Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 130
Menifee Mayor and City Council
May 6, 2026
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transfer to the Rebate Fund pursuant to Section 3.7 hereof upon written direction from the District. If the amounts in the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund are insufficient to pay the principal of, including Sinking Fund Payments, or interest on any Parity Bonds when due, or amounts in the Special Tax Fund are insufficient to make transfers to the Rebate Fund when required, the Trustee shall withdraw from the Reserve Account , first from the cash on deposit therein, and second from a draw on the Reserve Policy, if any, for deposit in the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund or the Rebate Fund, as applicable, moneys necessary for such purposes. (b) Whenever moneys are withdrawn from the Reserve Account, after making the required transfers referred to in Sections 3.3, 3.4 and 3.5 above, the Trustee shall transfer to the Reserve Account from available moneys in the Special Tax Fund, or from any other legally available funds which the District elects to apply to such purpose, the amount needed to restore the amount of such Reserve Account to the Reserve Requirement by first, repaying any amounts due under the 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.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 131
Menifee Mayor and City Council
May 6, 2026
Page
457 of 714
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Section 3.7. Rebate Fund.
(a) The Trustee shall establish and maintain a fund separate from any other fund established and maintained hereunder designated as the Rebate Fund and shall establish a separate Rebate Account and Alternate Penalty Account therein. All money at any time deposited in the Rebate Account or the Alternate Penalty Account of the Rebate Fund shall be held by the Trustee in trust, for payment to the United States Treasury. A separate subaccount of the Rebate Account and the Alternate Penalty Account shall be established for the Bonds and each issue of Parity Bonds the interest on which is excluded from gross income for federal income tax purposes. All amounts on deposit in the Rebate Fund with respect to the Bonds or an issue of Parity Bonds shall be governed by this Section 3.7 and the Tax Certificate for such issue, unless the District obtains an opinion of Bond Counsel that the exclusion from gross income for federal income tax purposes of interest payments on the Bonds and Parity Bonds will not be adversely affected if such requirements are not satisfied.
(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.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 132
Menifee Mayor and City Council
May 6, 2026
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(iii) Payment to the Treasury. The Trustee shall pay, as directed in writing by an Authorized Representative of the District, to the United States Treasury, out of amounts in each subaccount of the Rebate Account:
(X) not later than 60 days after the end of: (A) the fifth Bond Year for the Bonds and each issue of Parity Bonds to which this Section 3.7 is applicable; and (B) each applicable fifth Bond Year thereafter, an amount equal to at least 90% of the Rebatable Arbitrage calculated as of the end of such Bond Year for the Bonds and each issue of Parity Bonds, as applicable; and
(Y) not later than 60 days after the payment or redemption of all of the Bonds or an issue of Parity Bonds, as applicable, an amount equal to 100% of the Rebatable Arbitrage calculated as of the end of such applicable Bond Year, and any income attributable to the Rebatable Arbitrage, computed in accordance with Section 148(f) of the Code.
In the event that, prior to the time of any payment required to be made from the Rebate Account, the amount in the Rebate Account is not sufficient to make such payment when such payment is due, the District shall calculate or cause to be calculated the amount of such deficiency and deposit an amount received from any legally available source equal to such deficiency prior to the time such payment is due. Each payment required to be made pursuant to this subsection (a)(1) 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 Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 133
Menifee Mayor and City Council
May 6, 2026
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Period the 1½% Penalty, if applicable and payable, computed with respect to the Bonds and any issue of Parity Bonds in accordance with Section 148(f)(4) of the Code. In the event that, prior to the time of any payment required to be made from a subaccount of the Alternate Penalty Account, the amount in such subaccount is not sufficient to make such payment when such payment is due, the District shall calculate the amount of such deficiency and direct the Trustee, in writing, to deposit an amount equal to such deficiency into such subaccount of the Alternate Penalty Account from any funds held by the Trustee pursuant to this Indenture and designated by the District in such written directions prior to the time such payment is due. Each payment required to be made pursuant to this subsection (a)(2) shall be made to the Internal Revenue Service, Ogden, Utah 84201 on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038-T or shall be made in such other manner as provided under the Code. (b) Disposition of Unexpended Funds . Any funds remaining in the Accounts of the Rebate Fund with respect to the Bonds or an issue of Parity Bonds after redemption and payment of such issue and after making the payments described in subsections (a)(1)(iii) or (a)(2)(iii) (whichever is applicable), may be withdrawn by the Trustee at the written direction of the District and utilized in any manner by the District.
(c) Survival of Defeasance and Final Payment. Notwithstanding anything in this Section or this Indenture to the contrary, the obligation to comply with the requirements of this Section shall 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 am ount 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 Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 134
Menifee Mayor and City Council
May 6, 2026
Page
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Acquisition and Construction Fund to pay Project Costs; or (v) after all Project Costs have been paid, to the District, for any other lawful purpose of the District.
The amounts in the Surplus Fund are not pledged to the repayment of the Bonds or the Parity Bonds and may be used by the District for any lawful purpose. In the event that the District reasonably expects to use any portion of the moneys in the Surplus Fund to pay debt service on any Outstanding Bonds or Parity Bonds, the District shall notify the Trustee in a Certificate of an Authorized Representative and the Trustee shall segregate such amount into a separate subaccount and the moneys on deposit in such subaccount of the Surplus Fund shall be invested at the written direction of the District in Authorized Investments the interest on which is excludable from gross income under Section 103 of the Code (other than bonds the interest on which is a tax preference item for purposes of computing the alternative minimum tax of individuals under the Code) or in Authorized Investments at a yield not in excess of the yield on the issue of Bonds or Parity Bonds to which such amounts are to be applied, unless, in the opinion of Bond Counsel, investment at a higher yield will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or any Parity Bonds which were issued on a tax-exempt basis for federal income tax purposes. Such amounts shall be disbursed as directed by an Authorized Representative of the District.
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 tr ansferred 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 di sbursed 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 Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 135
Menifee Mayor and City Council
May 6, 2026
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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.
Section 3.10. Investments. Moneys held in any of the F unds, 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 A ccounts therein), the Special Tax Fund, the Surplus Fund and the Rebate Fund and each Account therein (other than the Reserve Account of the Special Tax Fund) shall be deposited in those respective Funds, 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 Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
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May 6, 2026
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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.
(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.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 137
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May 6, 2026
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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 (other than prepayments of the Special Tax by property owners) on any Interest Payment Date on or after September 1, 2032, in whole or in part, from such maturities as are selected by the District and by lot within a maturity, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the date of redemption:
Redemption Date Redemption Price
September 1, 2032 and March 1, 2033 103%
September 1, 2033 and March 1, 2034 102
September 1, 2034 and March 1, 2035 101
September 1, 2035 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 30 but no more than 60 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 Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
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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:
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 Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
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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:
Term Bonds Maturing September 1, 2055
Sinking Fund Redemption Date
(September 1) Sinking Fund Payments
20__ $
*
_____________
* Maturity.
