out of or in connection with the performance of or failure to perform such Services, operations or activities of Contractor hereunder.

5.3 Subcontractors. Contractor shall incorporate similar indemnity agreements with its subcontractors. Contractor shall be fully responsible to indemnify City, and failure of City to monitor compliance with these provisions shall not be a waiver hereof.

5.4 Limitation of Indemnification. The provisions of this Section 5 do not apply to claims occurring as a result of City’s sole or active negligence. The provisions of this Section 5 shall not release City from liability arising from gross negligence or willful acts or omissions of City or any and all of its officers, officials, employees, and agents acting in an official capacity.

In the event any applicable law contains a limitation on indemnification under this Agreement, such limitation shall supersede the provisions herein only to the extent required by said law.

SECTION 6. INDEPENDENT CONTRACTOR.

At all times during the term of this Agreement, Contractor shall be an independent contractor and shall not be an employee of City. City shall have the right to control Contractor only insofar as the results of the Services rendered pursuant to this Agreement and assignment of personnel pursuant to Subsection 1.4; however, otherwise City shall not have the right to control the means by which Contractor accomplishes the Services rendered pursuant to this Agreement.

The personnel performing the Services under this Agreement on behalf of Contractor shall at all times be under Contractor’s exclusive direction and control. Contractor shall not at any time or in any manner represent that it is or any of its officers, employees, or agents are in any manner officers, officials, employees, or agents of City. Contractor shall not incur or have the power to incur any debt, obligation, or liability whatever against City, or bind City in any manner. Except for the fees paid to Contractor as provided in this Agreement, City shall not pay salaries, wages, or other compensation to Contractor for performing the Services hereunder for City. City shall not be liable for compensation or indemnification to Contractor for injury or sickness arising out of performing the Services hereunder. Notwithstanding any other City, state, or federal policy, rule, regulation, law, or ordinance to the contrary, Contractor and any of its employees, agents, and subcontractors providing services under this Agreement shall not qualify for or become entitled to any compensation, benefit, or any incident of employment by City, including but not limited to eligibility to enroll in the California Public Employees Retirement System (“PERS”) as an employee of City and entitlement to any contribution to be paid by City for employer contributions and/or employee contributions for PERS benefits. Contractor shall perform all Services required herein as an independent contractor of City and shall remain at all times as to City a wholly independent contractor with only such obligations as are consistent with that role.

City shall not in any way or for any purpose become or be deemed to be a partner of Contractor in its business or otherwise or a joint venturer or a member of any joint enterprise with Contractor.

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 19
Menifee Mayor and City Council
August 16, 2023
Page
363 of 759

2905/031858-0001
19201719.4 a07/24/23 -15-
SECTION 7. LEGAL REQUIREMENTS.

7.1 Governing Law. The laws of the State of California shall govern this Agreement.

7.2 Compliance with Applicable Laws. Contractor and any subcontractor shall comply with all applicable local, state, and federal laws and regulations applicable to the performance of the work hereunder. Contractor shall not hire or employ any person to perform work within City or allow any person to perform the Services required under this Agreement unless such person is properly documented and legally entitled to be employed within the United States. Contractor acknowledges and agrees that it shall be independently responsible for reviewing the applicable laws and regulations and effectuating compliance with such laws. Contractor shall require the same of all subcontractors.

7.3 Prevailing Wages. Contractor acknowledges and agrees that it shall be independently responsible for reviewing the applicable prevailing wage laws and regulations and effectuating compliance with such laws, including, but not limited to the prevailing wage and related requirements set forth in this Subsection 7.3. Contractor shall bear all risks of payment or non-payment of prevailing wages under California law and/or the implementation of California Labor Code Section 1781, as the same may be amended from time to time, and/or any other similar law.
a. Public Work. Contractor hereby expressly acknowledges and agrees that City has never previously affirmatively represented to Contractor, its employees or agents in writing or otherwise that the Services are not a “public work,” as defined in Section 1720 of the California Labor Code. It is agreed by the Parties that, in connection with the development, construction (as defined by applicable law) and operation of the Services, including, without limitation, any public work (as defined by applicable law), if any, Contractor shall bear all risks of payment or non-payment of state and/or federal prevailing wages and/or the implementation of California Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, and/or any other provision of law. To the extent applicable, City will enforce all penalties required by law for Contractor’s failure to pay prevailing wages. b. California Labor Code. The Contractor’s attention is directed to Division 2, Part 7, Chapter 1 of the California Labor Code and especially to Article 2 (Wages); and Article 3 (Working Hours), thereof.
(i) In accordance with Sections 1773 and 1773.2 of the California Labor Code, City has found and determined the general prevailing rates of wages in the locality in which the public work is to be performed are those determined by the Director of Industrial Relations and available at https://www.dir.ca.gov/OPRL/2022-1/PWD/Southern.html. Copies of the prevailing rates of wages are maintained with City’s principal office and are available to any interested party on request. Contractor shall post a copy of the prevailing rate of per diem wages at each job site.
(ii) Contractor is aware of and will comply with the provisions of California Labor Code Section 1776, including the keeping of payroll records and furnishing certified copies thereof in accordance with said Section. Pursuant to California Labor Code Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 20
Menifee Mayor and City Council
August 16, 2023
Page
364 of 759

2905/031858-0001
19201719.4 a07/24/23 -16-
Section 1771.4, Contractor must submit certified payroll records to the Labor Commissioner using the Department of Industrial Relations’ electronic certified payroll reporting (eCPR) system. (iii) Pursuant to California Labor Code Section 1810, it is stipulated hereby that eight (8) hours labor constitutes a legal day’s work hereunder. (iv) Pursuant to California Labor Code Section 1815, work performed by employees of contractors in excess of eight (8) hours per day, and 40 hours during any one week, shall be permitted upon public work upon compensation for all hours worked in excess of eight (8) hours per day at not less than 1 ½ times the basic rate of pay. (v) Pursuant to California Labor Code Section 1813, it is stipulated hereby that Contractor shall, as a penalty to City, forfeit twenty-five dollars ($25) for each worker employed in the execution of this Agreement by Contractor or by any subcontractor hereunder for each calendar day during which such worker is required or permitted to work more than eight (8) hours in any one calendar day and forty (40) hours in any one (1) calendar week in violation of the provisions of Article 3 (commencing with Section 1810), Chapter 1, Part 7, Division 2 of the California Labor Code.
(vi) Contractor is aware of and will comply with the provisions of California Labor Code Sections 1777.5 and 1777.6 with respect to the employment of apprentices.

Pursuant to Section 1777.5 it is hereby stipulated that Contractor will be responsible for obtaining compliance therewith on the part of any and all sub-consultants or subcontractors employed by Contractor in connection with this Agreement.
(vii) Pursuant to California Labor Code Section 1775, it is hereby stipulated that Contractor shall, as a penalty to City, forfeit not more than two-hundred dollars ($200) for each calendar day, or portion thereof, for each worker paid less than the prevailing rates as determined by the Director of Industrial Relations for the work or craft in which the worker is employed for the Services by Contractor or any sub-consultant or subcontractor. c. Bidding Eligibility. Pursuant to California Labor Code Section 1771.1, no contractor or subcontractor (or consultant or subconsultant) may be listed on a bid proposal for a public works project unless registered with the Department of Industrial Relations. Pursuant to California Public Contract Code Section 6109, Contractor may not perform any Services hereunder with a subcontractor who is ineligible to perform the Services pursuant to Section 1777.1 or 1777.7 of the California Labor Code.
d. DIR Monitoring. Pursuant to California Labor Code Section 1771.4, Contractor is hereby notified that this project is subject to compliance monitoring and enforcement by the Department of Industrial Relations.
e. Indemnification Related to Prevailing Wages. Section 5, Indemnification, specifically encompasses Claims arising from or related to (i) the noncompliance by Contractor or any party performing the Services of any applicable local, state, and/or federal law, including, without limitation, any applicable federal and/or state labor laws (including, without limitation, the requirement to pay state prevailing wages and hire apprentices); (ii) the implementation of California Labor Code Sections 1726 and 1781, as the same may be amended from time to time, Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 21
Menifee Mayor and City Council
August 16, 2023
Page
365 of 759

2905/031858-0001
19201719.4 a07/24/23 -17-
or any other similar law; and/or (iii) failure by Contractor or any party performing the Services to provide any required disclosure or identification as required by California Labor Code Section 1781, as the same may be amended from time to time, and/or any other similar law.

7.4 Licenses and Permits, Fees, and Assessments. Contractor represents, warrants, and covenants to City that Contractor and its employees, agents, and any subcontractors have all licenses, permits, qualifications, and approvals of whatsoever nature that are legally required to practice their respective professions, and perform the Services. Contractor represents, warrants, and covenants to City that Contractor and its employees, agents, and subcontractors shall, at their sole cost and expense, keep in effect at all times during the term of this Agreement any licenses, permits, and approvals that are legally required to practice their respective professions, and perform the Services. In addition to the foregoing, Contractor and any subcontractors shall obtain and maintain during the term of this Agreement valid business licenses from City. Contractor shall have the sole obligation to pay for any fees, assessments, and taxes, plus applicable penalties and interest, which may be imposed by law and arise from or are necessary for Contractor’s performance of the Services, and shall indemnify, defend and hold harmless City, its officers, employees or agents of City, against any such fees, assessments, taxes, penalties or interest levied, assessed, or imposed against City hereunder.

7.5 Conflicts of Interest. Contractor represents, warrants, and covenants that Contractor presently has no interest, direct or indirect, which would interfere with or impair in any manner or degree the performance of Contractor’s obligations and responsibilities under this Agreement. Contractor further agrees that while this Agreement is in effect, Contractor shall not acquire or otherwise obtain any interest, direct or indirect, that would interfere with or impair in any manner or degree the performance of Contractor’s obligations and responsibilities under this Agreement.

7.6 Unfair Business Practices Claims. In entering into this Agreement, Contractor offers and agrees to assign to City all rights, title, and interest in and to all causes of action it may have under Section 4 of the Clayton Act (15 U.S.C. § 15) or under the Cartwright Act (Chapter 2, (commencing with Section 16700) of Part 2 of Division 7 of the Business and Professions Code), arising from purchases of goods, services, or materials related to this Agreement. This assignment shall be made and become effective at the time City renders final payment to Contractor without further acknowledgment of the Parties.

7.7 Annual Appropriation of Funding. In accord with Article 16 Section 18 of the California Constitution, payment of compensation under this Agreement is contingent upon annual appropriation of funds by City for that purpose. Contractor acknowledges and agrees that to the extent that the Services extend beyond one (1) fiscal year, payment for such Services is expressly conditioned on City’s annual appropriation of funds for such Services for each year. If no funds are appropriated then this Agreement shall be terminated. City pledges and agrees to process such appropriation requests annually and in good faith. Nothing in this Subsection shall be construed to limit the right of either Party to terminate this Agreement as provided herein.

7.8 Liquidated Damages. Since the determination of actual damages for any delay in performance of this Agreement would be extremely difficult or impractical to determine in the event of a breach of this Agreement, Contractor and its sureties shall be liable for and shall pay to Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 22
Menifee Mayor and City Council
August 16, 2023
Page
366 of 759

2905/031858-0001
19201719.4 a07/24/23 -18-
City the sum of FIVE HUNDRED DOLLARS ($500.00) as liquidated damages for each working day of delay in the performance of any of the Services. City may withhold from any monies payable on account of the Services performed by Contractor any accrued liquidated damages.

SECTION 8. TERMINATION AND MODIFICATION.

8.1 Termination. City may terminate this Agreement at any time and without cause upon thirty (30) days’ written notification to Contractor. City may also terminate this Agreement pursuant to Subsection 8.8.

8.2 Termination by Contractor. Contractor may terminate this Agreement upon sixty (60) days’ written notice to City.

8.3 Consequences of Termination. In the event of termination, Contractor shall be entitled to compensation for the Services satisfactorily performed up to the date of termination; City, however, may condition payment of such compensation upon Contractor delivering to City any or all materials provided to Contractor or prepared by or for Contractor or City in connection with this Agreement. Upon receipt of any notice of termination, Contractor shall immediately cease all Services hereunder except such as may be specifically approved by the Contract Administrator.

8.4 Administrative Change Orders. City shall have the right at any time during the performance of the Services, without invalidating this Agreement, to order extra work beyond that specified in the Scope of Services or make changes by altering, adding to, or deducting from said work. No such extra work may be undertaken unless a written change order is first given by the Contract Administrator to Contractor, incorporating therein any adjustment in (i) the total compensation, and/or (ii) the time to perform this Agreement, which said adjustments are subject to the written approval of Contractor. Any increase in compensation of up to five percent (5%) of the total compensation or TWENTY-FIVE THOUSAND DOLLARS ($25,000), whichever is less; or in the time to perform of up to one hundred eighty (180) days may be approved in writing by the Contract Administrator. Contractor understands and agrees that, if City grants an extension in time without additional work, City shall have no obligation to provide Contractor with compensation beyond the maximum amount provided for in this Agreement. Similarly, unless authorized by the Contract Administrator, City shall have no obligation to reimburse Contractor for any otherwise reimbursable expenses incurred during the extension period. All other extensions or modifications to this Agreement shall require a written amendment pursuant to Subsection 8.5.

8.5 Amendments. The Parties may amend this Agreement only by a writing signed by all the Parties. The Contract Administrator shall have the authority to execute amendments to this Agreement which do not materially change the terms hereof, in the Contract Administrator’s discretion, to the extent permitted by applicable federal, state, and local law. The Contract Administrator may refer any proposed amendment to the City Council for review and approval.

8.6 Assignment and Subcontracting. City and Contractor recognize and agree that this Agreement contemplates personal performance by Contractor and is based upon a determination of Contractor’s unique personal competence, experience, and specialized personal knowledge.

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 23
Menifee Mayor and City Council
August 16, 2023
Page
367 of 759

2905/031858-0001
19201719.4 a07/24/23 -19-
Moreover, a substantial inducement to City for entering into this Agreement was and is the professional reputation and competence of Contractor. Contractor may not assign this Agreement or any interest therein without the prior written approval of the Contract Administrator. Contractor shall not subcontract any portion of the performance contemplated and provided for herein, other than to the subcontractors noted in the Scope of Services, without prior written approval of the Contract Administrator. In the event of any unapproved assignment, including in connection with any bankruptcy proceeding, this Agreement shall be void. No approved assignment shall release Contractor or any surety of Contractor of any liability hereunder without the express consent of City.

8.7 Survival. All obligations arising prior to the expiration or termination of this Agreement and all provisions of this Agreement allocating liability between City and Contractor shall survive the expiration or termination of this Agreement.

8.8 Disputes, Default. In the event that Contractor is in default under the terms of this Agreement, City shall not have any obligation or duty to continue compensating Contractor for any of the Services performed after the date of default. Instead, City may give notice to Contractor of the default and the reasons for the default. The notice shall include the timeframe in which Contractor may cure the default. This timeframe is presumptively thirty (30) days, but may be extended, though not reduced, in the sole discretion of the Contract Administrator. During the period of time that Contractor is in default, City shall hold all invoices and shall, when the default is cured, proceed with payment on the invoices. In the alternative, City may, in its sole discretion, elect to pay some or all of the outstanding invoices during the period of default. If Contractor does not cure the default, City's remedies shall include, but not be limited to, any or all of the following:
a. Immediately terminate this Agreement;
b. Retain the plans, specifications, drawings, reports, design documents, and any other work product prepared by Contractor pursuant to this Agreement; c. Retain a different contractor to complete the Services; and/or d. Charge Contractor the difference between the cost to complete the Services that is unfinished at the time of breach and the amount that City would have paid Contractor pursuant to Section 2 if Contractor had completed the Services.

Any failure on the part of City to give notice of Contractor’s default shall not be deemed to result in a waiver of City’s legal rights or any rights arising out of any provision of this Agreement.

8.9 Claims by Contractor. Claims, as that term is defined in California Public Contract Code Section 9204, by Contractor and, where applicable, any subcontractor, in connection with a public works project shall by subject to the mediation procedure in California Public Contract Code Section 9204.

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 24
Menifee Mayor and City Council
August 16, 2023
Page
368 of 759

2905/031858-0001
19201719.4 a07/24/23 -20-
SECTION 9. KEEPING AND STATUS OF RECORDS.

9.1 Documents and Data. All drawings, specifications, maps, designs, photographs, studies, surveys, data, notes, computer files, reports, records, documents, and other materials plans, drawings, estimates, test data, survey results, models, renderings, and other documents or works of authorship fixed in any tangible medium of expression, including but not limited to, physical drawings, digital renderings, or data stored digitally, magnetically, or in any other medium (the “Documents and Materials”) prepared or caused to be prepared by Contractor, its employees, subcontractors, and agents in the performance of this Agreement shall be the property of City and shall be delivered to City upon request of the Contract Administrator or upon the expiration or termination of this Agreement, and Contractor shall have no claim for further employment or additional compensation as a result of the exercise by City of its full rights of ownership use, reuse, or assignment of the Documents and Materials hereunder. Any use, reuse or assignment of such completed Documents and Materials for other projects and/or use of uncompleted documents without specific written authorization by Contractor will be at City’s sole risk and without liability to Contractor, and Contractor’s guarantee and warranties shall not extend to such use, revise, or assignment. Contractor may retain copies of such Documents and Materials for its own use.

Contractor shall have an unrestricted right to use the concepts embodied therein. All subcontractors shall provide for assignment to City of any Documents and Materials prepared by them, and in the event Contractor fails to secure such assignment, Contractor shall indemnify City for all damages resulting therefrom.

9.2 Licensing of Intellectual Property. This Agreement creates a non-exclusive and perpetual license for City to copy, use, modify, reuse, or sublicense any and all copyrights, designs, rights of reproduction, and other intellectual property embodied in the Documents and Materials.

Contractor shall require all subcontractors to agree in writing that City is granted a non-exclusive and perpetual license for the Documents and Materials the subcontractor prepares under this Agreement. Contractor represents and warrants that Contractor has the legal right to license any and all of the Documents and Materials. Contractor makes no such representation and warranty in regard to the Documents and Materials which were prepared by design professionals other than Contractor or provided to Contractor by City. City shall not be limited in any way in its use of the Documents and Materials at any time, provided that any such use not within the purposes intended by this Agreement shall be at City’s sole risk.

9.3 Records. Contractor shall keep, and require subcontractors to keep, such ledgers books of accounts, invoices, vouchers, canceled checks, reports (including but not limited to payroll reports), studies, or other documents relating to the disbursements charged to City and the Services performed hereunder (the “Books and Records”), as shall be necessary to perform the Services required by this Agreement and enable the Contract Administrator to evaluate the performance of such Services. Any and all such Books and Records shall be maintained in accordance with generally accepted accounting principles and shall be complete and detailed. The Contract Administrator shall have full and free access to such Books and Records at all times during normal business hours of City, including the right to inspect, copy, audit, and make records and transcripts from such Books and Records. Such Books and Records shall be maintained for a period of three (3) years following completion of the Services hereunder, and City shall have access to such Books and Records in the event any audit is required. In the event of dissolution of Contractor’s business, custody of the Books and Records may be given to City, and access shall Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 25
Menifee Mayor and City Council
August 16, 2023
Page
369 of 759

2905/031858-0001
19201719.4 a07/24/23 -21-
be provided by Contractor’s successor in interest. Under California Government Code Section 8546.7, if the amount of public funds expended under this Agreement exceeds TEN THOUSAND DOLLARS ($10,000.00), this Agreement shall be subject to the examination and audit of the State Auditor, at the request of City or as part of any audit of City, for a period of three (3) years after final payment under this Agreement.

9.4 Reports. Contractor shall periodically prepare and submit to the Contract Administrator such reports concerning the performance of the Services required by this Agreement as the Contract Administrator shall require. Contractor hereby acknowledges that City is greatly concerned about the cost of the Services to be performed pursuant to this Agreement. For this reason, Contractor agrees that if Contractor becomes aware of any facts, circumstances, techniques, or events that may or will materially increase or decrease the cost of the Services contemplated herein or, if Contractor is providing design services, the cost of the project being designed, Contractor shall promptly notify the Contract Administrator of said fact, circumstance, technique, or event and the estimated increased or decreased cost related thereto and, if Contractor is providing design services, the estimated increased or decreased cost estimate for the project being designed.

9.5 Confidentiality. City and Contractor agree that, until final approval by City, all data, plans, specifications, reports, and other documents are confidential and will not be released to third parties without prior written consent of both Parties unless required by law. Contractor, its officers, employees, agents, or subcontractors, shall not, without prior written authorization from the Contract Administrator or unless requested by the City Attorney, voluntarily provide documents, declarations, letters of support, testimony at depositions, response to interrogatories, or other information concerning the work performed under this Agreement. If Contractor, or any officer, employee, agent, or subcontractor of Contractor, provides any information or work product in violation of this Agreement, then City shall have the right to reimbursement and indemnity from Contractor for any Claims caused by or incurred as a result of Contractor’s conduct. Contractor shall promptly notify City should Contractor, its officers, employees, agents, or subcontractors be served with any summons, complaint, subpoena, notice of deposition, request for documents, interrogatories, request for admissions, or other discovery request, court order, or subpoena from any party regarding this Agreement and the Services performed thereunder. City retains the right, but has no obligation, to represent Contractor or be present at any deposition, hearing, or similar proceeding. Contractor agrees to cooperate fully with City and to provide City with the opportunity to review any response to discovery requests provided by Contractor. However, this right to review any such response does not imply or mean the right by City to control, direct, or rewrite said response. Response to a subpoena or court order shall not be considered a voluntary disclosure so long as Contractor gives City notice of such court order or subpoena as provided herein.

SECTION 10. MISCELLANEOUS PROVISIONS.

10.1 Attorneys’ Fees. If either Party to this Agreement brings any action, including an action for declaratory relief, to enforce or interpret the provision of this Agreement, the prevailing Party shall be entitled to reasonable attorneys’ fees and expenses including costs, in addition to any other relief to which that Party may be entitled; provided, however, that the attorneys’ fees awarded pursuant to this Subsection shall not exceed the hourly rate paid by City for legal services Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 26
Menifee Mayor and City Council
August 16, 2023
Page
370 of 759

2905/031858-0001
19201719.4 a07/24/23 -22-
multiplied by the reasonable number of hours spent by the prevailing Party in the conduct of the litigation. The court may set such fees in the same action or in a separate action brought for that purpose.

10.2 Applicable Law, Venue. The laws of the State of California shall govern this Agreement. In the event that either Party brings any action against the other under this Agreement, the Parties agree that trial of such action shall be vested exclusively in Riverside County.

10.3 Severability. If any provision of this Agreement is held invalid, the remainder of this Agreement shall not be affected thereby and all other parts of this Agreement shall nevertheless be in full force and effect.

10.4 Section Headings and Subheadings. The section headings and subheadings contained in this Agreement are included for convenience only and shall not limit or otherwise affect the terms of this Agreement.

10.5 No Implied Waiver of Breach. Waiver by any Party to this Agreement of any term, condition, or covenant of this Agreement shall not constitute a waiver of any other term, condition, or covenant. Waiver by any Party of any breach of the provisions of this Agreement shall not constitute a waiver of any other provision or a waiver of any subsequent breach or violation of any provision of this Agreement. Acceptance by City of any work or services by Contractor shall not constitute a waiver of any of the provisions of this Agreement. No delay or omission in the exercise of any right or remedy by a non-defaulting Party on any default shall impair such right or remedy or be construed as a waiver. Any waiver by either Party of any default must be in writing and shall not be a waiver of any other default concerning the same or any other provision of this Agreement.

10.6 Successors and Assigns. The provisions of this Agreement shall inure to the benefit of and shall apply to and bind the successors and assigns of the Parties.

10.7 Contractor Principals and Representatives. The following principals of Contractor (“Principals”) are hereby designated as being the principals and representatives of Contractor authorized to act in its behalf with respect to the work specified herein and make all decisions in connection therewith:
(Name) (Title)
(Name) (Title)
(Name) (Title)
It is expressly understood that the experience, knowledge, capability, and reputation of the Principals were a substantial inducement for City to enter into this Agreement. Therefore, the Principals shall be responsible during the term of this Agreement for directing all activities of Contractor and devoting sufficient time to personally supervise the Services hereunder. All Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 27
Menifee Mayor and City Council
August 16, 2023
Page
371 of 759

2905/031858-0001
19201719.4 a07/24/23 -23-
personnel of Contractor, and any authorized agents, shall at all times be under the exclusive direction and control of the Principals. For purposes of this Agreement, the Principals may not be replaced nor may their responsibilities be substantially reduced by Contractor without the express written approval of City.

10.8 City Contract Administration. This Agreement shall be administered by a City employee, Diego Guillen, Associate Engineer (“Contract Administrator”). All correspondence shall be directed to or through the Contract Administrator or his designee. It shall be Contractor’s responsibility to assure that the Contract Administrator is kept informed of the progress of the performance of the Services and Contractor shall refer any decisions which must be made by City to the Contract Administrator. Unless otherwise provided by applicable law, the Contract Administrator shall have the power to act on behalf of City for all purposes under this Agreement.

Unless otherwise provided in this Agreement, Contractor shall not accept direction or orders from any person other than the Contract Administrator or his designee.

10.9 Notices. Any written notice to Contractor shall be sent to:

Attn: Hailey Copp, Executive Assistant
6751 STANTON AVE
BUENA PARK, CA 90621
Any written notice to City shall be sent to the Contract Administrator at:

City of Menifee
29844 Haun Road
Menifee, CA 92586
Attn: Diego Guillen, Associate Engineer
with a copy to:

City Clerk
City of Menifee
29844 Haun Road
Menifee, CA 92586
Any notice, demand, request, document, consent, approval, or communication either Party desires or is required to give to the other Party or any other person shall be in writing and either served personally or sent by prepaid, first-class mail. Either Party may change its address by notifying the other Party of the change of address in writing. Notice shall be deemed communicated at the time personally delivered or in seventy-two (72) hours from the time of mailing if mailed as provided in this Section.

10.10 Rights and Remedies. Except with respect to rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the Parties are cumulative and the exercise by either Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party.

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 28
Menifee Mayor and City Council
August 16, 2023
Page
372 of 759

2905/031858-0001
19201719.4 a07/24/23 -24-

10.11 Integration, Interpretation. This Agreement, including Exhibits A and B, represents the entire and integrated agreement between City and Contractor and supersedes all prior negotiations, representations, or agreements, either written or oral. The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either Party by reason of the authorship of this Agreement or any other rule of construction which might otherwise apply.

10.12 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be an original and all of which together shall constitute one agreement.

10.13 Execution of Contract. The persons executing this Agreement on behalf of each of the Parties hereto represent and warrant that (i) such Party is duly organized and existing, (ii) they are duly authorized to execute and deliver this Agreement on behalf of said Party, (iii) by so executing this Agreement, such Party is formally bound to the provisions of this Agreement, and (iv) that entering into this Agreement does not violate any provision of any other agreement to which said Party is bound.

10.14 Nondiscrimination. Contractor covenants that, by and for itself, its heirs, executors, assigns, and all persons claiming under or through them, that in the performance of this Agreement there shall be no discrimination against or segregation of, any person or group of persons on account of any impermissible classification including, but not limited to, race, color, creed, religion, sex, marital status, sexual orientation, national origin, or ancestry. Contractor shall take affirmative action to insure that applicants are employed and that employees are treated during employment without regard to their race, color, creed, religion, sex, marital status, sexual orientation, national origin, or ancestry.

10.15 No Third Party Beneficiaries. There are no intended third-party beneficiaries under this Agreement and no such other third parties shall have any rights or obligations hereunder.

10.16 Nonliability of City Officers and Employees. No officer, official, employee, agent, representative, or volunteer of City shall be personally liable to Contractor, or any successor in interest, in the event of any default or breach by City or for any amount which may become due to Contractor or to its successor, or for breach of any obligation of the terms of this Agreement.

10.17 No Undue Influence. Contractor declares and warrants that no undue influence or pressure is used against or in concert with any officer or employee of City in connection with the award, terms or implementation of this Agreement, including any method of coercion, confidential financial arrangement, or financial inducement. No officer or employee of City shall receive compensation, directly or indirectly, from Contractor, or from any officer, employee, or agent of Contractor, in connection with the award of this Agreement or any work to be conducted as a result of this Agreement.

10.18 No Benefit to Arise to City Employees. No member, officer, or employee of City, or their designees or agents, and no public official who exercises authority over or has responsibilities with respect to this Agreement during his/her tenure or for one (1) year thereafter, shall have any interest, direct or indirect, in any agreement or sub-agreement, or the proceeds thereof, for the Services to be performed under this Agreement.

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 29
Menifee Mayor and City Council
August 16, 2023
Page
373 of 759

2905/031858-0001
19201719.4 a07/24/23 -25-
[Signatures on Following Page]
Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 30
Menifee Mayor and City Council
August 16, 2023
Page
374 of 759

2905/031858-0001
19201719.4 a07/24/23 -26-
IN WITNESS WHEREOF, the Parties hereto have executed and entered into this Agreement as of the Effective Date.

CITY OF MENIFEE
Armando Villa, City Manager
Attest:

Stephanie Roseen, Acting City Clerk
Approved as to Form:

Jeffrey T. Melching, City Attorney

CONTRACTOR
Ezekiel A. Copp, President

Erlinda Copp, Secretary

[Note: 2 officer’s signatures required if
Contractor is a corporation, unless provided
with a certificate of secretary in-lieu]
Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 31
Menifee Mayor and City Council
August 16, 2023
Page
375 of 759

2905/031858-0001
19201719.4 a07/24/23

EXHIBIT A

EXHIBIT A

SPECIAL REQUIREMENTS
Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 32
Menifee Mayor and City Council
August 16, 2023
Page
376 of 759

2905/031858-0001
19201719.4 a07/24/23

EXHIBIT B

EXHIBIT B

SCOPE OF SERVICES
Services shall include CIP 23-05 & CIP 23-06 CASA BLANCA & WILLOWS/LAKE RIDGE COMMUNITY RESURFACING PROJECT services, including labor, materials, services and equipment is the total amount of all lump sum items and of all unit price sums, determined by multiplying the unit price for each item times the actual quantity of each such item, in the amount not to exceed () as further detailed in the attached pages (if any). If the Services include Services pursuant to a request for proposals or bid, the Services shall include the work contemplated by the entire “Bid Package” or “Request for Proposals” for the Services, including all plans, addenda, documentation, and specifications attached thereto. A copy of the Bid Package and/or Request for Proposals, as applicable shall be retained with a copy of this Agreement. Contractor shall keep a copy of the same for at least three (3) years following termination of this Agreement.

The numerical reference for the Bid Package or Request for Proposals is: 58- (CASA BLANCA COMMUNITY RESURFACING PROJECT (CIP 23-05) & WILLOWS/LAKE RIDGE COMMUNITY RESURFACING PROJECT (CIP 23-06)).

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 33
Menifee Mayor and City Council
August 16, 2023
Page
377 of 759

2905/031858-0001
19201719.4 a07/24/23 EXHIBIT B.

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 34
Menifee Mayor and City Council
August 16, 2023
Page
378 of 759

2905/031858-0001
19201719.4 a07/24/23 EXHIBIT B.

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 35
Menifee Mayor and City Council
August 16, 2023
Page
379 of 759

2905/031858-0001
19201719.4 a07/24/23 EXHIBIT B.

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 36
Menifee Mayor and City Council
August 16, 2023
Page
380 of 759

2905/031858-0001
19201719.4 a07/24/23 EXHIBIT B.

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 37
Menifee Mayor and City Council
August 16, 2023
Page
381 of 759

2905/031858-0001
19201719.4 a07/24/23 EXHIBIT B.

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 38
Menifee Mayor and City Council
August 16, 2023
Page
382 of 759

2905/031858-0001
19201719.4 a07/24/23 EXHIBIT B.

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 39
Menifee Mayor and City Council
August 16, 2023
Page
383 of 759

2905/031858-0001
19201719.4 a07/24/23 EXHIBIT B.

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 40
Menifee Mayor and City Council
August 16, 2023
Page
384 of 759

2905/031858-0001
19201719.4 a07/24/23 EXHIBIT B.

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 41
Menifee Mayor and City Council
August 16, 2023
Page
385 of 759

2905/031858-0001
19201719.4 a07/24/23 EXHIBIT B.

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 42
Menifee Mayor and City Council
August 16, 2023
Page
386 of 759

2905/031858-0001
19201719.4 a07/24/23 EXHIBIT B.

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 43
Menifee Mayor and City Council
August 16, 2023
Page
387 of 759

UTILITY AGREEMENT – Eastern Municipal Water District Page 1 of 6

UTILITY RELOCATION AGREEMENT

BETWEEN THE CITY OF MENIFEE AND EASTERN MUNICIPAL WATER DISTRICT FOR THE CIP 23-05 CASA BLANCA & CIP 23-06 WILLOWS/LAKE RIDGE RESURFACING

This Utility Relocation Agreement (“Agreement”) is entered into by and between City of Menifee (“CITY”) and Eastern Municipal Water District (“EMWD”) whose address is 2270 Trumble, Road Perris, CA 92570

CITY proposes to improve existing Casa Blanca Neighborhood Resurfacing Project (CIP No. 23-05) This project is located east of the 215 freeway and south of McCall Blvd. The major crossroads are Antelope Road & Grand Avenue. This portion of the project is bounded by the following streets: Grand Ave., Cannon Dr., Golden Hill CT., Wild Sage CT., Cliff top CT., Skeen CT., Bavaria Dr., & Cor te Magdalena. Willows/Lake Ridge Neighborhood Resurfacing Project (CIP No. 23-06) This project is located east of the 215 freeway and south of Newport Road. The major crossroads are La Piedra Road & Menifee Road. This portion of the project is bounded by the following streets: Water mill Ln., Bayport Ln., Meadow Run Pl., Bridge water Lane, Crescent Bend Cir., Mill Bridge Dr.,Rosie Isle Ct., Teal Brood Dr . all in the City of Menifee, California , hereinafter referred to as “PRO JECT”. As part of thi s PROJECT, the existing street will be improved . EMWD owns, operates, and maint ains 8” VCP sewer pipe lines, 6” ACP water pipelines, 8” ACP water pipe lines, and 12” ACP water pipe lines, located within PROJECT limits. The existing sewer manholes and water valve covers will need to be adjusted vertically.

Therefore, it is hereby mutually agreed between CITY and EMWD that:

I. WORK TO BE DONE

A. CITY shall prepare plans for vertical adjustment of sewer manholes, and water valve covers.

B. CITY shall adjust manholes, and water valve covers to proposed grade.

C. All work shall be performed substantially in accordance with EMWD’s water and sewer standards.

EMWD shall review and approve CITY’s plans prior to commencement of construction, and agrees to permit construction in the manner approved. After approval of the plans by EMWD, changes in the plans shall be for unforeseen conditions only unless both parties mutually agree otherwise D. Deviations from the work described above, initiated by either CITY or EMWD, shall be agreed upon by both parties hereto under a Revised Notice to Owner. Such Revised Notices to Owner, approved by CITY and agreed to/acknowledged by EMWD, will constitute an approved revision and are hereby made a part hereof. No work under said deviation shall commence prior to written execution by EMWD of the Revised Notice to Owner. Changes in the scope of the work will require an amendment to this Agreement in addition to the Revised Notice to Owner.

E. EMWD shall have the right to inspect the work by CITY’s contractor during the adjustment to grade of the manholes and water valve covers. Upon completion of work by CITY, EMWD agrees to accept ownership and maintenance of the relocated facilities.

F. E
MWD shall provide inspections of adjustment to grade of the manholes and water valve covers work performed within the contract.

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 44
Menifee Mayor and City Council
August 16, 2023
Page
388 of 759

UTILITY AGREEMENT – Eastern Municipal Water District Page 2 of 6

G. EMWD shall be responsible for all communication between the CITY’s contractor performing the work and their Inspector.

H. EMWD shall provide in writing any corrective work to the CITY’s contractor. No work on EMWD facilities will be allowed to be performed by the CITY’s contractor without an EMWD Inspector on site.

I. EMWD shall perform inspections in a timely manner to avoid project delays.

II. LIABILITY FOR WORK

A. Costs for relocation by CITY are to include, but are not limited to, all elements of planning, design, construction, inspection, and project closeout.

B. The adjustment of manholes, and adjustment of water valve covers will be relocated at EMWD’s expense and shall include all EMWD staff, consultant, inspection, and contractor costs.

III. PERFORMANCE OF WORK

A. CITY will administer the construction contract to adjust the manholes and water valves to grade on CIP 23-05 Casa Blanca & CIP 23-06 Willows/Lake Ridge Improvement plans. CITY will provide construction management and inspection as well.

B. EMWD shall have access to all phases of the facilities being adjusted by the CITY, as described in Section I above, for the purpose of inspection to ensure that the work is in accordance with the specifications contained in the PROJECT Construction Contract, however, all questions regarding the work being performed by CITY will be directed to CITY’s Engineer for their evaluation and reply to the question. EMWD shall retain the right to make final decisions that impact their facilities.

C. Engineering services for locating, making of surveys, preparation of plans, specifications, estimates, supervision, and inspection are to be furnished by CITY.

D. Pursuant to Public Works Case No. 2001-059 determination by the California Department of Industrial Relations dated October 25, 2002, work performed by the CITY’s contractor is a public work under the definition of Labor Code Section 1720(a) and is therefore subject to prevailing wage requirement.

E. Work performed directly by EMWD’s employees falls within the exception of Labor Code Section 1720(a)(1) and does not constitute a public work under Section 1720(a)(2) and is not subject to prevailing wages.

IV. PAYMENT FOR WORK

A. EMWD shall be solely responsible for costs associated with adjustment of manholes and water valves.

In the event additional work becomes necessary to complete this work, EMWD shall bear full financial responsibility for all costs associated with the additional work.

B. As indicated under Section III, Performance of Work, EMWD will perform plan check and construction inspection activities of facilities. The actual costs incurred by EMWD in its performance Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 45
Menifee Mayor and City Council
August 16, 2023
Page
389 of 759

UTILITY AGREEMENT – Eastern Municipal Water District Page 3 of 6

of said work will be paid by EMWD.

C. It is understood and agreed that CITY will not pay for any betterment or increase in capacity of EMWD’s facilities in the new location.

D. Detailed records from which the billing is compiled shall be retained by CITY for a period of three years from the date of the final payment and will be available for audit by CITY and/or Federal auditors. EMWD agrees to comply with Contract Cost Principles and Procedures as set forth in 48 CFR, Chapter 1, Part 31, et seq., 23 CFR, Chapter 1, Part 645.

E. As indicated under Section III, Performance of Work, CITY will: design, prepare plans, prepare specifications, oversee and inspect all work. CITY shall perform the work at EMWD expense.

F. 90% of the reimbursements will be paid by EMWD to the CITY within the first 60 days after bids have opened.

V. GENERAL CONDITIONS

A. If CITY’s PROJECT which precipitated this Agreement is canceled or modified so as to eliminate the necessity of work described herein, CITY will notify EMWD in writing and CITY reserves the right to terminate this Agreement by Amendment. The Amendment shall provide mutually acceptable terms and conditions for terminating this Agreement and reconciling outstanding costs/reimbursements due.

B. CITY shall prepare all documentation and obtain any and all environmental clearances as necessary for the relocated facilities, including but not limited to compliance with requirements imposed under the National Environmental Protection Act (NEPA) and the California Environmental Quality Act (CEQA).