If the District purchases Term Bonds during the Fiscal Year immediately preceding one of the sinking fund redemption dates specified above, the District shall notify the Trustee at least 45 days prior to the redemption date as to the principal amount purchased, and the amount purchased shall 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 Bonds purchased pursuant to this subsection shall be cancelled pursuant to Section 10.1 hereof.
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 shall be reduced, as nearly as practicable, on a pro rata basis.
(c) Special Mandatory Redemption. 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 September 1, 2026 and shall be redeemed by the Trustee, from Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
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Prepayments deposited to the Redemption Account pursuant to Section 3.2, plus amounts transferred from the Reserve Account pursuant to Section 3.6(c), 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
Redemption Date Redemption Price
Interest Payment Dates through and including March 1, 2033 103% September 1, 2033 and March 1, 2034 102
September 1, 2034 and March 1, 2035 101
Prepayments and amounts released from the Reserve Account in connection with Prepayments will be allocated to the payment at maturity and redemption of Bonds and any Parity Bonds as nearly as practicable on a proportionate basis based on the outstanding principal amount of the Bonds and any Parity Bonds and such amounts shall be applied to redeem Bonds and Parity Bonds as nearly as practicable on a pro rata basis among maturities in increments of $5,000; provided, however, that, for Prepayments of less than $50,000, the District may specify in a Certificate of an Authorized Representative that Prepayments be applied to one or more maturities of the Bonds or Parity Bonds so long as there is delivered to the Trustee a Certificate of the Independent Financial Consultant that, following such application of the Prepayments, the maximum Special Taxes that may be levied in each Fiscal Year on Taxable Property is not less than 110% of Annual Debt Service in the Bond Year that begins in such Fiscal Year. (d) The redemption provisions for Parity Bonds shall be set forth in a Supplemental Indenture.
Section 4.2. Selection of Bonds and Parity Bonds for Redemption . If less than all of the Bonds or Parity Bonds Outstanding are to be redeemed, the portion of any Bond or Parity Bond of a denomination of more than $5,000 to be redeemed shall be in the principal amount of $5,000 or an integral multiple thereof. In selecting portions of such Bonds or Parity Bonds for redemption, the Trustee shall treat such Bonds or Parity Bonds, as applicable, as representing that number of Bonds or Parity Bonds of $5,000 denominations which is obtained by dividing the principal amount of such Bonds or Parity 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 shall promptly notify the District in writing of the Bonds or Parity Bonds, or portions thereof, selected for redemption.
Section 4.3. Notice of Redemption. When Bonds or Parity Bonds are due for redemption under Section 4.1 above or under another redemption provision set forth in a Supplemental Indenture relating to any Parity Bonds, the Trustee shall give notice, in the name of the District, of the redemption of such Bonds or Parity Bonds. Such notice of redemption shall: (i) specify the CUSIP numbers (if any), the bond numbers and the maturity date or dates of the Bonds or Parity Bonds selected for redemption, except that where all of the Bonds or all of an issue of Parity Bonds are subject to redemption, or all of the Bonds or Parity 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 or Parity Bonds to be redeemed; (iii) state the redemption price; (iv) state the place or places where the Bonds or Parity Bonds are to be redeemed; (v) in the case of Bonds or Parity Bonds to be redeemed only in part, state the portion of such Bond or Parity Bond which is to Item Title: 12.1
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be redeemed; (vi) state the date of issue of the Bonds or Parity Bonds as originally issued; (vii) state the rate of interest borne by each Bond or Parity Bond being redeemed; and (viii) state any other descriptive information needed to identify accurately the Bonds or Parity Bonds being redeemed as shall be specified by the Trustee. Such notice shall further state that on the date fixed for redemption, there shall become due and payable on each Bond, Parity 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 shall cease to accrue and be payable. At least 30 days but no more than 45 days prior to the redemption date, the Trustee shall 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 or Parity Bonds; provided, however, so long as the Bonds and Parity 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 or Parity Bond of notice of such redemption shall not be a condition precedent to redemption, and neither the failure to receive nor any defect in such notice shall affect the validity of the proceedings for the redemption of such Bonds or Parity Bonds, or the cessation of interest on the redemption date. A certificate by the Trustee that notice of such redemption has been given as herein provided shall be conclusive as against all parties and the Owner shall not be entitled to show that he or she failed to receive notice of such redemption.
In addition to the foregoing notice, further notice shall 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 shall in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed.
Each further notice of redemption shall be sent not later than the date that notice of redemption is given to the Owners pursuant to the first paragraph of this Section 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 and Parity 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 and Parity Bonds.
Upon the payment of the redemption price of any Bonds and Parity Bonds being redeemed, each check or other transfer of funds issued for such purpose shall to the extent practicable bear the CUSIP number identifying, by issue and maturity, the Bonds and Parity Bonds being redeemed with the proceeds of such check or other transfer.
With respect to any notice of optional redemption of Bonds or Parity Bonds, such notice may state that such redemption shall be 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 or Parity 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 or Parity 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 or Parity 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 Item Title: 12.1
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conditional redemption notice was given that such condition or conditions were not met and that the redemption was canceled.
Section 4.4. Partial Redemption of Bonds or Parity Bonds . Upon surrender of any Bond or Parity Bond to be redeemed in part only, the District shall execute and the Trustee shall authenticate and deliver to the Owner, at the expense of the District, a new Bond or Bonds or a new Parity Bond or Parity Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bonds surrendered, with the same interest rate and the same maturity or, in the case of surrender of a Parity Bond, a new Parity Bond or Parity Bonds subject to the foregoing limitations.
Section 4.5. Effect of Notice and Availability of Redemption Money. Notice of redemption having been duly given, as provided in Section 4.3 hereof, 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:
(a) the Bonds and Parity Bonds, or portions thereof, designated for redemption shall, on the date fixed for redemption, become due and payable at the redemption price thereof as provided in this Indenture or in any Supplemental Indenture with respect to any Parity Bonds, anything in this Indenture or in the Bonds or the Parity Bonds to the contrary notwithstanding; (b) upon presentation and surrender thereof at the office of the Trustee, the redemption price of such Bonds and Parity Bonds shall be paid to the Owners thereof; (c) as of the redemption date the Bonds or the Parity Bonds, or portions thereof so designated for redemption shall be deemed to be no longer Outstanding and such Bonds or Parity Bonds, or portions thereof, shall cease to bear further interest; and (d) as of the date fixed for redemption no Owner of any of the Bonds, Parity Bonds or portions thereof so designated for redemption shall be entitled to any of the benefits of this Indenture or any Supplemental 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.