C. CITY represents and warrants that this Agreement is not subject to 23 CFR 635.410, the Buy America provisions.

D. EMWD and CITY each hereby agree to indemnify, defend, and hold harmless the other party and their respective directors, officials, officers, employees, and agents from and against any claims, actions, damages, and liabilities arising out of or in any manner connected with the activities governed by this Agreement due to any negligent acts, errors, or omissions or willful misconduct of the indemnifying party performed in connection with such party's duties and obligations hereunder.

E. The undersigned individuals hereby warrant and represent that they each have full legal authority to sign this Agreement and bind the respective party hereto.

F. This Agreement will be construed and interpreted under, and governed and enforced according to the laws of the State of California.

G. This Agreement contains the entire agreement between the parties regarding the subject matter of this Agreement. No subsequent agreement, representation, or promise made by either party hereto, or by or to any employee, officer, agent or representative of either party, will be of any effect unless it is in writing and executed by the party to be bound thereby. No person is authorized to make, and by execution hereof each of the parties acknowledges that no person has made, any representation, warranty, guaranty, or promise except as set forth herein; and no such agreement, statement, Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 46
Menifee Mayor and City Council
August 16, 2023
Page
390 of 759

UTILITY AGREEMENT – Eastern Municipal Water District Page 4 of 6

representation, or promise that is not contained herein will be valid or binding on any of the parties.

H. This Agreement may be executed simultaneously in one or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. For purposes of this Agreement, facsimile and electronic signatures will be deemed to be original signatures.

I. Each of the parties has reviewed this Agreement and each has had the opportunity to have its respective counsel review and revise this Agreement. Any rule of construction to the effect that ambiguities are to be resolved against the drafting party will not apply in the interpretation of this Agreement or any amendments or exhibits thereto. In this Agreement the neuter gender includes the feminine and masculine, and singular number includes the plural, and the words “person” and “party” include corporation, partnership, firm, trust, or association wherever the context so requires. The recitals and captions of the sections and subsections of this Agreement are for convenience and reference only, and the words contained therein will in no way be held to explain, modify, amplify or aid in the interpretation, construction or meaning of the provisions of this Agreement.

J. If any part, term or provision of this Agreement is held by a court of competent jurisdiction to be illegal or in conflict with any law, the validity of the remaining provisions will not be affected, and the rights and obligations of the Parties will be construed and enforced as if this Agreement did not contain the particular part, term or provision held to be invalid.

VI. COST ESTIMATES AND WAIVERS

Please refer to Attachment A for quantities and reimbursement fees.

Reimbursement Agreement
Description EMWD CITY

Design
Adjust manholes and water
valves to grade.

CITY’s responsibility.

City’s cost to EMWD
Waived

Construction
Adjust manholes to grade Quantity = 84 EA CITY’s responsibility.

EMWD to reimburse CITY
for Construction
Adjust water valve covers
to grade and paint blue or
purple.

Quantity = 96 EA CITY’s responsibility.

EMWD to reimburse CITY
for Construction
TOTAL

Agency Estimate Costs:

Description EMWD CITY
Design Review Adjust manholes and water
valves to grade.

EMWD’s responsibility
EMWD’s cost to City
Waived

Inspection Fees Adjust manholes and water
valves to grade.

EMWD’s responsibility
EMWD’s cost to City
Waived

TOTAL $ Waive** $ Waive**

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 47
Menifee Mayor and City Council
August 16, 2023
Page
391 of 759

UTILITY AGREEMENT – Eastern Municipal Water District Page 5 of 6

**EMWD and City agree to waive all design reviews, encroachment permits, and inspection fees. **THE ACTUAL REIMBURSEMENT CO ST TO CITY BY EMWD FOR ITS SHARE OF THE ABOVE-DESCRIBED WORK SHALL BE DETERMINED AT COMPLETION OF WORK.

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 48
Menifee Mayor and City Council
August 16, 2023
Page
392 of 759

UTILITY AGREEMENT – Eastern Municipal Water District Page 6 of 6

IN WITNESS WHEREOF, the above parties have executed this Agreement the day and year above written.

CITY OF MENIFEE: EASTERN MUNICIPAL WATER DISTRICT:

By By
Name Date Name Date
Title Title
APPROVAL RECOMMENDED:

By By
Name Date Name Date
Title Title

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 49
Menifee Mayor and City Council
August 16, 2023
Page
393 of 759

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 50
Menifee Mayor and City Council
August 16, 2023
Page
394 of 759

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 51
Menifee Mayor and City Council
August 16, 2023
Page
395 of 759

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 52
Menifee Mayor and City Council
August 16, 2023
Page
396 of 759

Item Title: 10.12
Bid Award and Agreement with Copp Contracting, Inc. for Construction Services for the Casa Blanca and Willows / Lake Ridge Community Resurfacing Projects, Capital Improvement Program Nos. 23-05 and 23-06 Item Page Number: 53
Menifee Mayor and City Council
August 16, 2023
Page
397 of 759

CITY OF MENIFEE
SUBJECT: Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by
Sutter Mitland 01, LLC
MEETING DATE: August 16, 2023
TO: Mayor and City Council
PREPARED BY: Chet Robinson, Senior Engineer
REVIEWED BY: Nick Fidler, Public Works Director / City Engineer APPROVED BY: Armando G. Villa, City Manager
-------------------------------------------------------------------------------------------------------------------------------

RECOMMENDED ACTION

1. Accept the public improvements for streets, drainage, water, sewer and survey monuments for Tract Map 36485-2, Audie Murphy Ranch, located east of Goetz Road and north of Audie Murphy Road South; and

2. Authorize the City Engineer to release posted securities per the City’s Standard Policies.

DISCUSSION
Sutter Mitland 01, LLC is the developer of Audie Murphy Ranch Tract 36485-2, a subdivision of

46.17 gross acres into 129 lots for residential purposes. The tract is located east of Goetz Road and north of Audie Murphy Road South, as depicted in the attached project map. As part of the development requirements, Sutter Mitland 01, LLC, constructed streets, drainage, water and sewer system improvements and installed survey monuments.

Sutter Mitland 01, LLC has now completed construction of these facilities and is requesting acceptance of the completed improvements into the City’s maintenance system. Staff has inspected the completed improvements, determined that the improvements have been constructed in accordance with City specifications and standards, and verified that all project conditions of approval have been met to release the faithful performance security and labor and materials security in accordance with City policy. A 10% warranty security will be held for a period of one year in accordance with the City Municipal Code. The original posted securities for the improvements and the monuments are listed in Table 1 and Table 2 on the following page.

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 1
Menifee Mayor and City Council
August 16, 2023
Page
398 of 759

City of Menifee Staff Report
Public Improvements Tract Map 36485-2
August 16, 2023

1 7
2 3
Table 1 - Original Posted Security Improvements
Improvement Security No.

Performance / Material
Faithful
Performance
Material and
Labor
Streets/Drainage 1000829629 /
TCS0171585
$ 2,870,000 $ 1,435,000
Water System 1000829629 /
TCS0171585
$ 577,500 $ 288,750
Sewer System 1000829629 /
TCS0171585
$ 487,500 $ 243,750
Total $ 3,935,000 $ 1,967,500
Table 2 - Original Posted Security Monument Improvements Improvement Security No. Monument Bond
Survey Monuments 1000829624 / TCS0171577 $ 115,200 Total $ 115,200

STRATEGIC PLAN OBJECTIVE
Safe and Vibrant Community

FISCAL IMPACT
There is no fiscal impact associated with the recommended action. The developer has paid all necessary fees and deposits to cover the costs of the required inspection of the completed improvements. Ongoing maintenance costs for the improvements will be supported through approved Fiscal Year 2023/2024 operating budgets in Community Facilities District 2012-1.

ATTACHMENTS

1. Project Map

2. Agreement – Streets and Drainage

3. Agreement – Water System

4. Agreement – Sewer System

5. Bond - Improvements

6. Agreement – Monuments

7. Bond – Monuments
Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 2
Menifee Mayor and City Council
August 16, 2023
Page
399 of 759

TRACT. NO. 364B5-2

EXHIBIT A
36 3 7 38 39 40 41
�VICINITY MAP 1
TRA,,=IL,,_____,._---r----=r==.::...:::-
N.T.S.

SEC710N 6, rr;s, RJW
THOMAS GU/OE PAGE 887
21 20
18 109
122 117
�1------,
� 101
121 118
100
120 119 99
'
MERRltK LANE
94 95 96
42 43
51 50
63 64 65 66 67
74 75
73 72 71
PINES
76 77 78 79 80 16 1-------,...-.......------.--- ""'
93 92 91 90 89
DIABLO
12 11 10
lNQl,BltJNC J/J7 N. SHEl1fDN/ S11fFET
SU1E 117
IND PIA>NNC CORONA, CAU'll'lMA 92B/JO 1EL 951 279-1800
UmK° FAX f;,_,;j 279-4J/10
£ngt,..t,g. tic.

Drawing. R \267373\Exhibit \ Tract Mop \373 - EXH - 36485-2 Site Mop.dwg Layout. p 77x7 7 L Saved. 7 /7 /207 7 9. 32 AM Platted 7 /7 /207 7 9: 55 AM Plot Scale.· 7. 7 By Kyle McQu1/k1n 9 400 600

PROJECT MAP
Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC Item Page Number: 3
Menifee Mayor and City Council
August 16, 2023
Page
400 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 4
Menifee Mayor and City Council
August 16, 2023
Page
401 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 5
Menifee Mayor and City Council
August 16, 2023
Page
402 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 6
Menifee Mayor and City Council
August 16, 2023
Page
403 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 7
Menifee Mayor and City Council
August 16, 2023
Page
404 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 8
Menifee Mayor and City Council
August 16, 2023
Page
405 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 9
Menifee Mayor and City Council
August 16, 2023
Page
406 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 10
Menifee Mayor and City Council
August 16, 2023
Page
407 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 11
Menifee Mayor and City Council
August 16, 2023
Page
408 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 12
Menifee Mayor and City Council
August 16, 2023
Page
409 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 13
Menifee Mayor and City Council
August 16, 2023
Page
410 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 14
Menifee Mayor and City Council
August 16, 2023
Page
411 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 15
Menifee Mayor and City Council
August 16, 2023
Page
412 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 16
Menifee Mayor and City Council
August 16, 2023
Page
413 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 17
Menifee Mayor and City Council
August 16, 2023
Page
414 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 18
Menifee Mayor and City Council
August 16, 2023
Page
415 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 19
Menifee Mayor and City Council
August 16, 2023
Page
416 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 20
Menifee Mayor and City Council
August 16, 2023
Page
417 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 21
Menifee Mayor and City Council
August 16, 2023
Page
418 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 22
Menifee Mayor and City Council
August 16, 2023
Page
419 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 23
Menifee Mayor and City Council
August 16, 2023
Page
420 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 24
Menifee Mayor and City Council
August 16, 2023
Page
421 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 25
Menifee Mayor and City Council
August 16, 2023
Page
422 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 26
Menifee Mayor and City Council
August 16, 2023
Page
423 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 27
Menifee Mayor and City Council
August 16, 2023
Page
424 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 28
Menifee Mayor and City Council
August 16, 2023
Page
425 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 29
Menifee Mayor and City Council
August 16, 2023
Page
426 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 30
Menifee Mayor and City Council
August 16, 2023
Page
427 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 31
Menifee Mayor and City Council
August 16, 2023
Page
428 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 32
Menifee Mayor and City Council
August 16, 2023
Page
429 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 33
Menifee Mayor and City Council
August 16, 2023
Page
430 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 34
Menifee Mayor and City Council
August 16, 2023
Page
431 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 35
Menifee Mayor and City Council
August 16, 2023
Page
432 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 36
Menifee Mayor and City Council
August 16, 2023
Page
433 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 37
Menifee Mayor and City Council
August 16, 2023
Page
434 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 38
Menifee Mayor and City Council
August 16, 2023
Page
435 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 39
Menifee Mayor and City Council
August 16, 2023
Page
436 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 40
Menifee Mayor and City Council
August 16, 2023
Page
437 of 759

Item Title: 10.13
Acceptance of Public Improvements and 90% Release of Security for Tract Map 36485-2, Audie Murphy Ranch, by Sutter Mitland 01, LLC
Item Page Number: 41
Menifee Mayor and City Council
August 16, 2023
Page
438 of 759

CITY OF MENIFEE
SUBJECT: Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds
MEETING DATE: August 16, 2023
TO: Mayor and City Council
PREPARED BY: Lauri Lockwood, Financial Analyst
REVIEWED BY: Margarita Cornejo, Acting Chief Financial Officer APPROVED BY: Armando G. Villa, City Manager
-------------------------------------------------------------------------------------------------------------------------------

RECOMMENDED ACTION

1. Adopt a resolution authorizing the issuance of Community Facilities District 2021-2, Sumac Ridge, special tax bonds and the execution and delivery of documents in connection with Community Facilities District 2021-2, Sumac Ridge, located north of Scott Road at Lindenberger Road.

DISCUSSION
The City Council has previously completed the necessary proceedings to establish Community Facilities District (CFD) No. 2021-2 (Sumac Ridge) of the City of Menifee (the “District”). As part of those proceedings, the City Council declared the necessity to issue bonds on behalf of the District pursuant to the terms and provisions of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California (the “Act”).

On November 3, 2021, the City Council adopted Resolution Nos. 21-1095 and 21-1096 (collectively the “Resolution of Formation”). The Resolution of Formation established the District, authorized the levy of a special tax (the “Special Tax”) within the District, determined the necessity to incur bonded indebtedness in an amount not-to-exceed $15,000,000 within the District, and called an election within the District on the proposition of incurring bonded indebtedness, levying the Special Tax and setting an appropriations limit.

On November 3, 2021, an election was held within the District in which the property owner within the District approved the proposition authorizing the issuance of bonds in an amount not-to- exceed $15,000,000.

The District contains approximately 59 taxable acres and is located on the north side of Scott Road at Lindenberger Road. The project is planned for 175 single-family homes being marketed Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 1
Menifee Mayor and City Council
August 16, 2023
Page
439 of 759

City of Menifee Staff Report
CFD 2021-2 (Sumac Ridge), Issuance of Special Tax Bonds August 16, 2023

1 7
4 9
as “Sumac Ridge.” Meritage Homes of California, Inc., a California corporation (“Meritage”) is the developer of the project in the District.

As of June 19, 2023, Meritage had completed and conveyed 78 homes within the District to individual homeowners, and as of such date, Meritage owned four model homes (none of which were in escrow), 25 homes in various stages of construction (13 of which were in escrow) and 68 finished lots (none of which were in escrow). Meritage currently expects to complete and convey all homes planned within the District to individual homeowners by the end of 2025.

Annual debt service on the proposed Special Tax Bonds, Series 2023A (the “2023A Bonds”) will be sized based on the expected Special Tax revenues to be received from all 175 planned homes classified as Developed Property. The development and ownership status of the planned homes within the District as of June 19, 2023, is shown in the table below.

Table 1 – Ownership and Development Summary (June 19, 2023)

PARCELS IN ESCROW
Individually Owned
Completed 78 --
Developer Owned
Model Homes 4 --
Under Construction 25 13
Finished Lots 68 --
TOTAL 175 13

The resolution before the City Council authorizes the issuance of the 2023A Bonds and the execution and delivery of certain documents in connection therewith in the forms presented at this meeting.

Based on current market conditions, the proposed 2023A Bonds are estimated to have a par amount of approximately $9.825 million with a final maturity of September 1, 2053 (30-year financing term). Proceeds from the 2023A Bonds will primarily finance public improvements benefitting the development within the District. The final par amount and interest rate structure will be determined when the 2023A Bonds are priced and sold.

The table below highlights financing statistics based on current market conditions.

Table 2 – Summary of Financial Statistics*
2023A Bonds
Par Amount $9,825,000
True Interest Cost 5.24%
Estimated Cost to Homeowners
FY 2023/24 Assessment** $3,101 to $3,885
*Preliminary; Subject to Change; Based on Market Conditions **Annual Assigned Special Tax will increase at approximately 2% per year.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 2
Menifee Mayor and City Council
August 16, 2023
Page
440 of 759

City of Menifee Staff Report
CFD 2021-2 (Sumac Ridge), Issuance of Special Tax Bonds August 16, 2023

1 7
4 9
As required under Section 5852.1 of the California Government Code (Code), below are the good faith estimates as provided by the Municipal Advisor and Underwriter (which are also provided in Attachment 2 to this Staff Report):

1. As illustrated above, the true interest cost of the 2023A Bonds is estimated at 5.24%, calculated as provided in Section 5852.1(a)(1)(A) of the Code

2. The finance charge of the 2023A Bonds, including underwriter’s discount and all other fees and charges paid to third parties, is estimated at $327,725.

3. Proceeds of the 2023A Bonds received by the District for the sale of the 2023A Bonds, less the finance charges set forth in (2) above and the reserve fund funded with proceeds of the 2023A Bonds, is equal to $8,587,107 which will be available to finance the project.

4. The total payment amount calculated as provided in Section 5852.1(a)(1)(D) of the Code is estimated at $21,049,227.

Documents to be Approved
Approval of the attached Resolution, authorizes the sale of the proposed 2023A Bonds and the execution of the following documents attached to this staff report:
 Preliminary Official Statement
 Bond Indenture
 Continuing Disclosure Certificate
 Bond Purchase Agreement
Bond Counsel and the City Attorney have reviewed the attached legal and financing documents on behalf of the City and the District. If this resolution is approved, City staff will continue to work with the financing team to finalize the aforementioned documents. The pricing date is targeted for late August 2023, with bond closing anticipated for approximately two weeks after the pricing date.

STRATEGIC PLAN OBJECTIVE
Regular City Business

FISCAL IMPACT
Debt service on the 2023A Bonds as well as administrative costs of the District will be paid from Special Taxes levied within the District. These tax proceeds are held within a special custodial fund used specifically for the District’s debt service, separate from all other government funds.

There is no fiscal impact to the City’s General Fund.

ATTACHMENTS

1. Project Map

2. Good Faith Estimates

3. Resolution

4. Preliminary Official Statement

5. Bond Indenture

6. Continuing Disclosure Certificate
Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 3
Menifee Mayor and City Council
August 16, 2023
Page
441 of 759

City of Menifee Staff Report
CFD 2021-2 (Sumac Ridge), Issuance of Special Tax Bonds August 16, 2023

1 7
4 9

7. Bond Purchase Agreement

8. Appraisal Report
Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 4
Menifee Mayor and City Council
August 16, 2023
Page
442 of 759

BREIGHTONWOOD ST

SCOTT RD

LORETTA AVE

LINDENBERGER RD

MIRA ST

BERYL ST

LAMTARRA
LOOP

WICKERD RD

EAGLE RD
0 750 1,500375
Feet
CFD Boundary

LOCATION MAP
COMMUNITY FACILITIES DISTRICT NO. 2021-2 (SUMAC RIDGE)

CITY OF MENIFEE
¹
Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 5
Menifee Mayor and City Council
August 16, 2023
Page
443 of 759

GOOD FAITH ESTIMATES
The good faith estimates set forth herein are provided with respect to the 2023 Bonds in accordance with California Government Code Section 5852.1. Such good faith estimates have been provided to the District by Urban Futures, Inc., the District’s Municipal Advisor (the “Municipal Advisor”) in consultation with Stifel, Nicolaus & Company, Incorporated, the Underwriter for the 2023 Bonds.

Principal Amount. The Municipal Advisor has informed the District that, based on the District’s financing plan and current market conditions, its good faith estimate of the aggregate principal amount of the 2023 Bonds to be sold is $9,825,000 (the “Estimated Principal Amount”).

True Interest Cost of the 2023 Bonds. The Municipal Advisor has informed the District that, assuming that the Estimated Principal Amount of the 2023 Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the true interest cost of the 2023 Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the 2023 Bonds, is 5.24%.

Finance Charge of the 2023 Bonds. The Municipal Advisor has informed the District that assuming that the Estimated Principal Amount of the 2023 Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the finance charge for the 2023 Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the 2023 Bonds), is $327,725.

Amount of Proceeds to be Received. The Municipal Advisor has informed the District that, assuming the Estimated Principal Amount of the 2023 Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the amount of proceeds expected to be received by the District for sale of the 2023 Bonds, less the finance charge of the 2023 Bonds, as estimated above, and any reserves or capitalized interest paid or funded with proceeds of the 2023 Bonds, is $8,587,107.

Total Payment Amount. The Municipal Advisor has informed the District that, assuming that the Estimated Principal Amount of the 2023 Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the total payment amount, which means the sum total of all payments the District will make to pay debt service on the 2023 Bonds, plus the finance charge for the 2023 Bonds, as described above, not paid with the proceeds of the 2023 Bonds, calculated to the final maturity of the Bonds, is $21,049,227.

The foregoing estimates constitute good faith estimates only. The actual principal amount of the 2023 Bonds issued and sold, the true interest cost thereof, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to (a) the actual date of the sale of the 2023 Bonds being different than the date assumed for purposes of such Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 6
Menifee Mayor and City Council
August 16, 2023
Page
444 of 759

estimates, (b) the actual principal amount of the 2023 Bonds sold being different from the Estimated Principal Amount, (c) the actual amortization of the 2023 Bonds being different than the amortization assumed for purposes of such estimates, (d) the actual market interest rates at the time of sale of the 2023 Bonds being different than those estimated for purposes of such estimates, (e) other market conditions, or (f) alterations in the District’s financing plan, or a combination of such factors. The actual date of sale of the 2023 Bonds and the actual principal amount of 2023 Bonds sold will be determined by the District based on the timing of the need for proceeds of the 2023 Bonds and other factors. The actual interest rates borne by the 2023 Bonds will depend on market interest rates at the time of sale thereof. The actual amortization of the 2023 Bonds will also depend, in part, on market interest rates at the time of sale thereof. Market interest rates are affected by economic and other factors beyond the control of the District.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 7
Menifee Mayor and City Council
August 16, 2023
Page
445 of 759

RESOLUTION NO. 23-___

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MENIFEE,

CALIFORNIA, ACTING AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 2021-2 OF THE CITY OF MENIFEE (SUMAC

RIDGE) AUTHORIZING THE ISSUANCE OF ITS SPECIAL TAX BONDS, SERIES 2023 IN A PRINCIPAL AMOUNT NOT TO EXCEED ELEVEN MILLION DOLLARS ($11,000,000) AND APPROVING CERTAIN DOCUMENTS AND

TAKING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH
WHEREAS, the City Council (the “City Council”) of the City of Menifee (the “City”), has heretofore undertaken proceedings to establish Community Facilities District No. 2021-2 of the City of Menifee (Sumac Ridge) (the “District”) and declared the necessity to issue bonds on behalf of the District pursuant to the terms and provisions of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California (Act); and
WHEREAS, pursuant to Resolution Nos. 21-1095 and 21-1096 adopted by the legislative body of the District on November 3, 2021, certain bond propositions were submitted to the qualified electors within the District, and were approved by more than two-thirds of the votes cast at the election held on November 3, 2021; and
WHEREAS, the legislative body of the District desires to issue a first series of bonds for the District at this time under the Act to finance certain public facilities the District is authorized to finance (the “Facilities”); and
WHEREAS, the District desires to finance certain Facilities through the issuance of bonds in an aggregate principal amount not to exceed $11,000,000 designated as the “Community Facilities District No. 2021-2 of the City of Menifee (Sumac Ridge) Special Tax Bonds, Series 2023” (the “Bonds”); and
WHEREAS, in order to effect the issuance of the Bonds, the District desires to enter into various agreements and approve certain documents in substantially the forms presented herein; and
WHEREAS, based on the appraisal of real property prepared by Kitty Siino & Associates, Inc. (the “Appraisal”) of property within the District, the value of the real property in the District subject to the special tax to pay debt service on the Bonds is more than three times the sum of the principal amount of the Bonds and the principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to the Act or a special assessment levied on property within the District as calculated in the manner set forth in Section 53345.8(a) of the Act; and WHEREAS, the City Council has determined in accordance with Section 53360.4 of the Act that a negotiated sale of the Bonds to Stifel, Nicolaus & Company, Incorporated (the “Underwriter”) in accordance with the terms of the Bond Purchase Agreement for the Bonds to be entered into by the District and the Underwriter (the “Bond Purchase Agreement”) approved as to form by this City Council herein will result in a lower overall cost to the District than a public sale; and
Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 8
Menifee Mayor and City Council
August 16, 2023
Page
446 of 759

Resolution Authorizing Issuance of Special Tax Bonds CFD No. 2021-2 (Sumac Ridge) 2 4
7 2
3 9
WHEREAS, the District has determined to adopt the City’s Debt Management Policy as the debt management policy of the District.

NOW, THEREFORE, THE CITY COUNCIL, ACTING AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 2021-2 OF THE CITY OF MENIFEE (SUMAC RIDGE), DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS:

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

Section 2. The issuance of the Bonds is hereby authorized in an aggregate principal amount not to exceed $11,000,000, with the exact principal amount to be determined by the official signing the Bond Purchase Agreement in accordance with Section 5 below. The City Council hereby determines that it is prudent in the management of the District’s fiscal affairs to issue the Bonds. The Bonds shall mature on the dates and pay interest at the rates set forth in the Bond Purchase Agreement to be executed on behalf of the District in accordance with Section 5 hereof. All other provisions of the Bonds shall be governed by the terms and conditions of the Bond Indenture (the “Indenture”), which Indenture is hereby approved in substantially the form on file with the City Clerk, with such additions thereto and changes therein (including, but not limited to, changes in the amount to be maintained in the Reserve Account (as defined in the Indenture) as the officer or officers executing the same deem necessary to enhance the security for the Bonds, to cure any ambiguity or defect therein, to insert the offering price(s), interest rate(s), selling compensation, principal amount per maturity, redemption dates and prices and such other related terms and provisions as limited by Section 5 hereof or to conform any provisions therein to the Bond Purchase Agreement or the Official Statement delivered to the Underwriter of the Bonds. Approval of such changes shall be conclusively evidenced by the execution and delivery of the Indenture by one of the following: the Mayor, the City Manager, the Assistant City Manager, the Deputy City Manager, the Chief Financial Officer (or any acting or interim of such positions) or their written designees (each, an “Authorized Officer” and collectively, the “Authorized Officers”), each of whom is authorized to execute the Indenture.

Capitalized terms used in this Resolution which are not defined herein have the meanings ascribed to them in the Indenture.

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

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

Section 5. The form of the Bond Purchase Agreement presented at this meeting is hereby approved and each of the Authorized Officers is hereby authorized to execute the Bond Purchase Agreement, with such additions thereto and changes therein relating to dates and numbers as are necessary to conform the Bond Purchase Agreement to the dates, amounts and interest rates applicable to the Bonds as of Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 9
Menifee Mayor and City Council
August 16, 2023
Page
447 of 759

Resolution Authorizing Issuance of Special Tax Bonds CFD No. 2021-2 (Sumac Ridge) 3 4
7 2
3 9
the sale date. Approval of such additions and changes shall be conclusively evidenced by the execution and delivery of the Bond Purchase Agreement by one or more of such Authorized Officers; provided, however, that the Bond Purchase Agreement shall be signed only if the Underwriter’s discount does not exceed

1.30% of the principal amount of the Bonds and only if the true interest cost on the Bonds does not exceed 6.00%. Each of the Authorized Officers is authorized to determine the day on which the Bonds are to be priced in order to attempt to produce the lowest borrowing cost for the District and may reject any terms presented by the Underwriter if determined not to be in the best interest of the District.

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

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

The Underwriter is further authorized to distribute the final Official Statement for the Bonds and any supplement thereto to the purchasers of the Bonds upon the execution of the final Official Statement as described above.

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

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

Section 10. The Authorized Officers, the City Clerk and the other officers and staff of the City and the District responsible for the fiscal affairs of the District are hereby authorized Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 10
Menifee Mayor and City Council
August 16, 2023
Page
448 of 759

Resolution Authorizing Issuance of Special Tax Bonds CFD No. 2021-2 (Sumac Ridge) 4 4
7 2
3 9
and directed to take any actions and execute and deliver any and all documents as are necessary to accomplish the issuance, sale and delivery of the Bonds in accordance with the provisions of this Resolution and the fulfillment of the purposes of the Bonds as described in the Indenture, including, in the discretion of any of the Authorized Officers, the execution and delivery of an amendment to the Acquisition, Construction and Funding Agreement, dated November 3, 2021, (the “Acquisition Agreement”) by and between the City and Meritage Homes of California, Inc. (“Meritage”) with respect to the Security (as defined in the Acquisition Agreement) to be provided by Meritage, the execution and delivery of a letter of credit or cash depository agreement (or an amendment to an existing letter of credit or cash depository agreement) with respect to the special taxes to be levied on property owned by the developer within the District, and providing certificates to the Underwriter as to the accuracy of any information relating to the District which is included within the Official Statement. Any document authorized herein to be signed by the City Clerk may be signed by a duly appointed deputy clerk.

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

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

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

PASSED, APPROVED AND ADOPTED this the 16th day of August, 2023. ___________________________
Bill Zimmerman, Mayor
Attest:
___________________________
Sarah Manwaring, City Clerk
Approved as to form:
___________________________
Jeffrey T. Melching, City Attorney
Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 11
Menifee Mayor and City Council
August 16, 2023
Page
449 of 759

Stradling Yocca Carlson & Rauth
Draft of 07/25/23
4859-1311-2685v6/200299-0019
PRELIMINARY OFFICIAL STATEMENT, DATED AUGUST __, 2023
NEW ISSUE—BOOK-ENTRY ONLY NO RATING
In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California (“Bond Counsel”), under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State of California personal income tax. See “TAX MATTERS” with respect to tax consequences relating to the Bonds, including with respect to the alternative minimum tax imposed on certain large corporations for tax years beginning after December 31, 2022. $9,645,000*
COMMUNITY FACILITIES DISTRICT NO. 2021-2

OF THE CITY OF MENIFEE (SUMAC RIDGE)
SPECIAL TAX BONDS, SERIES 2023
Dated: Delivery Date Due: September 1, as shown on inside cover page The Community Facilities District No. 2021-2 of the City of Menifee (Sumac Ridge) Special Tax Bonds, Series 2023 (the “Bonds”) are being issued by Community Facilities District No. 2021-2 of the City of Menifee (Sumac Ridge) (the “District”) to: (i) finance certain public improvements needed with respect to the development of property located within the District, including public improvements to be owned by the City of Menifee (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; (iii) fund capitalized interest on a portion of the Bonds through September 1, 2024 and (iv) pay costs of issuance for the Bonds. The Bonds are authorized to be issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the Government Code of the State of California) (the “Act”), and pursuant to that certain Bond Indenture, dated as of September 1, 2023 (the “Indenture”), by and between the District and Wilmington Trust, National Association, as trustee (the “Trustee”).

The Bonds are payable from Net Taxes (as defined herein) derived from a certain annual Special Tax (as defined herein) to be levied on taxable parcels within the District and from certain other funds pledged under the Indenture, all as further described herein. The Special Tax is to be levied according to the rate and method of apportionment approved by the City Council of the City and the qualified electors within the District. See the caption “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes” and Appendix A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” The Bonds will be issued in fully registered form and when issued will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). Individual purchases of the Bonds may be made in principal amounts of $5,000 and integral multiples thereof and will be in book-entry form only. Purchasers of the Bonds will not receive certificates representing their beneficial ownership of the Bonds but will receive credit balances on the books of their respective nominees. The Bonds will not be transferable or exchangeable except for transfer to another nominee of DTC or as otherwise described herein. Interest on the Bonds will be payable on each March 1 and September 1, commencing March 1, 2024. Principal of and interest on the Bonds will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants, who will remit such payments to the Beneficial Owners of the Bonds.

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

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

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

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

MATURITY SCHEDULE
(See Inside Cover Page)
The Bonds are offered when, as and if issued and accepted by the Underwriter, subject to approval as to their legality by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed on for the City and the District by Rutan & Tucker, LLP, Irvine, California, City Attorney, and for the District by Stradling Yocca Carlson & Rauth, a Professional Corporation, Disclosure Counsel, for the Underwriter by Kutak Rock LLP, Irvine, California, and for the Trustee by its counsel. It is anticipated that the Bonds in book-entry form will be available for delivery on or about September __, 2023. [STIFEL LOGO]
Dated: August __, 2023
* Preliminary, subject to change.

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

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 12
Menifee Mayor and City Council
August 16, 2023
Page
450 of 759

4859-1311-2685v6/200299-0019
$9,645,000*
COMMUNITY FACILITIES DISTRICT NO. 2021-2

OF THE CITY OF MENIFEE (SUMAC RIDGE)
SPECIAL TAX BONDS, SERIES 2023

MATURITY SCHEDULE
BASE CUSIP†:

Maturity Date
(September 1)
Principal
Amount Interest Rate Yield Price CUSIP No.†
$ % %
$___ ___% Term Bonds due September 1, 20__ Yield: ___% Price: ___ CUSIP No.† ___ $___ ___% Term Bonds due September 1, 20__ Yield: ___% Price: ___ CUSIP No.† ___ $___ ___% Term Bonds due September 1, 20__ Yield: ___% Price: ___ CUSIP No.† ___ * Preliminary, subject to change
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by FactSet Research Systems Inc. Copyright(c) 2023 CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. None of the City, the District nor the Underwriter is responsible for the selection or uses of these CUSIP numbers, and no representation is made as to their correctness on the applicable Bonds or as included herein.

The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 13
Menifee Mayor and City Council
August 16, 2023
Page
451 of 759

4859-1311-2685v6/200299-0019

CITY OF MENIFEE

COUNTY OF RIVERSIDE, CALIFORNIA

CITY COUNCIL
Bill Zimmerman, Mayor
Bob Karwin, District 1
Ricky Estrada, District 2
Lesa Sobek, District 3
Dean Deines, District 4

CITY ADMINISTRATORS
Armando G. Villa, City Manager
Rochelle Clayton, Assistant City Manager

CITY ATTORNEY
Rutan & Tucker, LLP
Irvine, California

BOND AND DISCLOSURE COUNSEL
Stradling Yocca Carlson & Rauth, a Professional Corporation Newport Beach, California

MUNICIPAL ADVISOR
Urban Futures, Inc.

Walnut Creek, California

SPECIAL TAX CONSULTANT
Spicer Consulting Group, LLC
Murrieta, California

APPRAISER
Kitty Siino & Associates, Inc.

Tustin, California

TRUSTEE
Wilmington Trust, National Association
Costa Mesa, California
Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 14
Menifee Mayor and City Council
August 16, 2023
Page
452 of 759

4859-1311-2685v6/200299-0019
Except where otherwise indicated, all information contained in this Official Statement has been provided by the City and the District. No dealer, broker, salesperson or other person has been authorized by the City, the District, the Trustee or the Underwriter to give any information or to make any representations in connection with the offer or sale of the Bonds other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by the City, the District, the Trustee or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

This Official Statement is not to be construed as a contract with the purchasers or Owners of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact. This Official Statement, including any supplement or amendment to this Official Statement, is intended to be deposited with the Electronic Municipal Market Access System of the Municipal Securities Rulemaking Board, which can be found at www.emma.msrb.org.

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

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

The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City, the District or any other parties described herein since the date hereof. All summaries of the Indenture or other documents are made subject to the provisions of such documents respectively and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the City for further information in connection therewith.

IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY

OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF

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

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

Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as a “plan,” “expect,” “estimate,” “project,” “budget,” or similar words. Such forward-looking statements include, but are not limited to certain statements contained in the information under the captions “THE DISTRICT” and “PROPERTY OWNERSHIP AND THE DEVELOPMENT.”

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH

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

OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS

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

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

POTENTIAL INVESTORS SHOULD SPECIFICALLY CONSIDER THE VARIOUS FACTORS WHICH COULD

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

The City maintains a website. However, the information presented on such website is not part of this Official Statement and should not be relied upon in making an investment decision with respect to the Bonds.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 15
Menifee Mayor and City Council
August 16, 2023
Page
453 of 759

i
4859-1311-2685v6/200299-0019

TABLE OF CONTENTS
Page
INTRODUCTION .................................................................................................................................................1 The District ........................................................................................................................................................1 Sources of Payment for the Bonds.....................................................................................................................2 Appraisal Report ................................................................................................................................................3 Description of the Bonds ...................................................................................................................................4 Tax Exemption...................................................................................................................................................4 Professionals Involved in the Offering ..............................................................................................................4 Continuing Disclosure .......................................................................................................................................5 Parity Bonds for Refunding Purposes Only.......................................................................................................5 Bond Owners’ Risks ..........................................................................................................................................5 Other Information ..............................................................................................................................................5 FINANCING PLAN ..............................................................................................................................................6 Estimated Sources and Uses of Funds ...............................................................................................................6 THE BONDS .........................................................................................................................................................6 General Provisions.............................................................................................................................................6 Debt Service Schedule .......................................................................................................................................8 Redemption........................................................................................................................................................8 Registration, Transfer and Exchange...............................................................................................................12 SOURCES OF PAYMENT FOR THE BONDS .................................................................................................13 Limited Obligations .........................................................................................................................................13 Special Taxes ...................................................................................................................................................13 Reserve Account of the Special Tax Fund.......................................................................................................19 No Teeter Plan .................................................................................................................................................20 Parity Bonds for Refunding Purposes Only.....................................................................................................20 Meritage Letter of Credit .................................................................................................................................21 THE DISTRICT...................................................................................................................................................21 General Description of the District..................................................................................................................21 Authorized Uses of Bond Proceeds .................................................................................................................22 Appraisal Report ..............................................................................................................................................22 Estimated Appraised Value-to-Lien Ratios .....................................................................................................23 Direct and Overlapping Debt...........................................................................................................................29 Delinquency History ........................................................................................................................................33 PROPERTY OWNERSHIP AND THE DEVELOPMENT................................................................................33 General.............................................................................................................................................................33 Planned Development Within the District .......................................................................................................33 Meritage ...........................................................................................................................................................35 SPECIAL RISK FACTORS ................................................................................................................................36 Risks of Real Estate Secured Investments Generally ......................................................................................36 Insufficiency of Special Tax Revenues............................................................................................................36 Impact of Economic Conditions on the Development in the District..............................................................38 Increasing Mortgage Interest Rates .................................................................................................................38 Concentration of Ownership............................................................................................................................38 Property Values................................................................................................................................................39 Natural Disasters..............................................................................................................................................39 Hazardous Substances......................................................................................................................................40 Enforcement Delays – Bankruptcy ..................................................................................................................40 Special Tax Delinquencies...............................................................................................................................40 Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 16
Menifee Mayor and City Council
August 16, 2023
Page
454 of 759

ii
4859-1311-2685v6/200299-0019
FDIC/Federal Government Interests in Parcels ...............................................................................................41 Direct and Overlapping Indebtedness..............................................................................................................42 Payment of Special Taxes is not a Personal Obligation of the Property Owners............................................42 No Acceleration Provision...............................................................................................................................42 Limited Obligations .........................................................................................................................................42 Ballot Initiatives...............................................................................................................................................43 Proposition 218 ................................................................................................................................................43 Litigation with Respect to Community Facilities Districts .............................................................................44 Loss of Tax Exemption....................................................................................................................................45 No Ratings – Limited Secondary Market ........................................................................................................45 Limitations on Remedies .................................................................................................................................45 Potential Early Redemption of Bonds from Prepayments or Community Facilities District Bond Proceeds ....................................................................................................................................................46 Cybersecurity ...................................................................................................................................................46 CONTINUING DISCLOSURE...........................................................................................................................46 District Continuing Disclosure ........................................................................................................................46 Developer Continuing Disclosure....................................................................................................................47 TAX MATTERS..................................................................................................................................................47 LEGAL OPINION ...............................................................................................................................................49 ABSENCE OF LITIGATION .............................................................................................................................49 NO RATING........................................................................................................................................................49 UNDERWRITING ..............................................................................................................................................49 FINANCIAL INTERESTS..................................................................................................................................49 MUNICIPAL ADVISOR.....................................................................................................................................49 MISCELLANEOUS ............................................................................................................................................50 APPENDIX A RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX..........................A-1 APPENDIX B CERTAIN ECONOMIC AND DEMOGRAPHIC INFORMATION.............................B-1 APPENDIX C FORM OF OPINION OF BOND COUNSEL.................................................................C-1 APPENDIX D APPRAISAL REPORT ...................................................................................................D-1 APPENDIX E SUMMARY OF THE INDENTURE ..............................................................................E-1 APPENDIX F FORM OF DISTRICT CONTINUING DISCLOSURE CERTIFICATE .......................F-1 APPENDIX G FORM OF DEVELOPER CONTINUING DISCLOSURE CERTIFICATE .................G-1 APPENDIX H BOOK-ENTRY ONLY SYSTEM ..................................................................................H-1 Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 17
Menifee Mayor and City Council
August 16, 2023
Page
455 of 759

4859-1311-2685v6/200299-0019
[INSERT VICINITY MAP]
Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 18
Menifee Mayor and City Council
August 16, 2023
Page
456 of 759

4859-1311-2685v6/200299-0019
[INSERT AERIAL PHOTOGRAPH]
Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 19
Menifee Mayor and City Council
August 16, 2023
Page
457 of 759

1 4859-1311-2685v6/200299-0019
$9,645,000
COMMUNITY FACILITIES DISTRICT NO. 2021-2

OF THE CITY OF MENIFEE (SUMAC RIDGE)
SPECIAL TAX BONDS, SERIES 2023

INTRODUCTION
The purpose of this Official Statement, which includes the cover page, the table of contents and the attached appendices (collectively, the “Official Statement”), is to provide certain information concerning the issuance by Community Facilities District No. 2021-2 of the City of Menifee (Sumac Ridge) (the “District”) of its Special Tax Bonds, Series 2023 in the aggregate principal amount of $9,645,000 * (the “Bonds”). The proceeds of the Bonds will be used to: (i) finance certain public improvements needed with respect to the development of property located within the District, including public improvements to be owned by the City of Menifee (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; (iii) fund capitalized interest on a portion of the Bonds through September 1, 2024 and (iv) pay costs of issuance for the Bonds.