ARTICLE V
COVENANTS AND WARRANTY
Section 5.1. Warranty. The District shall preserve and protect the security pledged hereunder to the Bonds and any Parity Bonds against all claims and demands of all persons.
Section 5.2. Covenants. So long as any of the Bonds or Parity Bonds issued hereunder are Outstanding and unpaid, the District makes the following covenants with the Owners under the provisions of the Act and this Indenture (to be performed by the District or its proper officers, agents or employees), which covenants are necessary and desirable to secure the Bonds and Parity Bonds and tend to make them more marketable; provided, however, that said covenants do not require the District to expend any funds or moneys other than the Special Taxes and other amounts deposited to the Special Tax Fund:
Item Title: 12.1
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(a) Punctual Payment; Against Encumbrances. The District covenants that it will receive all Special Taxes in trust for the Owners and will deposit all Special Taxes with the Trustee immediately upon their apportionment to the District, and the District shall have no beneficial right or interest in the amounts so deposited except as provided by this Indenture. All such Special Taxes shall be disbursed, allocated and applied solely to the uses and purposes set forth herein, and shall be accounted for separately and apart from all other money, funds, accounts or other resources of the District.
The District covenants that it will duly and punctually pay or cause to be paid the principal of and interest on every Bond and Parity Bond issued hereunder, together with the premium, if any, thereon on the date, at the place and in the manner set forth in the Bonds and the Parity Bonds and in accordance with this Indenture to the extent that Net Taxes and other amounts pledged hereunder are available therefor, and that the payments into the Funds and Accounts created hereunder will be made, all in strict conformity with the terms of the Bonds, any Parity Bonds, and this Indenture, and that it will faithfully observe and perform all of the conditions, covenants and requirements of this Indenture and all Supplemental Indentures and of the Bonds and any Parity Bonds issued hereunder.
The District will not mortgage or otherwise encumber, pledge or place any charge upon any of the Net Taxes except as provided in this Indenture, and will not issue any obligation or security having a lien or charge upon the Net Taxes superior to or on a parity with the Bonds, other than Parity Bonds. Nothing herein shall prevent the District from issuing or incurring indebtedness which is payable from a pledge of Net Taxes which is subordinate in all respects to the pledge of Net Taxes to repay the Bonds and the Parity Bonds, subject to compliance with the District’s bonded indebtedness limit.
(b) Levy of Special Tax. Beginning in Fiscal Year 2026-27 and so long as any Bonds or Parity Bonds issued under this Indenture are Outstanding, the District covenants to levy the Special Tax in an amount sufficient, together with other amounts on deposit in the Special Tax Fund, to pay:
(1) the principal of and interest on the Bonds and any Parity Bonds when due; (2) the Administrative Expenses; and (3) any amounts required to replenish the Reserve Account of the Special Tax Fund to the Reserve Requirement , including any amounts to pay costs related to the Reserve Policy, if any.
The District further covenants that it will take no actions that would discontinue or cause the discontinuance of the Special Tax levy or the District’s authority to levy the Special Tax for so long as the Bonds and any Parity Bonds are Outstanding.
(c) Commence Foreclosure Proceedings . The District covenants 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 parcels owned by a single taxpayer whose properties in the aggregate have delinquent Special Taxes in excess o f $5,000 by the October 1 following the close of each Fiscal Year in which such Special Taxes were due; and (i 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 (i v) 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 may, but shall not be obligated to, advance funds from any source of legally available funds in order to maintain the Reserve Account. The District may treat Item Title: 12.1
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any delinquent Special Tax sold to an independent third-party or to the City for at least 100% of the delinquent amount as having been paid. Proceeds of any such sale up to 100% of the delinquent amount will be deposited in the Special Tax Fund.
The District covenants 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. (d) Payment of Claims. The District will pay and discharge any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the Net Taxes or other funds in the Special Tax Fund (other than the Administrative Expense Account therein), or which might impair the security of the Bonds or any Parity Bonds then Outstanding; provided, however, that nothing herein contained shall require the District to make any such payments so long as the District in good faith shall contest the validity of any such claims. (e) Books and Accounts . The District will keep proper books of records and accounts, separate from all other records and accounts of the District, in which complete and correct entries shall be made of all transactions relating to the Project, the levy of the Special Tax and the deposits to the Special Tax Fund. Such books of records and accounts shall at all times during business hours be subject to the inspection of the Trustee or of the Owners or the Owners of any issue of Parity Bonds then Outstanding or their representatives authorized in writing. (f) Federal Tax Covenants . Notwithstanding any other provision of this Indenture, absent an opinion of Bond Counsel that the exclusion from gross income of interest on the Bonds and any Parity Bonds issued on a tax- exempt basis for federal income tax purposes will not be adversely affected for federal income tax purposes, the District covenants to comply with all applicable requirements of the Code necessary to preserve such exclusion from gross income and specifically covenants, without limiting the generality of the foregoing, as follows:
(1) Private Activity. The District will take no action or refrain from taking any action or make any use of the proceeds of the Bonds or any Parity Bonds or of any other monies or property which would cause the Bonds or any Parity Bonds issued on a tax -exempt basis for federal income tax purposes to be “private activity bonds” within the meaning of Section 141 of the Code. (2) Arbitrage. The District will make no use of the proceeds of the Bonds or any Parity Bonds or of any other amounts or property, regardless of the source, or take any action or refrain from taking any action which will cause the Bonds or any Parity Bonds issued on a tax-exempt basis for federal income tax purposes to be “arbitrage bonds” within the meaning of Section 148 of the Code.
(3) Federal Guaranty. The District will make no use of the proceeds of the Bonds or any Parity Bonds or take or omit to take any action that would cause the Bonds or any Parity Bonds issued on a tax-exempt basis for federal income tax purposes to be “federally guaranteed” within the meaning of Section 149(b) of the Code.
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(4) Information Reporting . The District will take or cause to be taken all necessary action to comply with the informational reporting requirement of Section 149(e) of the Code.