The Bonds are authorized to be issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the Government Code of the State of California) (the “Act”), a resolution adopted on August 16, 2023, by the City Council of the City, acting as the legislative body of the District, and a Bond Indenture, dated as of September 1, 2023 (the “Indenture”), by and between the District and Wilmington Trust, National Association, as trustee (the “Trustee”). The Bonds are secured under the Indenture by a pledge of and lien upon Net Taxes (as such term is defined herein) and all moneys in the Special Tax Fund (other than the Administrative Expense Account therein) as described in the Indenture.

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

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

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

The District
General. The City is located in the western portion of the County of Riverside (the “County”), California (the “State”). The District contains approximately 59 taxable acres, and is located on the north side of Scott Road at Lindenberger Road, in the City. The property within the District is being developed by Meritage Homes of California, Inc., a California corporation (“Meritage”) in a project marketed by Meritage as “Sumac Ridge.”
The property within the District is planned for 175 single family detached homes. As of June 19, 2023, Meritage had completed and conveyed 78 homes within the District to individual homeowners. As of such date, Meritage owned four model homes (none of which were in escrow), 25 homes in various stages of construction (13 of which were in escrow) and 68 finished lots (none of which were in escrow). As of July 1, 2023, Meritage had obtained building permits for all 175 homes planned within the District. Meritage currently expects to complete and convey all homes planned within the District to individual homeowners by the end of 2025.

The major infrastructure (sewer, water, storm drains, utilities, and arterial roads) necessary to develop the property within the District has been completed. Meritage expects to complete the remaining infrastructure within the District, which consists of landscaping, certain interior streets, drainage improvements and wet and  Preliminary, subject to change.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 20
Menifee Mayor and City Council
August 16, 2023
Page
458 of 759

2 4859-1311-2685v6/200299-0019
dry utilities as construction of the related homes occurs. Meritage is limited to 141 home closings in the District until the completion of all remaining roads, storm drainage, water systems, sewer systems, and landscaping.

Meritage does not expect the foregoing conditions to delay its projected development timing within the District as described herein.

See the captions “THE DISTRICT” and “PROPERTY OWNERSHIP AND THE DEVELOPMENT” for further information with respect to the District, Meritage and development within the District.

Formation Proceedings. The District was formed on November 3, 2021 pursuant to the Act. The Act was enacted to provide an alternative method of financing certain public capital facilities and services, especially in developing areas of the State. Any local agency (as defined in the Act) may establish a community facilities district to provide for and finance the cost of eligible public facilities and services. Generally, the legislative body of the local agency which forms a community facilities district acts on behalf of such district as its legislative body. Subject to approval by two-thirds of the votes cast at an election and compliance with the other provisions of the Act, a legislative body of a local agency may issue bonds for a community facilities district and may levy and collect a special tax within such district to repay such indebtedness.

Pursuant to the Act, on September 15, 2021 the City Council adopted Resolution No. 21-1066 (the “Resolution of Intention”), stating its intention to form the District and to authorize the levy of a special tax on the taxable property within the District, and Resolution No. 21-1067, stating its intention to incur bonded indebtedness in an aggregate principal amount not to exceed $15,000,000 for the purpose of financing the purchase, construction, expansion or rehabilitation of certain public facilities to serve the area within the District.

Subsequent to a noticed public hearing on November 3, 2021, the City Council adopted Resolution Nos. 21-1095 and 21-1096 (collectively the “Resolution of Formation”). The Resolution of Formation:
(i) established the District; (ii) authorized the levy of a special tax (the “Special Tax”) within the District; (iii) determined the necessity to incur bonded indebtedness in an amount not to exceed $15,000,000 within the District; and (iv) called an election within the District on the proposition of incurring bonded indebtedness, levying the Special Tax and setting an appropriations limit.

On November 3, 2021, an election was held within the District in which the property owner within the District approved the proposition authorizing the issuance of bonds in an amount not to exceed $15,000,000. A Notice of Special Tax Lien for the District was recorded in the office of the County Recorder on November 17, 2021, as Document No. 2021-0682899. On November 17, 2021, the City Council adopted Ordinance No. 2021- 330 (the “Ordinance”) which authorizes the levy of a special tax pursuant to the Rate and Method of Apportionment approved at the November 3, 2021 election (the “Rate and Method”), a copy of which is attached hereto as Appendix A.

Sources of Payment for the Bonds
Special Taxes. As used in this Official Statement, the term “Special Tax” means the annual Special Tax which has been authorized pursuant to the Act and the Rate and Method to be levied upon taxable property within the District. See the caption “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes” and Appendix A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” See the caption “THE DISTRICT.”
Under the Indenture, the District has pledged to repay the Bonds and any Parity Bonds (as defined herein) from the Special Tax revenues remaining after the payment of certain annual Administrative Expenses of the District (the “Net Taxes”) and from other amounts in the Special Tax Fund (other than the Administrative Expense Account therein) established under the Indenture. The Special Taxes are the primary source of security for the repayment of the Bonds and any Parity Bonds. In the event that the Special Taxes are not paid when due, the only sources of funds available to pay the debt service on the Bonds and any Parity Bonds are amounts held by the Trustee in the Special Tax Fund, including amounts held in the Reserve Account therein, to the limited Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 21
Menifee Mayor and City Council
August 16, 2023
Page
459 of 759

3 4859-1311-2685v6/200299-0019
extent described in the Indenture. See the caption “SOURCES OF PAYMENT FOR THE BONDS — Reserve Account of the Special Tax Fund.”
Based on building permits issued through and including May 1, 2023, 134 parcels within the District will be classified as Developed Property and 41 parcels will be classified as Approved Property for the Fiscal Year 2023-24 Special Tax levy. Annual Debt Service on the Bonds in Fiscal Year 2023-24 has been structured so that Special Taxes levied on the 134 parcels with building permits issued as of May 1, 2023 and to be classified as Developed Property in Fiscal Year 2023-24, at the Assigned Special Tax rates, assuming no delinquencies, plus the amount of capitalized interest funded, will generate not less than 110% of debt service payable with respect to the Bonds for the Bond Year ending September 1, 2024. The District will not levy Special Taxes on Approved Property in Fiscal Year 2023-24.

Since May 1, 2023, the Meritage has obtained building permits for the balance of the planned homes within the District (175 total homes). Annual Debt Service for the Bonds in Fiscal Year 2024-25 and in each Fiscal Year thereafter has been structured based on the expected Special Tax revenues to be received in each Fiscal Year from all 175 parcels to be classified as Developed Property, assuming that the Special Taxes are levied at 100% of the Assigned Special Tax. Assuming no delinquencies, the Special Tax levy on 175 parcels of Developed Property within the District will generate in each Fiscal Year not less than the Administrative Expenses Cap plus 110% of debt service payable with respect to the Bonds in that calendar year that begins in that Fiscal Year. Actual collections of the Special Tax will depend on the amount of Special Tax delinquencies.

Both the Special Tax levy and the Administrative Expenses Cap escalate at 2% each Fiscal Year.

Foreclosure Proceeds. The District will covenant in the Indenture for the benefit of the owners of the Bonds and Parity Bonds that it will: (i) commence judicial foreclosure proceedings against parcels with delinquent Special Taxes in excess of $5,000 by the October 1 following the close of each Fiscal Year in which such Special Taxes were due; and (ii) commence judicial foreclosure proceedings against all parcels with delinquent Special Taxes by the October 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than 95% of the total Special Tax levied; and (iii) diligently pursue such foreclosure proceedings until the delinquent Special Taxes are paid; provided that, notwithstanding the foregoing, the District may elect to defer foreclosure proceedings on any parcel so long as the amount in the Reserve Account is at least equal to the Reserve Requirement. See the caption “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales.” There is no assurance that the property within the District can be sold for the appraised or assessed values described herein, or for a price sufficient to pay the principal of and interest on the Bonds in the event of a default in payment of Special Taxes by the current or future landowners within the District. See the caption “SPECIAL RISK FACTORS —Property Values.”

EXCEPT FOR THE NET TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE CITY

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

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

Appraisal Report
Kitty Siino & Associates, Inc. (the “Appraiser”) has conducted an appraisal (the “Appraisal Report”) with a date of value of June 19, 2023 (the “Date of Value”) of certain land and existing improvements within the District to provide an estimate of the market value of the fee simple interest of such land and improvements.

The Appraisal Report provides an estimate of the approximate market value of the property in the District subject to the levy of Special Taxes, assuming that development of the property as currently planned will consist of 175 residential units. Based on the contingencies, assumptions and limiting conditions in the Appraisal Report, the Appraiser concluded that the minimum market value of all of the parcels within the District subject to the Special Tax was $66,392,673 as of the Date of Value.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 22
Menifee Mayor and City Council
August 16, 2023
Page
460 of 759

4 4859-1311-2685v6/200299-0019
The Appraisal Report is based upon a variety of assumptions and limiting conditions that are described in Appendix D. The District makes no representation as to the accuracy of the Appraisal. See “THE DISTRICT — Appraisal Report” and “— Estimated Appraised Value-to-Lien Ratios.” There is no assurance that property within the District can be sold for the prices set forth in the Appraisal Report or that any parcel can be sold for a price sufficient to pay the Special Tax for that parcel in the event of a default in payment of Special Taxes by a property owner. See “THE DISTRICT,” “SPECIAL RISK FACTORS — Property Values” herein and Appendix D.

Description of the Bonds
The Bonds will be issued and delivered as fully registered Bonds, registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”), and will be available to actual purchasers of the Bonds (the “Beneficial Owners”) in the denominations of $5,000 or any integral multiple thereof, under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants as described herein. Beneficial Owners will not be entitled to receive physical delivery of the Bonds. In the event that the book-entry only system described herein is no longer used with respect to the Bonds, the Bonds will be registered and transferred in accordance with the Indenture. See Appendix H — “BOOK-ENTRY ONLY SYSTEM.”
Principal of, premium, if any, and interest on the Bonds is payable by the Trustee to DTC. Disbursement of such payments to DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of DTC Participants. See Appendix H — “BOOK-ENTRY ONLY SYSTEM.”
The Bonds are subject to optional redemption, special mandatory redemption and mandatory sinking fund redemption prior to maturity as described herein. See the caption “THE BONDS — Redemption.” For a more complete description of the Bonds and the basic documentation pursuant to which they are being sold and delivered, see the caption “THE BONDS” and Appendix E — “SUMMARY OF THE INDENTURE.” Tax Exemption
In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California (“Bond Counsel”), under existing statutes, regulations, rulings and judicial decisions, and assuming certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals.

In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State of California personal income tax. See the caption “TAX MATTERS” with respect to tax consequences relating to the Bonds, including with respect to the alternative minimum tax imposed on certain large corporations for tax years beginning after December 31, 2022.

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

Certain proceedings in connection with the issuance and delivery of the Bonds are subject to the approval of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel and Disclosure Counsel to the District in connection with the issuance of the Bonds. Certain legal matters will be passed on for the City and the District by Rutan & Tucker, LLP, Irvine, California, City Attorney, for the Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 23
Menifee Mayor and City Council
August 16, 2023
Page
461 of 759

5 4859-1311-2685v6/200299-0019
Underwriter by Kutak Rock LLP, Irvine, California, and for the Trustee by its counsel. Other professional services have been performed by Spicer Consulting Group, LLC, Murrieta, California, as Special Tax Consultant (the “Special Tax Consultant”), Urban Futures, Inc., Walnut Creek, California, as Municipal Advisor, and by Kitty Siino & Associates, Tustin, California, as Appraiser.

For information concerning circumstances in which certain of the above-mentioned professionals, advisors, counsel and consultants may have a financial or other interest in the offering of the Bonds, see the caption “FINANCIAL INTERESTS.”
Continuing Disclosure
Pursuant to a Continuing Disclosure Certificate to be executed by the District (the “District Continuing Disclosure Certificate”), the District will agree to provide, or cause to be provided, to the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access system (“EMMA”), maintained on the Internet at http://emma.msrb.org, certain annual financial information and operating data and notices of certain enumerated events. These covenants are being made in order to assist the Underwriter in complying with subsection (b)(5) of Rule 15c2-12 adopted by the Securities and Exchange Commission (“Rule 15c2-12”).

The Underwriter does not consider Meritage to be an “obligated person” with respect to the Bonds for purposes of Rule 15c2-12. Notwithstanding the foregoing, to assist in the marketing of the Bonds, Meritage will agree to provide, or cause to be provided to EMMA, certain updates with respect to the development within the District and notices of certain enumerated events. See Appendix G for a description of the specific nature of the semiannual reports and enumerated event notices to be filed by Meritage.

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

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

Brief descriptions of the Bonds and the Indenture are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. All references herein to the Indenture, the Bonds and the Constitution and laws of the State, as well as the proceedings of the City Council, Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 24
Menifee Mayor and City Council
August 16, 2023
Page
462 of 759

6 4859-1311-2685v6/200299-0019
acting as the legislative body of the District, are qualified in their entirety by references to such documents, laws and proceedings, and with respect to the Bonds, by reference to the Indenture. Capitalized terms not otherwise defined in this Official Statement have the meanings set forth in Appendix E.

Copies of the Indenture and other documents and information are available for inspection and copies may be obtained from the City, 29844 Haun Road, Menifee, California, 92586, Attention: Assistant City Manager.

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

Sources of Funds
Principal Amount of Bonds $ _____
Plus Net Original Issue Premium
Total Sources $
Uses of Funds:

Acquisition and Construction Fund $
Interest Account(1)
Costs of Issuance(2)
Reserve Account of the Special Tax Fund
Total Uses $
(1) Reflects capitalized interest on a portion of the Bonds through September 1, 2024. (2) To pay costs of issuance of the Bonds, including legal fees, underwriter’s discount, printing costs, Appraiser, Special Tax Consultant and Trustee fees.

THE BONDS
General Provisions
The Bonds will be dated their date of delivery and will bear interest at the rates per annum set forth on the inside cover page hereof, payable semiannually on each March 1 and September 1, commencing March 1, 2024 (each, an “Interest Payment Date”), and will mature in the amounts and on the dates set forth on the inside cover page of this Official Statement. Interest will be calculated on the basis of a 360-day year comprised of twelve 30-day months. The Bonds will be issued in fully registered form in denominations of $5,000 or any integral multiple thereof.

Interest on any Bond will be payable from the Interest Payment Date next preceding the date of authentication of such Bond, unless: (i) such date of authentication is an Interest Payment Date, in which event interest will be payable from such date of authentication; (ii) the date of authentication is after the fifteenth day of the month preceding an Interest Payment Date, regardless of whether such day is a Business Day (each, a “Record Date”) but prior to the immediately succeeding Interest Payment Date, in which event interest will be payable from the Interest Payment Date immediately succeeding the date of authentication; or (iii) the date of authentication is prior to the close of business on the first Record Date occurring after the issuance of such Bond, in which event interest will be payable from the dated date of such Bond, as applicable; provided, however, that if at the time of authentication of such Bond, interest is in default, interest on such Bond will be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment on such Bond, interest on such Bond will be payable from its dated date.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 25
Menifee Mayor and City Council
August 16, 2023
Page
463 of 759

7 4859-1311-2685v6/200299-0019
Interest on any Bond will be paid to the person whose name appears as its owner in the registration books held by the Trustee on the close of business on the Record Date. Principal of, premium, if any, due upon redemption is payable upon presentation and surrender of the Bonds at the principal corporate trust office of the Trustee in Costa Mesa, California.

The Bonds will be issued as fully registered bonds and will be registered in the name of Cede & Co., as nominee of DTC. DTC will act as securities depository of the Bonds. Ownership interests in the Bonds may be purchased in book-entry form only in denominations of $5,000 and any integral multiple thereof. So long as DTC is the securities depository all payments of principal and interest on the Bonds will be made to DTC and will be paid to the Beneficial Owners in accordance with DTC’s procedures and the procedures of DTC’s Participants. See APPENDIX H — “BOOK-ENTRY-ONLY SYSTEM.” In the event the Bonds are not held in book-entry form, interest will be paid by check of the Trustee mailed by first class mail, postage prepaid, to the Bondowner at its address on the registration books kept by the Trustee. Pursuant to a written request prior to the Record Date of a Bondowner of at least $1,000,000 in aggregate principal amount of Bonds or of any issue of Parity Bonds, payment will be made by wire transfer in immediately available funds to a designated account in the United States. [Remainder of Page Intentionally Left Blank]
Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 26
Menifee Mayor and City Council
August 16, 2023
Page
464 of 759

8 4859-1311-2685v6/200299-0019
Debt Service Schedule
The following table presents the annual debt service on the Bonds (including sinking fund redemptions), assuming that there are no optional or special mandatory redemptions. See the caption “—Redemption” below.

Interest on a portion of the Bonds through September 1, 2024 will be paid from capitalized interest.

Year Ending
September 1 Principal Interest Total Debt Service
$ $ $

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

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 27
Menifee Mayor and City Council
August 16, 2023
Page
465 of 759

9 4859-1311-2685v6/200299-0019
Redemption Date Redemption Price
September 1, 20__ and March 1, 20__ 103%
September 1, 20__ and March 1, 20__ 102
September 1, 20__ and March 1, 20__ 101
September 1, 20__ and any Interest Payment Date thereafter 100 In the event that the District elects to redeem Bonds as provided above, the District shall give written notice to the Trustee of its election to so redeem, the redemption date and the principal amount of the Bonds of each maturity to be redeemed. The notice to the Trustee shall be given at least 45 but no more than 60 calendar days prior to the redemption date, or by such later date as is acceptable to the Trustee.

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

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

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

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

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 28
Menifee Mayor and City Council
August 16, 2023
Page
466 of 759

10 4859-1311-2685v6/200299-0019
The Bonds maturing on September 1, 20__ (the “20__ Term Bonds”) will be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account established under the Indenture, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20__ Term Bonds so called for redemption will be selected by the Trustee by lot and will be redeemed at a redemption price for each redeemed 20__ Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:

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

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

In the event of a partial optional redemption or special mandatory redemption of the Term Bonds, each of the remaining Sinking Fund Payments for such Term Bonds will be reduced, as nearly as practicable, on a pro rata basis.

Special Mandatory Redemption from Special Tax Prepayments. The Bonds are subject to special mandatory redemption as a whole or in part on a pro rata basis among maturities and by lot within a maturity, on any Interest Payment Date on or after March 1, 2024, and will be redeemed by the Trustee, from any amounts paid by the District to the Trustee and designated by the District as a prepayment of Special Taxes for one or more parcels in the District made in accordance with the Rate and Method (the “Prepayments”) deposited to the Redemption Account pursuant to the Indenture, plus amounts transferred from the Reserve Account pursuant to the Indenture, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date:

Redemption Date Redemption Price
Any Interest Payment Date from March 1, 2024 through March 1, 20__ 103% September 1, 20__ and March 1, 20__ 102
September 1, 20__ and March 1, 20__ 101
September 1, 20__ and any Interest Payment Date thereafter 100 Prepayments and amounts released from the Reserve Account in connection with Prepayments will be allocated to the payment at maturity and redemption of Bonds and any Parity Bonds as nearly as practicable on a proportionate basis based on the outstanding principal amount of the Bonds and any Parity Bonds and such amounts shall be applied to redeem Bonds and Parity Bonds as nearly as practicable on a pro rata basis among maturities in increments of $5,000; provided, however, that, for Prepayments of less than $50,000, the District may specify in a Certificate of an Authorized Representative that Prepayments be applied to one or more Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 29
Menifee Mayor and City Council
August 16, 2023
Page
467 of 759

11 4859-1311-2685v6/200299-0019
maturities of the Bonds or Parity Bonds so long as there is delivered to the Trustee a Certificate of the Independent Financial Consultant that, following such application of the Prepayments, the maximum Special Taxes that may be levied in each Fiscal Year on Taxable Property is not less than 110% of Annual Debt Service in the Bond Year that begins in such Fiscal Year.

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

Notice of Redemption. So long as the Bonds are held in book-entry form, notice of redemption will be sent by the Trustee to DTC and not to the Beneficial Owners of the Bonds under the DTC book-entry only system. Neither the District nor the Trustee is responsible for notifying the Beneficial Owners, who are to be notified in accordance with the procedures in effect for the DTC book-entry system. See Appendix H — “BOOK-ENTRY ONLY SYSTEM.”
The Trustee will give notice, in the name of the District, of the redemption of Bonds. Such notice of redemption will: (i) specify the CUSIP numbers (if any), the bond numbers and the maturity date or dates of the Bonds selected for redemption, except that where all of the Bonds are subject to redemption, or all of the Bonds of one maturity are to be redeemed, the bond numbers of such issue need not be specified; (ii) state the date fixed for redemption and surrender of the Bonds to be redeemed; (iii) state the redemption price; (iv) state the place or places where the Bonds are to be redeemed; (v) in the case of Bonds to be redeemed only in part, state the portion of such Bond which is to be redeemed; (vi) state the date of issue of the Bonds as originally issued; (vii) state the rate of interest borne by each Bond being redeemed; and (viii) state any other descriptive information needed to identify accurately the Bonds being redeemed as specified by the Trustee. Such notice will further state that on the date fixed for redemption, there will become due and payable on each Bond, or portion thereof called for redemption, the principal thereof, together with any premium, and interest accrued to the redemption date, and that from and after such date, interest thereon will cease to accrue and be payable. At least 30 days but no more than 45 days prior to the redemption date, the Trustee will mail a copy of such notice of redemption, by first class mail, postage prepaid, to the respective Owners thereof at their addresses appearing on the Bond Register, and to the original purchaser of any Bonds; provided, however, so long as the Bonds are registered in the name of the Nominee, such notice shall be given in such manner as complies with the requirements of the Depository. The actual receipt by the Owner of any Bond of notice of such redemption is not a condition precedent to redemption, and neither the failure to receive nor any defect in such notice will affect the validity of the proceedings for the redemption of such Bonds, or the cessation of interest on the redemption date. A certificate by the Trustee that notice of such redemption has been given as provided in the Indenture will be conclusive as against all parties and the Owner is not entitled to show that he or she failed to receive notice of such redemption.

In addition to the foregoing notice, further notice will be given by the Trustee as set out below, but no defect in said further notice nor any failure to give all or any portion of such further notice will in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed.

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

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

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 30
Menifee Mayor and City Council
August 16, 2023
Page
468 of 759

12 4859-1311-2685v6/200299-0019
With respect to any notice of optional redemption of Bonds, such notice may state that such redemption is conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption of moneys sufficient to pay the principal of, premium, if any, and interest on such Bonds to be redeemed and that, if the District determines that such moneys will not be so received on or prior to the redemption date, said notice shall be of no force and effect and the Trustee shall not be required to redeem such Bonds. If any condition stated in the redemption notice for an optional redemption shall not have been satisfied on or prior to the redemption date:
(i) the redemption notice shall be of no force and effect, (ii) the District shall not be required to redeem such Bonds, (iii) the redemption shall not be made, and (iv) the Trustee shall within a reasonable time thereafter give notice to the persons in the manner in which the conditional redemption notice was given that such condition or conditions were not met and that the redemption was canceled.

Selection of Bonds for Redemption. If less than all of the Bonds Outstanding are to be redeemed, the portion of any Bond of a denomination of more than $5,000 to be redeemed will be in the principal amount of $5,000 or an integral multiple thereof. In selecting portions of such Bonds for redemption, the Trustee will treat such Bonds, as applicable, as representing that number of Bonds of $5,000 denominations which is obtained by dividing the principal amount of such Bonds to be redeemed in part by $5,000. The procedure for the selection of Parity Bonds for redemption may be modified as set forth in the Supplemental Indenture for such Parity Bonds. The Trustee will promptly notify the District in writing of the Bonds, or portions thereof, selected for redemption.

Partial Redemption of Bonds. Upon surrender of any Bond to be redeemed in part only, the District will execute and the Trustee will authenticate and deliver to the Owner, at the expense of the District, a new Bond or Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bonds surrendered, with the same interest rate and the same maturity.

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

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

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

Bonds may be exchanged at the office of the Trustee for a like aggregate principal amount of Bonds for other authorized denominations of the same maturity and issue. The Trustee may not collect from the Owner any charge for any new Bond issued upon any exchange or transfer, but will require the Owner requesting such exchange or transfer to pay any tax or other governmental charge required to be paid with respect to such Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 31
Menifee Mayor and City Council
August 16, 2023
Page
469 of 759

13 4859-1311-2685v6/200299-0019
exchange or transfer. Whenever any Bonds are surrendered for registration of transfer or exchange, the District will execute and the Trustee will authenticate and deliver a new Bond or Bonds, as applicable, of the same issue and maturity, for a like aggregate principal amount; provided that the Trustee is not required to register transfers or make exchanges of: (i) Bonds for a period of 15 days next preceding any selection of the Bonds to be redeemed; or (ii) any Bonds chosen for redemption.

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

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

In the event that the Special Tax revenues are not received when due, the only sources of funds available to pay the debt service on the Bonds are amounts held by the Trustee in the Special Tax Fund (other than the Administrative Expense Account therein), including amounts held in the Reserve Account therein, for the exclusive benefit of the Owners of the Bonds.

NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE COUNTY,

THE STATE OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. EXCEPT FOR THE NET TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE CITY BUT ARE

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

Special Taxes
Authorization and Pledge. In accordance with the provisions of the Act, the City established the District on November 3, 2021 for the purpose of financing of various public improvements required in connection with the proposed development within the District. At a special election held on November 3, 2021, the qualified elector within the District authorized the District to incur indebtedness in an amount not to exceed $15,000,000 for the District and the levy of the Special Taxes on property within the District to repay such bonds and to finance the Facilities (as defined below). The qualified elector within the District also voted to approve the Rate and Method which authorized the Special Tax to be levied to repay indebtedness of the District, including the Bonds.

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

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 32
Menifee Mayor and City Council
August 16, 2023
Page
470 of 759

14 4859-1311-2685v6/200299-0019
The Special Taxes levied in any Fiscal Year may not exceed the maximum rates authorized pursuant to the Rate and Method. See “— Rate and Method of Apportionment of Special Tax” and Appendix A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” There is no assurance that the Net Taxes will, in all circumstances, be adequate to pay the principal of and interest on the Bonds when due. See the caption “SPECIAL RISK FACTORS — Insufficiency of Special Tax Revenues.” Rate and Method of Apportionment of Special Tax. The Rate and Method applicable to the District is contained in Appendix A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” The meaning of the defined terms used in this section are as set forth in Appendix A.

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

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

The Special Tax Requirement for the District is to be satisfied first by levying the Special Tax Proportionately on each Assessor’s Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax. If additional moneys are needed to satisfy the Special Tax Requirement, the Special Tax will be levied Proportionately on each Assessor’s Parcel of Approved Property at up to 100% of the Maximum Special Tax applicable to each such Assessor’s Parcel. If additional moneys are still needed to satisfy the Special Tax Requirement, the Special Tax will be levied Proportionately on each Assessor’s Parcel of Undeveloped Property up to 100% of the Maximum Special Tax applicable to each such Assessor’s Parcel. If additional moneys are needed to satisfy the Special Tax Requirement, the Special Tax on each Assessor’s Parcel of Developed Property for which the Maximum Special Tax is the Backup Special Tax will be increased Proportionately from the Assigned Special Tax up to 100% of the Backup Special Tax. Finally, if additional moneys are needed to satisfy the Special Tax Requirement, the Special Tax will be levied Proportionately on each Assessor’s Parcel of Provisional Undeveloped Property at up to 100% of the Maximum Special Tax applicable to each such Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 33
Menifee Mayor and City Council
August 16, 2023
Page
471 of 759

15 4859-1311-2685v6/200299-0019
Assessor’s Parcel. Notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor’s Parcel of Residential Property as a result of a delinquency in the payment of the Special Tax applicable to any other Assessor’s Parcel be increased by more than 10% above the amount that would have been levied in that Fiscal Year had there never been any such delinquency or default.

As of May 1, 2023, Meritage had obtained building permits for 134 of the 175 planned homes within the District. Since May 1, 2023, Meritage has obtained building permits for the balance of the planned homes in the District. Beginning with Fiscal Year 2024-25, all 175 parcels of Taxable Property will be classified as Developed Property. There are certain parcels which are expected to remain as open space when development in the District is complete. Such parcels are Exempt Property but may be classified as Provisional Undeveloped Property in the future, if necessary, in accordance with the Rate and Method.

For Fiscal Year 2023-24, the Assigned Special Tax for Developed Property within the District that is classified as Single Family Residential Property will range from $3,103.43 per taxable unit with a Building Square Footage of less than 2,000 square feet to $3,884.85 per taxable unit with a Building Square Footage of greater than 3,200 square feet. On each July 1 the Assigned Special Tax rates for Developed Property shall be increased by two percent (2.00%) of the amount in effect in the prior Fiscal Year.

The Maximum Special Tax for each Assessor’s Parcel of Approved Property expected to be classified as Single Family Residential Property shall be the Backup Special Tax computed pursuant to the Rate and Method. For Fiscal Year 2023-24, the Maximum Special Tax on Approved Property not classified as Single Family Residential Property is $23,215.49 per acre. For Fiscal Year 2023-24, the Maximum Special Tax for each Assessor’s Parcel of Provisional Undeveloped Property is $23,215.49 per acre.

Table 1 below sets forth the Assigned Special Tax for Developed Property, the Maximum Special Tax for Approved Property, the Fiscal Year 2023-24 Special Tax levy and the percent of such levy based on land use type.

TABLE 1

CITY OF MENIFEE
COMMUNITY FACILITIES DISTRICT NO. 2021-2 (SUMAC RIDGE)
ASSIGNED SPECIAL TAX RATES FOR FISCAL YEAR 2023-24
Land Use Type
Residential Floor
Area (sq. ft.)
Assigned
Special Tax
Rates
Fiscal Year
2023-24(1)
Special Tax
Levy Rates
Fiscal Year
2023-24
Percent of
Maximum/
Assigned
Rate
No. of
Units
Aggregate
Special Taxes
Fiscal Year
2023-24(2)
Percent of
Total
Single Family Residential Property < 2,000 $ 3,101.43 $3,101.43 100.0% 14 $ 43,420.05 9.3% Single Family Residential Property 2,000 - 2,200 3,188.83 0.00 0.0 0 0.00 0.0 Single Family Residential Property 2,201 - 2,400 3,275.18 3,275.18 100.0 17 55,678.05 12.0 Single Family Residential Property 2,401 - 2,600 3,388.58 3,388.58 100.0 31 105,046.07 22.6 Single Family Residential Property 2,601 - 2,800 3,501.99 3,501.99 100.0 21 73,541.71 15.8 Single Family Residential Property 2,801 - 3,000 3,588.34 3,588.34 100.0 34 122,003.55 26.2 Single Family Residential Property 3,001 - 3,200 3,737.12 0.00 0.0 0 0.00 0.0 Single Family Residential Property > 3,200 3,884.85 3,884.85 100.0 17 66,042.51 14.2 Approved Property N/A 3,841.83 0.00 0.0 41 0.00 0.0
Multifamily Property N/A 23,215.49 0.00 0.0 0 0.00 0.0
Non-Residential Property N/A 23,215.49 0.00 0.0 0 0.00 0.0 Total 175 $ 465,731.94 100.0%
(1) Reflects the Assigned Special Tax rate for Developed Property and the Maximum Special Tax for Approved Property, Multifamily Property and Non-Residential Property.
(2) Includes the Fiscal Year 2023-24 Administrative Expenses Cap of $31,212. The Administrative Expenses Cap escalates at 2% per Fiscal Year.

Source: Spicer Consulting Group, LLC.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 34
Menifee Mayor and City Council
August 16, 2023
Page
472 of 759

16 4859-1311-2685v6/200299-0019
Backup Special Tax Rates. The Backup Special Tax for an Assessor’s Parcel within a Final Map classified as Single Family Residential Property or Approved Property expected to be classified as Single Family Residential Property is calculated by multiplying the Maximum Special Tax per acre of Undeveloped Property by the acreage of Single Family Residential Property expected to exist in such Final Map at the time of calculation and dividing such product by the number of residential units expected to exist in such Final Map at the time of calculation.

In the event any portion of the Final Map is changed or modified, the Backup Special Tax for all Assessor’s Parcels within such changed or modified area shall be $23,215.49 per acre for Fiscal Year 2023-24.

Notwithstanding the foregoing, the Backup Special Tax for an Assessor’s Parcel of Developed Property for which a certificate of occupancy has been granted may not be revised. In the event any superseding Final Map is recorded as a Final Map within the boundaries of the District, the Backup Special Tax for all Assessor’s Parcels within such Final Map shall be $23,215.49 per acre for Fiscal Year 2023-24. The Backup Special Tax shall not apply to Multifamily Residential Property or Non-Residential Property. On each July 1 the Backup Special Tax rate will increase by two percent (2.00%) of the amount in effect in the prior Fiscal Year.

Prepayment of Special Taxes. The Maximum Special Tax obligation may be prepaid and permanently satisfied for (i) Assessor’s Parcels of Developed Property, (ii) Assessor’s Parcels of Approved Property or Undeveloped Property for which a building permit has been issued, (iii) Approved Property or Undeveloped Property for which a building permit has not been issued, and (iv) Assessor’s Parcels of Provisional Undeveloped Property that are not Exempt Property. In addition, the Maximum Special Tax obligation for an Assessor’s Parcel of Developed Property, Approved Property, Undeveloped Property or Provisional Undeveloped Property may be partially prepaid. The Prepayment amount is calculated based on the sum of the Bond Redemption Amount, the Redemption Premium, the Future Facilities Amount, the Defeasance Amount, Administrative Fees and Expenses and less a credit for the resulting reduction in the Reserve Requirement for the Bonds (if any), all as specified in Section G of the Rate and Method attached as Appendix A. Prepayments of Special Taxes will be applied to effect an extraordinary redemption of Bonds and Parity Bonds. See “THE BONDS — Redemption — Special Mandatory Redemption from Special Tax Prepayments.” Estimated Debt Service Coverage. Based on building permits issued through and including May 1, 2023, 134 parcels within the District will be classified as Developed Property and 41 parcels will be classified as Approved Property for the Fiscal Year 2023-24 Special Tax levy. Annual Debt Service on the Bonds in Fiscal Year 2023-24 has been structured so that Special Taxes levied on the 134 parcels with building permits issued as of May 1, 2023 and to be classified as Developed Property in Fiscal Year 2023-24, at the Assigned Special Tax rates, assuming no delinquencies, plus the amount of capitalized interest funded, will generate not less than 110% of debt service payable with respect to the Bonds for the Bond Year ending September 1, 2024. The District will not levy Special Taxes on Approved Property in Fiscal Year 2023-24.

Since May 1, 2023, the Meritage has obtained building permits for the balance of the planned homes within the District (175 total homes). Annual Debt Service for the Bonds in Fiscal Year 2024-25 and in each Fiscal Year thereafter has been structured based on the expected Special Tax revenues to be received in each Fiscal Year from all 175 parcels to be classified as Developed Property, assuming that the Special Taxes are levied at 100% of the Assigned Special Tax. Assuming no delinquencies, the Special Tax levy on 175 parcels of Developed Property within the District will generate in each Fiscal Year not less than the Administrative Expenses Cap plus 110% of debt service payable with respect to the Bonds in that calendar year that begins in that Fiscal Year. Actual collections of the Special Tax will depend on the amount of Special Tax delinquencies.

Both the Special Tax levy and the Administrative Expenses Cap escalate at 2% each Fiscal Year.

Limitation on Special Tax Levy and Potential Impact on Coverage. Pursuant to Section 53321(d) of the Government Code, the special tax levied against any assessor’s parcel for which an occupancy permit for private residential use has been issued will not be increased as a consequence of delinquency or default by the owner of any other assessor’s parcel within the District by more than 10% above the amount that would have Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 35
Menifee Mayor and City Council
August 16, 2023
Page
473 of 759

17 4859-1311-2685v6/200299-0019
been levied in that fiscal year had there never been any such delinquencies or defaults. As a result, it is possible that the District may not be able to increase the tax levy to the Assigned Special Tax in all years.

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

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

The District will make certain covenants in the Indenture which are intended to ensure that the current maximum Special Tax rates and method of collection of the Special Taxes are not altered in a manner that would impair the District’s ability to collect sufficient Special Taxes to pay debt service on the Bonds, Parity Bonds and Administrative Expenses when due.

First, the District will covenant in the Indenture that it will take no actions that would discontinue or cause the discontinuance of the Special Tax levy or the District’s authority to levy the Special Tax for so long as the Bonds and any Parity Bonds are Outstanding.

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

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

See Appendix E under the caption “COVENANTS AND WARRANTY.” Although the Special Taxes constitute liens on taxed parcels within the District, they do not constitute a personal indebtedness of the owners of property within the District. Moreover, other liens for taxes and assessments already exist on the property located within the District and others could come into existence in the future in certain situations without the consent or knowledge of the City or the landowners in the District. See the captions “THE DISTRICT — Direct and Overlapping Debt” and “SPECIAL RISK FACTORS — Direct and Overlapping Indebtedness.” There is no assurance that property owners will be financially able to pay the annual Special Taxes or that they will pay such taxes even if financially able to do so, all as more fully described under the caption “SPECIAL RISK FACTORS.”
Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 36
Menifee Mayor and City Council
August 16, 2023
Page
474 of 759

18 4859-1311-2685v6/200299-0019
Proceeds of Foreclosure Sales. The net proceeds received following a judicial foreclosure sale of property within the District resulting from a property owner’s failure to pay the Special Taxes when due are included within the Net Taxes pledged to the payment of principal of and interest on the Bonds and any Parity Bonds under the Indenture.

Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of any Special Tax or receipt by the District of Special Taxes in an amount which is less than the Special Taxes levied, the City Council, as the legislative body of the District, may order that Special Taxes be collected by a Superior Court action to foreclose the lien within specified time limits. In such an action, the real property subject to the unpaid amount may be sold at a judicial foreclosure sale. Under the Act, the commencement of judicial foreclosure following the nonpayment of a Special Tax is not mandatory. However, the District will covenant in the Indenture for the benefit of the owners of the Bonds and any Parity Bonds that it will: (i) commence judicial foreclosure proceedings against parcels with delinquent Special Taxes in excess of $5,000 by the October 1 following the close of each Fiscal Year in which such Special Taxes were due; and (ii) commence judicial foreclosure proceedings against all parcels with delinquent Special Taxes by the October 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than 95% of the total Special Tax levied; and (iii) diligently pursue such foreclosure proceedings until the delinquent Special Taxes are paid; provided that, notwithstanding the foregoing, the District may elect to defer foreclosure proceedings on any parcel so long as the amount in the Reserve Account is at least equal to the Reserve Requirement.

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

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

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

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

Except for Prepayments, which will be deposited to the Redemption Account of the Special Tax Fund, the Trustee will, on each date on which the Special Taxes are received from the District, deposit the Special Taxes in the Special Tax Fund to be held in trust for the Owners. The Trustee will transfer the Special Taxes on deposit in the Special Tax Fund on the dates, in the amounts and in the following order of priority, to:

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 37
Menifee Mayor and City Council
August 16, 2023
Page
475 of 759

19 4859-1311-2685v6/200299-0019
First: To the Administrative Expense Account in an amount up to the Administrative Expenses Cap.

Second: To the Interest Account, an amount such that the balance in the Interest Account one Business Day prior to each Interest Payment Date is equal to the installment of interest due on the Bonds and any Parity Bonds on said Interest Payment Date and any installment of interest due on a previous Interest Payment Date which remains unpaid. Moneys in the Interest Account will be used for the payment of interest on the Bonds and any Parity Bonds as the same become due.

Third: To the Principal Account, an amount such that the balance in the Principal Account one Business Day prior to September 1 of each year, commencing September 1, 2024, is equal to the principal payment due on the Bonds and any Parity Bonds maturing on such September 1 and any principal payment due on a previous September 1 which remains unpaid. Moneys in the Principal Account shall be used for the payment of the principal of such Bonds and any Parity Bonds as the same become due at maturity.

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

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

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

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

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

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

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 38
Menifee Mayor and City Council
August 16, 2023
Page
476 of 759

20 4859-1311-2685v6/200299-0019
Subject to the limits on the maximum annual Special Tax levy set forth in the Rate and Method and in the Indenture, the District will covenant in the Indenture to levy Special Taxes in an amount sufficient, in light of the other intended uses of the Special Tax proceeds, to maintain the balance in the Reserve Account at the Reserve Requirement. Amounts in the Reserve Account are to be applied: (i) to pay debt service on the Bonds, or any Parity Bonds, including Sinking Fund Payments, to the extent that other monies are not available therefor; (ii) to redeem Bonds or Parity Bonds in the event of prepayment of Special Taxes, to optionally redeem Bonds or Parity Bonds or in connection with a partial defeasance of Bonds or Parity Bonds, in accordance with the Indenture; and (iii) to pay any rebate requirements. See Appendix E under the caption “CREATION OF FUNDS AND APPLICATION OF PROCEEDS — Reserve Account of the Special Tax Fund.” No Teeter Plan
Although the Riverside County Board of Supervisors has adopted the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”) which allows each entity levying secured property taxes in the County to draw on the amount of property taxes levied rather than the amount actually collected, as provided for in Section 4701 et seq. of the California Revenue and Taxation Code, the District is not included in the County Teeter Plan. Consequently, the District may not draw on the County Tax Loss Reserve Fund in the event of delinquencies in Special Tax payments within the District.

Parity Bonds for Refunding Purposes Only
The District may at any time after the issuance and delivery of the Bonds issue Parity Bonds payable from the Net Taxes and other amounts deposited in the Special Tax Fund (other than in the Administrative Expense Account therein) and secured by a lien and charge upon such amounts equal to the lien and charge securing the Outstanding Bonds and any other Parity Bonds theretofore issued; provided, however, Parity Bonds may only be issued for the purpose of refunding all or a portion of the Bonds or any Parity Bonds then Outstanding. Parity Bonds may be issued subject to the following additional specific conditions, which are made conditions precedent to the issuance of any such Parity Bonds by the Indenture:
(a) The District shall be in compliance with all covenants set forth in the Indenture and any Supplemental Indenture then in effect and a certificate of the District to that effect shall have been filed with the Trustee; provided, however, that Parity Bonds may be issued notwithstanding that the District is not in compliance with all such covenants so long as immediately following the issuance of such Parity Bonds the District will be in compliance with all such covenants.
(b) The issuance of such Parity Bonds shall have been duly authorized pursuant to the Act and all applicable laws, and the issuance of such Parity Bonds shall have been provided for by a Supplemental Indenture duly authorized, executed and delivered by the District which shall specify the following: (1) the purpose for which such Parity Bonds are to be issued and the fund or funds into which the proceeds thereof are to be deposited; (2) the authorized principal amount of such Parity Bonds; (3) the date and the maturity date or dates of such Parity Bonds; provided that: (i) each maturity date shall fall on a September 1; (ii) all such Parity Bonds of like maturity shall be identical in all respects, except as to number; (iii) fixed serial maturities or Sinking Fund Payments, or any combination thereof, shall be established to provide for the retirement of all such Parity Bonds on or before their respective maturity dates; and (iv) the maturity of the Parity Bonds to be issued shall not exceed the maturity of the Bonds and Parity Bonds being refunded; (4) the description of the Parity Bonds, the place of payment thereof and the procedure for execution and authentication; (5) the denominations and method of numbering of such Parity Bonds; (6) the amount and due date of each mandatory Sinking Fund Payment, if any, for such Parity Bonds; (7) the amount, if any, to be deposited from the proceeds of such Parity Bonds in the Reserve Account of the Special Tax Fund to increase the amount therein to the Reserve Requirement; (8) the form of such Parity Bonds; and (9) such other provisions as are necessary or appropriate and not inconsistent with the Indenture.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 39
Menifee Mayor and City Council
August 16, 2023
Page
477 of 759

21 4859-1311-2685v6/200299-0019
(c) The District shall have received the following documents or money or securities, all of such documents dated or certified, as the case may be, as of the date of delivery of such Parity Bonds by the Trustee (unless the Trustee shall be directed by the District to accept any of such documents bearing a prior date): (1) a certified resolution of the City Council, acting as the legislative body of the District, authorizing the issuance of such Parity Bonds; (2) a written request of the District as to the delivery of such Parity Bonds; (3) an opinion of Bond Counsel and/or general counsel to the District substantially to the effect that: (i) the District has the right and power under the Act to execute and deliver the Supplemental Indenture relating to such Parity Bonds, and such Supplemental Indenture has been duly and lawfully executed by the District, and the Indenture and such Supplemental Indenture are in full force and effect and are valid and binding upon the District and enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors’ rights); (ii) the Indenture creates the valid pledge which it purports to create of the Net Taxes and other amounts as provided in the Indenture, subject to the application thereof to the purposes and on the conditions permitted by the Indenture; and (iii) such Parity Bonds are valid and binding limited obligations of the District, enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors’ rights) and the terms of the Indenture and the Supplemental Indenture executed and delivered in connection with such Parity Bonds and are entitled to the benefits of the Indenture and such Supplemental Indenture, and such Parity Bonds have been duly and validly authorized and issued in accordance with the Act (or other applicable laws) and the Indenture and such Supplemental Indenture; and a further opinion of Bond Counsel to the effect that, assuming compliance by the District with certain tax covenants, the issuance of the Parity Bonds will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds and any Parity Bonds theretofore issued on a tax-exempt basis, or the exemption from State of California personal income taxation of interest on any Outstanding Bonds and Parity Bonds theretofore issued; (4) a certificate of the District containing such statements as may be reasonably necessary to show compliance with the requirements of the Indenture; (5) a certificate of an Independent Financial Consultant certifying that in each Bond Year the Annual Debt Service on the Bonds and Parity Bonds to remain Outstanding following the issuance of the Parity Bonds proposed to be issued is less than the Annual Debt Service on the Bonds and Parity Bonds Outstanding prior to the issuance of such Parity Bonds; and (6) such further documents, money and securities as are required by the provisions of the Indenture and the Supplemental Indenture providing for the issuance of such Parity Bonds.

Meritage Letter of Credit
Meritage has provided an irrevocable letter of credit (the “Letter of Credit”) to secure payment of Special Taxes levied on the property in the District owned by it, which identifies the Trustee as beneficiary. The amount available to be drawn under the Letter of Credit (the “Stated Amount”) is equal to the estimated Special Tax levy attributable to the parcels owned by Meritage as of July 23, 2023 in Fiscal Years 2023-24 and 2024-

25. The initial Stated Amount of the Letter of Credit shall be $558,613. Meritage is obligated to maintain the Letter of Credit until the property then owned by Meritage is responsible for is (i) less than twenty percent (20%) of the Maximum Special Tax levy in the District or (ii) Meritage has paid all the Special Taxes owned by Meritage in the then current Fiscal Year and the property owned by Meritage is responsible for less than 20% of the Maximum Special Tax levy in the District in the next Fiscal Year. Notwithstanding the foregoing, the Letter of Credit is available but not pledged under the Indenture for the repayment of debt service on the Bonds and the District could instruct the Trustee to release the Letter of Credit at any time without the consent of the Owners or Beneficial Owners of the Bonds.

THE DISTRICT
General Description of the District
General. The District contains approximately 59 taxable acres, and is located on the north side of Scott Road at Lindenberger Road, in the City. The property within the District is being developed by Meritage in a project marketed by Meritage as “Sumac Ridge.”
Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 40
Menifee Mayor and City Council
August 16, 2023
Page
478 of 759

22 4859-1311-2685v6/200299-0019
The property within the District is planned for 175 single family detached homes. As of June 19, 2023, Meritage had completed and conveyed 78 homes within the District to individual homeowners. As of such date, Meritage owned four model homes (none of which were in escrow), 25 homes in various stages of construction (13 of which were in escrow) and 68 finished lots (none of which were in escrow). As of July 1, 2023, Meritage had obtained building permits for all 175 homes planned within the District. Meritage currently expects to complete and convey all homes planned within the District to individual homeowners by the end of 2025.

The major infrastructure (sewer, water, storm drains, utilities, and arterial roads) necessary to develop the property within the District has been completed. Meritage expects to complete the remaining infrastructure within the District, which consists of landscaping, certain interior streets, drainage improvements and wet and dry utilities as construction of the related homes occurs. Meritage is limited to 141 home closings in the District until the completion of all remaining roads, storm drainage, water systems, sewer systems, and landscaping.

Meritage does not expect the foregoing conditions to delay its projected development timing within the District as described herein.

Water and sewer service to the property within the District is currently supplied by the Eastern Municipal Water District. Electricity is currently supplied by Southern California Edison and gas by The Gas Company. Public education instruction is provided by Menifee Union School District and Perris Union High School District.

The property within the District is not located in an Alquist-Priolo Earthquake Study Zone and is not located within one-half mile of an active earthquake fault. Additionally, the District is not located in a flood plain area or in an area which the Department of Forestry and Fire Protection of the State of California has designated as a high fire hazard severity zone. Notwithstanding the foregoing, the property in the District may be subject to unpredictable seismic activity, fires, flood, or other natural disasters. See “SPECIAL RISK FACTORS — Natural Disasters.”
A map showing the location of the District and an aerial photograph thereof appear following the Table of Contents.

Authorized Uses of Bond Proceeds
Proceeds of the Bonds are authorized to be used to pay for the costs of construction of City facilities, including certain storm drain and street improvements, the costs of certain water and sewer system improvements to be owned and operated by the Eastern Municipal Water District and the costs of school facilities to be owned and operated by the Menifee Union School District. See the caption “FINANCING PLAN.” Appraisal Report
The estimated assessed value of the property within the District, as shown on the County’s assessment roll for Fiscal Year 2022-23 is approximately $183,669, which as a result of timing of the County’s determination of the assessed values for Fiscal Year 2022-23, does not reflect the substantial development activity that has taken place since such value was determined.

A property’s assessed value is not necessarily indicative of its market value. In order to provide information with respect to the value of the taxable property within the District, the City engaged the Appraiser to prepare the Appraisal Report. The Appraiser has an “MAI” designation from the Appraisal Institute and has prepared numerous appraisals for the sale of land-secured municipal bonds. The Appraiser was selected by the City and has no material relationships with the City or the owners of the land within the District other than the relationship represented by the engagement to prepare the Appraisal Report. The City instructed the Appraiser to prepare its analysis and report in conformity with City-approved guidelines and the Appraisal Standards for Land Secured Financings published in 1994 and revised in 2004 by the California Debt and Investment Advisory Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 41
Menifee Mayor and City Council
August 16, 2023
Page
479 of 759

23 4859-1311-2685v6/200299-0019
Commission. A copy of the Appraisal Report is included as Appendix D — “APPRAISAL REPORT” to this Official Statement.

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

Subject to the assumptions and limiting conditions set forth in the Appraisal Report, the Appraiser concluded that, as of June 19, 2023, the market value of the Taxable Property within the District was $66,392,673. In valuing the property within the District, the Appraiser used a sales comparison approach for the property to be developed and, with respect to the Meritage-owned models and production units more than 95% complete, a discounted cash flow analysis was applied. The discounted cash flow analysis accounts for remaining development costs, marketing and carrying costs and a discount rate through the estimated absorption period for such models and production units. Lots with homes less than 95% complete were valued as finished lots.

The Appraisal Report is based upon a variety of assumptions and limiting conditions that are described in Appendix D. The City, the Underwriter and the District make no representation as to the accuracy of the Appraisal Report. There is no assurance that the property within the District can be sold for the prices set forth in the Appraisal Report or that any parcel can be sold for a price sufficient to pay the Special Tax for that parcel in the event of a default in payment of Special Taxes by the landowner. See “SPECIAL RISK FACTORS — Property Values” and Appendix D — “APPRAISAL REPORT.”
Estimated Appraised Value-to-Lien Ratios
The aggregate appraised value of property within the District is $66,392,673. Dividing the aggregate estimate of value by the principal amount of the Bonds results in a value to lien ratio of 6.88-to-1* for the District.

Including overlapping indebtedness, the estimated value to lien ratio based on the appraised value is 6.67-to-1*.

See Table 4 below and “SPECIAL RISK FACTORS — Direct and Overlapping Indebtedness.” The assessed value of the property within the District is $183,669 for Fiscal Year 2022-23, which as a result of timing of the County’s determination of the assessed values for Fiscal Year 2022-23, does not reflect the substantial development activity that has taken place since such value was determined.

Based on ownership status as of June 19, 2023 and assuming no further development activity and transfer of ownership, individual homeowners and Meritage would be responsible for approximately 58.1% and

41.9%, respectively, of the Fiscal Year 2023-24 Special Tax levy. A portion of the debt service on the Bonds for the Bond Year ending September 1, 2024, will be paid from capitalized interest on the Bonds and the District does not expect to levy Special Taxes on Approved Property in Fiscal Year 2023-24.

As of July 1, 2023, Meritage has obtained building permits for all 175 planned homes within the District.

Assuming no change of ownership from June 19, 2023, individual homeowners and Meritage would be responsible for approximately 44.6% and 55.4%, respectively, of the projected Fiscal Year 2024-25 Special Tax levy.

Table 2A below sets forth the appraised value-to-lien ratio of the Taxable Property within the District based on ownership status as of June 19, 2023, the appraised values set forth in the Appraisal Report, the principal amount of the Bonds and overlapping debt, allocated based on the Fiscal Year 2023-24 Special Tax levy. Table 2B below sets forth the appraised value-to-lien ratio of the Taxable Property within the District based on ownership status as of June 19, 2023, the appraised values set forth in the Appraisal Report, the Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 42
Menifee Mayor and City Council
August 16, 2023
Page
480 of 759

24 4859-1311-2685v6/200299-0019
principal amount of the Bonds and overlapping debt, allocated based on the estimated Fiscal Year 2024-25 Special Tax levy (assuming no change in ownership from June 19, 2023).

Table 3A below sets forth the estimated appraised value-to-lien ratios for Developed Property within the District by various ranges based upon the principal amount of the Bonds and overlapping debt, allocated based on the Fiscal Year 2023-24 Special Tax levy. Table 3B below sets forth the estimated appraised value- to-lien ratios for Developed Property within the District by various ranges based upon the principal amount of the Bonds and overlapping debt, allocated based on the estimated Fiscal Year 2024-25 Special Tax levy (assuming no change in ownership from June 19, 2023).
[Remainder of Page Intentionally Left Blank]
Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 43
Menifee Mayor and City Council
August 16, 2023
Page
481 of 759

25 4859-1311-2685v6/200299-0019
TABLE 2A

CITY OF MENIFEE
COMMUNITY FACILITIES DISTRICT NO. 2021-2 (SUMAC RIDGE)

ESTIMATED VALUE-TO-LIEN RATIOS

ALLOCATED BY PROPERTY OWNER
BASED ON FISCAL YEAR 2023-24 SPECIAL TAX LEVY
Property Owner(1)
No. of
Parcels
Appraised
Property
Value(2)
Percent of
Appraised
Value
Maximum
Special
Tax(3)
Percentage
of Maximum
Tax
Actual
Fiscal Year
2023-24
Special Tax
Levy(4)
Percent of
Actual
Fiscal Year
2023-24
Special Tax
Levy
CFD 2021-2
Bonds(5)*
All Other
Overlapping
Debt (6)
Appraised
Value-to-
Lien Ratio*
Developed Property(7)
Individually Owned 78 $ 45,236,813 68.14% $ 300,050 44.58% $ 270,587 58.10% $ 5,603,682 $ 181,481 7.82:1 Meritage Homes Owned 56 13,022,521 19.61 215,487 32.02 195,145 41.90 4,041,318 130,882 3.12:1 Subtotal Developed Property 134 $ 58,259,334 87.75% $ 515,537 76.60% $ 465,732 100.00% $ 9,645,000 $ 312,363 5.85:1 Approved Property(7)
Meritage Homes Owned 41 $ 8,133,339 12.25% $ 157,515 0.00% $ 0 0.00% $ 0 $ 0 N/A Subtotal Approved Property 41 $ 8,133,339 12.25% $ 157,515 0.00% $ 0 0.00% $ 0 $ 0 N/A Total 175 $ 66,392,673 100.00% $ 673,052 76.60% $ 465,732 100.00% $ 9,645,000 $ 312,363 6.67:1 * Preliminary, subject to change.
(1) Property ownership status as of June 19, 2023.
(2) Based on the appraised value set forth in the Appraisal Report as of June 19, 2023, the Date of Value. (3) Based on Backup Special Tax rate on Developed Property and the Maximum Special Tax rate on Approved Property. See “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Rate and Method of Apportionment of Special Tax.” (4) Fiscal Year 2023-24 Special Tax Levy based upon development status as of June 19, 2023 and an Administrative Expenses Cap for Fiscal Year 2023-24 of $31,212. The levy on Developed Property shown is equal to 100% of the Assigned Special Tax rates on Developed Property. A portion of the debt service on the Bonds for the Bond Year ending September 1, 2024, will be paid from capitalized interest on the Bonds and the District currently does not expect to levy the Special Tax on Approved Property in Fiscal Year 2023-24. (5) Allocated based on Fiscal Year 2023-24 Special Tax levy. (6) Includes overlapping debt set forth in Table 4 below. (7) Based on the number of building permits issued as of May 1, 2023.

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

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 44
Menifee Mayor and City Council
August 16, 2023
Page
482 of 759

26 4859-1311-2685v6/200299-0019
TABLE 2B

CITY OF MENIFEE
COMMUNITY FACILITIES DISTRICT NO. 2021-2 (SUMAC RIDGE)

ESTIMATED VALUE-TO-LIEN RATIOS

ALLOCATED BY PROPERTY OWNER
BASED ON ESTIMATED FISCAL YEAR 2024-25 SPECIAL TAX LEVY Property Owner(1)
No. of
Parcels
Appraised
Property
Value(2)
Percent of
Appraised
Value
Maximum
Special
Tax(3)
Percentage
of Maximum
Special Tax
Estimated
Fiscal Year
2024-25
Special Tax
Levy(4)
Percent of
Estimated
Fiscal Year
2024-25
Special Tax
Levy
CFD 2021-2
Bonds(5)*
All Other
Overlapping
Debt (6)
Appraised
Value-to-
Lien Ratio*
Developed Property
Individually Owned 78 $ 45,236,813 68.14% $ 306,051 44.57% $ 251,793 44.57% $ 4,309,281 $ 139,560 10.17:1 Meritage Homes Owned 97 21,155,860 31.86 380,594 55.43 311,768 55.43% 5,335,719 172,802 3.84:1 Subtotal Developed Property 175 $ 66,392,673 100.00% $ 686,645 100.00% $ 563,561 100.00% $ 9,645,000 $ 312,363 6.67:1 * Preliminary, subject to change.
(1) Property ownership status as of June 19, 2023.
(2) Based on the appraised value set forth in the Appraisal Report as of June 19, 2023, the Date of Value. (3) Based on Backup Special Tax rate on Developed Property. See “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Rate and Method of Apportionment of Special Tax.” (4) Estimated Fiscal Year 2024-25 Special Tax Levy based upon development status as of July 1, 2023 and an Administrative Expenses Cap for Fiscal Year 2024-25 of $31,836. The estimated levy on Developed Property shown is equal to 100% of the Assigned Special Tax rates on Developed Property. (5) Allocated based on estimated Fiscal Year 2024-25 Special Tax levy. (6) Includes overlapping debt set forth in Table 4 below.

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

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 45
Menifee Mayor and City Council
August 16, 2023
Page
483 of 759

27 4859-1311-2685v6/200299-0019
TABLE 3A

CITY OF MENIFEE
COMMUNITY FACILITIES DISTRICT NO. 2021-2 (SUMAC RIDGE)

VALUE-TO-LIEN STRATIFICATION FOR DEVELOPED PROPERTY
BASED ON FISCAL YEAR 2023-24 SPECIAL TAX LEVY*
Value-to-Lien Category
No. of
Parcels of
Developed
Property
Percent of
Developed
Property
Appraised
Value(1)
Percent of
Appraised
Value
CFD 2021-2
Actual Fiscal
Year 2023-24
Special Tax
Levy
Percent
Share of
Actual
Fiscal
Year
2023-24
Special
Tax Levy
CFD 2021-2
Bonds(2)
Percent
Share of
CFD 2021-2
Bonds
All Other
Overlapping
Debt(3)
Less than 3.00:1(4) 49 36.57% $ 9,720,332 16.68% $ 170,033 36.51% $ 3,521,262 36.51% $ 114,039

5.01:1 to 7.00:1 7 5.22 3,302,189 5.67 25,112 5.39 520,056 5.39 16,843 Greater than 7.00:1(4) 78 58.21 45,236,813 77.65 270,587 58.10 5,603,682 58.10 181,481 Totals 134 100.00% $ 58,259,334 100.00% $ 465,732 100.00% $ 9,645,000 100.00% $ 312,363 * Preliminary, subject to change.
(1) Based on the appraised value set forth in the Appraisal Report as of June 19, 2023, the Date of Value. (2) Allocated based on the Fiscal Year 2023-24 Special Tax levy and reflects 134 building permits issued as of May 1, 2023 and an Administrative Expenses Cap for Fiscal Year 2023-24 of $31,212.
(3) Includes overlapping debt set forth in Table 4 below. (4) The minimum value to lien in the less than 3.00:1 category is 2.39:1*. The maximum value to lien in the greater than 7.00:1 category is 8.30:1*.

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

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 46
Menifee Mayor and City Council
August 16, 2023
Page
484 of 759

28 4859-1311-2685v6/200299-0019
TABLE 3B

CITY OF MENIFEE
COMMUNITY FACILITIES DISTRICT NO. 2021-2 (SUMAC RIDGE)

VALUE-TO-LIEN STRATA FOR ALL TAXABLE PROPERTY
BASED ON ESTIMATED FISCAL YEAR 2024-25 SPECIAL TAX LEVY* Value-to-Lien Category
No. of
Parcels of
Taxable
Property
Percent of
Taxable
Property
Appraised
Value(1)
Percent of
Appraised
Value
Estimated
Fiscal Year
2024-25 Levy
Percent
Share of
Estimated
Fiscal
Year
2024-25
Special
Tax Levy
CFD 2021-2
Bonds(2)
Percent
Share of
CFD 2021-2
Bonds
All Other
Overlapping
Debt
Less than 5.00:1(3) 90 51.43% $ 17,853,671 26.89% $ 288,400 51.17% $ 4,935,791 51.17% $ 159,850

5.01:1 to 9.00:1 7 4.00 3,302,189 4.79 23,368 4.15 399,928 4.15 12,952 Greater than 9.00:1(3) 78 44.57 45,236,813 68.14 251,793 44.68 4,309,281 44.68 139,560 Totals 175 100.00% $ 66,392,673 100.00% $ 563,561 100.00% $ 9,645,000 100.00% $ 312,363 * Preliminary, subject to change.
(1) Based on the appraised value set forth in the Appraisal Report as of June 19, 2023, the Date of Value. (2) Allocated based on the estimated Fiscal Year 2024-25 Special Tax levy and reflects all 175 building permits issued as of July 1, 2023 and an Administrative Expenses Cap for Fiscal Year 2024-25 of $31,836.
(3) Includes overlapping debt set forth in Table 4 below. (4) The minimum value to lien in the less than 5.00:1 category is 3.11:1*. The maximum value to lien in the greater than 9.00:1 category is 10.80:1*.

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

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 47
Menifee Mayor and City Council
August 16, 2023
Page
485 of 759

29 4859-1311-2685v6/200299-0019
Direct and Overlapping Debt
The District is included within the boundaries of overlapping local agencies providing governmental services. Some of these local agencies have outstanding bonds, and/or the authority to issue bonds, payable from taxes or assessments. The existing and authorized indebtedness payable from taxes and assessments that may be levied upon the property within the District is shown in Table 4 below. In addition to current debt, new community facilities districts and/or special assessment districts could be formed in the future encompassing all or a portion of the property within the District; and such districts or the agencies that formed them could issue more bonds and levy additional special taxes or assessments on such property within the District. [Remainder of Page Intentionally Left Blank]
Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 48
Menifee Mayor and City Council
August 16, 2023
Page
486 of 759

30 4859-1311-2685v6/200299-0019
TABLE 4

CITY OF MENIFEE
COMMUNITY FACILITIES DISTRICT NO. 2021-2 (SUMAC RIDGE)

DIRECT AND OVERLAPPING DEBT
AS OF JUNE 19, 2023
I. Appraised Value (1) $ 66,392,673
II. Land Secured Bond Indebtedness
Outstanding Direct and
Overlapping Bonded Debt Type Issued Outstanding
%
Applicable
Parcels in
CFD No.
2021-2(3)
Amount
Applicable
CITY OF MENIFEE CFD NO. 2021-2, SERIES 2023 CFD $ 9,645,000 $ 9,645,000 * 100.000% 175 $ 9,645,000 *

PERRIS UNION HIGH SCHOOL DISTRICT FINANCING
AUTHORITY, 2015 REVENUE BONDS CFD 46,150,000 31,050,000 0.991 175 307,693 TOTAL LAND SECURED BONDED DEBT(2) $ 9,952,693 *
Authorized but Unissued Direct and
Overlapping Indebtedness Type Authorized Unissued
%
Applicable
Parcels in
CFD No.
2021-2(3)
Amount
Applicable
CITY OF MENIFEE CFD NO. 2021-2, SERIES 2023(2) CFD $ 15,000,000 $ 0 100.000% 175 $ 0

PERRIS UNION HIGH SCHOOL DISTRICT FINANCING
AUTHORITY, 2015 REVENUE BONDS CFD 140,000,000 93,850,000 0.991 175 930,014 TOTAL UNISSUED LAND SECURED INDEBTEDNESS(2) $ 930,014
TOTAL OUTSTANDING AND UNISSUED LAND SECURED INDEBTEDNESS $ 10,882,707 * III. General Obligation Bond Indebtedness
Outstanding Direct and
Overlapping Bonded Debt Type Issued Outstanding
%
Applicable
Parcels in
CFD No.
2021-2(3)
Amount
Applicable
METROPOLITAN WATER GO $ 850,000,000 $ 20,175,000 0.000% 175 $ 35 MT. SAN JACINTO COLLEGE DISTRICT GO 295,000,000 253,195,000 0.000 175 393 MENIFEE UNION SCHOOL DISTRICT GO 144,463,923 120,934,720 0.001 175 1,480 PERRIS UNION HIGH SCHOOL DISTRICT GO 347,415,402 315,277,686 0.001 175 2,762 TOTAL OUTSTANDING GENERAL OBLIGATION BONDED DEBT(2) $ 4,670 Authorized but Unissued Direct and
Overlapping Indebtedness Type Authorized Unissued
%
Applicable
Parcels in
CFD No.
2021-2(3)
Amount
Applicable
METROPOLITAN WATER DISTRICT GO $ 850,000,000 $ 0 0.000% 175 $ 0 MT. SAN JACINTO COLLEGE DISTRICT GO 295,000,000 0 0.000 175 0 MENIFEE UNION SCHOOL DISTRICT GO 180,960,000 36,496,077 0.001 175 447 PERRIS UNION HIGH SCHOOL DISTRICT GO 347,420,000 4,598 0.001 175 0 TOTAL UNISSUED GENERAL OBLIGATION INDEBTEDNESS(2) $ 447 TOTAL OUTSTANDING AND UNISSUED GENERAL OBLIGATION INDEBTEDNESS $ 5,117 TOTAL OF ALL OUTSTANDING DIRECT AND OVERLAPPING BONDED DEBT $ 9,957,363 * TOTAL OF ALL OUTSTANDING DIRECT AND UNISSUED DIRECT OVERLAPPING INDEBTEDNESS $ 10,887,824 * IV. Ratios to Appraisal Value
Outstanding Land Secured Bonded Debt 6.67:1*
Total Outstanding Bonded Debt 6.67:1*
* Preliminary, subject to change.
(1) Based on the Appraisal Report as of June 19, 2023, Date of Value. (2) Parity Bonds may be issued for refunding purposes only. (3) All parcels have subdivided into 175 individual parcels. Based on development status as of July 1, 2023, all 175 parcels will be classified as Developed Property under the Rate and Method beginning with Fiscal Year 2024-25.

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

Table 5 below describes the estimated Fiscal Year 2023-24 effective tax burden for the development in the District based on the average appraised value of homes within each Land Use Category (as defined in the Rate and Method) as of the Date of Value, the Fiscal Year 2023-24 Special Tax levy and Fiscal Year 2022-23 levies for all other overlapping taxing jurisdictions. Based on the foregoing, the projected debt service on the Bonds and the Administrative Expenses Cap of $31,212 (which amount shall escalate at 2% per Fiscal Year), in Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 49
Menifee Mayor and City Council
August 16, 2023
Page
487 of 759

31 4859-1311-2685v6/200299-0019
Fiscal Year 2023-24, the estimated effective tax rate on Developed Property in the District is estimated to range from approximately 1.94% to 2.01%.
[Remainder of Page Intentionally Left Blank]
Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 50
Menifee Mayor and City Council
August 16, 2023
Page
488 of 759

32 4859-1311-2685v6/200299-0019
TABLE 5

CITY OF MENIFEE
COMMUNITY FACILITIES DISTRICT NO. 2021-2 (SUMAC RIDGE)
ESTIMATED FISCAL YEAR 2023-24 TAX OBLIGATION

FOR SAMPLE DEVELOPED PROPERTY
TR 37668
Sage Cedar
Plan Type 1 2 3 4 5 1 2 3
CFD Tax Category Less than
2,000 S.F.
2,201 to
2,400 S.F.
2,401 to
2,600 S.F.
2,601 to
2,800 S.F.
2,801 to
3,000 S.F.
2,401 to
2,600 S.F.
2,801 to
3,000 S.F.

Over
3,200 S.F.

Home Size 1,910 2,320 2,541 2,771 2,948 2,527 2,992 3,247 Appraisal Value(1) $515,700 $547,520 $559,020 $576,368 $583,704 $601,426 $610,368 $633,165 Ad Valorem Property Taxes:

Ad-Valorem Tax Rate (1.00%) $ 5,157 $ 5,475 $ 5,590 $ 5,764 $ 5,837 $ 6,014 $ 6,104 $ 6,332 Metro Water West (0.00350%) 18 19 20 20 20 21 21 22
Menifee Union School District (0.06201%) 320 340 347 357 362 373 378 393 Perris Union High School District (0.08859%) 457 485 495 511 517 533 541 561 Mt. San Jacinto. College District (0.01320%) 68 72 74 76 77 79 81 84 Total General Property Taxes $ 6,020 $ 6,391 $ 6,525 $ 6,728 $ 6,814 $ 7,020 $ 7,125 $ 7,391 Assessment, Special Taxes & Parcel Charges:

Perris Union High School District CFD 92-1 $ 330 $ 330 $ 330 $ 330 $ 330 $ 330 $ 330 $ 330 Flood Control Stormwater / Cleanwater / Santa Ana 4 4 4 4 4 4 4 4 EMWD Standby 21 21 21 21 21 21 21 21
MWD Standby charge 7 7 7 7 7 7 7 7
City of Menifee CFD No. 2017-1 - Maintenance Services 880 880 880 880 880 880 880 880 City of Menifee CFD No. 2021-2(2) 3,101 3,275 3,389 3,502 3,588 3,389 3,588 3,885 Total Assessments & Special Taxes $ 4,343 $ 4,517 $ 4,630 $ 4,744 $ 4,830 $ 4,630 $ 4,830 $ 5,126 Projected Total Property Tax $ 10,363 $ 10,908 $ 11,156 $ 11,472 $ 11,643 $ 11,651 $ 11,955 $ 12,517 Projected Effective Tax Rate 2.01% 1.99% 2.00% 1.99 % 1.99% 1.94% 1.96% 1.98% (1) Based on the average appraised value for homes in each Land Use Class (as defined in the Rate and Method) set forth in the Appraisal Report as of the Date of Value. (2) Reflects the Fiscal Year 2023-24 Special Tax levy on Developed Property at the Assigned Special Tax rates.

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

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 51
Menifee Mayor and City Council
August 16, 2023
Page
489 of 759

33 4859-1311-2685v6/200299-0019
Delinquency History
Unpaid amounts of the Special Taxes for the first and second installments become delinquent after December 10 and April 10 of each Fiscal Year, respectively. Fiscal Year 2022-23 was the first fiscal year in which Special Taxes were levied. There were no delinquencies for the Fiscal Year 2022-23 Special Tax levy.

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

See the caption “SPECIAL RISK FACTORS.”
Notwithstanding the belief of Meritage that it will have sufficient funds to complete its planned development in the District, no assurance can be given that amounts necessary to fund the remaining planned development by Meritage in the District will be available when needed. None of Meritage, or any other entity or person, is under any legal obligation of any kind to expend funds for the development of the property as planned by Meritage in the District. Any contributions by Meritage or any other entity or person to fund the costs of its development are entirely voluntary. If and to the extent the aforementioned sources are inadequate to pay the costs to complete the planned development by Meritage within the District, the remaining portions of such development may not be completed. Meritage has no legal obligation to Bondholders to make any such funds available for construction or development, or the payment of ad valorem property taxes or the Special Taxes. See the caption “SPECIAL RISK FACTORS.”
General
The District contains approximately 59 taxable acres, and is located on the north side of Scott Road at Lindenberger Road, in the City. The property within the District is being developed by Meritage in a project marketed by Meritage as “Sumac Ridge.”
The property within the District is planned for 175 single family detached homes. The major infrastructure (sewer, water, storm drains, utilities, and arterial roads) necessary to develop the property within the District has been completed. Meritage expects to complete the remaining infrastructure within the District, which consists of landscaping, certain interior streets, drainage improvements and wet and dry utilities as construction of the related homes occurs. Meritage is limited to 141 home closings in the District until the completion of all remaining roads, storm drainage, water systems, sewer systems, and landscaping. Meritage does not expect the foregoing conditions to delay its projected development timing within the District as described herein.

Planned Development Within the District
The property within the District is planned for 175 residential units within two product lines – Cedar (58 homes) and Sage (117 home). As of June 19, 2023, Meritage had completed and conveyed 78 homes within the District to individual homeowners. As of such date, Meritage owned four model homes (none of which were in escrow), 25 homes in various stages of construction (13 of which were in escrow) and 68 finished lots (none Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 52
Menifee Mayor and City Council
August 16, 2023
Page
490 of 759

34 4859-1311-2685v6/200299-0019
of which were in escrow). Meritage currently expects to complete and convey all homes planned within the District to individual homeowners by the end of 2025.

The following tables summarize the status of development within the three product lines planned within the District as of June 19, 2023.

COMMUNITY FACILITIES DISTRICT NO. 2021-2 (SUMAC RIDGE)
CEDAR
(As of June 19, 2023)
Owned by Meritage
Plan
Total
Units
Planned
Estimated
Home
Square
Footage
Closings as of
June 19, 2023
Completed
Homes/Homes
Under
Construction(1) Finished Lots
Base Home
Prices(2)
1 19 2,527 12 3 4 $601,000
2 19 2,992 9 4 6 $626,000
3 20 3,247 9 5 6 $643,000
Totals 58 30 12 16
(1) Includes 2 model homes and 10 homes under construction (6 in escrow). (2) Base home prices shown exclude lot premiums, options and extras and any incentives or price reductions. Base sales prices are subject to change.

Source: Meritage.

COMMUNITY FACILITIES DISTRICT NO. 2021-2 (SUMAC RIDGE)
SAGE
(As of June 19, 2023)
Owned by Meritage
Plan
Total
Units
Planned
Estimated
Home
Square
Footage
Closings as of
June 19, 2023
Completed
Homes/Homes
Under
Construction(1) Finished Lots
Base Home
Prices(2)
1 22 1,910 8 2 12 $546,000
2 23 2,320 9 4 10 $559,000
3 22 2,541 10 2 10 $571,000
4 25 2,771 10 5 10 $584,000
5 25 2,948 11 4 10 $596,000
Totals 117 48 17 52
(1) Includes 2 model homes and 15 homes under construction (7 in escrow). (2) Base home prices shown exclude lot premiums, options and extras and any incentives or price reductions. Base sales prices are subject to change.

Source: Meritage.