(5) Hedge Bonds. The District will make no use of the proceeds of the Bonds or any Parity Bonds or any other amounts or property, regardless of the source, or take any action or refrain from taking any action that would cause the Bonds or any Parity Bonds issued on a tax-exempt basis for federal income tax purposes to be considered “hedge bonds” within the meaning of Section 149(g) of the Code unless the District takes all necessary action to assure compliance with the requirements of Section 149(g) of the Code to maintain the exclusion from gross income for federal income tax purposes of interest on the Bonds and any applicable Parity Bonds. (6) Miscellaneous. The District will take no action or refrain from taking any action inconsistent with its expectations stated in the Tax Certificate executed on the Delivery Date by the District in connection with the Bonds and any issue of Parity Bonds and will comply with the covenants and requirements stated therein and incorporated by reference herein. (7) Other Tax- Exempt Issues . The District will not use proceeds of other tax-exempt securities to redeem any Bonds or Parity Bonds without first obtaining the written opinion of Bond Counsel that doing so will not impair the exclusion from gross income for federal income tax purposes of interest on the Bonds and any Parity Bonds issued on a tax-exempt basis. (8) Subsequent Opinions. If the District obtains a subsequent opinion of Bond Counsel other than Stradling Yocca Carlson & Rauth LLP , where such opinion is required in connection with a change or amendment to this Indenture or the procedures set forth in the Tax Certificate, it will obtain an opinion substantially to the effect originally delivered by Stradling Yocca Carlson & Rauth LLP , that interest on the Bonds is excluded from gross income for federal income tax purposes.
(g) Reduction of Maximum Special Taxes . The District hereby finds and determines that, historically, delinquencies in the payment of special taxes authorized pursuant to the Act in community facilities districts in Southern California have from time to time been at levels requiring the levy of special taxes at the maximum authorized rates in order to make timely payment of principal of and interest on the outstanding indebtedness of such community facilities districts. For this reason, the District hereby determines that a reduction in the maximum Special Tax rates authorized to be levied on parcels in Improvement Area No. 1 below the levels provided in this Section 5.2(g) would interfere with the timely retirement of the Bonds and Parity Bonds. The District determines it to be necessary in order to preserve the security for the Bonds and Parity Bonds to covenant, and, to the maximum extent that the law permits it to do so, the District hereby does covenant, that it shall not initiate proceedings to reduce the maximum Special Tax rates for Improvement Area No. 1, 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 Improvement Area No. 1 to an amount which is less than the Administrative Expense 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.
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(h) Covenants to Defend. The District covenants that, in the event that any initiative is adopted by the qualified electors in Improvement Area No. 1 which purports to reduce the maximum Special Tax below the levels specified in Section 5.2(g) above or to limit the power of the District to levy the Special Taxes for the purposes set forth in Section 5.2(b) above, it will commence and pursue legal action in order to preserve its ability to comply with such covenants. (i) Limitation on Right to Tender Bonds . The District hereby covenants that it will not adopt any policy pursuant to Section 53344.1 of the Act permitting the tender of Bonds or Parity Bonds in full payment or partial payment of any Special Taxes unless the District shall have 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.
(j) Continuing Disclosure . The District covenants to comply with the terms of the Continuing Disclosure Certificate and with the terms of any agreement executed by the District with respect to any Parity Bonds to assist the Underwriter in complying with Rule 15c2-12 adopted by the Securities and Exchange Commission; provided, however, that a failure to comply shall not be considered an event of default hereunder and the Owners shall be limited to enforcing the terms thereof in accordance with the terms of the Continuing Disclosure Certificate. (k) Further Assurances. The District shall make, execute and deliver any and all such further agreements, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture and for the better assuring and confirming unto the Owners of the Bonds and any Parity Bonds of the rights and benefits provided in this Indenture.
ARTICLE VI
AMENDMENTS TO INDENTURE
Section 6.1. Supplemental Indentures or Orders Not Requiring Owner Consent . The District may from time to time, and at any time, without notice to or consent of any of the Owners, adopt Supplemental Indentures for any of the following purposes:
(a) to cure any ambiguity, to correct or supplement any provisions herein which may be inconsistent with any other provision herein, or to make any other provision with respect to matters or questions arising under this Indenture or in any additional resolution or order, provided that such action is not materially adverse to the interests of the Owners; (b) to add to the covenants and agreements of and the limitations and the restrictions upon the District contained in this Indenture other covenants, agreements, limitations and restrictions to be observed by the District which are not contrary to or inconsistent with this Indenture as theretofore in effect or which further secure Bond or Parity Bond payments; (c) to provide for the issuance of any Parity Bonds, and to provide the terms and conditions under which such Parity Bonds may be issued, subject to and in accordance with the provisions of this Indenture;
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(d) to modify, amend or supplement this Indenture in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, or to comply with the Code or regulations issued thereunder, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute, and which shall not materially adversely affect the interests of the Owners of the Bonds or any Parity Bonds then Outstanding;
(e) to modify, alter or amend the RMA in any manner, so long as the Trustee receives a certificate of an Independent Financial Consultant stating that : (i) such changes do not reduce the maximum Special Taxes that may be levied in each year on property within Improvement Area No. 1 to an amount which is less than the Administrative Expense 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 amendment and (ii) based on the current development plan for parcels within Improvement Area No. 1, do not reduce the maximum Special Ta xes which could be levied upon Taxable P roperty within Improvement Area No. 1 to an amount which is less than the Administrative Expense 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 amendment;
(f) to modify, alter, amend or supplement this Indenture in any other respect which is not materially adverse to the Owners; or
(g) to modify, alter, amend or supplement this Indenture in any other respect, as may be required to fund all or a portion of the Reserve Requirement with a Reserve Policy.
Section 6.2. Supplemental Indentures or Orders Requiring Owner Consent .
Exclusive of the Supplemental Indentures described in Section 6.1, the Owners of not less than a majority in aggregate principal amount of the Bonds and Parity Bonds Outstanding shall have the right to consent to and approve the adoption by the District of such Supplemental Indentures as shall be deemed necessary or desirable by the District for the purpose of waiving, modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Indenture; provided, however, that nothing herein shall permit, or be construed as permitting: (a) an extension of the maturity date of the principal, or the payment date of interest on, any Bond or Parity Bond; (b) a reduction in the principal amount of, or redemption premium on, any Bond or Parity Bond or the rate of interest thereon; (c) a preference or priority of any Bond or Parity Bond over any other Bond or Parity Bond; or (d) a reduction in the aggregate principal amount of the Bonds and Parity Bonds the Owners of which are required to consent to such Supplemental Indenture, without the consent of the Owners of all Bonds and Parity Bonds then Outstanding.
If at any time the District shall desire to adopt a Supplemental Indenture, which pursuant to the terms of this Section shall require the consent of the Owners, the District shall so notify the Trustee and shall deliver to the Trustee a copy of the proposed Supplemental Indenture. The Trustee shall, at the expense of the District, cause notice of the proposed Supplemental Indenture to be mailed, by first class mail, postage prepaid, to all Owners at their addresses as they appear in the Bond Register. Such notice shall briefly set forth the nature of the proposed Supplemental Indenture and shall state that a copy thereof is on file at the office of the Trustee for inspection by all Owners.