No assurance can be given that home construction and sales will be carried out on the schedule and according to the plans outlined herein, or that the home construction and sale plans or base prices set forth above will not change after the date of this Official Statement. Additionally, homes sold may not result in closed escrows as sales contracts are subject to cancellation. In changing market conditions, builders will often revise the product lines and prices and the rate of sales can fluctuate. Meritage continuously evaluates its product lines and prices in light of the then current market conditions. See “SPECIAL RISK FACTORS” herein for a discussion of risk factors.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 53
Menifee Mayor and City Council
August 16, 2023
Page
491 of 759

35 4859-1311-2685v6/200299-0019
Meritage
General. Meritage Homes of California, Inc., a California corporation (previously defined as “Meritage”) is a subsidiary of Meritage Homes Corporation (“Meritage Homes Corporation”), a Maryland corporation. Meritage Homes Corporation is a homebuilder focused primarily on high-growth regions of the western and southern United States. Meritage Homes Corporation operates as a holding company, has no independent assets or operations, and is traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “MTH.” Homebuilding, construction, development and sales activities are conducted through subsidiaries. As of July 1, 2023, Meritage Homes Corporation was actively selling homes in three geographic regions: West (Arizona, California and Colorado), Central (Texas) and East (Florida, Georgia, North Carolina, South Carolina and Tennessee).

Meritage Homes Corporation is subject to the informational reporting requirements of the Exchange Act, and in accordance therewith is obligated to file reports, proxy statements and other information with the SEC. Such filings set forth, among other things, certain data relative to the consolidated results of operations and financial position of Meritage Homes Corporation and its subsidiaries (e.g., see Meritage Homes Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on February 15, 2023 and Quarterly Report on Form 10-Q for the quarterly period ended March 30, 2023, as filed with the SEC on April 28, 2023) as of the dates described therein. The SEC maintains an Internet website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC, including Meritage Homes Corporation. The address of such Internet website is www.sec.gov. All documents subsequently filed by Meritage Homes Corporation pursuant to the requirements of the Exchange Act after the date of this Official Statement will be available for inspection in such manner as the SEC prescribes. Copies of Meritage Homes Corporation’s annual report, quarterly reports and current reports, including any amendments, will be available from Meritage Homes Corporation’s website at www.meritagehomes.com.

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

Financing Plan. Through July 1, 2023, Meritage had spent approximately $7.3 million in acquiring its land in the District and approximately $58.2 million in site development costs, permits and impact fees, home construction costs, and other development, marketing and sales costs (exclusive of internal financing repayment, corporate overhead and other carry costs) related to its development within the District. Meritage expects to spend approximately $20.2 million in additional site development costs, permit and impact fees, home construction costs, and other development, marketing and sales costs (exclusive of corporate overhead and other carry costs) between July 1, 2023 and full build-out of the homes proposed to be constructed in the District.

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

Except as described in this Official Statement and except for those consents, permits, authorizations, certifications and approvals of governmental entities required in the ordinary course of development, Meritage has no actual knowledge of any impediment to construction or obtaining land use entitlements which could be Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 54
Menifee Mayor and City Council
August 16, 2023
Page
492 of 759

36 4859-1311-2685v6/200299-0019
reasonably expected to have a material adverse effect on its ability to complete the planned development of its property within the District as described in the Official Statement. Although the information in this Official Statement reflects the current development expectations of Meritage, no assurance can be given that home construction and sales will be carried out on the schedule and according to the plans described herein, or that the home construction and sale plans or base prices set forth herein will not change after the date of this Official Statement. Meritage reserves the right to change its development at any time without notice. Additionally, homes under contract to be sold may not result in closed escrows as sales contracts are subject to cancellation.

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

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

Risks of Real Estate Secured Investments Generally
The Bond Owners will be subject to the risks generally incident to an investment secured by real estate, including, without limitation: (i) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of the District, the supply of or demand for competitive properties in such area, and the market value of residential property or buildings and/or sites in the event of sale or foreclosure; (ii) changes in real estate tax rates and other operating expenses, governmental rules (including, without limitation, zoning laws and laws relating to endangered species and hazardous materials) and fiscal policies; (iii) natural disasters (including, without limitation, earthquakes, wildfires and floods), which may result in uninsured losses; (iv) adverse changes in local market conditions; and (v) increased delinquencies due to rising mortgage costs and other factors.

No assurance can be given that the property owners within the District will pay Special Taxes in the future or that they will be able to pay such Special Taxes on a timely basis. See the caption “— Enforcement Delays — Bankruptcy” for a discussion of certain limitations on the District’s ability to pursue judicial proceedings with respect to delinquent parcels.

Insufficiency of Special Tax Revenues
As discussed below, the Special Taxes may not produce revenues sufficient to pay the debt service on the Bonds due to nonpayment of the amounts levied.

In order to pay debt service on the Bonds, it is generally necessary that the Special Taxes be paid in a timely manner. Should the Special Taxes not be paid on time, the District has established a Reserve Account under the Indenture to be maintained in an amount equal to the Reserve Requirement to pay debt service on the Bonds to the extent other funds are not available. See “SOURCES OF PAYMENT FOR THE BONDS — Reserve Account of the Special Tax Fund.” The District will covenant in the Indenture to maintain in the Reserve Account an amount equal to the Reserve Requirement, subject, however, to the availability of Net Taxes in amounts sufficient to do so and to the limitation that the District may not levy the Special Tax in any Fiscal Year at a rate in excess of the maximum amounts permitted under the Rate and Method. See Appendix A and Appendix E hereto. As a result, if a significant number of Special Tax delinquencies occurs within the District, Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 55
Menifee Mayor and City Council
August 16, 2023
Page
493 of 759

37 4859-1311-2685v6/200299-0019
the District could be unable to replenish the Reserve Account to the Reserve Requirement due to the limitations on the amount of the Special Tax that may be levied. If such defaults were to continue in successive years, the Reserve Account could be depleted and a default on the Bonds could occur.

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

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

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

Prior to July 1, 1983, the right of redemption from foreclosure sales was limited to a period of one year from the date of sale. Under legislation effective July 1, 1983, the statutory right of redemption from such foreclosure sales has been repealed. However, a period of 20 days must elapse after the date on which the notice of levy of the interest in real property was served on the judgment debtor before the sale of such lot or parcel Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 56
Menifee Mayor and City Council
August 16, 2023
Page
494 of 759

38 4859-1311-2685v6/200299-0019
can be made. Furthermore, if the purchaser at the sale is the judgment creditor (e.g., the District), an action may be commenced by the delinquent property owner within 90 days after the date of sale to set aside such sale. The constitutionality of the aforementioned legislation, which repeals the one year redemption period, has not been tested and there can be no assurance that, if tested, such legislation will be upheld. (Section 701.680 of the Code of Civil Procedure of the State.)
Impact of Economic Conditions on the Development in the District Certain events and factors which negatively affect the regional, State and national economies could have an adverse effect on the pace at which the current or any future developers in the District can complete the remaining infrastructure and future homes, and demand by, and the ability of individuals to purchase homes within the District. Such events and factors could include rising inflation and interest rates, persistent supply chain issues and global market instability caused by geopolitical events. Any adverse impact of the foregoing and other economic factors on the projects in the District and the real estate market in general cannot be predicted.

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

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

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

Concentration of Ownership
Based on development and ownership status as of June 19, 2023, (and assuming no further development activity and transfer of ownership), individual homeowners and Meritage would be responsible for approximately 58.1% and 41.9%, respectively, of the Fiscal Year 2023-24 Special Tax levy. Based on ownership status as of June 19, 2023 and that all 175 parcels will be classified as Developed Property for the Fiscal Year 2024-25 Special Tax levy, individual homeowners and Meritage would be responsible for approximately 44.6% and 55.4%, respectively, of the projected Fiscal Year 2024-25 levy.

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

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 57
Menifee Mayor and City Council
August 16, 2023
Page
495 of 759

39 4859-1311-2685v6/200299-0019
Property Values
The value of the property within the District is a critical factor in determining the investment quality of the Bonds. If a property owner is delinquent in the payment of Special Taxes, the District’s only remedy is to commence foreclosure proceedings against the delinquent parcel in an attempt to obtain funds to pay the Special Taxes. Reductions in property values due to a downturn in the economy, physical events such as earthquakes, fires or floods, stricter land use regulations, delays in development or other events will adversely impact the security underlying the Special Taxes. See “THE DISTRICT — Appraisal Report” and Appendix D — “APPRAISAL REPORT.”
The Appraiser has estimated, on the basis of certain assumptions and limiting conditions contained in the Appraisal Report, that as of the Date of Value, the market value of the land and improvements within the District was approximately $66,392,673. See “THE DISTRICT — Appraisal Report” The Appraisal Report indicates the Appraiser’s opinion as to the market value of the properties referred to therein as of the date and under the conditions specified therein. The Appraiser’s opinion reflects conditions prevailing in the applicable market as of the Date of Value. The Appraiser’s opinion does not predict the future value of the subject property, and there can be no assurance that market conditions will not change adversely in the future.

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

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

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

The District is not located in an area which the Department of Forestry and Fire Protection of the State of California has designated as a high fire hazard severity zone. However, there is a risk of residential property within the District being destroyed by wildfires and no assurance can be given as to the severity or frequency of wildfires within the vicinity of the District. Additionally, property located adjacent to burn areas can be subject to mudslides and flooding, which can cause significant damage and destruction to property.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 58
Menifee Mayor and City Council
August 16, 2023
Page
496 of 759

40 4859-1311-2685v6/200299-0019
In the event of a severe earthquake, fire, flood or other natural disaster, there may be significant damage to both property and infrastructure in the District. As a result, a substantial portion of the property owners may be unable or unwilling to pay the Special Taxes when due. In addition, the value of land in the District could be diminished in the aftermath of such a natural disaster, reducing the resulting proceeds of foreclosure sales in the event of delinquencies in the payment of the Special Taxes.

Hazardous Substances
While government taxes, assessments and charges are a common claim against the value of a parcel, other less common claims may also be relevant. One of the most serious in terms of the potential reduction in the value of a parcel is a claim with regard to a hazardous substance. In general, the owners and operators of a parcel may be required by law to remedy conditions relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Super Fund Act,” is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar in effect. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of a parcel whether or not the owner (or operator) had anything to do with creating or handling the hazardous substance.

The effect, therefore, should any of the parcels within the District be affected by a hazardous substance, is to reduce the marketability and value by the costs of remedying the condition.

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

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

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

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

Special Tax Delinquencies
Under provisions of the Act, the Special Taxes, from which funds necessary for the payment of principal of, and interest on, the Bonds are derived, will be billed to the properties within the District on the regular ad valorem property tax bills sent to owners of such properties by the County Tax Collector. The Act currently Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 59
Menifee Mayor and City Council
August 16, 2023
Page
497 of 759

41 4859-1311-2685v6/200299-0019
provides that such Special Tax installments are due and payable, and bear the same penalties and interest for non-payment, as do ad valorem property tax installments.

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

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

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

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

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

In the case of Fannie Mae and Freddie Mac, in the event a parcel of taxable property is owned by a federal government entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, or a private deed of trust secured by a parcel of taxable property is owned by a federal government entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, the ability to foreclose on the parcel or to collect delinquent Special Taxes may be limited. Federal courts have held that, based on the supremacy clause of the United States Constitution “this Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, anything in the Constitution or Laws of any State to the contrary notwithstanding.” In the absence of Congressional intent to the contrary, a state or local agency cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal government interest. This means that, unless Congress has otherwise provided, if a Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 60
Menifee Mayor and City Council
August 16, 2023
Page
498 of 759

42 4859-1311-2685v6/200299-0019
federal government entity owns a parcel of taxable property but does not pay taxes and assessments levied on the parcel (including Special Taxes), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments.

Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and the District wishes to foreclose on the parcel as a result of delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on a parity with the Special Taxes and preserve the federal government’s mortgage interest. For a discussion of risks associated with taxable parcels within the District becoming owned by the federal government, federal government entities or federal government sponsored entities, see “—Insufficiency of Special Tax Revenues.”
The District’s remedies may also be limited in the case of delinquent Special Taxes with respect to parcels in which other federal agencies (such as the Internal Revenue Service and the Drug Enforcement Administration) have or obtain an interest.

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

The imposition of additional liens on a parity with the Special Taxes may reduce the ability or willingness of property owners to pay the Special Taxes and increase the possibility that foreclosure proceeds will not be adequate to pay delinquent Special Taxes.

Payment of Special Taxes is not a Personal Obligation of the Property Owners An owner of a taxable parcel is not personally obligated to pay Special Taxes. Rather, Special Taxes are an obligation which is secured only by a lien against the taxable parcel. If the value of a taxable parcel is not sufficient, taking into account other liens imposed by public agencies, to secure fully Special Taxes, the District has no recourse against the property owner.

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

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

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

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 61
Menifee Mayor and City Council
August 16, 2023
Page
499 of 759

43 4859-1311-2685v6/200299-0019
The District’s legal obligations with respect to any delinquent Special Taxes are limited to: (i) payments from the Reserve Account to the extent of funds on deposit therein; and (ii) the institution of judicial foreclosure proceedings under certain circumstances with respect to any parcels for which Special Taxes are delinquent. See the caption “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales.” The Bonds cannot be accelerated in the event of any default.

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

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

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

It may be possible, however, for voters or the City Council, acting as the legislative body of the District, to reduce the Special Taxes in a manner which does not interfere with the timely repayment of the Bonds, but which does reduce the maximum amount of Special Taxes that may be levied in any year below the existing levels. Therefore, no assurance can be given with respect to the future levy of Special Taxes in amounts greater than the amount necessary for the timely retirement of the Bonds. Nevertheless, to the maximum extent that the law permits it to do so, the District will covenant that it will not initiate proceedings under the Act to reduce the maximum Special Tax rates for the District, unless, in connection therewith, the District receives a certificate from one or more Independent Financial Consultants which, when taken together, certify that: (i) such changes do not reduce the maximum Special Taxes that may be levied in each year on property within the District to an amount which is less than the Administrative Expenses Cap plus 110% of the Annual Debt Service due in each Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 62
Menifee Mayor and City Council
August 16, 2023
Page
500 of 759

44 4859-1311-2685v6/200299-0019
corresponding future Bond Year with respect to the Bonds and Parity Bonds Outstanding as of the date of such proposed reduction; and (ii) the District is not delinquent in the payment of the principal of or interest on the Bonds or any Parity Bonds. The District also will covenant that, in the event an initiative is adopted which purports to reduce or otherwise alter the Rate and Method, it will commence and pursue legal action in order to preserve its ability to comply with the foregoing covenant. However, no assurance can be given as to the enforceability of the foregoing covenants.

Litigation with Respect to Community Facilities Districts Shapiro. The California Court of Appeal, Fourth Appellate District, Division One, issued its opinion in City of San Diego v. Melvin Shapiro (2014) 228 Cal.App.4th 756 (the “San Diego Decision”). The case involved a Convention Center Facilities District (the “CCFD”) established by the City of San Diego (“San Diego”). The CCFD is a financing district much like a community facilities district established under the provisions of the Act. The CCFD is comprised of all of the real property in San Diego. However, the special tax to be levied within the CCFD was to be levied only on hotel properties located within the CCFD.

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

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

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

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

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

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 63
Menifee Mayor and City Council
August 16, 2023
Page
501 of 759

45 4859-1311-2685v6/200299-0019
The Special Tax Election in the District. With respect to the San Diego Decision, the facts of such case show that there were thousands of registered voters within the CCFD (viz., all of the registered voters in San Diego). The election held in the District had less than 12 registered voters at the time of the election to authorize the Special Taxes. In the San Diego Decision, the court expressly stated that it was not addressing the validity of landowner voting to impose special taxes pursuant to the Act in situations where there are fewer than 12 registered voters. Thus, by its terms, the court’s holding in the San Diego Decision does not apply to the Special Tax election in the District. Moreover, Section 53341 of the Act provides that any “action or proceeding to attack, review, set aside, void or annul the levy of a special tax…shall be commenced within 30 days after the special tax is approved by the voters.” Similarly, Section 53359 of the Act provides that any action to determine the validity of bonds issued pursuant to the Act be brought within 30 days of the voters approving the issuance of such bonds. The petitioners in Horizon filed the writ of mandate within 30 days of the landowner election.

Voters in the District approved Special Tax on November 3, 2021. Based on Sections 53341 and 53359 of the Act and analysis of existing laws, regulations, rulings and court decisions, the District believes that no successful challenge to the Special Tax being levied in accordance with the Rate and Method may now be brought. In connection with the issuance of the Bonds, Bond Counsel expects to deliver its opinion in the proposed form attached hereto as Appendix C.

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

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

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

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

Bond Counsel has limited its opinion as to the enforceability of the Bonds and of the Indenture to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other similar laws affecting generally the enforcement of creditor’s rights, by equitable principles and by the exercise of judicial discretion and by limitations on remedies against public agencies in the Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 64
Menifee Mayor and City Council
August 16, 2023
Page
502 of 759

46 4859-1311-2685v6/200299-0019
State of California. The lack of availability of certain remedies or the limitation of remedies may entail risks of delay, limitation or modification of the rights of the Owners.

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

In March 2023, the City experienced a cybersecurity incident, in which an attacker successfully impersonated a known vendor and gained unauthorized mailbox access across several City employees. As a result of the City’s cyber security controls, the City did not incur any financial loss as a result of such cybersecurity incident. The City has established cybersecurity risk management policies and procedures and also conducts ongoing cybersecurity awareness training for all employees.

CONTINUING DISCLOSURE
District Continuing Disclosure
Pursuant to a Continuing Disclosure Certificate, dated as of September 1, 2023 (the “Disclosure Certificate”), to be executed and delivered by the District at the time of issuance of the Bonds, the District will covenant for the benefit of the holders and Beneficial Owners of the Bonds to provide certain financial information and operating data relating to the District by March 1 following the end of the District’s Fiscal Year (currently its Fiscal Year ends on June 30) (the “Annual Report”), commencing with the Annual Report for the Fiscal Year ending June 30, 2023, and to provide notices of the occurrence of certain enumerated events. The Annual Report and the notices of enumerated events will be filed by the District with EMMA. The specific nature of the information to be contained in the Annual Report and the notice of enumerated events is set forth in Appendix F — “FORM OF DISTRICT CONTINUING DISCLOSURE CERTIFICATE.” These covenants have been made in order to assist the Underwriter in complying with subsection (b)(5) of Rule 15c2-12.

The District has not had any continuing disclosure undertakings outstanding during the previous five- year period. The City has retained Spicer Consulting Group, LLC to serve as Dissemination Agent for the continuing disclosure undertaking related to the Bonds, and has adopted policies and procedures with respect to its continuing disclosure practices.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 65
Menifee Mayor and City Council
August 16, 2023
Page
503 of 759

47 4859-1311-2685v6/200299-0019
Developer Continuing Disclosure
The Underwriter does not consider Meritage to be an “obligated person” with respect to the Bonds for purposes of the Rule. Notwithstanding the foregoing, to provide updated information with respect to the development within the District, Meritage will execute a continuing disclosure certificate (the “Developer Continuing Disclosure Certificate”) pursuant to which it will covenant to provide semiannual reports until satisfaction of certain conditions set forth in the Developer Continuing Disclosure Certificate. The semiannual reports to be provided by Meritage will contain updates regarding the development within the District as outlined in Section 4 of the Developer Continuing Disclosure Certificate attached hereto as APPENDIX G. In addition to its semiannual reports, Meritage will agree to provide notices of certain events set forth in the Developer Continuing Disclosure Certificate.

Meritage’s obligations under the Developer Continuing Disclosure Certificate will terminate upon the earliest to occur of: (a) the legal defeasance, prior redemption or payment in full of all the Bonds; or (b) at such time as Meritage has conveyed 140 residential units in the District to individual homeowners.

Meritage has not failed to comply in any material respect with any continuing disclosure agreement with respect to community facilities district or assessment district financings in Southern California within the past five years.

TAX MATTERS
In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California (“Bond Counsel”), under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes, and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. However, it should be noted that for tax years beginning after December 31, 2022, with respect to applicable corporations as defined in Section 59(k) of the Internal Revenue Code of 1986, as amended (the “Code”), generally certain corporations with more than $1,000,000,000 of average annual adjusted financial statement income, interest (and original issue discount) with respect to the Bonds might be taken into account in determining adjusted financial statement income for purposes of computing the alternative minimum tax imposed by Section 55 of the Code on such corporations. In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State of California personal income tax.

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

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

The amount by which a Beneficial Owner’s original basis for determining loss on sale or exchange in the applicable Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 66
Menifee Mayor and City Council
August 16, 2023
Page
504 of 759

48 4859-1311-2685v6/200299-0019
date) constitutes amortizable Bond premium, which must be amortized under Section 171 of the Code; such amortizable Bond premium reduces the Beneficial Owner’s basis in the applicable Bond (and the amount of tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of Bond premium may result in a Beneficial Owner realizing a taxable gain when a Bond is sold by the Beneficial Owner for an amount equal to or less (under certain circumstances) than the original cost of the Bond to the Beneficial Owner. Purchasers of the Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable Bond premium.

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

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

LOCAL STATUTORY CHANGES (OR JUDICIAL OR REGULATORY CHANGES TO OR

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

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

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

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

INTRODUCED OR ENACTED OR JUDICIAL OR REGULATORY INTERPRETATIONS WILL NOT OCCUR HAVING THE EFFECTS DESCRIBED ABOVE. BEFORE PURCHASING ANY OF THE BONDS,

ALL POTENTIAL PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING

POSSIBLE STATUTORY CHANGES OR JUDICIAL OR REGULATORY CHANGES OR INTERPRETATIONS, AND THEIR COLLATERAL TAX CONSEQUENCES RELATING TO THE BONDS.

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

Although Bond Counsel will render an opinion that interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes provided that the District and the City continue to comply with certain requirements of the Code, the ownership of the Bonds and the accrual or receipt of interest (and original issue discount) with respect to the Bonds may otherwise affect the tax liability of certain persons.

Bond Counsel expresses no opinion regarding any such tax consequences. Accordingly, before purchasing any of the Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences relating to the Bonds.

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

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

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 67
Menifee Mayor and City Council
August 16, 2023
Page
505 of 759

49 4859-1311-2685v6/200299-0019

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

ABSENCE OF LITIGATION
In connection with the issuance of the Bonds, the City Attorney will deliver an opinion to the effect that, to their actual knowledge, after due inquiry and investigation, there is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body, pending or threatened, or any unfavorable decision, ruling or finding, against or affecting the District, which would affect the validity of the Bonds or the Indenture, or contest the authority of the District to enter into or perform its obligations under the Bonds or the Indenture, or affects in any manner the right or ability of the District to collect the Special Taxes or pledge the Net Taxes levied within the District for the repayment of the Bonds.

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

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

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

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

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

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 68
Menifee Mayor and City Council
August 16, 2023
Page
506 of 759

50 4859-1311-2685v6/200299-0019
Urban Futures, Inc., is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities.

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

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

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

COMMUNITY FACILITIES DISTRICT NO. 2021-2 OF

THE CITY OF MENIFEE (SUMAC RIDGE)
By:

Armando G. Villa
City Manager of the City of Menifee
Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 69
Menifee Mayor and City Council
August 16, 2023
Page
507 of 759

A-1
4859-1311-2685v6/200299-0019

APPENDIX A

RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
COMMUNITY FACILITIES DISTRICT NO. 2021-2

OF THE CITY OF MENIFEE (SUMAC RIDGE)
A Special Tax (all capitalized terms not otherwise defined herein are defined in Section A, “Definitions”, below) shall be applicable to each Assessor’s Parcel of Taxable Property located within the boundaries of the City of Menifee Community Facilities District No. 2021-2 (Sumac Ridge) ("CFD No. 2021-2"). The amount of Special Tax to be levied in each Fiscal Year on an Assessor’s Parcel shall be determined by the City Council of the City of Menifee, acting in its capacity as the legislative body of CFD No. 2021-2, by applying the appropriate Special Tax for Developed Property, Approved Property, Undeveloped Property, and Provisional Undeveloped Property that is not Exempt Property as set forth below. All of the real property, unless exempted by law or by the provisions hereof in Section F, shall be taxed for the purposes, to the extent and in the manner herein provided.

A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
"Acre” or “Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor’s Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, or other recorded parcel map or instrument. The square footage of an Assessor’s Parcel is equal to the Acreage multiplied by 43,560.
"Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of CFD No. 2021-2: the costs of computing the Special Taxes and preparing the Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the City or otherwise); the costs of remitting Special Taxes to the Trustee; the costs of the Trustee (including legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 2021-2 or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No. 2021-2 or any designee thereof of complying with continuing disclosure requirements of the City, CFD No. 2021-2 and any major property owner associated with applicable federal and state securities laws and the Act; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, CFD No. 2021-2 or any designee thereof related to an appeal of the Special Tax; the costs associated with the release of funds from an escrow account; and the City’s annual administration fees and third party expenses. Administration Expenses shall also include amounts estimated by the CFD Administrator or advanced by the City or CFD No. 2021-2 for any other administrative purposes of CFD No. 2021-2, including attorney’s fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes.
"Approved Property" means all Assessor’s Parcels of Taxable Property: (i) that are included in a Final Map that was recorded prior to the January 1st preceding the Fiscal Year in which the Special Tax is being levied, (ii) that have an assigned Assessor’s Parcel Number from the County shown on an Assessor’s Parcel Map for the individual lot included on the Final Map, and (iii) that have not been issued a building permit on or before May 1st preceding the Fiscal Year in which the Special Tax is being levied. "Assessor’s Parcel" means a lot or parcel of land designated on an Assessor’s Parcel Map with an assigned Assessor’s Parcel Number.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 70
Menifee Mayor and City Council
August 16, 2023
Page
508 of 759

A-2
4859-1311-2685v6/200299-0019
"Assessor’s Parcel Map" means an official map of the Assessor of the County designating parcels by Assessor’s Parcel Number.
"Assessor’s Parcel Number" means that number assigned to an Assessor’s Parcel by the County for purposes of identification.
"Assigned Special Tax" means the Special Tax of that name described in Section D below. "Backup Special Tax" means the Special Tax of that name described in Section D below. "Bonds" means any obligation to repay a sum of money, including obligations in the form of bonds, certificates of participation, long-term leases, loans from government agencies, or loans from banks, other financial institutions, private businesses, or individuals, or long-term contracts, or any refunding thereof, to which Special Tax of CFD No. 2021-2 have been pledged.
"Boundary Map" means a recorded map of the CFD which indicates the boundaries of the CFD. "Building Permit" means the first legal document issued by a local agency giving official permission for new construction. For purposes of this definition, “Building Permit” may or may not include expired or cancelled building permits, or any subsequent building permit document(s) authorizing new construction on an Assessor’s Parcel that are issued or changed by the City after the first original issuance, as determined by the CFD Administrator, provided that following such determination the Maximum Special Tax that may be levied on all Assessor’s Parcels of Taxable Property will be at least 1.1 times annual debt service on all outstanding Bonds plus the estimated annual Administrative Expenses.
"Building Square Footage" or "BSF" means the square footage of assessable internal living space, exclusive of garages or other structures not used as living space, as determined by reference to the Building Permit for such Assessor’s Parcel.
"Calendar Year" means the period commencing January 1 of any year and ending the following December 31. “CFD Administrator" means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement, and providing for the levy and collection of the Special Taxes. "CFD” or “CFD No. 2021-2" means Community Facilities District No. 2021-2 (Sumac Ridge) established by the City under the Act.
“City” means the City of Menifee, State of California.
"City Council" means the City Council of the City of Menifee, acting as the legislative body of CFD No. 2021-2.
“Condominium Plan" means a condominium plan pursuant to California Civil Code, Section 4285. "County" means the County of Riverside, State of California. "Developed Property" means all Assessor’s Parcels that: (i) are included in a Final Map that was recorded prior to the January 1 st preceding the Fiscal Year in which the Special Tax is being levied, and (ii) have an Assessor’s Parcel Number from the County shown on an Assessor’s Parcel Map for the individual lot included on the Final Map, and (iii) a Building Permit for new construction was issued on or before May 1st preceding the Fiscal Year in which the Special Tax is being levied.
"Exempt Property" means all Assessor’s Parcels designated as being exempt from Special Taxes as provided for in Section F.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 71
Menifee Mayor and City Council
August 16, 2023
Page
509 of 759

A-3
4859-1311-2685v6/200299-0019
"Final Map" means a subdivision of property by recordation of a final map, parcel map, or lot line adjustment, pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or recordation of a Condominium Plan pursuant to California Civil Code Section 4285 that creates individual lots for which Building Permits may be issued without further subdivision. "Fiscal Year" means the period commencing on July 1st of any year and ending the following June 30th. “Indenture” means the indenture, fiscal agent agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same.
“Land Use Category” means any of the categories listed in Table 1 of Section D. "Maximum Special Tax" means for each Assessor’s Parcel, the maximum Special Tax, determined in accordance with Section D below, that can be levied by CFD No. 2021-2 on such Assessor’s Parcel. “Multifamily Property” means all Assessor’s Parcels of Developed Property for which a Building Permit has been issued for the purpose of constructing a building or buildings comprised of attached Residential Units available for rental by the general public, not for sale to an end user, and under common management, as determined by the CFD Administrator.
"Non-Residential Property" means all Assessor's Parcels of Developed Property for which a Building Permit(s) was issued for a non-residential use. The CFD Administrator shall make the determination if an Assessor’s Parcel is Non-Residential Property.
"Partial Prepayment Amount" means the amount required to prepay a portion of the Special Tax obligation for an Assessor’s Parcel, as described in Section G.2.
"Prepayment Amount" means the amount required to prepay the Special Tax obligation in full for an Assessor’s Parcel, as described in Section G.1.
“Proportionately” means for Taxable Property that is (i) Developed Property, that the ratio of the actual Special Tax levy to the Assigned Special Tax is the same for all Assessor’s Parcels of Developed Property, (ii) Approved Property, that the ratio of the actual Special Tax levy to the Maximum Special Tax is the same for all Assessor’s Parcels of Approved Property, and (iii) Undeveloped Property or Provisional Undeveloped Property, that the ratio of the actual Special Tax levy per Acre to the Maximum Special Tax per Acre is the same for all Assessor’s Parcels of Undeveloped Property or Provisional Undeveloped Property, as applicable. "Provisional Undeveloped Property" means all Assessor’s Parcels of Taxable Property that would otherwise be classified as Exempt Property pursuant to the provisions of Section F, but cannot be classified as Exempt Property because to do so would be reduce the Acreage of all Taxable Property below the required minimum Acreage set forth in Section F.
"Residential Property" means all Assessor’s Parcels of Developed Property for which a Building Permit has been issued for purposes of constructing one or more Residential Units. “Residential Unit” or "RU" means a residential unit that is used or intended to be used as a domicile by one or more persons, as determined by the CFD Administrator.
“Single Family Residential Property” means all Assessor’s Parcels of Residential Property other than Multifamily Property.
"Special Tax" or “Special Taxes” means any of the special taxes authorized to be levied within CFD No. 2021- 2 pursuant to the Act to fund the Special Tax Requirement.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 72
Menifee Mayor and City Council
August 16, 2023
Page
510 of 759

A-4
4859-1311-2685v6/200299-0019
"Special Tax Requirement " means the amount required in any Fiscal Year to pay: (i) the debt service or the periodic costs on all outstanding Bonds due in the Calendar Year that commences in such Fiscal Year, (ii) Administrative Expenses, (iii) the costs associated with the release of funds from an escrow account, (iv) any amount required to replenish any reserve funds established in association with the Bonds, (v) an amount up to any anticipated shortfall due to Special Tax delinquencies and (vi) for the collection or accumulation of funds for the acquisition or construction of facilities authorized by CFD No. 2021-2 or the payment of debt services on Bonds anticipated to be issued, provided that the inclusion of such amount does not cause an increase in the levy of Special Tax on Approved Property or Undeveloped Property as set forth in Steps Two or Three of Section E., less (vii) any amounts available to pay debt service or other periodic costs on the Bonds pursuant to the Indenture.
"Taxable Property" means all Assessor’s Parcels within CFD No. 2021-2, which are not Exempt Property. “Taxable Unit” means either a Residential Unit or an Acre. “Trustee” means the trustee, fiscal agent, or paying agent under the Indenture. "Undeveloped Property" means all Assessor’s Parcels of Taxable Property which are not Developed Property, Approved Property, or Provisional Undeveloped Property.

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

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

Assessor’s Parcels of Developed Property shall further be classified as Residential Property or Non-Residential Property. Each Assessor’s Parcel of Residential Property shall further be classified as a Single Family Residential Property or Multifamily Property. Each Assessor’s Parcel of Single Family Residential Property shall be further assigned to a Land Use Category based on its Building Square Footage.

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

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 73
Menifee Mayor and City Council
August 16, 2023
Page
511 of 759

A-5
4859-1311-2685v6/200299-0019
D. MAXIMUM SPECIAL TAX

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

The Maximum Special Tax for each Assessor’s Parcel of Multifamily Property and Non-Residential Property shall be the applicable Assigned Special Tax described in Table 1 of Section D. a. Assigned Special Tax
Each Fiscal Year, each Assessor’s Parcel of Single Family Residential Property, Multifamily Property or Non-Residential Property shall be subject to an Assigned Special Tax. The Assigned Special Tax for Fiscal Year 2021-2022 applicable to an Assessor's Parcel of Developed Property shall be determined pursuant to Table 1 below.

TABLE 1

ASSIGNED SPECIAL TAX FOR DEVELOPED PROPERTY
FISCAL YEAR 2021-2022

LAND USE CATEGORY
TAXAB
LE
UNIT

BUILDING SQUARE

FOOTAGE

ASSIGNED

SPECIAL TAX
PER

TAXABLE
UNIT

1. Single Family Residential Property RU Less than 2,000 sq. ft $2,981.00

2. Single Family Residential Property RU 2,000 sq. ft to 2,200 sq. ft $3,065.00

3. Single Family Residential Property RU 2,201 sq. ft to 2,400 sq. ft $3,148.00

4. Single Family Residential Property RU 2,401 sq. ft to 2,600 sq. ft $3,257.00

5. Single Family Residential Property RU 2,601 sq. ft to 2,800 sq. ft $3,366.00

6. Single Family Residential Property RU 2,801 sq. ft to 3,000 sq. ft $3,449.00

7. Single Family Residential Property RU 3,001 sq. ft to 3,200 sq. ft $3,592.00

8. Single Family Residential Property RU Greater than 3,200 sq. ft $3,734.00

9. Multifamily Property Acre N/A $22,314.00

10. Non-Residential Property Acre N/A $22,314.00
On each July 1, commencing July 1, 2022, the Assigned Special Tax rate for Developed Property shall be increased by two percent (2.00%) of the amount in effect in the prior Fiscal Year. b. Multiple Land Use Categories
In some instances an Assessor’s Parcel of Developed Property may contain more than one Land Use Category. The Maximum Special Tax levied on an Assessor’s Parcel shall be the sum of the Maximum Special Tax for each Taxable Unit for all Land Use Categories located on the Assessor’s Parcel. The CFD Administrator’s allocation to each type of property shall be final. c. Backup Special Tax
The Backup Special Tax for an Assessor’s Parcel within a Final Map classified as Single Family Residential Property or Approved Property expected to be classified as Single Family Residential Property shall calculated according to the following formula.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 74
Menifee Mayor and City Council
August 16, 2023
Page
512 of 759

A-6
4859-1311-2685v6/200299-0019
B = (U x A) / L
The terms above have the following meanings:

B = Backup Special Tax per Assessor’s Parcel classified as Single Family Residential Property or Approved Property expected to be classified as Single Family Residential Property within the Final Map.

U = Maximum Special Tax per Acre of Undeveloped Property per Section D.3 below.

A = Acreage of Single Family Residential Property expected to exist after build out in such Final Map at the time of calculation, as determined by the Administrator L = Number of Assessor’s Parcels of Single Family Residential Property expected to exist after build out in such Final Map at the time of calculation, as determined by the Administrator.

In the event any portion of the Final Map is changed or modified, the Backup Special Tax for all Assessor’s Parcels within such changed or modified area shall be $22,314 per Acre.

Notwithstanding the foregoing, the Backup Special Tax for an Assessor’s Parcel of Developed Property for which a certificate of occupancy has been granted may not be revised.

In the event any superseding Final Map is recorded as a Final Map within the boundaries of the CFD, the Backup Special Tax for all Assessor’s Parcels within such Final Map shall be $22,314 per Acre. The Backup Special Tax shall not apply to Multifamily Residential Property or Non-Residential Property.

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

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

The Maximum Special Tax for each Assessor’s Parcel of Approved Property not expected to be classified as Single Family Residential Property shall be $22,314 per Acre.

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

3. Undeveloped Property and Provisional Undeveloped Property The Maximum Special Tax for each Assessor’s Parcel of Undeveloped Property and Provisional Undeveloped Property shall be $22,314 per Acre.

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

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 75
Menifee Mayor and City Council
August 16, 2023
Page
513 of 759

A-7
4859-1311-2685v6/200299-0019
E. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
Commencing Fiscal Year 2021-2022 and for each subsequent Fiscal Year, the City Council shall levy Special Taxes on all Taxable Property in accordance with the following steps:

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

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

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

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

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

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

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

26.06 Acres.

Notwithstanding the above, the City Council shall not classify an Assessor’s Parcel as Exempt Property if such classification would reduce the sum of all Taxable Property to less than 26.06 Acres. Assessor's Parcels which cannot be classified as Exempt Property because such classification would reduce the Acreage of all Taxable Property to less than 26.06 Acres will be classified as Provisional Undeveloped Property, and will be subject to Special Tax pursuant to Step Five in Section E.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 76
Menifee Mayor and City Council
August 16, 2023
Page
514 of 759

A-8
4859-1311-2685v6/200299-0019
G. PREPAYMENT OF SPECIAL TAX
The following additional definitions apply to this Section G:
“CFD Facilities” means $13,000,000 expressed in 2021 dollars, which shall increase by the Construction Inflation Index on July 1, 2022, and on each July 1 thereafter, or such lower amount (i) determined by the City Council as sufficient to provide the facilities under the authorized bonding program for CFD No. 2021-2, or (ii) determined by the City Council concurrently with a covenant that it will not issue any more Bonds to be supported by Special Tax levied under this Rate and Method of Apportionment. “Construction Fund” means an account specifically identified in the Indenture or functionally equivalent to hold funds, which are available for expenditure to acquire or construct facilities eligible to be financed by CFD No. 2021-2.
“Construction Inflation Index” means the greater of (i) 2% and (ii) the annual percentage change in the Engineering News-Record Building Cost Index for the city of Los Angeles, measured as of the Calendar Year which ends in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the City that is reasonably comparable to the Engineering News- Record Building Cost Index for the city of Los Angeles. “Future Facilities Costs” means the CFD Facilities minus (i) amounts deposited in the Construction Fund, (ii) amounts deposited in any escrow accounts funded by the Outstanding Bonds and anticipated to fund public facilities costs, and (iii) public facility costs funded by interest earnings on the Construction Fund actually earned prior to the date of prepayment.
“Outstanding Bonds” means all previously issued Bonds issued and secured by the levy of Special Tax which will remain outstanding after the first interest and/or principal payment date following the current Fiscal Year, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayments of Special Tax.