The failure of any Owners to receive such notice shall not affect the validity of such Supplemental Indenture when consented to and approved by the Owners of not less than a majority in aggregate principal amount of the Bonds and Parity Bonds Outstanding as required by this Section. Whenever Item Title: 12.1
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at any time within one year after the date of the first mailing of such notice, the Trustee shall receive an instrument or instruments purporting to be executed by the Owners of not less than a majority in aggregate principal amount of the Bonds and Parity Bonds Outstanding, which instrument or instruments shall refer to the proposed Supplemental Indenture described in such notice, and shall specifically consent to and approve the adoption thereof by the District substantially in the form of the copy referred to in such notice as on file with the Trustee, such proposed Supplemental Indenture, when duly adopted by the District, shall thereafter become a part of the proceedings for the issuance of the Bonds and any Parity Bonds. In determining whether the Owners of a majority of the aggregate principal amount of the Bonds and Parity Bonds have consented to the adoption of any Supplemental Indenture, Bonds or Parity Bonds which are owned by the District or by any person directly or indirectly controlling or controlled by or under the direct or indirect common control with the District, shall be disregarded and shall be treated as though they were not Outstanding for the purpose of any such determination.
Upon the adoption of any Supplemental Indenture and the receipt of consent to any such Supplemental Indenture from the Owners of not less than a majority in aggregate principal amount of the Outstanding Bonds and Parity Bonds in instances where such consent is required pursuant to the provisions of this Section, this Indenture shall be, and shall be deemed to be, modified and amended in accordance therewith, and the respective rights, duties and obligations under this Indenture of the District and all Owners of Outstanding Bonds and Parity Bonds shall thereafter be determined, exercised and enforced hereunder, subject in all respects to such modifications and amendments.
Section 6.3. Notation of Bonds or Parity Bonds; Delivery of Amended Bonds or Parity Bonds. After the effective date of any action taken as hereinabove provided, the District may determine that the Bonds or any Parity Bonds may bear a notation, by endorsement in form approved by the District, as to such action, and in that case upon demand of the Owner of any Outstanding Bond or Parity Bond at such effective date and presentation of such Owner’s Bond or Parity Bond for the purpose at the office of the Trustee or at such additional offices as the Trustee may select and designate for that purpose, a suitable notation as to such action shall be made on such Bonds or Parity Bonds. If the District shall so determine, new Bonds or Parity Bonds so modified as, in the opinion of the District, shall be necessary to conform to such action shall be prepared and executed, and in that case upon demand of the Owner of any Outstanding Bond or Parity Bond at such effective date such new Bonds or Parity Bonds shall be exchanged at the office of the Trustee or at such additional offices as the Trustee may select and designate for that purpose, without cost to each Owner of Outstanding Bonds or Parity Bonds, upon surrender of such Outstanding Bonds or Parity Bonds.
The Trustee shall have the right to require such opinions of counsel as it deems necessary concerning: (i) the lack of material adverse effect of the amendment on Owners ; and (ii) the fact that the amendment will not affect the tax status of interest with respect to the Bonds.
ARTICLE VII
TRUSTEE
Section 7.1. Trustee. Wilmington Trust, National Association shall be the Trustee for the Bonds and any Parity Bonds unless and until another Trustee is appointed by the District hereunder.
The Trustee represents that it has (or is a member of a bank holding company system whose bank holding company has) a combined capital (exclusive of borrowed capital) and surplus of at least $100,000,000. The District may, at any time, appoint a successor Trustee satisfying the requirements Item Title: 12.1
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of Section 7.2 below for the purpose of receiving all money which the District is required to deposit with the Trustee hereunder and to allocate, use and apply the same as provided in this Indenture.
The Trustee is hereby authorized to and shall mail by first class mail, postage prepaid, or wire transfer in accordance with Section 2.5 above, interest payments to the Owners, to select Bonds and Parity Bonds for redemption, and to maintain the Bond Register. The Trustee is hereby authorized to pay the principal of and premium, if any, on the Bonds and Parity Bonds when the same are duly presented to it for payment at maturity or on call and redemption, to provide for the registration of transfer and exchange of Bonds and Parity Bonds presented to it for such purposes, to provide for the cancellation of Bonds and Parity Bonds all as provided in this Indenture, and to provide for the authentication of Bonds and Parity Bonds, and shall perform all other duties assigned to or imposed on it as provided in this Indenture. The Trustee shall keep accurate records of all funds administered by it and all Bonds and Parity Bonds paid, discharged and cancelled by it.
The Trustee is hereby authorized to pay and redeem the Bonds and Parity Bonds when duly presented for payment at maturity, or on redemption prior to maturity. The Trustee shall cancel all Bonds and Parity Bonds upon payment thereof in accordance with the provisions of Section 10.1 hereof.
The District shall from time to time, subject to any agreement between the District and the Trustee then in force, timely pay to the Trustee following demand therefor compensation for its services, reimburse the Trustee for all its advances and expenditures, including, but not limited to, advances to and fees, costs and expenses of independent accountants or counsel employed by it in the exercise and performance of its powers and duties hereunder, and indemnify and save the Trustee, its officers, directors, employees and agents, harmless against costs, claims, expenses and liabilities, including, without limitation, fees, costs and expenses of its attorneys (not arising from its own gross negligence or willful misconduct) which it may incur in the exercise and performance of its powers and duties hereunder. The foregoing obligation of the District to indemnify the Trustee shall survive the removal or resignation of the Trustee or the discharge of the Bonds and Parity Bonds.
Section 7.2. Removal of Trustee . The District may at any time at its sole discretion , upon 30 days’ notice, remove the Trustee initially appointed, and any successor thereto, by delivering to the Trustee a written notice of its decision to remove the Trustee and may appoint a successor or successors thereto; provided that any such successor shall be a bank or trust company having (or whose parent bank holding company has) a combined capital (exclusive of borrowed capital) and surplus of at least $100,000,000, and subject to supervision or examination by federal or state authority. Any removal shall become effective only upon acceptance of appointment by the successor Trustee. If any bank or trust company appointed as a successor publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. Any removal of the Trustee and appointment of a successor Trustee shall become effective only upon acceptance of appointment by the successor Trustee and notice of the successor Trustee’s identity and address being sent by the successor Trustee to the Owners.
Section 7.3. Resignation of Trustee . The Trustee may at any time resign and be discharged from its duties and obligations hereunder by giving written notice to the District. Upon receiving such notice of resignation, the District shall promptly appoint a successor Trustee Item Title: 12.1
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satisfying the criteria in Section 7.2 above by an instrument in writing. Any resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon acceptance of appointment by the successor Trustee. If no successor Trustee shall have been appointed by the District within thirty (30) days of giving such notice or removal or resignation, then the Trustee, or any Owner may petition, at the sole expense of the District, a court of competent jurisdiction for the appointment of a successor Trustee and other appropriate relief, and such court may thereupon, after such notice (if any) as it may deem proper, appoint a successor Trustee under the Indenture.