1. Prepayment in Full
The Special Tax obligation may be prepaid and permanently satisfied for (i) Assessor’s Parcels of Developed Property, (ii) Assessor’s Parcels of Approved Property or Undeveloped Property for which a Building Permit has been issued, (iii) Assessor’s Parcels of Approved Property or Undeveloped Property for which a Building Permit has not been issued and (iv) Assessor’s Parcels of Provisional Undeveloped Property. The Special Tax obligation applicable to an Assessor’s Parcel may be fully prepaid and the obligation to pay the Special Tax for such Assessor’s Parcel permanently satisfied as described herein; provided that a prepayment may be made only if there are no delinquent Special Taxes with respect to such Assessor’s Parcel at the time of prepayment. An owner of an Assessor’s Parcel intending to prepay the Special Tax obligation for such Assessor’s Parcel shall provide the CFD Administrator with written notice of intent to prepay, and within 5 business days of receipt of such notice, the CFD Administrator shall notify such owner of the amount of the non- refundable deposit determined to cover the cost to be incurred by the CFD in calculating the Prepayment Amount (as defined below) for the Assessor’s Parcel. Within 15 days of receipt of such non-refundable deposit, the CFD Administrator shall notify such owner of the Prepayment Amount for the Assessor’s Parcel. Prepayment must be made not less than 60 days prior to the redemption date for any Bonds to be redeemed with the proceeds of such prepaid Special Taxes.

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

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 77
Menifee Mayor and City Council
August 16, 2023
Page
515 of 759

A-9
4859-1311-2685v6/200299-0019
Bond Redemption Amount
plus Redemption Premium
plus Future Facilities Amount
plus Defeasance Amount
plus Administrative Fees and Expenses
less Reserve Fund Credit
Equals: Prepayment Amount
The Prepayment Amount shall be determined as of the proposed prepayment date as follows:

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

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

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

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

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

6. Determine the Future Facilities Costs.

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

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

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

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

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

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 78
Menifee Mayor and City Council
August 16, 2023
Page
516 of 759

A-10
4859-1311-2685v6/200299-0019

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

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

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

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

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

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

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

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

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

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

PP = Partial Prepayment Amount
Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 79
Menifee Mayor and City Council
August 16, 2023
Page
517 of 759

A-11
4859-1311-2685v6/200299-0019
PE = the Prepayment Amount calculated according to Section G.1 F = the percent by which the owner of the Assessor’s Parcel(s) is partially prepaying the Special Tax obligation
A = the Administrative Fees and Expenses determined pursuant to Section G.1 The owner of an Assessor’s Parcel who desires to partially prepay the Special Tax obligation for the Assessor’s Parcel shall notify the CFD Administrator of (i) such owner’s intent to partially prepay the Special Tax obligation, (ii) the percentage of the Special Tax obligation such owner wishes to prepay, and (iii) the company or agency that will be acting as the escrow agent, if any. Within 5 days of receipt of such notice, the CFD Administrator shall notify such property owner of the amount of the non-refundable deposit determined to cover the cost to be incurred by the CFD in calculating the Partial Prepayment Amount. Within 15 business days of receipt of such non-refundable deposit, the CFD Administrator shall notify such owner of the amount of the Partial Prepayment Amount for the Assessor’s Parcel. A Partial Prepayment Amount must be made not less than 60 days prior to the redemption date for the Outstanding Bonds to be redeemed with the proceeds of the Partial Prepayment Amount.

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

H. TERMINATION OF SPECIAL TAX
For each Fiscal Year that any Bonds are outstanding the Special Tax shall be levied on all Assessor’s Parcels subject to the Special Tax pursuant to Section E. The Special Tax shall cease not later than the 2061-2062 Fiscal Year, however, Special Taxes will cease to be levied in an earlier Fiscal Year if the CFD Administrator has determined (i) that all the required interest and principal payments on the CFD No. 2021-2 Bonds have been paid; (ii) all authorized facilities of CFD No. 2021-2 have been acquired and all reimbursements to the developer have been paid, (iii) no delinquent Special Taxes remain uncollected and (iv) all other obligations of CFD No. 2021-2 have been satisfied.

I. MANNER OF COLLECTION
The Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that CFD No. 2021-2 may collect Special Taxes at a different time or in a different manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on delinquent Assessor’s Parcels as permitted by the Act.

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

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

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 80
Menifee Mayor and City Council
August 16, 2023
Page
518 of 759

B-1
4859-1311-2685v6/200299-0019

APPENDIX B

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

General
The City of Menifee is located approximately 80 miles southeast of Los Angeles in the southwestern portion of Riverside County. The City was incorporated on October 1, 2008 as a general law City. As of January 1, 2023, the City has slightly more than 110,000 residents and covers an area of over 46 square miles.

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

Area 2019 2020 2021 2022 2023
City of Menifee 94,710 102,466 104,323 107,411 110,034
County of Riverside 2,419,057 2,418,185 2,418,727 2,430,976 2,439,234 State of California 39,605,361 39,538,223 39,286,510 39,078,674 39,940,231 Source: California State Department of Finance, Demographic Research Unit. 2010 Census Benchmark for 2019 and 2020 Census Benchmark for 2020 through 2023.

Building Activity
The following tables provide summaries of the building permit valuations and the number of new dwelling units authorized in the City and County from 2018 through 2022.

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

Residential $ 296,414 $343,285 $448,581 $391,923 $295,989 Non-residential 38,992 1,150 94,195 39,831 27,092
Total* $ 335,406 $344,435 $542,776 $431,754 $323,081
Residential Units:

Single family 967 922 1,457 1,256 796
Multiple family 0 330 0 0 0
Total 967 1,252 1,457 1,256 796
* Totals may not add to sums because of rounding.

Source: Construction Industry Research Board.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 81
Menifee Mayor and City Council
August 16, 2023
Page
519 of 759

B-2
4859-1311-2685v6/200299-0019

BUILDING PERMIT VALUATIONS
County of Riverside
2018-2022
(Dollars in Thousands)
2018 2019 2020 2021 2022
Residential $2,558,081 $2,275,405 $3,071,183 $2,262,642 $2,921,113 Non-residential 1,959,680 1,285,856 1,153,778 1,543,998 1,701,618 Total* $4,517,761 $3,561,261 $4,224,961 $3,806,640 $4,622,731 Residential Units:

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

Source: Construction Industry Research Board.

Employment
The following tables show the largest employers located in the City and County as of June 30, 2022.

LARGEST EMPLOYERS
City of Menifee
(as of June 30, 2022)
Rank Name of Business Employees Type of Business

1. Mt. San Jacinto College District 1,500 School District

2. Menifee Union School District 1,290 School District

3. Romoland Elementary School District 554 School District

4. Target Corporation 417 Retail Stores

5. Menifee Global Medical Center 365 Medical Center

6. Stater Brothers 362 Supermarkets

7. City of Menifee 312 City Government

8. United Parcel Service (UPS) 248 Postal Delivery Service

9. Southern California Edison 220 Community Services

10. Texas Roadhouse 200 Casual Dining
Source: City of Menifee Comprehensive Annual Financial Report for the year ending June 30, 2022.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 82
Menifee Mayor and City Council
August 16, 2023
Page
520 of 759

B-3
4859-1311-2685v6/200299-0019

LARGEST EMPLOYERS
County of Riverside
(as of June 30, 2022)
Rank Name of Business Employees Type of Business

1. County of Riverside 23,772 County Government

2. Amazon 14,500 Online Retail

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

4. University of California, Riverside 8,593 University

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

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

7. Corona-Norco Unified School District 5,478 School District

8. Riverside Unified School District 5,431 School District

9. Stater Bros 4,699 Supermarket

10. Mt. San Jacinto College District 4,638 School District Source: County of Riverside Comprehensive Annual Financial Report for the year ending June 30, 2022.

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

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 83
Menifee Mayor and City Council
August 16, 2023
Page
521 of 759

B-4
4859-1311-2685v6/200299-0019
The following table represents the Annual Average Labor Force and Industry Employment for the period from 2018 through 2022.

RIVERSIDE-SAN BERNARDINO-ONTARIO MSA

INDUSTRY EMPLOYMENT & LABOR FORCE - BY ANNUAL AVERAGE
2018 2019 2020 2021 2022
Civilian Labor Force 2,045,200 2,075,200 2,095,800 2,125,300 2,160,600 Civilian Employment 1,957,500 1,991,200 1,888,900 1,968,700 2,071,200 Civilian Unemployment 87,700 84,000 206,900 156,600 89,400 Civilian Unemployment Rate 4.3% 4.0% 9.9% 7.4% 4.1%
Total Farm 14,500 15,400 14,100 13,700 13,900
Total Nonfarm 1,506,600 1,552,700 1,495,800 1,575,100 1,660,300 Total Private 1,249,400 1,291,500 1,247,800 1,333,100 1,410,900 Goods Producing 206,800 209,700 202,200 207,700 216,400 Mining and Logging 1,200 1,200 1,300 1,400 1,600
Construction 105,200 107,200 104,900 110,100 115,200
Manufacturing 100,400 101,300 96,000 96,100 99,600
Service Providing 1,299,800 1,343,100 1,293,700 1,367,400 1,443,900 Trade, Transportation and Utilities 379,400 395,100 406,900 443,200 464,500 Wholesale Trade 66,100 67,700 65,600 67,400 69,700
Retail Trade 181,200 180,700 168,800 177,000 180,600
Transportation, Warehousing and Utilities 132,100 146,600 172,500 198,800 214,200 Information 11,400 11,500 9,600 9,700 10,200
Financial Activities 44,600 45,000 44,100 45,200 46,800 Professional and Business Services 151,400 157,900 154,800 169,400 179,100 Educational and Health Services 239,500 250,300 248,800 254,300 266,400 Leisure and Hospitality 170,600 175,900 141,300 160,200 179,600 Other Services 45,800 46,200 40,200 43,600 47,900
Government 257,200 261,200 248,000 242,000 249,400 Total, All Industries 1,521,100 1,568,100 1,509,900 1,588,800 1,674,200 Note: Does not include proprietors, self-employed, unpaid volunteers or family workers, domestic workers in households and persons involved in labor-management trade disputes. Employment reported by place of work. Items may not add to total due to independent rounding. The “Total, All Industries” data is not directly comparable to the employment data found in this Appendix B.

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

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 84
Menifee Mayor and City Council
August 16, 2023
Page
522 of 759

B-5
4859-1311-2685v6/200299-0019
The following table summarizes the labor force, employment and unemployment figures for the period from 2018 through 2022 for the City, the County, the State and the nation as a whole.

CITY OF MENIFEE,

COUNTY OF RIVERSIDE,

STATE OF CALIFORNIA AND UNITED STATES
Average Annual Civilian Labor Force, Employment and Unemployment Year and Area Labor Force Employment(1) Unemployment(2) Unemployment
Rate (%)(3)
2018
City of Menifee 39,100 37,400 1,700 4.3%
County of Riverside 1,091,400 1,042,700 48,700 4.5
State of California 19,263,900 18,442,400 821,500 4.3
United States 162,075,000 155,761,000 6,314,000 3.9
2019
City of Menifee 39,600 38,000 1,600 4.0%
County of Riverside 1,104,000 1,057,900 46,100 4.2
State of California 19,353,700 18,550,500 803,200 4.2
United States 163,539,000 157,538,000 6,001,000 3.7
2020
City of Menifee 41,800 37,600 4,200 10.1%
County of Riverside 1,121,100 1,008,000 113,000 10.1
State of California 18,971,600 17,047,600 1,924,000 10.1 United States 160,757,000 149,961,000 10,795,000 6.7
2021
City of Menifee 42,300 39,100 3,200 7.5%
County of Riverside 1,133,000 1,050,000 83,000 7.3
State of California 18,973,400 17,586,300 1,387,100 7.3 United States 162,410,000 156,081,000 6,329,000 3.9
2022
City of Menifee 43,000 41,200 1,800 4.2%
County of Riverside 1,152,100 1,104,100 48,000 4.1
State of California 19,252,000 18,440,900 811,000 4.2
United States 164,966,000 159,244,000 5,722,000 3.5
Note: Data is not seasonally adjusted.
(1) Annual averages, unless otherwise specified.
(2) Includes persons involved in labor-management trade disputes. (3) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures in this table.

Source: U.S. Department of Labor – Bureau of Labor Statistics, California Employment Development Department. 2022 Benchmark.

Personal Income
Personal Income is the income that is received by all persons from all sources. It is calculated as the sum of wage and salary disbursements, supplements to wages and salaries, proprietors’ income with inventory valuation and capital consumption adjustments, rental income of persons with capital consumption adjustment, Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 85
Menifee Mayor and City Council
August 16, 2023
Page
523 of 759

B-6
4859-1311-2685v6/200299-0019
personal dividend income, personal interest income, and personal current transfer receipts, less contributions for government social insurance.

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

Total personal income in Riverside County increased by 86.2% between 2010 and 2021. The following tables summarize personal income for Riverside County for 2010 through 2021.

PERSONAL INCOME
Riverside County
2010-2021
(Dollars in Thousands)
Year Riverside County
Annual
Percent Change
2010 $67,585,240 --%
2011 71,936,625 6.4
2012 74,050,799 2.9
2013 76,519,738 3.3
2014 80,776,153 5.6
2015 86,196,663 6.7
2016 90,713,807 5.2
2017 94,542,096 4.2
2018 99,266,122 5.0
2019 104,149,463 4.9
2020 115,570,337 11.0
2021 125,820,553 8.9
Source: U.S. Department of Commerce, Bureau of Economic Analysis.

The following table summarizes per capita personal income for Riverside County, California and the United States for 2010-2021. This measure of income is calculated as the personal income of the residents of the area divided by the resident population of the area.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 86
Menifee Mayor and City Council
August 16, 2023
Page
524 of 759

B-7
4859-1311-2685v6/200299-0019

PER CAPITA PERSONAL INCOME
Riverside County, State of California and the United States 2010-2021
Year Riverside County California United States
2010 $30,699 $43,636 $40,547
2011 32,200 46,175 42,739
2012 32,748 48,813 44,605
2013 33,462 49,303 44,860
2014 34,875 52,363 47,071
2015 36,745 55,833 49,019
2016 38,114 58,048 50,015
2017 39,148 60,549 52,118
2018 40,587 63,720 54,606
2019 43,295 64,919 56,250
2020 47,702 70,647 59,765
2021 51,180 76,614 64,143
Source: U.S. Department of Commerce, Bureau of Economic Analysis.

Taxable Sales
The table below presents taxable sales for the years 2018 through 2022 for the City.

TAXABLE SALES
City of Menifee
2018-2022
(Dollars in Thousands)
Year Permits Taxable Transactions
2018 1,484 $742,128
2019 1,568 776,545
2020 1,726 752,610
2021 1,756 974,142
2022 1,915 1,071,002
Source: Taxable Sales in California, California Department of Tax and Fee Administration for 2018-2022.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 87
Menifee Mayor and City Council
August 16, 2023
Page
525 of 759

B-8
4859-1311-2685v6/200299-0019
The table below presents taxable sales for the years 2018 through 2022 for the County.

TAXABLE SALES
County of Riverside
2018-2022
(Dollars in Thousands)
Year Permits Taxable Transactions
2018 61,433 $38,919,498
2019 64,063 40,626,998
2020 69,284 42,313,474
2021 64,335 55,535,196
2022 66,738 61,908,344
Source: Taxable Sales in California, California Department of Tax and Fee Administration for 2018-2022.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 88
Menifee Mayor and City Council
August 16, 2023
Page
526 of 759

C-1
4859-1311-2685v6/200299-0019

APPENDIX C

FORM OF OPINION OF BOND COUNSEL
Upon issuance of the Bonds, Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel, proposes to render its final approving opinion in substantially the following form:
[Closing Date]
Community Facilities District No. 2021-2 of the
City of Menifee (Sumac Ridge)
Menifee, California
Re:$_____ Community Facilities District No. 2021-2 of the City of Menifee (Sumac Ridge) Special Tax Bonds, Series 2023
Ladies and Gentlemen:

We have examined the Constitution and the laws of the State of California, a certified record of the proceedings of the City of Menifee (the “City”) taken in connection with the formation of Community Facilities District No. 2021-2 of the City of Menifee (Sumac Ridge) (the “District”) and the authorization and issuance of the District’s Special Tax Bonds, Series 2023 in the aggregate principal amount of $_____ (the “Bonds”) and such other information and documents as we consider necessary to render this opinion. In rendering this opinion, we have relied upon certain representations of fact and certifications made by the District, the City, the initial purchasers of the Bonds and others. We have not undertaken to verify through independent investigation the accuracy of the representations and certifications relied upon by us.

The Bonds have been issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (comprising Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California), a resolution adopted by the City Council of the City, acting in its capacity as the legislative body of the District (the “City Council”) on August 16, 2023 (the “Resolution”), and a Bond Indenture (the “Indenture”) dated as of September 1, 2023, by and between the District and Wilmington Trust, National Association, as trustee (the “Trustee”). All capitalized terms not defined herein shall have the meaning set forth in the Indenture.

Based upon our examination of the foregoing, and in reliance thereon and on all matters of fact as we deem relevant under the circumstances, and upon consideration of applicable laws, we are of the opinion that:
(1) The Bonds have been duly and validly authorized by the District and are legal, valid and binding limited obligations of the District, enforceable in accordance with their terms and the terms of the Indenture.

The Bonds are limited obligations of the District but are not a debt of the City, the State of California or any other political subdivision thereof within the meaning of any constitutional or statutory limitation, and, except for the Net Taxes, neither the faith and credit nor the taxing power of the City, the State of California, or any of its political subdivisions is pledged for the payment thereof. (2) The Indenture has been duly executed and delivered by the District. The Indenture creates a valid pledge of, and the Bonds are secured by, the Net Taxes and the amounts on deposit in certain funds and accounts established under the Indenture, as and to the extent provided in the Indenture. The Indenture is enforceable in accordance with its terms; provided, however, we express no opinion as to the enforceability of the covenant of the District contained in the Indenture to levy Special Taxes for the payment of Administrative Expenses or as to indemnification, penalty, contribution, choice of law, choice of forum or waiver provisions contained therein.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 89
Menifee Mayor and City Council
August 16, 2023
Page
527 of 759

C-2
4859-1311-2685v6/200299-0019
(3) Under existing statutes, regulations, rulings and judicial decisions, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals; however, it should be noted that for tax years beginning after December 31, 2022, with respect to applicable corporations as defined in Section 59(k) of the Internal Revenue Code of 1986, as amended (the “Code”), interest (and original issue discount) with respect to the Bonds might be taken into account in determining adjusted financial statement income for purposes of computing the alternative minimum tax imposed on such corporations. (4) Interest (and original issue discount) on the Bonds is exempt from State of California personal income tax.
(5) The difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity are to be sold to the public) and the stated redemption price at maturity with respect to such Bond constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Bond Owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by a Bond Owner will increase the Bond Owner’s basis in the applicable Bond.
(6) The amount by which a Bond Owner’s original basis for determining loss on sale or exchange in the applicable Bond (generally the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable Bond premium which must be amortized under Section 171 of the Code; such amortizable Bond premium reduces the Bond Owner’s basis in the applicable Bond (and the amount of tax- exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of Bond premium may result in a Bond Owner realizing a taxable gain when a Bond is sold by the Owner for an amount equal to or less (under certain circumstances) than the original cost of the Bond to the Owner.

The opinions expressed in paragraphs (3) and (5) above as to the exclusion from gross income for federal income tax purposes of interest (and original issue discount) on the Bonds is subject to the condition that the District and the City comply with all requirements of the Code, that must be satisfied subsequent to the issuance of the Bonds to assure that such interest (and original issue discount) will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest (and original issue discount) on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The District and the City have covenanted to comply with all such requirements. Except as set forth in paragraphs (3), (4), (5) and (6) above, we express no opinion as to any tax consequences related to the Bonds.

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

Our opinion is limited to matters governed by the laws of the State of California and federal law. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction. We call attention to the fact that the rights and obligations under the Bonds, the Indenture and the Tax Certificate may be limited by bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, by the application of equitable principles and the exercise of judicial discretion in appropriate cases and by the limitations on legal remedies against public agencies in the State of California.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 90
Menifee Mayor and City Council
August 16, 2023
Page
528 of 759

C-3
4859-1311-2685v6/200299-0019
We express no opinion herein as to the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds and expressly disclaim any duty to advise the Owners of the Bonds with respect to matters contained in the Official Statement or other offering material.

The opinions expressed herein are based upon an analysis of existing statutes, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether such actions or events are taken (or not taken) or do occur (or do not occur).

Respectfully submitted,
Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 91
Menifee Mayor and City Council
August 16, 2023
Page
529 of 759

D-1
4859-1311-2685v6/200299-0019

APPENDIX D

APPRAISAL REPORT
Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 92
Menifee Mayor and City Council
August 16, 2023
Page
530 of 759

E-1
4859-1311-2685v6/200299-0019

APPENDIX E

SUMMARY OF THE INDENTURE
The following is a summary of certain provisions of the Indenture which are not described elsewhere.

This summary does not purport to be comprehensive and reference should be made to the Indenture for a full and complete statement of the provisions thereof.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 93
Menifee Mayor and City Council
August 16, 2023
Page
531 of 759

F-1
4859-1311-2685v6/200299-0019

APPENDIX F

FORM OF DISTRICT CONTINUING DISCLOSURE CERTIFICATE
Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 94
Menifee Mayor and City Council
August 16, 2023
Page
532 of 759

G-1
4859-1311-2685v6/200299-0019

APPENDIX G

DEVELOPER CONTINUING DISCLOSURE CERTIFICATE
This Developer Continuing Disclosure Certificate (the “Disclosure Certificate”) dated as of September 1, 2023 is executed and delivered by Meritage Homes of California, Inc., a California corporation (the “Landowner”), in connection with the issuance by Community Facilities District No. 2021-2 of the City of Menifee (Sumac Ridge) (the “District”) of the $_____ Community Facilities District No. 2021-2 of the City of Menifee (Sumac Ridge) Special Tax Bonds, Series 2023 (the “Bonds”). The Bonds are being issued pursuant to the Bond Indenture dated as of September 1, 2023 (the “Indenture”) by and between the District and Wilmington Trust, National Association, as trustee. The Landowner covenants and agrees as follows:

SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Landowner to assist the Underwriter in the marketing of the Bonds.

SECTION 2. Definitions. Unless defined herein, capitalized terms used herein shall have the meanings ascribed thereto in the Indenture.
“Affiliate” shall mean, with respect to the Landowner, any other Person (i) who directly, or indirectly through one or more intermediaries, is currently controlling, controlled by or under common control with the Landowner, and (ii) for whom information, including financial information or operating data, concerning such Person is material to potential investors in their evaluation of the District and investment decision regarding the Bonds (i.e. information regarding such Person’s assets or funds that would materially affect the Landowner’s ability to develop the Property as described in the Official Statement or to pay its Special Taxes on the portion of the Property then owned by the Landowner (to the extent the responsibility of the Landowner) prior to delinquency). For purposes hereof, the term “control” (including the terms “controlling,” “controlled by” or “under common control with”) means the present possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Beneficial Owner” shall mean any person which has or shares the power, directly or indirectly, to make investment decisions concerning ownership of the Bonds (including persons holding Bonds through nominees, depositories or other intermediaries).
“Dissemination Agent” shall mean the Landowner or any successor Dissemination Agent designated in writing by the Landowner and which has filed with the Landowner and the District a written acceptance of such designation.
“District” shall mean Community Facilities District No. 2021-2 of the City of Menifee (Sumac Ridge). “EMMA” shall mean the Electronic Municipal Market Access system of the MSRB. “Listed Event” shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. “MSRB” shall mean the Municipal Securities Rulemaking Board and any successor entity as the repository for filings.
“Official Statement” shall mean the Official Statement, dated _________, 2023, relating to the Bonds. “Person” shall mean an individual, a corporation, a partnership, a limited liability company, an association, a joint stock company, a trust, an unincorporated organization or a government or political subdivision thereof.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 95
Menifee Mayor and City Council
August 16, 2023
Page
533 of 759

G-2
4859-1311-2685v6/200299-0019
“Property” means the real property within the boundaries of the District that is owned by the Landowner or any Affiliate.
“Repository” shall mean the MSRB or any other entity designated or authorized by the Securities and Exchange Commission as a repository of disclosure information. Unless 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. “Semiannual Report” shall mean any report to be provided by the Landowner on or prior to June 15 and December 15 of each year, commencing with the Semiannual Report due December 15, 2023, pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “State” shall mean the State of California.
“Underwriter” shall mean the original underwriter of the Bonds, which is Stifel, Nicolaus & Company, Incorporated.

SECTION 3. Provision of Semiannual Reports.
(a) The Landowner shall, or upon receipt of the Semiannual Report the Dissemination Agent shall, not later than June 15 and December 15 of each year, commencing December 15, 2023, provide to the Repository the Semiannual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. If, in any year, June 15 or December 15 falls on a Saturday, Sunday or a federal holiday, such deadline shall be extended to the next following day that is not a Saturday, Sunday or federal holiday. The Semiannual 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. (b) If the Landowner utilizes the Dissemination Agent to file the Semiannual Report, then not later than 15 calendar days prior to the date specified in subsection (a) for providing the Semiannual Report to the Repository, the Landowner shall provide the Semiannual Report to the Dissemination Agent (if different from the Landowner), and shall provide a written certification with (or included as a part of) each Semiannual Report furnished to the Dissemination Agent, the Underwriter, and the District to the effect that such Semiannual Report constitutes the Semiannual Report required to be furnished by it under this Disclosure Certificate. If the Dissemination Agent (if different from the Landowner) does not receive a Semiannual Report from the Landowner and cannot verify that a Semiannual Report has been filed with the Repository by 15 calendar days prior to the date specified in subsection (a) for providing the Semiannual Report to the Repository, the Dissemination Agent shall send a reminder notice to the Landowner that the Semiannual Report has not been provided as required under Section 3(a) above. The reminder notice shall instruct the Landowner to determine whether its obligations under this Disclosure Certificate have terminated (pursuant to Section 6 below) and, if so, to provide the Dissemination Agent with a notice of such termination in the same manner as for a Listed Event (pursuant to Section 5 below).
(c) If the Landowner does not provide, or cause the Dissemination Agent to provide, a Semiannual Report to the Repository on or prior to the date specified in subsection (a) for providing the Semiannual Report to the Repository, the Dissemination Agent shall send, in a timely manner, a notice to the Repository of the failure to file the Semiannual Report in the form required by the Repository. (d) The Dissemination Agent shall:
(i) determine, prior to the date for providing the Semiannual Report, the name and address of the Repository; and
Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 96
Menifee Mayor and City Council
August 16, 2023
Page
534 of 759

G-3
4859-1311-2685v6/200299-0019
(ii) promptly after receipt of the Semiannual Report, file a report with the Landowner and the District certifying that the Semiannual Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided to the Repository. (e) Notwithstanding any other provision of this Disclosure Certificate, any of the required filings hereunder shall be made in accordance with the MSRB’s EMMA system or in another manner approved by the MSRB or the Securities and Exchange Commission.

SECTION 4. Content of Semiannual Reports.
(a) The Landowner’s Semiannual Report shall contain or include by reference the information which is updated through a date which shall not be more than 60 days prior to the date the applicable Semiannual Report is required to be filed, relating to the following:

1. To the extent not previously disclosed in a prior Semiannual Report, a discussion of any material change in the Landowner’s sources of funds to finance its development of the Property as disclosed in the Official Statement, and, if applicable, whether any material defaults exist under any loan arrangement related to such financing. As disclosed in the Official Statement, the Landowner is financing its development of the Property through internal sources.

2. A summary of development activity conducted by the Landowner or any Affiliate within the District, including the number of parcels for which sales to homebuyers have closed.

3. Any sale by the Landowner or any Affiliate of Property to another Person, other than to buyers of completed homes, including a description of the property sold (acreage, number of lots, etc.) and the identity of the Person that so purchased the property, all since the most recent Semiannual Report.

4. Any major legislative, administrative and judicial challenges that the Landowner is currently involved in or has actual knowledge of, to or affecting the Landowner’s development of the Property, or the time for construction of any public or private improvements to be made to the Property by the Landowner or any Affiliate (the “Landowner Improvements”).

5. Any significant amendments to land use entitlements known to the Landowner with respect to the Property owned by the Landowner or its Affiliates.

6. Information regarding any failure by the Landowner or any of its Affiliates to pay any real property taxes (including Special Taxes) levied on any Property owned by the Landowner or any Affiliates.
(b) Any and all of the items listed above may be included by specific reference to other documents, including official statements of debt issues which have been submitted to the Repository or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB. The Landowner 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 Landowner shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material under clauses (b) and (c) as soon as practicable after the occurrence of any of the following events:

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 97
Menifee Mayor and City Council
August 16, 2023
Page
535 of 759

G-4
4859-1311-2685v6/200299-0019

1. Failure to pay any real property taxes, special taxes or assessments levied within the District on a parcel owned by the Landowner or any Affiliate, to the extent such failure is not promptly cured by the Landowner or any Affiliate upon discovery thereof;

2. Material default by the Landowner or any Affiliate on any loan with respect to the construction or permanent financing of the Landowner Improvements to which the Landowner or any Affiliate has been provided a notice of default;

3. Material default by the Landowner or any Affiliate on any loan secured by property within the District owned by the Landowner or any Affiliate to which the Landowner or any Affiliate has been provided a notice of default;

4. Material payment default by the Landowner on any loan of the Landowner (whether or not such loan is secured by property within the District) which is beyond any applicable cure period in such loan;

5. The filing of any proceedings with respect to the Landowner, in which the Landowner, may be adjudicated as bankrupt or discharged from any or all of its debts or obligations or granted an extension of time to pay debts or a reorganization or readjustment of debts;

6. The filing of any proceedings with respect to an Affiliate of the Landowner, in which such Affiliate of the Landowner may be adjudicated as bankrupt or discharged from any or all of its respective debts or obligations or granted an extension of time to pay debts or a reorganization or readjustment of debts if such adjudication could materially adversely affect the completion of the Landowner Improvements or the development of the Property (including the payment of Special Taxes); and

7. The filing of any lawsuit against the Landowner or any of its Affiliates (with service of process on the Landowner or its Affiliates having occurred) which, in the reasonable judgment of the Landowner, will materially adversely affect the completion of the development of the Property owned by the Landowner or its Affiliates within the District, or litigation which if decided against the Landowner, or any of its Affiliates, in the reasonable judgment of the Landowner, would materially adversely affect the financial condition of the Landowner or any Affiliate of the Landowner owning any Property within the District, or their respective ability to pay Special Taxes levied on their respective Property within the District when due.
(b) Whenever the Landowner obtains knowledge of the occurrence of a Listed Event, the Landowner shall as soon as possible determine if such event would be material under applicable federal securities laws. The Dissemination Agent (if different from the Landowner) shall have no responsibility to determine the materiality of any of the Listed Events.
(c) If the Landowner determines that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the Landowner shall promptly file or cause the Dissemination Agent to file a notice of such occurrence with the Repository, with a copy to the District.

SECTION 6. Termination of Reporting Obligation. The Landowner’s obligations under this Disclosure Certificate shall terminate upon the earlier to occur of the following events:
(a) the legal defeasance, prior redemption or payment in full of all of the Bonds, or (b) the date on which, the Landowner has conveyed 140 or more of its 175 planned residential units in the District.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 98
Menifee Mayor and City Council
August 16, 2023
Page
536 of 759

G-5
4859-1311-2685v6/200299-0019
If such termination occurs prior to the final maturity of the Bonds, the Landowner shall give notice of such termination in the same manner as for a Semiannual Report hereunder.

SECTION 7. Dissemination Agent. The Landowner 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. If the Dissemination Agent is not the Landowner, the Dissemination Agent shall not be responsible in any manner for the form or content of any notice or report prepared by the Landowner pursuant to this Disclosure Certificate.

The Dissemination Agent may resign by providing (i) thirty days written notice to the Landowner and (ii) upon appointment of a new Dissemination Agent hereunder.

SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Landowner may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) If the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5, it may only be made in connection with a change in circumstances that arises from a change in legal requirements or change in law;
(b) The amendment or waiver either (i) is approved by the owners of the Bonds in the same manner as provided in the Indenture with the consent of owners of the Bonds, or (ii) does not, in the opinion of nationally recognized bond counsel addressed to the District and the Dissemination Agent, materially impair the interests of the owners or Beneficial Owners of the Bonds; and
(c) The Landowner, or the Dissemination Agent, shall have delivered copies of the amendment and any opinions delivered under (b) above to the District and the Trustee.

SECTION 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Landowner 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 Semiannual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Landowner chooses to include any information in any Semiannual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the Landowner shall have no obligation under this Disclosure Certificate to update such information or include it in any future Semiannual Report or notice of occurrence of a Listed Event.

The Landowner acknowledges and understands that other state and federal 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 Landowner, and that under some circumstances compliance with this Disclosure Certificate, without additional disclosures or other action, may not fully discharge all duties and obligations of the Landowner under such laws.

SECTION 10. Default. In the event of a failure of the Landowner or the Dissemination Agent to comply with any provision of this Disclosure Certificate, any Underwriter or 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 Landowner or the Dissemination Agent to comply with its obligations under this Disclosure Certificate. The sole remedy under this Disclosure Certificate in the event of any failure of the Landowner 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. The Dissemination Agent shall not be deemed to be acting in any fiduciary capacity for the Landowner, the Underwriter, owners of the Bonds or Beneficial Owners or any other party. The Dissemination Agent may rely and shall be protected in Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 99
Menifee Mayor and City Council
August 16, 2023
Page
537 of 759

G-6
4859-1311-2685v6/200299-0019
acting or refraining from acting upon a direction from the Landowner or an opinion of nationally recognized bond counsel. 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 may conclusively rely upon the Semiannual Report provided to it by the Landowner as constituting the Semiannual Report required of the Landowner in accordance with this Disclosure Certificate and shall have no duty or obligation to review such Semiannual Report. The Dissemination Agent shall have no duty to prepare the Semiannual Report nor shall the Dissemination Agent be responsible for filing any Semiannual Report not provided to it by the Landowner in a timely manner in a form suitable for filing with the Repositories. Any company succeeding to all or substantially all of the Dissemination Agent’s corporate trust business shall be the successor to the Dissemination Agent hereunder without the execution or filing of any paper or any further act.

SECTION 12. Landowner as Independent Contractor. In performing under this Disclosure Certificate, it is understood that the Landowner is not an agent or contractor of the District.

SECTION 13. Notices. Notices should be sent in writing by electronic, regular, or overnight mail to the following addresses. The following information may be conclusively relied upon until changed in writing.

Landowner: Meritage Homes
5 Peters Canyon Road, Suite 310
Irvine, California 92606
Attention: Forward Planning Manager
Email: [email protected]
Telephone: (949) 299-3848
Underwriter: Stifel, Nicolaus & Company, Incorporated
2121 Avenue of the Stars, Suite 2150
Los Angeles, CA 90067
Attn: Public Finance Department
Email: [email protected]
SECTION 14. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Landowner, the City, the District, the Dissemination Agent, the Underwriter and owners of the Bonds and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.

MERITAGE HOMES OF CALIFORNIA, INC., a
California corporation
By:
[Name],
[Title]
Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 100
Menifee Mayor and City Council
August 16, 2023
Page
538 of 759

H-1
4859-1311-2685v6/200299-0019

APPENDIX H

BOOK-ENTRY ONLY SYSTEM
The information in this Appendix concerning DTC and DTC’s book-entry only system has been obtained from sources that the District and the Underwriter believe to be reliable, but neither the District nor the Underwriter takes any responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, premium, if any, accreted value and interest on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC.

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

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

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934.

DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates.

Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of “AA+.” The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

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

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

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 101
Menifee Mayor and City Council
August 16, 2023
Page
539 of 759

H-2
4859-1311-2685v6/200299-0019
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the District or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Trustee, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

A Bond Owner shall give notice to elect to have its Bonds purchased or tendered, through its Participant, to the Trustee, and shall effect delivery of such Bonds by causing the Direct Participant to transfer the Participant’s interest in the Bonds, on DTC’s records, to the Trustee. The requirement for physical delivery of Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Bonds are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered Bonds to the Trustee’s DTC account.

DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the District or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, physical certificates are required to be printed and delivered.

The District may decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities depository). In that event, bonds will be printed and delivered to DTC.

THE TRUSTEE, AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE BONDS, WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO OWNERS ONLY TO DTC. ANY FAILURE

OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC PARTICIPANT TO NOTIFY ANY

BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT THE

VALIDITY OF SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMPTION OF THE BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 102
Menifee Mayor and City Council
August 16, 2023
Page
540 of 759

Stradling Yocca Carlson & Rauth
Draft 07/25/23
4885-4897-6232v2/200299-0019

BOND INDENTURE
Between
COMMUNITY FACILITIES DISTRICT NO. 2021-2

OF THE CITY OF MENIFEE (SUMAC RIDGE)
and

WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Trustee
Relating to
$_____
COMMUNITY FACILITIES DISTRICT NO. 2021-2

OF THE CITY OF MENIFEE (SUMAC RIDGE)
SPECIAL TAX BONDS, SERIES 2023
Dated as of September 1, 2023
Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 103
Menifee Mayor and City Council
August 16, 2023
Page
541 of 759

Table of Contents
Page
i
4885-4897-6232v2/200299-0019

ARTICLE I

DEFINITIONS
Section 1.1. Definitions ..................................................................................................................... 1

ARTICLE II

GENERAL AUTHORIZATION AND BOND TERMS
Section 2.1. Amount, Issuance, Purpose and Nature of Bonds and Parity Bonds........................... 10 Section 2.2. Type and Nature of Bonds and Parity Bonds .............................................................. 10 Section 2.3. Equality of Bonds and Parity Bonds and Pledge of Net Taxes ................................... 11 Section 2.4. Description of Bonds; Interest Rates ........................................................................... 11 Section 2.5. Place and Form of Payment......................................................................................... 12 Section 2.6. Form of Bonds and Parity Bonds ................................................................................ 13 Section 2.7. Execution and Authentication ..................................................................................... 13 Section 2.8. Bond Register .............................................................................................................. 14 Section 2.9. Registration of Exchange or Transfer.......................................................................... 14 Section 2.10. Mutilated, Lost, Destroyed or Stolen Bonds or Parity Bonds ..................................... 14 Section 2.11. Validity of Bonds and Parity Bonds ............................................................................ 15 Section 2.12. Book-Entry System...................................................................................................... 15 Section 2.13. Representation Letter................................................................................................... 16 Section 2.14. Transfers Outside Book-Entry System ........................................................................ 16 Section 2.15. Payments to the Nominee ............................................................................................ 16 Section 2.16. Initial Depository and Nominee .................................................................................. 16

ARTICLE III

CREATION OF FUNDS AND APPLICATION OF PROCEEDS
Section 3.1. Creation of Funds; Application of Proceeds................................................................ 17 Section 3.2. Deposits to and Disbursements from Special Tax Fund.............................................. 18 Section 3.3. Administrative Expense Account of the Special Tax Fund......................................... 18 Section 3.4. Interest Account and Principal Account of the Special Tax Fund .............................. 19 Section 3.5. Redemption Account of the Special Tax Fund............................................................ 19 Section 3.6. Reserve Account of the Special Tax Fund .................................................................. 20 Section 3.7. Rebate Fund................................................................................................................. 21 Section 3.8. Surplus Fund................................................................................................................ 24 Section 3.9. Acquisition and Construction Fund............................................................................. 25 Section 3.10. Investments.................................................................................................................. 25

ARTICLE IV

REDEMPTION OF BONDS AND PARITY BONDS
Section 4.1. Redemption of Bonds .................................................................................................. 27 Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 104
Menifee Mayor and City Council
August 16, 2023
Page
542 of 759

Table of Contents
(continued)
Page
ii
4885-4897-6232v2/200299-0019
Section 4.2. Selection of Bonds and Parity Bonds for Redemption ................................................ 30 Section 4.3. Notice of Redemption.................................................................................................. 30 Section 4.4. Partial Redemption of Bonds or Parity Bonds............................................................. 32 Section 4.5. Effect of Notice and Availability of Redemption Money ........................................... 32

ARTICLE V

COVENANTS AND WARRANTY
Section 5.1. Warranty ...................................................................................................................... 32 Section 5.2. Covenants .................................................................................................................... 32

ARTICLE VI

AMENDMENTS TO INDENTURE
Section 6.1. Supplemental Indentures or Orders Not Requiring Owner Consent ........................... 36 Section 6.2. Supplemental Indentures or Orders Requiring Owner Consent .................................. 37 Section 6.3. Notation of Bonds or Parity Bonds; Delivery of Amended Bonds or Parity Bonds ...........................................................................................................................38

ARTICLE VII

TRUSTEE
Section 7.1. Trustee ......................................................................................................................... 38 Section 7.2. Removal of Trustee ..................................................................................................... 39 Section 7.3. Resignation of Trustee................................................................................................. 39 Section 7.4. Liability of Trustee ...................................................................................................... 40 Section 7.5. Merger or Consolidation.............................................................................................. 44

ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.1. Events of Default ......................................................................................................... 44 Section 8.2. Remedies of Owners.................................................................................................... 44 Section 8.3. Application of Revenues and Other Funds After Default ........................................... 45 Section 8.4. Power of Trustee to Control Proceedings.................................................................... 45 Section 8.5. Appointment of Receivers ........................................................................................... 46 Section 8.6. Non-Waiver ................................................................................................................. 46 Section 8.7. Limitations on Rights and Remedies of Owners ......................................................... 46 Section 8.8. Termination of Proceedings......................................................................................... 47 Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 105
Menifee Mayor and City Council
August 16, 2023
Page
543 of 759

Table of Contents
(continued)
Page
iii
4885-4897-6232v2/200299-0019

ARTICLE IX

DEFEASANCE AND PARITY BONDS
Section 9.1. Defeasance................................................................................................................... 47 Section 9.2. Conditions for the Issuance of Parity Bonds and Other Additional Indebtedness ................................................................................................................48

ARTICLE X

MISCELLANEOUS
Section 10.1. Cancellation of Bonds and Parity Bonds..................................................................... 50 Section 10.2. Execution of Documents and Proof of Ownership...................................................... 50 Section 10.3. Unclaimed Moneys...................................................................................................... 51 Section 10.4. Provisions Constitute Contract; Governing Law; Venue ............................................ 51 Section 10.5. Future Contracts .......................................................................................................... 52 Section 10.6. Further Assurances ...................................................................................................... 52 Section 10.7. Entire Agreement; Severability ................................................................................... 52 Section 10.8. Notices ......................................................................................................................... 52 Signatures ....................................................................................................................................S-1 EXHIBIT A FORM OF SPECIAL TAX BOND...........................................................................A-1 EXHIBIT B REQUISITION FOR DISBURSEMENT OF PROJECT COSTS ............................B-1 Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 106
Menifee Mayor and City Council
August 16, 2023
Page
544 of 759

4885-4897-6232v2/200299-0019

BOND INDENTURE
THIS BOND INDENTURE dated as of September 1, 2023, by and between COMMUNITY FACILITIES DISTRICT NO. 2021-2 OF THE CITY OF MENIFEE (SUMAC RIDGE) (the “District”) and WILMINGTON TRUST, NATIONAL ASSOCIATION, as trustee (the “Trustee”), governs the terms of the Community Facilities District No. 2021-2 of the City of Menifee (Sumac Ridge) Special Tax Bonds, Series 2023 and any Parity Bonds issued in accordance herewith from time to time.