Section 7.4. Liability of Trustee . The recitals of fact and all promises, covenants and agreements contained herein and in the Bonds and any Parity Bonds shall be taken as statements, promises, covenants and agreements of the District, and the Trustee assumes no responsibility or liability for the correctness of the same and makes no representations whatsoever as to the validity or sufficiency of this Indenture, the Bonds or any Parity Bonds, and shall incur no responsibility or liability in respect thereof, other than in connection with its express duties or obligations specifically set forth herein, in the Bonds and any Parity Bonds, or in the certificate of authentication assigned to or imposed upon the Trustee. The Trustee shall not have nor be under any responsibility or duty with respect to the issuance of the Bonds or any Parity Bonds for value. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own gross negligence or willful misconduct. The Trustee shall not be liable for any action taken or omitted by it or any of its officers, employees or agents in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture . The Trustee shall not be liable for any actions taken or omitted to be taken, or any error of judgment made in good faith by a responsible officer, unless it shall be proved that the Trustee was grossly negligent in ascertaining the pertinent facts.
The Trustee shall be entitled to request and receive written instructions from the District and/or Owners and shall have no responsibility or liability for any losses or damages of any nature that may arise from any action taken or not taken by the Trustee in accordance with the written direction of any such party. The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in accordance with the written direction of the Owners of not less than a majority in aggregate principal amount of the Bonds and Parity Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture .
The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of an Owner and/or the District , pursuant to the provisions of this Indenture, unless such party shall have offered to the Trustee security or indemnity (satisfactory to the Trustee in its sole and absolute discretion) against the costs, expenses and liabilities which may be incurred by it in compliance with such request or direction.
Neither the Trustee nor any of its directors, officers, employees, agents or affiliates shall be responsible for nor have any duty to monitor the performance or any action of the District or any of its directors, members, officers, agents, affiliates or employee s, nor shall it have any liability in connection with the malfeasance or nonfeasance by such party. The Trustee may assume performance by all such persons of their respective obligations. The Trustee shall have no enforcement or notification obligat ions relating to breaches of representati ons or warranties of any other p erson. The Trustee shall be conclusively protected in acting upon any notice, resolution, request, consent, order, judgement, decree, certificate, report, Bond, Parity Bond or other paper or document signed or presented by the proper party or parties as provided hereunder, not only as to due Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
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execution, validity and effectiveness, but also as to the truth and accuracy of any information contained therein. The Trustee may, at the expense of the District, request, rely on and act in accordance with officer’s certificates and/or opinions of counsel, and shall incur no liability and shall be fully protected in acting or refraining from acting in accordance with such officer’s certificates and opinions of counsel.
The Trustee shall not be bound to recognize any person as the Owner of a Bond or Parity Bond unless and until such Bond or Parity Bond is submitted for inspection, if required, and his title thereto is satisfactorily established to the Trustee, if disputed.
Whenever in the administration of its express obligations under this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, the Trustee may, at the expense of the District, request, rely on and act in accordance with officer’s certificates and/or opinions of counsel (unless other evidence in respect thereof be herein specifically prescribed), and shall incur no liability and shall be fully protected in acting or refraining from acting in accordance with such officer’s certificates and opinions of counsel, but in its discretion the Trustee may but shall not be obligated to accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. It is understood and agreed that no such act shall broaden or imply the Trustee’s acceptance of a broadening of the scope of the Trustee’s duties and obligations hereunder unless the Trustee shall provide written acceptance thereof.
The Trustee shall have no duty or obligation whatsoever to enforce the collection of Special Taxes or other funds to be deposited with it hereunder, or as to the correctness of any amounts received, but its liability shall be limited to the proper accounting for such funds as it actually receives. No provision in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of its rights or powers.
The Trustee shall not be deemed to have knowledge of any default or event of default under this Indenture until an officer at the Trustee’s corporate trust office responsible for the administration of its duties hereunder shall have actual knowledge thereof or the Trustee shall have received written notice thereof at its corporate trust office.
The Trustee shall have no responsibility with respect to any information, statement, or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Bonds and any Parity Bonds.
Before taking any action under Article VIII hereof the Trustee may require that indemnity and security satisfactory to the Trustee in its sole and exclusive discretion be furnished to it for and from any expenses and liabilities and to protect it against any liability it may incur hereunder.
The immunities extended to the Trustee also extend to its directors, officers, employees and agents (including its counsel).
The Trustee shall not be liable for any action taken or not taken by it in accordance with the direction of the Owners of 25% (or other percentage provided for herein) in aggregate principal amount of Bonds and Parity Bonds Outstanding relating to the exercise of any right, power or Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
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remedy available to the Trustee. In the event of conflicting instructions hereunder, the Trustee shall have the right to decide the appropriate course of action and will be protected in so doing.
The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty or in any way expand or impliedly expand the scope of the Trustee’s duties hereunder, and, with respect to such permissive rights, the Trustee shall not be answe rable for other than its gross negligence or willful misconduct.
The Trustee may execute any of the trusts or powers hereof and perform any of its duties through attorneys, agents and receivers and shall not be answerable for the conduct of the same if appointed by it with reasonable care. The Trustee shall be entitled to rely on and shall not be liable for any action taken or omitted to be taken by the Trustee in accordance with the advice of counsel or other professionals retained or consulted by the Trustee.
The Trustee may become the Owner or pledgee of the Bonds and Parity Bonds with the same rights it would have if it were not Trustee.
The Trustee shall perform such duties and only such duties as are specifically set forth in this Indenture and no implied duties or obligations shall be read into this Indenture against the Trustee.
These duties shall be deemed purely ministerial in nature, and the Trustee shall not be liable except for the performance of such duties.
If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person.
The District shall, to the extent permitted by law, indemnify and save the Trustee and its officers, directors, agents, and employees harmless from and against (whether or not litigated) all claims, losses, costs, expenses, liability and damages, including legal fees and expenses, arising out of: (i) the use, maintenance, condition or management of, or from any work or thing done on, the Project; (ii) any breach or default on the part of the District in the performance of any of its obligations under this Indenture and any other agreement made and entered into for purposes of the Bonds and Parity Bonds; (iii) any act of the City, the District or of any of its agents, contractors, servants, employees or licensees with respect to the Project; (iv) any act of any assignee of, or purchaser from, the City, the District or of any of its or their agents, contractors, servants, employees or licensees with respect to the Project; (v) the construction or acquisition of the Project or the expenditure of Project Costs; (vi) the exercise and performance by the Trustee of its powers and duties hereunder or any related document; (vii) the sale of the Bonds and Parity Bonds and the carrying out of any of the transactions contemplated by the Bonds and Parity Bonds or this Indenture; or (viii) any untrue statement or alleged untrue statement of any material fact or omission or alleged omission to state a material fact necessary to make the statements made in light of the circumstances in which they were made, not misleading in any official statement or other disclosure document utilized in connection with the sale or marketing of the Bonds and Parity Bonds. The indemnification set forth in this Section shall extend to the Trustee’s officers, agents, employees, successors and assigns. No indemnification will be made under this Section or elsewhere in this Indenture or other agreements for willful misconduct or negligence by the Trustee, its officers, agents, employees, successors or assigns. The District’s obligations hereunder shall remain valid and binding notwithstanding maturity and payment of the Bonds and Parity Bonds, or the resignation or removal of the Trustee.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
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In accepting the trust hereby created, the Trustee acts solely as Trustee for the Owners and not in its individual capacity, and all persons, including, without limitation, the Owners, the District and the City, having any claim against the Trustee arising from this Indenture shall look only to the funds and accounts held by the Trustee hereunder for payment, except as otherwise provided herein.
Under no circumstances shall the Trustee be liable in its individual capacity for the obligations evidenced by the Bonds and any Parity Bonds.
THE TRUSTEE MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS
OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE DISTRICT OF THE PROJECT, OR ANY PORTION THEREOF. In no event shall the Trustee be liable for incidental, indirect, punitive, special or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit), in connection with or arising out of the Project or this Indenture for the existence, furnishing, functioning or use and possession of the Project, irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
The Trustee shall not be liable to the parties hereto or deemed in breach or default hereunder if and to the extent its performance hereunder is prevented by reason of force majeure . The term “force majeure” means an occurrence that is beyond the control of the Trustee and could not have been avoided by exercising due care. Force majeure shall include , but not limited to , any act or provision of any present or future law or regulation or governmental authority; acts of God; earthquakes; fires; floods; wars; terrorism; civil or military disturbances; sabotage; epidemics; quarantine restrictions; riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications service; accidents; labor disputes; acts of civil or military authority or governmental actions; or the unavailability of the Federal Reserve Bank wire or telex or other wire or communication facility, or other similar occurrences.
The Trustee shall be entitled to request and receive written instructions from the District or other parties and shall have no responsibility or liability for any losses or damages of any nature that may arise from any action taken or not taken by the Trustee in accordance with the written direction of the District or such other parties. The Trustee shall have the right to accept and act upon directions given pursuant to this Indenture and delivered using electronic notice; provided, however, that the Dist rict shall provide to the Trustee an incumbency certificate listing each Authorized Representative of the District with the authority to provide such directions and containing specimen signatures of such authorized officers, which incumbency certificate shall be amended whenever a person is to be added or deleted from the listing. If the District elects to give the Trustee directions using electronic notice and the Trustee in its discretion elects to act upon such directions, the Trustee’s understanding of such directions shall be deemed controlling. The District understands and agrees that the Trustee cannot determine the identity of the actual sender of such directions and that the Trustee shall conclusively presume that directions that purport to have been sent by an authorized officer listed on the incumbency certificate provided to the Trustee have been sent by such Authorized Representative of the District. The District shall be responsible for ensuring that only an Authorized Representative of the Di strict shall transmit such directions to the Trustee and that each Authorized Representative of the District treat applicable user and authorization codes, passwords and/or authentication keys with extreme care. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and a compliance with such directions, notwithstanding such directions conflict or are inconsistent with a subsequent written direction. The District agrees (i) to assume all risks arising out of the use of electronic notice to Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
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submit directions to the Trustee, including, without limitation, the risk of the Trustee acting on unauthorized directions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting directions to the Trustee and that there may be more secure methods of transmitting directions than the method(s) selected by the District; and (iii) that the security procedures (if any) to be followed in connection with its transmission of directions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances.
Section 7.5. Merger or Consolidation . Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, shall be the successor to the Trustee without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding.
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.1. Events of Default. Any one or more of the following events shall constitute an “Event of Default”:
(a) default in the due and punctual payment of the principal of or redemption premium, if any, on any Bond or Parity Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by declaration or otherwise; (b) default in the due and punctual payment of the interest on any Bond or Parity Bond when and as the same shall become due and payable; or
(c) except as described in subsections (a) or (b), default by the District in the observance of any of the agreements, conditions or covenants on its part contained in this Indenture, the Bonds or any Parity Bonds, which default continues for a period of 30 days after the District has been given notice in writing of such default by the Trustee or the Owners of twenty -five percent (25%) in aggregate principal amount of the Outstanding Bonds and Parity Bonds.
The Trustee agrees to give notice to the Owners as soon as practicable upon the occurrence of an Event of Default under subsections (a) or (b) above and within 30 days of the Trustee’s actual knowledge of an Event of Default under subsection (c) above.
Section 8.2. Remedies of Owners . Upon the occurrence of an Event of Default, any Owner may pursue any available remedy at law or in equity to enforce the payment of the principal of, premium, if any, and interest on the Outstanding Bonds and Parity Bonds, and to enforce any rights of the Trustee under or with respect to this Indenture, including:
(a) by mandamus or other suit or proceeding at law or in equity to enforce his rights against the District and any of the members, officers and employees of the District, and to compel the District or any such members, officers or employees to perform and carry out their duties under the Act and their agreements with the Owners as provided in this Indenture; Item Title: 12.1
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(b) by suit in equity to enjoin any actions or things which are unlawful or violate the rights of the Owners; or
(c) by a suit in equity to require the District and its members, officers and employees to account as the trustee of an express trust.
If an Event of Default shall have occurred and be continuing and if requested and directed so to do by the Owners of at least twenty-five percent (25%) in aggregate principal amount of Outstanding Bonds and Parity Bonds and if indemnified to its satisfaction, the Trustee shall be obligated to exercise such one or more of the rights and powers conferred by this Article VIII, as the Trustee, being advised by counsel, shall deem most expedient in the interests of the Owners of the Bonds and Parity Bonds.
No remedy herein conferred upon or reserved to the Owners is intended to be exclusive of any other remedy. Every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise, and may be exercised without exhausting and without regard to any other remedy conferred by the Act or any other law.