RECITALS :

A. The City Council of the City of Menifee, located in the County of Riverside, California (the “City Council”), has undertaken proceedings and declared the necessity to issue bonds on behalf of the District pursuant to the terms and provisions of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5, of the Government Code of the State of California (the “Act”).

B. Based upon Resolution Nos. 21-1095 and 21-1096 adopted by the City Council on November 3, 2021 and an election held on November 3, 2021, authorizing the levy of a special tax and the issuance of bonds, the District is authorized to issue bonds in one or more series pursuant to the Act, in an aggregate principal amount not to exceed $15,000,000.

C. The District intends to finance various Project Costs (as defined herein) through the issuance of bonds in an aggregate principal amount of $_____designated as the “Community Facilities District No. 2021-2 of the City of Menifee (Sumac Ridge) Special Tax Bonds, Series 2023” (the “Bonds”); and
D. The District has determined that all requirements of the Act for the issuance of the Bonds have been satisfied.

NOW, THEREFORE, in order to establish the terms and conditions upon and subject to which the Bonds are to be issued, and in consideration of the premises and of the mutual covenants contained herein and of the purchase and acceptance of the Bonds by the Owners thereof, and for other valuable consideration, the receipt of which is hereby acknowledged, the District does hereby covenant and agree, for the benefit of the Owners of the Bonds and any Parity Bonds (as defined herein) which may be issued hereunder from time to time, as follows:

ARTICLE I

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

Account. The term “Account” means any account created pursuant to this Indenture.

Act. The term “Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Section 53311 et seq. of the California Government Code.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 107
Menifee Mayor and City Council
August 16, 2023
Page
545 of 759

2 4885-4897-6232v2/200299-0019
Acquisition and Construction Fund. The term “Acquisition and Construction Fund” means the fund by that name established pursuant to Section 3.1 hereof.

Administrative Expense Account. The term “Administrative Expense Account” means the account by that name created and established in the Special Tax Fund pursuant to Section 3.1 hereof.

Administrative Expenses. The term “Administrative Expenses” means the administrative costs with respect to the calculation and collection of the Special Taxes, including all attorneys’ fees and other costs related thereto, the fees and expenses of the Trustee, any fees and related costs for credit enhancement for the Bonds or any Parity Bonds which are not otherwise paid as Costs of Issuance, any costs related to the District’s compliance with state and federal laws requiring continuing disclosure of information concerning the Bonds and the District, and any other costs otherwise incurred by City staff on behalf of the District in order to carry out the purposes of the District as set forth in the Resolution of Formation and any obligation of the District hereunder.

Administrative Expenses Cap. The term “Administrative Expenses Cap” means $30,212, which amount shall escalate at 2.00% per Fiscal Year (all as calculated by the District), commencing July 1, 2024.

Alternate Penalty Account. The term “Alternate Penalty Account” means the account by that name created and established in the Rebate Fund pursuant to Section 3.1 hereof.

Annual Debt Service. The term “Annual Debt Service” means the principal amount of any Outstanding Bonds or Parity Bonds payable in a Bond Year either at maturity or pursuant to a Sinking Fund Payment and any interest payable on any Outstanding Bonds or Parity Bonds in such Bond Year, if the Bonds and any Parity Bonds are retired as scheduled.

Authorized Investments. The term “Authorized Investments” means any of the following which at the time of investment are legal investments under the laws of the State for the moneys proposed to be invested therein:
(1) For all purposes, including defeasance investments in refunding escrow accounts:
(a) cash; or
(b) obligations of, or obligations guaranteed as to principal and interest by, the U.S. or any agency or instrumentality thereof, when such obligations are backed by the full faith and credit of the U.S., including U.S. treasury obligations, all direct or fully guaranteed obligations, Farmers Home Administration, General Services Administration, guaranteed Title XI financing, Government National Mortgage Association (GNMA) and State and Local Government Series; or (c) obligations of government-sponsored agencies that are not backed by the full faith and credit of the U.S. Government: Federal Home Loan Mortgage Corporation (FHLMC) debt obligations, Farm Credit System (formerly: Federal Land Banks, Federal Intermediate Credit Banks and Banks for Cooperatives), Federal Home Loan Banks (FHL Banks), Federal National Mortgage Association (FNMA) debt obligations, Financing Corp. (FICO) debt obligations, Resolution Funding Corp. (REFCORP) debt obligations and U.S. Agency for International Development (U.S.A.I.D.) guaranteed notes.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 108
Menifee Mayor and City Council
August 16, 2023
Page
546 of 759

3 4885-4897-6232v2/200299-0019
(2) For all purposes other than defeasance investments in refunding escrow accounts:
(a) obligations of any of the following federal agencies, which obligations represent the full faith and credit of the United States of America: Export-Import Bank, Rural Economic Community Development Administration, U.S. Maritime Administration, Small Business Administration, U.S. Department of Housing & Urban Development (PHAs), Federal Housing Administration and Federal Financing Bank;
(b) direct obligations of any of the following federal agencies, which obligations are not fully guaranteed by the full faith and credit of the United States of America: senior debt obligations issued by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC), obligations of the Resolution Funding Corporation (REFCORP) and senior debt obligations of the Federal Home Loan Bank System; (c) U.S. dollar denominated deposit accounts, federal funds and bankers’ acceptances with domestic commercial banks (including those of the Trustee and its affiliates) which have a rating on their short term certificates of deposit on the date of purchase of “A-1” or “A-1+” by S&P and “P-1” by Moody’s and maturing no more than 360 days after the date of purchase (ratings on holding companies are not considered as the rating of the bank); (d) commercial paper which is rated at the time of purchase in the single highest classification “A-1+” by S&P and “P-1” by Moody’s and which matures not more than 270 days after the date of purchase;
(e) investments in a money market fund rated “AAm,” “AAm-G” or better by S&P, including funds for which the Trustee or its affiliates provide investment advisory or other management services;
(f) pre-refunded municipal obligations defined as follows: any bonds or other obligations of any state of the United States of America, or any agency, instrumentality or local governmental unit of any such state, which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice, and
(i) which are rated, based on irrevocable escrow account or fund (the “escrow”), in the highest rating category of S&P and Moody’s or any successors thereto; or (ii) (1) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or obligations described in paragraph (1)(b) above, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate; and (2) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate;
(g) municipal obligations rated “Aaa/AAA” or general obligations of states with a rating of at least “Aa2/AA” or higher by both Moody’s and S&P; Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 109
Menifee Mayor and City Council
August 16, 2023
Page
547 of 759

4 4885-4897-6232v2/200299-0019
(h) Investment Agreements (supported by appropriate opinions of counsel); and (i) the Local Agency Investment Fund of the State, created pursuant to Section 16429.1 of the California Government Code, to the extent the Trustee is authorized to register such investment in its name.

The value of the above investments shall be determined as follows:
(a) for the purpose of determining the amount in any fund, all Authorized Investments credited to such fund shall be valued at market value. The Trustee shall determine the market value based on accepted industry standards, including the Trustee’s internal systems, and from accepted industry providers. Accepted industry providers shall include, but are not limited to, pricing services provided by Financial Times Interactive Data Corporation, Bank of America Merrill Lynch or Salomon Smith Barney. Notwithstanding anything to the contrary herein, in making any valuation of investments hereunder, the Trustee may utilize computerized securities pricing services that may be available to it, including those available through its regular accounting system, and rely thereon;
(b) as to certificates of deposit and bankers acceptances: the face amount thereof, plus accrued interest thereon; and
(c) as to any investment not specified above: the value thereof established by prior agreement between the City and the Trustee.

Authorized Representative of the District. The term “Authorized Representative of the District” means the Mayor, City Manager, Assistant City Manager or City Clerk of the City, or any other officer or employee authorized by the City Council of the City or by an Authorized Representative of the District to undertake the action referenced in this Indenture as required to be undertaken by an Authorized Representative of the District.

Bond Counsel. The term “Bond Counsel” means Stradling Yocca Carlson & Rauth, a Professional Corporation, or another attorney at law or a firm of attorneys selected by the District of nationally recognized standing in matters pertaining to the tax-exempt nature of interest on bonds issued by states and their political subdivisions duly admitted to the practice of law before the highest court of any state of the United States of America or the District of Columbia.

Bond Register. The term “Bond Register” means the books which the Trustee shall keep or cause to be kept on which the registration and transfer of the Bonds and any Parity Bonds shall be recorded.

Bonds. The term “Bonds” means the District’s Special Tax Bonds, Series 2023 issued on September __, 2023 in the aggregate principal amount of $_____.

Bond Year. The term “Bond Year” means the twelve month period commencing on September 2 of each year and ending on September 1 of the following year, except that the first Bond Year for the Bonds or an issue of Parity Bonds shall begin on the Delivery Date and end on the first September 1 which is not more than 12 months after the Delivery Date.

Business Day. The term “Business Day” means a day which is not a Saturday or Sunday or a day of the year on which banks or trust companies in New York, New York, Los Angeles, California, Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 110
Menifee Mayor and City Council
August 16, 2023
Page
548 of 759

5 4885-4897-6232v2/200299-0019
or the city where the corporate trust office of the Trustee is located, are not required or authorized by law, regulation or executive order, to close or to remain closed.

Certificate of an Authorized Representative. The term “Certificate of an Authorized Representative” means a written certificate or warrant request executed by an Authorized Representative of the District.

City. The term “City” means the City of Menifee, County of Riverside, State of California.

City Council. The term “City Council” means the City Council of the City.

City Facilities Account. The term “City Facilities Account” means the account by that name created and established in the Acquisition and Construction Fund pursuant to Section 3.1 hereof.

Code. The term “Code” means the Internal Revenue Code of 1986, as amended, and any Regulations, rulings, judicial decisions, and notices, announcements, and other releases of the United States Treasury Department or Internal Revenue Service interpreting and construing it.

Continuing Disclosure Certificate. The term “Continuing Disclosure Certificate” means that certain Continuing Disclosure Certificate dated as of September 1, 2023, as originally executed by the District and as it may be from time to time amended or supplemented in accordance with its terms.

Costs of Issuance. The term “Costs of Issuance” means the costs and expenses incurred in connection with the formation of the District and the issuance and sale of the Bonds or any Parity Bonds, including the acceptance and initial annual fees and expenses of the Trustee and its counsel, legal fees and expenses, costs of printing the Bonds and Parity Bonds and the preliminary and final official statements for the Bonds and Parity Bonds, fees of financial consultants, costs of the appraisal and all other related fees and expenses, including reimbursement to property owners within the District for design, engineering and legal costs, as set forth in a Certificate of an Authorized Representative of the District.

Costs of Issuance Account. The term “Costs of Issuance Account” means the account by that name created and established in the Acquisition and Construction Fund pursuant to Section 3.1 hereof.

Delivery Date. The term “Delivery Date” means, with respect to the Bonds and each issue of Parity Bonds, the date on which the bonds of such issue were issued and delivered to the initial purchasers thereof.

Depository. The term “Depository” means The Depository Trust Company, New York, New York, and its successors and assigns as securities depository for the Bonds, or any other securities depository acting as Depository under Article II hereof.

District. The term “District” means Community Facilities District No. 2021-2 of the City of Menifee (Sumac Ridge) established pursuant to the Act and Resolution No. 21-1095 adopted by the City Council of the City on November 3, 2021.

Event of Default. The term “Event of Default” means an event described in Section 8.1 hereof.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 111
Menifee Mayor and City Council
August 16, 2023
Page
549 of 759

6 4885-4897-6232v2/200299-0019
Fiscal Year. The term “Fiscal Year” means the period beginning on July 1 of each year and ending on the next following June 30.

Gross Taxes. The term “Gross Taxes” means the amount of all Special Taxes received by the District together with the proceeds collected from the sale of property pursuant to foreclosure for the delinquency of such Special Taxes remaining after the payment of all costs related to such foreclosure actions.

Indenture. The term “Indenture” means this Bond Indenture, together with any Supplemental Indenture approved pursuant to Article VI hereof.

Independent Financial Consultant. The term “Independent Financial Consultant” means a financial consultant or firm of such consultants generally recognized to be well qualified in the financial consulting field, appointed and paid by the District, who, or each of whom: (1) is in fact independent and not under the domination of the District or the City; (2) does not have any substantial interest, direct or indirect, in the District or the City; and (3) is not connected with the District or the City as a member, officer or employee of the District or the City, but who may be regularly retained to make annual or other reports to the District or the City.

Interest Account. The term “Interest Account” means the account by that name created and established in the Special Tax Fund pursuant to Section 3.1 hereof.

Interest Payment Date. The term “Interest Payment Date” means March 1, 2024 and each March 1 and September 1 thereafter; provided, however, that, if any such day is not a Business Day, interest up to the Interest Payment Date will be paid on the Business Day next succeeding such date.

Investment Agreement. The term “Investment Agreement” means one or more agreements for the investment of funds of the District complying with the criteria therefor as set forth in subsection (2)(h) of the definition of Authorized Investments herein.

Maximum Annual Debt Service. The term “Maximum Annual Debt Service” means the maximum sum obtained for any Bond Year prior to the final maturity of the Bonds and any Parity Bonds by adding the following for each Bond Year: (1) the principal amount of all Outstanding Bonds and Parity Bonds payable in such Bond Year either at maturity or pursuant to a Sinking Fund Payment; and (2) the interest payable on the aggregate principal amount of all Bonds and Parity Bonds Outstanding in such Bond Year if the Bonds and Parity Bonds are retired as scheduled.

Moody’s. The term “Moody’s” means Moody’s Investors Service, Inc., its successors and assigns.

Net Taxes. The term “Net Taxes” means Gross Taxes minus amounts set aside to pay Administrative Expenses.

Nominee. The term “Nominee” means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant to Section 2.16 hereof.

Ordinance. The term “Ordinance” means Ordinance No. 2021-330 adopted by the City Council on November 17, 2021 providing for the levying of the Special Tax.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 112
Menifee Mayor and City Council
August 16, 2023
Page
550 of 759

7 4885-4897-6232v2/200299-0019
Outstanding. The terms “Outstanding” or “Outstanding Bonds and Parity Bonds” means all Bonds and Parity Bonds theretofore issued by the District, except: (i) Bonds and Parity Bonds theretofore cancelled or surrendered for cancellation in accordance with Section 10.1 hereof; (ii) Bonds and Parity Bonds for payment or redemption of which monies shall have been theretofore deposited in trust (whether upon or prior to the maturity or the redemption date of such Bonds or Parity Bonds), provided that, if such Bonds or Parity Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as provided in this Indenture or any applicable Supplemental Indenture for Parity Bonds; and (iii) Bonds and Parity Bonds which have been surrendered to the Trustee for transfer or exchange pursuant to Section 2.9 hereof or for which a replacement has been issued pursuant to Section 2.10 hereof.

Owner. The term “Owner” means the person or persons in whose name or names any Bond or Parity Bond is registered.

Parity Bonds. The term “Parity Bonds” means all bonds, notes or other similar evidences of indebtedness hereafter issued, payable out of the Net Taxes and which, as provided in this Indenture or any Supplemental Indenture, rank on a parity with the Bonds.

Participants. The term “Participants” means those broker-dealers, banks and other financial institutions from time to time for which the Depository holds Bonds or Parity Bonds as securities depository.

Person. The term “Person” means natural persons, firms, corporations, partnerships, associations, trusts, public bodies and other entities.

Prepayments. The term “Prepayments” means any amounts paid by the District to the Trustee and designated by the District as a prepayment of Special Taxes for one or more parcels in the District made in accordance with the RMA.

Principal Account. The term “Principal Account” means the account by that name created and established in the Special Tax Fund pursuant to Section 3.1 hereof.

Principal Office of the Trustee. The term “Principal Office of the Trustee” means the office of the Trustee located in Costa Mesa, California, or such other office or offices as the Trustee may designate from time to time, or the office of any successor Trustee where it principally conducts its business of serving as trustee under indentures pursuant to which municipal or governmental obligations are issued.

Project. The term “Project” means those public facilities described in the Resolution of Formation which are to be acquired or constructed within and outside of the District, including all engineering, planning and design services and other incidental expenses related to such facilities and other facilities, if any, authorized by the qualified electors within the District from time to time.

Project Costs. The term “Project Costs” means the amounts necessary to finance the Project, to create and replenish any necessary reserve funds, to pay the initial and annual costs associated with the Bonds or any Parity Bonds, including, but not limited to, remarketing, credit enhancement, Trustee and other fees and expenses relating to the issuance of the Bonds or any Parity Bonds and the formation of the District, and to pay any other “incidental expenses” of the District, as such term is defined in the Act.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 113
Menifee Mayor and City Council
August 16, 2023
Page
551 of 759

8 4885-4897-6232v2/200299-0019
Rating Agency. The term “Rating Agency” means Moody’s or S&P, or both, as the context requires.

Rebate Account. The term “Rebate Account” means the account by that name created and established in the Rebate Fund pursuant to Section 3.1 hereof.

Rebate Fund. The term “Rebate Fund” means the fund by that name established pursuant to Section 3.1 hereof in which there are established the Accounts described in Section 3.1 hereof.

Rebate Regulations. The term “Rebate Regulations” means any final, temporary or proposed Regulations promulgated under Section 148(f) of the Code.

Record Date. The term “Record Date” means the fifteenth day of the month preceding an Interest Payment Date, regardless of whether such day is a Business Day.

Redemption Account. The term “Redemption Account” means the account by that name created and established in the Special Tax Fund pursuant to Section 3.1 hereof.

Regulations. The term “Regulations” means the regulations adopted or proposed by the Department of Treasury from time to time with respect to obligations issued pursuant to Section 103 of the Code.

Representation Letter. The term “Representation Letter” means the Blanket Letter of Representations from the District to the Depository as described in Section 2.13 hereof.

Reserve Account. The term “Reserve Account” means the account by that name created and established in the Special Tax Fund pursuant to Section 3.1 hereof. “Reserve Policy” means a letter of credit, insurance policy, surety bond or other such funding instrument issued by a municipal bond insurance company rated least “Aa2” or higher by Moody’s or “AA” or higher by S&P, delivered to the Trustee for the purpose of providing all or a portion of the Reserve Requirement for Bonds and Parity Bonds.

Reserve Requirement. The term “Reserve Requirement” means that amount as of any date of calculation equal to the lesser of: (i) 10% of the initial principal amount of the Bonds and Parity Bonds, if any; (ii) Maximum Annual Debt Service on the then Outstanding Bonds and Parity Bonds, if any; (iii) 125% of average Annual Debt Service on the then Outstanding Bonds and Parity Bonds, if any; provided, however, that the Reserve Requirement shall not exceed [$_____] except in connection with the issuance of Parity Bonds.

Resolution of Formation. The term “Resolution of Formation” means Resolution No. 21- 1095 adopted by the City Council on November 3, 2021, pursuant to which the City Council established the District.

RMA. The term “RMA” means the Rate and Method of Apportionment of Special Tax for the District approved by the qualified electors of the District at the November 3, 2021 election.

School Facilities Account. The term “School Facilities Account” means the account by that name created and established in the Acquisition and Construction Fund pursuant to Section 3.1 hereof.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 114
Menifee Mayor and City Council
August 16, 2023
Page
552 of 759

9 4885-4897-6232v2/200299-0019
Sinking Fund Payment. The term “Sinking Fund Payment” means the annual payment to be deposited in the Redemption Account to redeem a portion of the Term Bonds in accordance with the schedules set forth in Section 4.1(b) hereof and any annual sinking fund payment schedule to retire any Parity Bonds which are designated as Term Bonds.

Six-Month Period. The term “Six-Month Period” means the period of time beginning on the Delivery Date of each issue of Bonds or Parity Bonds, as applicable, and ending six consecutive months thereafter, and each six-month period thereafter until the latest maturity date of the Bonds and the Parity Bonds (and any obligations that refund an issue of the Bonds or Parity Bonds).

Special Tax Administrator. The term “Special Tax Administrator” means the individual or entity appointed by the City to administer the calculation and collection of the Special Taxes.

Special Tax Fund. The term “Special Tax Fund” means the fund by that name created and established pursuant to Section 3.1 hereof.

Special Taxes. The term “Special Taxes” means the taxes authorized to be levied by the District on property within the District in accordance with the Ordinance, the Resolution of Formation, the Act and the voter approval obtained at the November 3, 2021 election in the District, including any scheduled payments and any Prepayments thereof, the net proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and penalties and interest thereon; provided that any delinquent Special Tax sold to an independent third-party or to the City for 100% of the delinquent amount shall no longer be pledged hereunder to the payment of the Bonds or Parity Bonds.

S&P. The term “S&P” means S&P Global Ratings, a Standard & Poor’s Financial Services LLC business, its successors and assigns.

Subaccount. The term “Subaccount” means any subaccount created pursuant to this Indenture.

Supplemental Indenture. The term “Supplemental Indenture” means any supplemental indenture amending or supplementing this Indenture.

Surplus Fund. The term “Surplus Fund” means the fund by that name created and established pursuant to Section 3.1 hereof.

Tax Certificate. The term “Tax Certificate” means the certificate by that name to be executed by the District on a Delivery Date to establish certain facts and expectations and which contains certain covenants relevant to compliance with the Code.

Tax-Exempt. The term “Tax-Exempt” means, with reference to an Authorized Investment, an Authorized Investment the interest earnings on which are excludable from gross income for federal income tax purposes pursuant to Section 103(a) of the Code, other than one described in Section 57(a)(5)(C) of the Code.

Taxable Property. The term “Taxable Property” has the meaning ascribed to it in the RMA.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 115
Menifee Mayor and City Council
August 16, 2023
Page
553 of 759

10 4885-4897-6232v2/200299-0019
Term Bonds. The term “Term Bonds” means the Bonds maturing on September 1, 20__, September 1, 20__ and September 1, 20__ and any term maturities of an issue of Parity Bonds as specified in a Supplemental Indenture.

Trustee. The term “Trustee” means Wilmington Trust, National Association, a national banking association duly organized and existing under the laws of the United States, at its principal corporate trust office in Costa Mesa, California, and its successors or assigns, or any other bank or trust company which may at any time be substituted in its place as provided in Sections 7.2 or 7.3, and any successor thereto.

Underwriter. The term “Underwriter” means, with respect to the Bonds, Stifel, Nicolaus & Company, Incorporated, and with respect to each issue of Parity Bonds, the institution or institutions, if any, with whom the District enters into a purchase contract for the sale of such issue.

Water Facilities Account. The term “Water Facilities Account” means the account by that name created and established in the Acquisition and Construction Fund pursuant to Section 3.1 hereof.

ARTICLE II

GENERAL AUTHORIZATION AND BOND TERMS
Section 2.1. Amount, Issuance, Purpose and Nature of Bonds and Parity Bonds.

Under and pursuant to the Act, the Bonds in the aggregate principal amount of $_____, together with any Parity Bonds authorized by the City Council in accordance with Section 9.2 hereof, shall be issued for the purposes of financing and/or refinancing the Project, paying Costs of Issuance, funding the Reserve Account and funding capitalized interest; provided that the aggregate principal amount of the Bonds and any Parity Bonds shall not exceed the total indebtedness presently authorized or subsequently authorized by the qualified electors within the District in accordance with the Act. The Bonds and any Parity Bonds shall be and are limited obligations of the District and shall be payable as to the principal thereof and interest thereon and any premiums upon the redemption thereof solely from the Net Taxes and the other amounts in the Special Tax Fund (other than amounts in the Administrative Expense Account of the Special Tax Fund).

Section 2.2. Type and Nature of Bonds and Parity Bonds. Neither the faith and credit nor the taxing power of the City, the State of California, or any political subdivision thereof other than the District is pledged to the payment of the Bonds or any Parity Bonds. Except for the Net Taxes, no other taxes are pledged to the payment of the Bonds or any Parity Bonds. The Bonds and any Parity Bonds are not general or special obligations of the City nor general obligations of the District, but are limited obligations of the District payable solely from certain amounts deposited by the District in the Special Tax Fund (exclusive of the Administrative Expense Account), as more fully described herein. The District’s limited obligation to pay the principal of, premium, if any, and interest on the Bonds and any Parity Bonds from amounts in the Special Tax Fund (exclusive of the Administrative Expense Account) is absolute and unconditional, free of deductions and without any abatement, offset, recoupment, diminution or set-off whatsoever. No Owner of the Bonds or any Parity Bonds may compel the exercise of the taxing power by the District (except as pertains to the Special Taxes) or the City or the forfeiture of any of their property. The principal of and interest on the Bonds and any Parity Bonds and premiums upon the redemption thereof, if any, are not a debt of the City, the State of California or any of its political subdivisions within the meaning of any Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 116
Menifee Mayor and City Council
August 16, 2023
Page
554 of 759

11 4885-4897-6232v2/200299-0019
constitutional or statutory limitation or restriction. The Bonds and any Parity Bonds are not a legal or equitable pledge, charge, lien, or encumbrance upon any of the District’s property, or upon any of its income, receipts or revenues, except the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expense Account) which are, under the terms of this Indenture and the Act, set aside for the payment of the Bonds, any Parity Bonds and interest thereon, and neither the members of the legislative body of the District or the members of the City Council nor any persons executing the Bonds or any Parity Bonds are liable personally on the Bonds or any Parity Bonds, by reason of their issuance.

Notwithstanding anything to the contrary contained in this Indenture, the District shall not be required to advance any money derived from any source of income other than the Net Taxes for the payment of the interest on or the principal of the Bonds or any Parity Bonds, or for the performance of any covenants contained herein. The District may, however, advance funds for any such purpose, provided that such funds are derived from a source legally available for such purpose.

Section 2.3. Equality of Bonds and Parity Bonds and Pledge of Net Taxes. Pursuant to the Act and this Indenture, the Bonds and any Parity Bonds shall be equally payable from and secured by a first pledge of and lien on the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expense Account), without priority for number, date of the Bonds or Parity Bonds, date of sale, date of execution, or date of delivery, and the payment of the interest on and principal of the Bonds and any Parity Bonds and any premiums upon the redemption thereof, shall be exclusively paid from the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expense Account) which are hereby set aside for the payment of the Bonds and any Parity Bonds; provided that any delinquent Special Tax sold to an independent third-party or to the City for 100% of the delinquent amount shall no longer be pledged hereunder to the payment of the Bonds or Parity Bonds. Amounts in the Special Tax Fund (other than the Administrative Expense Account therein) shall constitute a trust fund held for the benefit of the Owners to be applied to the payment of the interest on and principal of the Bonds and any Parity Bonds and, so long as any of the Bonds and any Parity Bonds or interest thereon remain Outstanding, shall not be used for any other purpose, except as permitted by this Indenture or any Supplemental Indenture.

Notwithstanding any provision contained in this Indenture to the contrary, Net Taxes deposited in the Rebate Fund and the Surplus Fund shall no longer be considered to be pledged to the Bonds or any Parity Bonds, and none of the Rebate Fund, the Surplus Fund, the Acquisition and Construction Fund or the Administrative Expense Account of the Special Tax Fund shall be construed as a trust fund held for the benefit of the Owners.

Nothing in this Indenture or any Supplemental Indenture shall preclude: (i) subject to the limitations contained hereunder, the redemption prior to maturity of any Bonds or Parity Bonds subject to call and redemption and payment of said Bonds or Parity Bonds from proceeds of refunding bonds issued under the Act as the same now exists or as hereafter amended, or under any other law of the State of California; or (ii) the issuance, subject to the limitations contained herein, of Parity Bonds which shall be payable from Net Taxes.

Section 2.4. Description of Bonds; Interest Rates. The Bonds and any Parity Bonds shall be issued in fully registered form in denominations of $5,000 or any integral multiple thereof.

The Bonds and any Parity Bonds of each issue shall be numbered as desired by the Trustee.

The Bonds shall be designated “Community Facilities District No. 2021-2 of the City of Menifee (Sumac Ridge) Special Tax Bonds, Series 2023.” The Bonds shall be dated as of their Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 117
Menifee Mayor and City Council
August 16, 2023
Page
555 of 759

12 4885-4897-6232v2/200299-0019
Delivery Date and shall mature and be payable on September 1 in the years and in the aggregate principal amounts and shall be subject to and shall bear interest at the rates set forth in the table below payable on March 1, 2024 and each Interest Payment Date thereafter:

Maturity Date
September 1
Principal
Amount
Interest
Rate
$ %
*Term Bond
Interest shall be payable on each Bond and Parity Bond from the date established in accordance with Section 2.5 below on each Interest Payment Date thereafter until the principal sum of such Bond or Parity Bond has been paid; provided, however, that if at the maturity date of any Bond or Parity Bond (or if the same is redeemable and shall be duly called for redemption, then at the date fixed for redemption) funds are available for the payment or redemption thereof in full, in accordance with the terms of this Indenture, such Bonds and Parity Bonds shall then cease to bear interest. Interest due on the Bonds and Parity Bonds shall be calculated on the basis of a 360-day year comprised of twelve 30-day months.

Section 2.5. Place and Form of Payment. The Bonds and Parity Bonds shall be payable both as to principal and interest, and as to any premiums upon the redemption thereof, in lawful money of the United States of America. The principal of the Bonds and Parity Bonds and any premiums due upon the redemption thereof shall be payable upon presentation and surrender thereof at the Principal Office of the Trustee, or at the designated office of any successor Trustee. If the Nominee of the Bonds or Parity Bonds is registered to Cede & Co., payment of principal and any premiums shall be made without presentment. Interest on any Bond or Parity Bond shall be payable from the Interest Payment Date next preceding the date of authentication of such Bond or Parity Bond, unless: (i) such date of authentication is an Interest Payment Date, in which event interest shall be payable from such date of authentication; (ii) the date of authentication is after a Record Date but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication; or (iii) the date of authentication is prior to the close of business on the first Record Date occurring after the issuance of such Bond or Parity Bond, in which event interest shall be payable from the dated date of such Bond or Parity Bond, as applicable; provided, however, that if at the time of authentication of such Bond or Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 118
Menifee Mayor and City Council
August 16, 2023
Page
556 of 759

13 4885-4897-6232v2/200299-0019
Parity Bond, interest is in default, interest on such Bond or Parity Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment on such Bond or Parity Bond, interest on such Bond or Parity Bond shall be payable from its dated date. Interest on any Bond or Parity Bond shall be paid to the person whose name shall appear in the Bond Register as the Owner of such Bond or Parity Bond as of the close of business on the Record Date. Such interest shall be paid by check of the Trustee mailed by first class mail, postage prepaid, to such Owner at his or her address as it appears on the Bond Register. In addition, upon a request in writing received by the Trustee on or before the applicable Record Date from an Owner of $1,000,000 or more in principal amount of the Bonds or of any issue of Parity Bonds, payment shall be made on the Interest Payment Date by wire transfer in immediately available funds to an account within the United States of America designated by such Owner.

Section 2.6. Form of Bonds and Parity Bonds. The definitive Bonds may be printed from steel engraved or lithographic plates or may be typewritten. The Bonds and the certificate of authentication shall be substantially in the form attached hereto as Exhibit A, which form is hereby approved and adopted as the form of such Bonds and of the certificate of authentication. Each issue of Parity Bonds and the certificate of authentication therefor shall be in the form provided in the Supplemental Indenture for such issue of Parity Bonds.

Until definitive Bonds or Parity Bonds, as applicable, shall be prepared, the District may cause to be executed and delivered in lieu of such definitive Bonds or Parity Bonds temporary bonds in typed, printed, lithographed or engraved form and in fully registered form, subject to the same provisions, limitations and conditions as are applicable in the case of definitive Bonds or Parity Bonds, except that they may be in any denominations authorized by the District. Until exchanged for definitive Bonds or Parity Bonds, as applicable, any temporary bond shall be entitled and subject to the same benefits and provisions of this Indenture as definitive Bonds and Parity Bonds. If the District issues temporary Bonds or Parity Bonds, it shall execute and furnish definitive Bonds or Parity Bonds, as applicable, without unnecessary delay and thereupon any temporary Bond or Parity Bond may be surrendered to the Trustee at its office, without expense to the Owner, in exchange for a definitive Bond or Parity Bond of the same issue, maturity, interest rate and principal amount in any authorized denomination. All temporary Bonds or Parity Bonds so surrendered shall be cancelled by the Trustee and shall not be reissued.

Section 2.7. Execution and Authentication. The Bonds and Parity Bonds shall be signed on behalf of the District by the manual or facsimile signature of the Mayor of the City and countersigned by the manual or facsimile signature of the Acting City Clerk of the City, or any duly appointed Deputy Clerk, in their capacity as officers of the District, and the seal of the City or the District (or a facsimile thereof) may be impressed, imprinted, engraved or otherwise reproduced thereon, and attested by the signature of the Acting City Clerk of the City. In case any one or more of the officers who shall have signed or sealed any of the Bonds or Parity Bonds shall cease to be such officer before the Bonds or Parity Bonds so signed and sealed have been authenticated and delivered by the Trustee (including new Bonds or Parity Bonds delivered pursuant to the provisions hereof with reference to the transfer and exchange of Bonds or Parity Bonds or lost, stolen, destroyed or mutilated Bonds or Parity Bonds), such Bonds and Parity Bonds shall nevertheless be valid and may be authenticated and delivered as herein provided, and may be issued as if the person who signed or sealed such Bonds or Parity Bonds had not ceased to hold such office.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 119
Menifee Mayor and City Council
August 16, 2023
Page
557 of 759

14 4885-4897-6232v2/200299-0019
Only the Bonds as shall bear thereon such certificate of authentication in the form set forth in Exhibit A attached hereto shall be entitled to any right or benefit under this Indenture, and no Bond shall be valid or obligatory for any purpose until such certificate of authentication shall have been duly executed by the Trustee.

Section 2.8. Bond Register. The Trustee will keep or cause to be kept, at its office, sufficient books for the registration and transfer of the Bonds and any Parity Bonds which shall upon reasonable prior notice be open to inspection by the District during all regular business hours, and, subject to the limitations set forth in Section 2.9 below, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be transferred on said Bond Register, Bonds and any Parity Bonds as herein provided.

The District and the Trustee may treat the Owner of any Bond or Parity Bond whose name appears on the Bond Register as the absolute Owner of that Bond or Parity Bond for any and all purposes and the District and the Trustee shall not be affected by any notice to the contrary. The District and the Trustee may rely on the address of the Owner as it appears in the Bond Register for any and all purposes. It shall be the duty of the Owner to give written notice to the Trustee of any change in the Owner’s address so that the Bond Register may be revised accordingly.

Section 2.9. Registration of Exchange or Transfer. Subject to the limitations set forth in the following paragraph, the registration of any Bond or Parity Bond may, in accordance with its terms, be transferred upon the Bond Register by the person in whose name it is registered, in person or by his or her duly authorized attorney, upon surrender of such Bond or Parity Bond for cancellation at the office of the Trustee, accompanied by delivery of written instrument of transfer in a form acceptable to the Trustee and duly executed by the Owner or his or her duly authorized attorney.

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

Section 2.10. Mutilated, Lost, Destroyed or Stolen Bonds or Parity Bonds. If any Bond or Parity Bond shall become mutilated, the District shall execute, and the Trustee shall authenticate and deliver, a new Bond or Parity Bond of like tenor, date, issue and maturity in exchange and substitution for the Bond or Parity Bond so mutilated, but only upon surrender to the Trustee of the Bond or Parity Bond so mutilated. Every mutilated Bond or Parity Bond so surrendered to the Trustee shall be cancelled by the Trustee pursuant to Section 10.1 hereof. If any Bond or Parity Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence is satisfactory to the Trustee and, if any indemnity satisfactory to the Trustee shall be given, the District shall execute and the Trustee shall authenticate and deliver a Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 120
Menifee Mayor and City Council
August 16, 2023
Page
558 of 759

15 4885-4897-6232v2/200299-0019
new Bond or Parity Bond, as applicable, of like tenor, maturity and issue, numbered and dated as the Trustee shall determine in lieu of and in substitution for the Bond or Parity Bond so lost, destroyed or stolen. Any Bond or Parity Bond issued in lieu of any Bond or Parity Bond alleged to be mutilated, lost, destroyed or stolen shall be equally and proportionately entitled to the benefits hereof with all other Bonds and Parity Bonds issued hereunder. The Trustee shall not treat both the original Bond or Parity Bond and any replacement Bond or Parity Bond as being Outstanding for the purpose of determining the principal amount of Bonds or Parity Bonds which may be executed, authenticated and delivered hereunder or for the purpose of determining any percentage of Bonds or Parity Bonds Outstanding hereunder, but both the original and replacement Bond or Parity Bond shall be treated as one and the same. Notwithstanding any other provision of this Section, in lieu of delivering a new Bond or Parity Bond which has been mutilated, lost, destroyed or stolen, and which has matured, the Trustee may make payment with respect to such Bonds or Parity Bonds.

Section 2.11. Validity of Bonds and Parity Bonds. The validity of the authorization and issuance of the Bonds and any Parity Bonds shall not be affected in any way by any defect in any proceedings taken by the District for the financing of the Project, or by the invalidity, in whole or in part, of any contracts made by the District in connection therewith, and shall not be dependent upon the completion of the financing of the Project or upon the performance by any Person of his obligation with respect to the Project, and the recital contained in the Bonds or any Parity Bonds that the same are issued pursuant to the Act and other applicable laws of the State shall be conclusive evidence of their validity and of the regularity of their issuance.

Section 2.12. Book-Entry System. The Bonds shall be initially delivered in the form of a separate single fully registered Bond (which may be typewritten) for each maturity of the Bonds.

Upon initial delivery, the ownership of each such Bond shall be registered in the registration books kept by the Trustee in the name of the Nominee as nominee of the Depository. Except as provided in Section 2.14 hereof, all of the Outstanding Bonds shall be registered in the registration books kept by the Trustee in the name of the Nominee. At the election of the District, any Parity Bonds may also be issued as book-entry bonds registered in the name of the Nominee as provided herein, in which case the references in Sections 2.12 through 2.15 to “Bonds” shall be applicable to such Parity Bonds.

With respect to Bonds registered in the registration books kept by the Trustee in the name of the Nominee, the District and the Trustee shall have no responsibility or obligation to any such Participant or to any Person on behalf of which such a Participant holds an interest in the Bonds.

Without limiting the immediately preceding sentence, the District and the Trustee shall have no responsibility or obligation with respect to: (i) the accuracy of the records of the Depository, the Nominee, or any Participant with respect to any ownership interest in the Bonds; (ii) the delivery to any Participant or any other Person, other than an Owner as shown in the registration books kept by the Trustee, of any notice with respect to the Bonds, including any notice of redemption; (iii) the selection by the Depository and its Participants of the beneficial interests in the Bonds to be redeemed in the event that the Bonds are redeemed in part; or (iv) the payment to any Participant or any other Person, other than an Owner as shown in the registration books kept by the Trustee, of any amount with respect to principal of, premium, if any, or interest due with respect to the Bonds. The District and the Trustee may treat and consider the Person in whose name each Bond is registered in the registration books kept by the Trustee as the holder and absolute owner of such Bond for the purpose of payment of the principal of, premium, if any, and interest on such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond and for all other purposes whatsoever. The Trustee Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 121
Menifee Mayor and City Council
August 16, 2023
Page
559 of 759

16 4885-4897-6232v2/200299-0019
shall pay all principal of, premium, if any, and interest due on the Bonds only to or upon the order of the respective Owner, as shown in the registration books kept by the Trustee, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to satisfy and discharge fully the District’s obligations with respect to payment of the principal, premium, if any, and interest due on the Bonds to the extent of the sum or sums so paid. No Person other than an Owner, as shown in the registration books kept by the Trustee, shall receive a Bond evidencing the obligation of the District to make payments of principal, premium, if any, and interest pursuant to this Indenture. Upon delivery by the Depository to the Trustee and the District of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to Record Dates, the word Nominee in this Indenture shall refer to such new nominee of the Depository.

Section 2.13. Representation Letter. In order to qualify the Bonds and any Parity Bonds which the District elects to register in the name of the Nominee for the Depository’s book-entry system, an Authorized Representative of the District is hereby authorized to execute from time to time and deliver to such Depository the Representation Letter. The execution and delivery of the Representation Letter shall not in any way limit the provisions of Section 2.12 or in any other way impose upon the District or the Trustee any obligation whatsoever with respect to persons having interests in the Bonds other than the Owners, as shown on the registration books kept by the Trustee.

The District agrees to take all action necessary to continuously comply with all representations made by it in the Representation Letter. In addition to the execution and delivery of the Representation Letter, the Authorized Representatives of the District are hereby authorized to take any other actions, not inconsistent with this Indenture, to qualify the Bonds for the Depository’s book-entry program.

Section 2.14. Transfers Outside Book-Entry System. In the event that: (i) the Depository determines not to continue to act as securities depository for the Bonds; or (ii) the District determines that the Depository shall no longer so act, then the District will discontinue the book-entry system with the Depository. If the District fails to identify another qualified securities depository to replace the Depository then the Bonds so designated shall no longer be restricted to being registered in the registration books kept by the Trustee in the name of the Nominee, but shall be registered in whatever name or names Persons transferring or exchanging Bonds shall designate, in accordance with the provisions of Section 2.9 hereof.

Section 2.15. Payments to the Nominee. Notwithstanding any other provisions of this Indenture to the contrary, so long as any Bond is registered in the name of the Nominee, all payments with respect to principal, premium, if any, and interest due with respect to such Bond and all notices with respect to such Bond shall be made and given, respectively, as provided in the Representation Letter or as otherwise instructed by the Depository.

Section 2.16. Initial Depository and Nominee. The initial Depository under this Indenture shall be The Depository Trust Company, New York, New York. The initial Nominee shall be Cede & Co., as Nominee of The Depository Trust Company, New York, New York.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 122
Menifee Mayor and City Council
August 16, 2023
Page
560 of 759

17 4885-4897-6232v2/200299-0019

ARTICLE III

CREATION OF FUNDS AND APPLICATION OF PROCEEDS
Section 3.1. Creation of Funds; Application of Proceeds. (a) There are hereby created and established and shall be maintained by the Trustee the following funds and accounts:
(1) The Community Facilities District No. 2021-2 of the City of Menifee (Sumac Ridge) Special Tax Fund (the “Special Tax Fund”) (in which there shall be established and created an Interest Account, a Principal Account, a Redemption Account, a Reserve Account, and an Administrative Expense Account).
(2) The Community Facilities District No. 2021-2 of the City of Menifee (Sumac Ridge) Rebate Fund (the “Rebate Fund”) (in which there shall be established a Rebate Account and an Alternate Penalty Account).
(3) The Community Facilities District No. 2021-2 of the City of Menifee (Sumac Ridge) Acquisition and Construction Fund (the “Acquisition and Construction Fund”) (in which there shall be established a City Facilities Account, a Water Facilities Account, a School Facilities Account and a Costs of Issuance Account).
(4) The Community Facilities District No. 2021-2 of the City of Menifee (Sumac Ridge) Surplus Fund (the “Surplus Fund”).

The amounts on deposit in the foregoing funds, accounts and subaccounts shall be held by the Trustee. The Trustee shall invest and disburse the amounts in such funds, accounts and subaccounts in accordance with the provisions of this Article III and shall disburse investment earnings thereon in accordance with the provisions of Section 3.10 hereof.

In connection with the issuance of any Parity Bonds as described in Section 9.2, the Trustee, at the direction of an Authorized Representative of the District, may create new funds, accounts or subaccounts, or may create additional accounts and subaccounts within any of the foregoing funds and accounts for the purpose of separately accounting for the proceeds of the Bonds and any Parity Bonds.
(b) The proceeds of the sale of the Bonds shall be received by the Trustee on behalf of the District and deposited and transferred as follows:
(1) $_____shall be transferred to the Costs of Issuance Account of the Acquisition and Construction Fund to pay the Costs of Issuance of the Bonds; (2) $_____shall be transferred to the Reserve Account of the Special Tax Fund to fund the Reserve Requirement;
(3) $__________ shall be transferred to the Interest Account to pay a portion of the interest on the Bonds due through September 1, 2024; and Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 123
Menifee Mayor and City Council
August 16, 2023
Page
561 of 759

18 4885-4897-6232v2/200299-0019
(4) $_____shall be transferred to the Acquisition and Construction Fund of which $_____ shall be deposited in the City Facilities Account, $_____ shall be deposited in the Water Facilities Account and $_____ shall be deposited in the School Facilities Account.

The Trustee may, in its discretion, establish temporary funds or accounts in its books and records to facilitate such transfers.

Section 3.2. Deposits to and Disbursements from Special Tax Fund. (a) Except for Prepayments, which shall be deposited to the Redemption Account of the Special Tax Fund, the Trustee shall, on each date on which the Special Taxes are received from the District, deposit the Special Taxes in the Special Tax Fund to be held in trust for the Owners. The Trustee shall transfer the Special Taxes on deposit in the Special Tax Fund on the dates and in the amounts set forth in the following Sections, in the following order of priority, to:
(1) the Administrative Expense Account of the Special Tax Fund up to the Administrative Expenses Cap;
(2) the Interest Account of the Special Tax Fund;
(3) the Principal Account of the Special Tax Fund;
(4) the Redemption Account of the Special Tax Fund;
(5) the Reserve Account of the Special Tax Fund;
(6) the Administrative Expense Account of the Special Tax Fund to the extent that Administrative Expenses exceed or are expected to exceed the Administrative Expense Cap; (7) the Rebate Fund; and
(8) the Surplus Fund.
(b) At maturity of all of the Bonds and Parity Bonds and, after all principal and interest then due on the Bonds and Parity Bonds then Outstanding have been paid or provided for and any amounts owed to the Trustee have been paid in full, moneys in the Special Tax Fund and any accounts therein may be used by the District for any lawful purpose.

Section 3.3. Administrative Expense Account of the Special Tax Fund. The Trustee shall transfer from the Special Tax Fund and deposit in the Administrative Expense Account of the Special Tax Fund from time to time amounts necessary to make timely payment of Administrative Expenses as set forth in a Certificate of an Authorized Representative of the District; provided, however, that, except as set forth in the following sentence, the total amount transferred with respect to a Bond Year shall not exceed the Administrative Expenses Cap until such time as there has been deposited to the Interest Account and the Principal Account an amount, together with any amounts already on deposit therein, that is sufficient to pay the interest and principal on all Bonds and Parity Bonds due in such Bond Year and to restore the Reserve Account to the Reserve Requirement.

Notwithstanding the foregoing, amounts in excess of the Administrative Expenses Cap may be transferred to the Administrative Expense Account to the extent necessary to collect delinquent Special Taxes as set forth in a Certificate of an Authorized Representative of the District. Moneys in Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 124
Menifee Mayor and City Council
August 16, 2023
Page
562 of 759

19 4885-4897-6232v2/200299-0019
the Administrative Expense Account of the Special Tax Fund may be invested in any Authorized Investments as directed in writing by an Authorized Representative of the District and shall be disbursed as directed in a Certificate of an Authorized Representative.

Section 3.4. Interest Account and Principal Account of the Special Tax Fund. The principal of and interest due on the Bonds and any Parity Bonds until maturity, other than principal due upon redemption, shall be paid by the Trustee from the Principal Account and the Interest Account of the Special Tax Fund, respectively.

For the purpose of assuring that the payment of principal of and interest on the Bonds and any Parity Bonds will be made when due, after making the transfer required by Section 3.3, at least one Business Day prior to each March 1 and September 1, the Trustee shall make the following transfers from the Special Tax Fund first to the Interest Account and then to the Principal Account; provided, however, that to the extent that deposits have been made in the Interest Account or the Principal Account from the proceeds of the sale of an issue of the Bonds or any Parity Bonds, or otherwise, the transfer from the Special Tax Fund need not be made; and provided, further, that, if amounts in the Special Tax Fund (exclusive of the Reserve Account and the Administrative Expense Account) are inadequate to make the foregoing transfers, then any deficiency shall be made up by transfers from the Reserve Account:
(a) To the Interest Account, an amount such that the balance in the Interest Account one Business Day prior to each Interest Payment Date shall be equal to the installment of interest due on the Bonds and any Parity Bonds on said Interest Payment Date and any installment of interest due on a previous Interest Payment Date which remains unpaid. Moneys in the Interest Account shall be used for the payment of interest on the Bonds and any Parity Bonds as the same become due. (b) To the Principal Account, an amount such that the balance in the Principal Account one Business Day prior to September 1 of each year, commencing September 1, 2024, shall equal the principal payment due on the Bonds and any Parity Bonds maturing on such September 1 and any principal payment due on a previous September 1 which remains unpaid. Moneys in the Principal Account shall be used for the payment of the principal of such Bonds and any Parity Bonds as the same become due at maturity.

Section 3.5. Redemption Account of the Special Tax Fund. (a) With respect to each September 1 on which a Sinking Fund Payment is due, after the deposits have been made to the Administrative Expense Account, the Interest Account and the Principal Account of the Special Tax Fund as required by Sections 3.3 and 3.4 hereof, the Trustee shall next transfer into the Redemption Account of the Special Tax Fund from the Special Tax Fund the amount needed to make the balance in the Redemption Account one Business Day prior to each September 1 on which a Sinking Fund Payment is due equal to the Sinking Fund Payment due on any Outstanding Bonds and Parity Bonds on such September 1; provided, however, that, if amounts in the Special Tax Fund are inadequate to make the foregoing transfers, then any deficiency shall be made up by an immediate transfer from the Reserve Account, if funded, pursuant to Section 3.6 below. Moneys so deposited in the Redemption Account shall be used and applied by the Trustee to call and redeem Term Bonds in accordance with the Sinking Fund Payment schedules set forth in Section 4.1(b) hereof, and to redeem Parity Bonds in accordance with any Sinking Fund Payment schedule in the Supplemental Indenture for such Parity Bonds.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 125
Menifee Mayor and City Council
August 16, 2023
Page
563 of 759

20 4885-4897-6232v2/200299-0019
(b) After making the deposits to the Administrative Expense Account, the Interest Account and the Principal Account of the Special Tax Fund pursuant to Sections 3.3 and 3.4 above and to the Redemption Account for Sinking Fund Payments then due pursuant to subparagraph (a) of this Section, and in accordance with the District’s election to call Bonds for optional redemption as set forth in Section 4.1(a) hereof, or to call Parity Bonds for optional redemption as set forth in any Supplemental Indenture for Parity Bonds, the Trustee shall transfer from the Special Tax Fund and deposit in the Redemption Account moneys available for the purpose and sufficient to pay the principal and the premiums, if any, payable on the Bonds or Parity Bonds called for optional redemption; provided, however, that amounts in the Special Tax Fund (other than the Administrative Expense Account therein) may be applied to optionally redeem Bonds and Parity Bonds only if immediately following such redemption the amount in the Reserve Account will equal the Reserve Requirement.
(c) Prepayments deposited to the Redemption Account shall be applied on the redemption date established pursuant to Section 4.1(c) hereof to the payment of the principal of, premium, if any, and interest on the Bonds and Parity Bonds to be redeemed with such Prepayments. (d) Moneys set aside in the Redemption Account shall be used solely for the purpose of redeeming Bonds and Parity Bonds and shall be applied on or after the redemption date to the payment of principal of and premium, if any, on the Bonds or Parity Bonds to be redeemed upon presentation and surrender of such Bonds or Parity Bonds, and, in the case of an optional redemption or a special mandatory redemption from Prepayments, to pay the interest thereon; provided, however, that in lieu or partially in lieu of such call and redemption, moneys deposited in the Redemption Account may be used to purchase Outstanding Bonds or Parity Bonds in the manner hereinafter provided. Purchases of Outstanding Bonds or Parity Bonds may be made by the District at public or private sale as and when and at such prices as the District may in its discretion determine but only at prices (including brokerage or other expenses) not more than par plus accrued interest, plus, in the case of moneys set aside for an optional redemption or a special mandatory redemption, the premium applicable at the next following call date according to the premium schedule established pursuant to Section 4.1(a) or 4.1(c) hereof, as applicable, or in the case of Parity Bonds the premium established in any Supplemental Indenture. Any accrued interest payable upon the purchase of Bonds or Parity Bonds may be paid from the amount reserved in the Interest Account of the Special Tax Fund for the payment of interest on the next following Interest Payment Date.

Section 3.6. Reserve Account of the Special Tax Fund. There shall be maintained in the Reserve Account of the Special Tax Fund an amount equal to the Reserve Requirement. The Reserve Requirement may be satisfied in whole or in part by cash, a Reserve Policy, or a combination thereof. The amounts in the Reserve Account shall be applied as follows:
(a) Moneys in the Reserve Account shall be used solely for the purpose of paying the principal of, including Sinking Fund Payments, and interest on the Bonds and any Parity Bonds when due in the event that the moneys in the Interest Account and the Principal Account of the Special Tax Fund are insufficient therefor or moneys in the Redemption Account of the Special Tax Fund are insufficient to make a Sinking Fund Payment when due and for the purpose of making any required transfer to the Rebate Fund pursuant to Section 3.7 hereof upon written direction from the District. If the amounts in the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund are insufficient to pay the principal of, including Sinking Fund Payments, or interest on any Parity Bonds when due, or amounts in the Special Tax Fund are insufficient to make transfers to the Rebate Fund when required, the Trustee shall withdraw from the Reserve Account, first from the Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 126
Menifee Mayor and City Council
August 16, 2023
Page
564 of 759

21 4885-4897-6232v2/200299-0019
cash on deposit therein, and second from a draw on the Reserve Policy, if any, for deposit in the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund or the Rebate Fund, as applicable, moneys necessary for such purposes. (b) Whenever moneys are withdrawn from the Reserve Account, after making the required transfers referred to in Sections 3.3, 3.4 and 3.5 above, the Trustee shall transfer to the Reserve Account from available moneys in the Special Tax Fund, or from any other legally available funds which the District elects to apply to such purpose, the amount needed to restore the amount of such Reserve Account to the Reserve Requirement by first, repaying any amounts due under the Reserve Policy, and second to fund the Reserve Account to the Reserve Requirement. Moneys in the Special Tax Fund shall be deemed available for transfer to the Reserve Account only if the Trustee determines that such amounts will not be needed to make the deposits required to be made to the Administrative Expense Account, the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund on or before the next September 1. If amounts in the Special Tax Fund together with any other amounts transferred to replenish the Reserve Account are inadequate to restore the Reserve Account to the Reserve Requirement, including any amounts necessary to pay costs related to the Reserve Policy, if any, then the District shall include the amount necessary to restore the Reserve Account to the Reserve Requirement, in the next annual Special Tax levy to the extent of the maximum permitted Special Tax rates.
(c) In connection with a redemption of Bonds pursuant to Section 4.1(a) or 4.1(c) or Parity Bonds in accordance with any Supplemental Indenture, or a partial defeasance of Bonds or Parity Bonds in accordance with Section 9.1 hereof, amounts in the Reserve Account may be applied to such redemption or partial defeasance so long as the amount on deposit in the Reserve Account following such redemption or partial defeasance equals the Reserve Requirement. The District shall set forth in a Certificate of an Authorized Representative the amount in the Reserve Account to be transferred to the Redemption Account on a redemption date or to be transferred pursuant to the Indenture to partially defease Bonds or Parity Bonds, and the Trustee shall make such transfer on the applicable redemption or defeasance date, subject to the limitation in the preceding sentence. (d) To the extent that the Reserve Account is at the Reserve Requirement as of the first day of the final Bond Year for the Bonds or an issue of Parity Bonds, amounts in the Reserve Account may be applied to pay the principal of and interest due on the Bonds and Parity Bonds, as applicable, in the final Bond Year for such issue. Moneys in the Reserve Account in excess of the Reserve Requirement not transferred in accordance with the preceding provisions of this Section shall be withdrawn from the Reserve Account on the Business Day before each March 1 and September 1 and shall be transferred to the Acquisition and Construction Fund or an Account therein, as directed by an Authorized Representative of the District, until all amounts have been disbursed from the Acquisition and Construction Fund (or such fund is closed) and thereafter to the Interest Account of the Special Tax Fund.

Section 3.7. Rebate Fund.
(a) The Trustee shall establish and maintain a fund separate from any other fund established and maintained hereunder designated as the Rebate Fund and shall establish a separate Rebate Account and Alternate Penalty Account therein. All money at any time deposited in the Rebate Account or the Alternate Penalty Account of the Rebate Fund shall be held by the Trustee in trust, for payment to the United States Treasury. A separate subaccount of the Rebate Account and the Alternate Penalty Account shall be established for the Bonds and each issue of Parity Bonds the Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 127
Menifee Mayor and City Council
August 16, 2023
Page
565 of 759

22 4885-4897-6232v2/200299-0019
interest on which is excluded from gross income for federal income tax purposes. All amounts on deposit in the Rebate Fund with respect to the Bonds or an issue of Parity Bonds shall be governed by this Section 3.7 and the Tax Certificate for such issue, unless the District obtains an opinion of Bond Counsel that the exclusion from gross income for federal income tax purposes of interest payments on the Bonds and Parity Bonds will not be adversely affected if such requirements are not satisfied.
(1) Rebate Account. The following requirements shall be satisfied with respect to each subaccount of the Rebate Account:
(i) Annual Computation. Within 55 days of the end of each Bond Year, the District shall calculate or cause to be calculated the amount of rebatable arbitrage for the Bonds and each issue of Parity Bonds to which this Section 3.7 is applicable, in accordance with Section 148(f)(2) of the Code and Section 1.148-3 of the Rebate Regulations (taking into account any applicable exceptions with respect to the computation of the rebatable arbitrage described in the Tax Certificate for each issue (e.g., the temporary investments exceptions of Section 148(f)(4)(B) and (C) of the Code), and taking into account whether the election pursuant to Section 148(f)(4)(C)(vii) of the Code (the “1½% Penalty”) has been made), for this purpose treating the last day of the applicable Bond Year as a computation date, within the meaning of Section 1.148-1(b) of the Rebate Regulations (the “Rebatable Arbitrage”). The District shall obtain expert advice as to the amount of the Rebatable Arbitrage to comply with this Section.
(ii) Annual Transfer. Within 55 days of the end of each Bond Year for which Rebatable Arbitrage must be calculated as required by the Tax Certificate for each issue, upon the written direction of an Authorized Representative of the District, an amount shall be deposited to each subaccount of the Rebate Account by the Trustee from any funds so designated by the District if and to the extent required, so that the balance in the Rebate Account shall equal the amount of Rebatable Arbitrage so calculated by or on behalf of the District in accordance with clause (i) of this subsection (a)(1) with respect to the Bonds and each issue of Parity Bonds to which this Section 3.7 is applicable. In the event that immediately following any transfer required by the previous sentence, or the date on which the District determines that no transfer is required for such Bond Year, the amount then on deposit to the credit of the applicable subaccount of the Rebate Account exceeds the amount required to be on deposit therein, upon written instructions from an Authorized Representative of the District, the Trustee shall withdraw the excess from the appropriate subaccount of the Rebate Account and then credit the excess to the Special Tax Fund. (iii) Payment to the Treasury. The Trustee shall pay, as directed in writing by an Authorized Representative of the District, to the United States Treasury, out of amounts in each subaccount of the Rebate Account:
(X) not later than 60 days after the end of: (A) the fifth Bond Year for the Bonds and each issue of Parity Bonds to which this Section 3.7 is applicable; and (B) each applicable fifth Bond Year thereafter, an amount equal to at least 90% of the Rebatable Arbitrage calculated as of the end of such Bond Year for the Bonds and each issue of Parity Bonds, as applicable; and
(Y) not later than 60 days after the payment or redemption of all of the Bonds or an issue of Parity Bonds, as applicable, an amount equal to 100% of the Rebatable Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 128
Menifee Mayor and City Council
August 16, 2023
Page
566 of 759

23 4885-4897-6232v2/200299-0019
Arbitrage calculated as of the end of such applicable Bond Year, and any income attributable to the Rebatable Arbitrage, computed in accordance with Section 148(f) of the Code.

In the event that, prior to the time of any payment required to be made from the Rebate Account, the amount in the Rebate Account is not sufficient to make such payment when such payment is due, the District shall calculate or cause to be calculated the amount of such deficiency and deposit an amount received from any legally available source equal to such deficiency prior to the time such payment is due. Each payment required to be made pursuant to this subsection (a)(1) shall be made to the Internal Revenue Service Center, Ogden, Utah 84201 on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038-T, or shall be made in such other manner as provided under the Code. (2) Alternate Penalty Account.
(i) Six-Month Computation. If the 1½% Penalty has been elected for the Bonds or an issue of Parity Bonds, within 85 days of each particular Six-Month Period, the District shall determine or cause to be determined whether the 1½% Penalty is payable (and the amount of such penalty) as of the close of the applicable Six-Month Period. The District shall obtain expert advice in making such determinations.
(ii) Six-Month Transfer. Within 85 days of the close of each Six-Month Period, the Trustee, at the written direction of an Authorized Representative of the District, shall deposit an amount in the appropriate subaccounts of the Alternate Penalty Account from any source of funds held by the Trustee pursuant to this Indenture and designated by the District in such written directions or provided to it by the District, if and to the extent required, so that the balance in each subaccount of the Alternate Penalty Account equals the amount of 1½% Penalty due and payable to the United States Treasury determined as provided in subsection (a)(2)(i) above. In the event that immediately following any transfer provided for in the previous sentence, or the date on which the District determines that no transfer is required for such Bond Year, the amount then on deposit in a subaccount of the Alternate Penalty Account exceeds the amount required to be on deposit therein to make the payments required by subsection (iii) below, the Trustee, at the written direction of an Authorized Representative of the District, may withdraw the excess from the applicable subaccount of the Alternate Penalty Account and credit the excess to the Special Tax Fund. (iii) Payment to the Treasury. The Trustee shall pay, as directed in writing by an Authorized Representative of the District, to the United States Treasury, out of amounts in a subaccount of the Alternate Penalty Account, not later than 90 days after the close of each Six-Month Period the 1½% Penalty, if applicable and payable, computed with respect to the Bonds and any issue of Parity Bonds in accordance with Section 148(f)(4) of the Code. In the event that, prior to the time of any payment required to be made from a subaccount of the Alternate Penalty Account, the amount in such subaccount is not sufficient to make such payment when such payment is due, the District shall calculate the amount of such deficiency and direct the Trustee, in writing, to deposit an amount equal to such deficiency into such subaccount of the Alternate Penalty Account from any funds held by the Trustee pursuant to this Indenture and designated by the District in such written directions prior to the time such payment is due. Each payment required to be made pursuant to this subsection (a)(2) shall be made to the Internal Revenue Service, Ogden, Utah 84201 on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038-T or shall be made in such other manner as provided under the Code.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 129
Menifee Mayor and City Council
August 16, 2023
Page
567 of 759

24 4885-4897-6232v2/200299-0019
(b) Disposition of Unexpended Funds. Any funds remaining in the Accounts of the Rebate Fund with respect to the Bonds or an issue of Parity Bonds after redemption and payment of such issue and after making the payments described in subsections (a)(1)(iii) or (a)(2)(iii) (whichever is applicable), may be withdrawn by the Trustee at the written direction of the District and utilized in any manner by the District.
(c) Survival of Defeasance and Final Payment. Notwithstanding anything in this Section or this Indenture to the contrary, the obligation to comply with the requirements of this Section shall survive the defeasance and final payment of the Bonds and any Parity Bonds with respect to which an Account has been created in the Rebate Fund.
(d) Amendment Without Consent of Owners. This Section 3.7 may be deleted or amended in any manner without the consent of the Owners, provided that prior to such event there is delivered to the District an opinion of Bond Counsel to the effect that such deletion or amendment will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds and any issue of Parity Bonds issued on a tax-exempt basis. (e) Trustee. The Trustee shall have no responsibility to monitor or calculate any amounts payable to the U.S. Treasury pursuant to this Section and shall be deemed constructively to have complied with its obligations hereunder if it follows the written instructions of the District given pursuant to this Section.

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

3.6 and 3.7 hereof, as soon as practicable after each September 1, the Trustee shall transfer all remaining amounts in the Special Tax Fund to the Surplus Fund, unless on or prior to such date, it has received a Certificate of an Authorized Representative directing that certain amounts be retained in the Special Tax Fund because the District has included such amounts as being available in the Special Tax Fund in calculating the amount of the levy of Special Taxes for such Fiscal Year pursuant to Section 5.2(b) hereof. Moneys deposited in the Surplus Fund will be transferred by the Trustee at the direction of an Authorized Representative of the District: (i) to the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund to pay the principal of, including Sinking Fund Payments, premium, if any, and interest on the Bonds and any Parity Bonds when due in the event that moneys in the Special Tax Fund and the Reserve Account of the Special Tax Fund are insufficient therefor; (ii) to the Reserve Account in order to replenish the Reserve Account to the Reserve Requirement; (iii) to the Administrative Expense Account of the Special Tax Fund to pay Administrative Expenses to the extent that the amounts on deposit in the Administrative Expense Account of the Special Tax Fund are insufficient to pay Administrative Expenses; (iv) to the Acquisition and Construction Fund to pay Project Costs; or (v) after all Project Costs have been paid, to the District, for any other lawful purpose of the District.

The amounts in the Surplus Fund are not pledged to the repayment of the Bonds or the Parity Bonds and may be used by the District for any lawful purpose. In the event that the District reasonably expects to use any portion of the moneys in the Surplus Fund to pay debt service on any Outstanding Bonds or Parity Bonds, the District shall notify the Trustee in a Certificate of an Authorized Representative and the Trustee shall segregate such amount into a separate subaccount and the moneys on deposit in such subaccount of the Surplus Fund shall be invested at the written direction of the District in Authorized Investments the interest on which is excludable from gross income under Section 103 of the Code (other than bonds the interest on which is a tax preference item for purposes of computing the alternative minimum tax of individuals under the Code) or in Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 130
Menifee Mayor and City Council
August 16, 2023
Page
568 of 759

25 4885-4897-6232v2/200299-0019
Authorized Investments at a yield not in excess of the yield on the issue of Bonds or Parity Bonds to which such amounts are to be applied, unless, in the opinion of Bond Counsel, investment at a higher yield will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or any Parity Bonds which were issued on a tax-exempt basis for federal income tax purposes. Such amounts shall be disbursed as directed by an Authorized Representative of the District.

Section 3.9. Acquisition and Construction Fund.
(a) The moneys in the Costs of Issuance Account shall be disbursed by the Trustee pursuant to a Certificate of an Authorized Representative of the District, and any balance remaining therein after 180 days shall be transferred by the Trustee to an Account within the Acquisition and Construction Fund as directed in writing by an Authorized Representative of the District. Following such transfer to the Acquisition and Construction Fund, the Costs of Issuance Account shall be closed.
(b) The moneys in the Acquisition and Construction Fund and the Accounts therein (other than the Costs of Issuance Account) shall be applied exclusively to pay the Project Costs.

Amounts for Project Costs shall be disbursed by the Trustee from the Acquisition and Construction Fund or the Accounts therein (other than the Costs of Issuance Account), as specified in a Request for Disbursement of Project Costs, substantially in the form of Exhibit B-1 attached hereto. A properly executed Request for Disbursement of Project Costs must be submitted in connection with each requested disbursement and the Trustee may rely thereon without investigating the accuracy thereof. Amounts in an Account of the Acquisition and Construction Fund may be transferred to another Account or Accounts therein pursuant to a Certificate of an Authorized Representative of the District.
(c) Upon receipt of a Certificate of an Authorized Representative of the District stating that all or a specified portion of the amount remaining in the Acquisition and Construction Fund or the Accounts therein (other than the Costs of Issuance Account) is no longer needed to pay Project Costs, the Trustee shall: (i) transfer all or such specified portion, as applicable, of the moneys remaining on deposit in the Acquisition and Construction Fund or the Accounts therein (other than the Costs of Issuance Account) to the Interest Account, the Principal Account or Redemption Account of the Special Tax Fund, to the Costs of Issuance Account or to the Surplus Fund, as directed in such certificate, provided that in connection with any direction to transfer amounts to the Surplus Fund there shall have been delivered to the Trustee with such certificate an opinion of Bond Counsel to the effect that such transfer to the Surplus Fund will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or any Parity Bonds which were issued on a tax-exempt basis for federal income tax purposes; and (ii) thereafter, close the Acquisition and Construction Fund (including all Accounts and Subaccounts therein).

Section 3.10. Investments. Moneys held in any of the Funds, Accounts and Subaccounts under this Indenture shall be invested at the written direction of the District upon at least two (2) Business Days’ notice in accordance with the limitations set forth below only in Authorized Investments which shall be deemed at all times to be a part of such Funds, Accounts and Subaccounts. Any loss resulting from such Authorized Investments shall be credited or charged to the Fund, Account or Subaccount from which such investment was made, and any investment earnings on a Fund, Account or Subaccount shall be applied as follows: (i) investment earnings on all amounts deposited in the Acquisition and Construction Fund (including the Accounts therein), the Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 131
Menifee Mayor and City Council
August 16, 2023
Page
569 of 759

26 4885-4897-6232v2/200299-0019
Special Tax Fund, the Surplus Fund and the Rebate Fund and each Account therein (other than the Reserve Account of the Special Tax Fund) shall be deposited in those respective Funds, Accounts and Subaccounts; and (ii) investment earnings on all amounts deposited in the Reserve Account shall be deposited therein to be applied as set forth in Section 3.6. Moneys in the Funds, Accounts and Subaccounts held under this Indenture may be invested by the Trustee as directed in writing by the District, from time to time, in Authorized Investments subject to the following restrictions (provided that the Trustee is not required to verify compliance with such restrictions and may rely on the District’s written instructions as evidence of such compliance):
(a) Moneys in the Acquisition and Construction Fund and the Accounts therein shall be invested in Authorized Investments which will by their terms mature, or in the case of an Investment Agreement are available without penalty, as close as practicable to the date the District estimates the moneys represented by the particular investment will be needed for withdrawal from the Acquisition and Construction Fund or the Accounts therein. Notwithstanding anything herein to the contrary, amounts in the Acquisition and Construction Fund or the Accounts therein three years after the Delivery Date for the Bonds and the proceeds of each issue of Parity Bonds issued on a tax-exempt basis which are remaining on deposit in the Acquisition and Construction Fund on the date which is three years following the date of issuance of such issue of Parity Bonds shall be invested by the District only in Authorized Investments the interest on which is excluded from gross income under Section 103 of the Code (other than bonds the interest on which is a tax preference item for purposes of computing the alternative minimum tax of individuals under the Code) or in Authorized Investments at a yield not in excess of the yield on the issue of Bonds or Parity Bonds from which such proceeds were derived, unless in the opinion of Bond Counsel such restriction is not necessary to prevent interest on the Bonds or any Parity Bonds which were issued on a tax-exempt basis for federal income tax purposes from being included in gross income for federal income tax purposes. (b) Moneys in the Interest Account, the Principal Account, and the Redemption Account of the Special Tax Fund shall be invested only in Authorized Investments which will by their terms mature, or in the case of an Investment Agreement are available for withdrawal without penalty, on such dates so as to ensure the payment of principal of, premium, if any, and interest on the Bonds and any Parity Bonds as the same become due.
(c) Moneys in the Reserve Account of the Special Tax Fund may be invested only in Authorized Investments (other than the Authorized Investment described in clause (2)(i) of the definition thereof) which, taken together, have a weighted average maturity not in excess of five years; provided that such amounts may be invested in an Investment Agreement to the later of the final maturity of the Bonds or any Parity Bonds so long as such amounts may be withdrawn at any time, without penalty, for application in accordance with Section 3.6 hereof; and provided that no such Authorized Investment of amounts in the Reserve Account allocable to the Bonds or an issue of Parity Bonds shall mature later than the respective final maturity date of the Bonds or the issue of Parity Bonds, as applicable.
(d) Moneys in the Rebate Fund shall be invested only in Authorized Investments of the type described in clause (1) of the definition thereof which by their terms will mature, as nearly as practicable, on the dates such amounts are needed to be paid to the United States Government pursuant to Section 3.7 hereof or in Authorized Investments of the type described in clause (2)(e) of the definition thereof.

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 132
Menifee Mayor and City Council
August 16, 2023
Page
570 of 759

27 4885-4897-6232v2/200299-0019
(e) In the absence of written investment directions from the District, the Trustee shall invest solely in Authorized Investments specified in clause (2)(e) of the definition thereof. If no such written investment direction from the District is received, the funds shall be uninvested.

The Trustee shall sell, or present for redemption, any Authorized Investment whenever it may be necessary to do so in order to provide moneys to meet any payment or transfer to such funds and accounts or from such funds and accounts. Notwithstanding anything herein to the contrary, the Trustee shall not be responsible for any loss from investments, sales or transfers undertaken in accordance with the provisions of this Indenture. Any Authorized Investments that are registrable securities shall be registered in the name of the Trustee.

The Trustee may act as principal or agent in the making or disposing of any investment and shall be entitled to its customary fee for making such investment. The Trustee may sell at the best market price obtainable, or present for redemption, any Authorized Investment so purchased whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such Authorized Investment is credited, and, subject to the provisions of Section 7.4, the Trustee shall not be liable or responsible for any loss resulting from such investment. For investment purposes, the Trustee may commingle the funds and accounts established hereunder, but shall account for each separately. The Trustee is hereby authorized, in making or disposing of any investment permitted by this Section, to deal with itself (in its individual capacity) or which any one or more of its affiliates, whether it or such affiliate is acting as an agent of the Trustee or for any third person or dealing as principal for its own account. The parties acknowledge that the Trustee is not providing investment supervision, recommendations, or advice.

The District acknowledges that, to the extent that regulations of the Comptroller of the Currency or other applicable regulatory entity grant the District the right to receive brokerage confirmations of security transactions as they occur, the District specifically waives receipt of such confirmations to the extent permitted by law. The Trustee will furnish the District periodic cash transaction statements which include detail for all investment transactions made by the Trustee hereunder.

ARTICLE IV

REDEMPTION OF BONDS AND PARITY BONDS
Section 4.1. Redemption of Bonds.
(a) Optional Redemption. The Bonds may be redeemed at the option of the District from any source of funds on any Interest Payment Date on or after September 1, 20__, in whole or in part, from such maturities as are selected by the District and by lot within a maturity, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the date of redemption:

Item Title: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 133
Menifee Mayor and City Council
August 16, 2023
Page
571 of 759

28 4885-4897-6232v2/200299-0019
Redemption Date Redemption Price
September 1, 20__ and March 1, 20__ 103%
September 1, 20__ and March 1, 20__ 102
September 1, 20__ and March 1, 20__ 101
September 1, 20__ and any Interest Payment Date thereafter 100 In the event that the District elects to redeem Bonds as provided above, the District shall give written notice to the Trustee of its election to so redeem, the redemption date and the principal amount of the Bonds of each maturity to be redeemed. The notice to the Trustee shall be given at least 45 but no more than 60 calendar days prior to the redemption date, or by such later date as is acceptable to the Trustee.
(b) Mandatory Sinking Fund Redemption. The Bonds maturing on September 1, 20__ (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 hereunder, 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__
Sinking Fund Redemption Date
(September 1) Sinking Fund Payments
$
_____________
* Maturity.

The Bonds maturing on September 1, 20__ (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 hereunder, 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: 12.1
Community Facilities District 2021-2, Sumac Ridge, Issuance of Special Tax Bonds Item Page Number: 134
Menifee Mayor and City Council
August 16, 2023
Page
572 of 759

29 4885-4897-6232v2/200299-0019
Term Bonds Maturing September 1, 20__
Sinking Fund Redemption Date
(September 1) Sinking Fund Payments
$
_____________
* Maturity.