Section 8.3. Application of Revenues and Other Funds After Default . All amounts received by the Trustee pursuant to any right given or action taken by the Owners under the provisions of this Indenture relating to the Bonds and Parity Bonds shall be applied by the Trustee in the following order upon presentation of the several Bonds and Parity Bonds:
First, to the payment of the costs, fees and expenses of the Trustee in declaring such Event of Default and in performing its duties and obligations hereunder, including reasonable compensation to its agents, attorneys and counsel;
Second, to the payment of the fees, costs and expenses of the Owners in declaring such Event of Default and in carrying out the provisions of this Article VIII, including reasonable compensation to its agents, attorneys and counsel, and to the payment of all other outstanding fees and expenses of the Trustee; and
Third, to the payment of the whole amount of interest on and principal of the Bonds and Parity Bonds then due and unpaid, with interest on overdue installments of principal and interest to the extent permitted by law at the net effective rate of interest then borne by the Outstanding Bonds and Parity Bonds; provided, however, that in the event that such amounts shall be insufficient to pay the full amount of such interest and principal, then such amounts shall be applied in the following order of priority:
(a) first to the payment of all installments of interest on the Bonds and Parity Bonds then due and unpaid on a pro rata basis based on the total amount then due and owing; (b) second, to the payment of all installments of principal, including Sinking Fund Payments, of the Bonds and Parity Bonds then due and unpaid on a pro rata basis based on the total amount then due and owing; and
(c) third, to the payment of interest on overdue installments of principal and interest on the Bonds and Parity Bonds on a pro rata basis based on the total amount then due and owing.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 156
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May 6, 2026
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Section 8.4. Power of Trustee to Control Proceedings . In the event that the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its obligations hereunder, whether upon its own discretion or upon the request of the Owners of twenty- five percent (25%) in aggregate principal amount of the Bonds and Parity Bonds then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Owners of the Bonds and Parity Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the Owners of a majority in aggregate principal amount of the Outstanding Bonds and Parity Bonds hereunder opposing such discontinuance, withdrawal, compromise, settlement or other such litigation. Any suit, action or proceeding which any Owner of Bonds or Parity Bonds shall have the right to bring to enforce any right or remedy hereunder may be brought by the Trustee for the equal benefit and protection of all Owners of Bonds and Parity Bonds similarly situated and the Trustee is hereby appointed (and the successive respective Owners of the Bonds and Parity Bonds issued hereunder, by taking and holding the same, shall be conclusively deemed so to have appointed it) the true and lawful attorney in fact of the respective Owners of the Bonds and Parity Bonds for the purposes of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the respective Owners of the Bonds and Parity Bonds as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney-in-fact.
Section 8.5. Appointment of Receivers . Upon the occurrence of an Event of Default hereunder, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights and of the Owners of the Bonds and Parity Bonds under this Indenture, the Trustee shall be entitled, as a matter of right to which the District expressly agrees, to the appointment of a receiver or receivers of the Net Taxes and other amounts pledged hereunder, pending such proceedings, with such powers as the court making such appointment shall confer.
Section 8.6. Non-Waiver. Nothing in this Article VIII or in any other provision of this Indenture, or in the Bonds or the Parity Bonds, shall affect or impair the obligation of the District, which is absolute and unconditional, to pay the interest on and principal of the Bonds and Parity Bonds to the respective Owners of the Bonds and Parity Bonds at the respective dates of maturity, as herein provided, or to pay the Trustee its fees and expenses as provided in Section 8.3 hereof, out of the Net Taxes and other moneys herein pledged for such payment.
A waiver of any default or breach of duty or contract by the Trustee or any Owners shall not affect any subsequent default or breach of duty or contract, or impair any rights or remedies on any such subsequent default or breach. No delay or omission of the Trustee or any Owner of any of the Bonds or Parity Bonds to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy conferred upon the Trustee or the Owners by the Act or by this Article VIII may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee or the Owners, as the case may be.
Section 8.7. Limitations on Rights and Remedies of Owners . No Owner of any Bond or Parity Bond issued hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Indenture, unless: (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default; (b) the Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
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Owners of a majority in aggregate principal amount of all the Bonds and Parity Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said Owners shall have tendered to the Trustee indemnity and security reasonably acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity and security shall have been made to, the Trustee.
Such notification, request, tender of indemnity and security and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds and Parity Bonds of any remedy hereunder; it being understood and intended that no one or more Owners of Bonds and Parity Bonds shall have any right in any manner whatever by his or their action to enforce any right under this Indenture, except in the manner herein provided, and that all proceedings at law or in equity to enforce any provision of this Indenture shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners of the Outstanding Bonds and Parity Bonds.
The right of any Owner of any Bond and Parity Bond to receive payment of the principal of and interest and premium (if any) on such Bond and Parity Bond as herein provided or to institute suit for the enforcement of any such payment, shall not be impaired or affected without the written consent of such Owner, notwithstanding the foregoing provisions of this Section or any other provision of this Indenture.
Section 8.8. Termination of Proceedings . In case any Owner shall have proceeded to enforce any right under this Indenture by the appointment of a receiver or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely, then and in every such case, the District, the Trustee and the Owners shall be restored to their former positions and rights hereunder, respectively, with regard to the property subject to this Indenture, and all rights, remedies and powers of the Owners shall continue as if no such proceedings had been taken.
ARTICLE IX
DEFEASANCE AND PARITY BONDS
Section 9.1. Defeasance. If the District shall pay or cause to be paid, or there shall otherwise be paid, to the Owner of an Outstanding Bond or Parity Bond the interest due thereon and the principal thereof, at the times and in the manner stipulated in this Indenture or any Supplemental Indenture, then the Owner of such Bond or Parity Bond shall cease to be entitled to the pledge of Net Taxes, and, other than as set forth below, all covenants, agreements and other obligations of the District to the Owner of such Bond or Parity Bond under this Indenture and any Supplemental Indenture relating to such Parity Bond shall thereupon cease, terminate and become void and be discharged and satisfied. In the event of a defeasance of all Outstanding Bonds and Parity Bonds pursuant to this Section, the Trustee shall execute and deliver to the District all such instruments as may be desirable to evidence such discharge and satisfaction, and the Trustee shall pay over or deliver to the District’s general fund all money or securities held by it pursuant to this Indenture which are not required for the payment of the principal of, premium, if any, and interest due on such Bonds and Parity Bonds.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 158
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May 6, 2026
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Any Outstanding Bond or Parity Bond shall be deemed to have been paid within the meaning expressed in the first paragraph of this Section if such Bond or Parity Bond is paid in any one or more of the following ways:
(a) by paying or causing to be paid the principal of, premium, if any, and interest on such Bond or Parity Bond, as and when the same become due and payable; (b) by depositing with the Trustee, in trust, at or before maturity, money which, together with the amounts then on deposit in the Special Tax Fund (exclusive of the Administrative Expense Account) and available for such purpose, is fully sufficient to pay the principal of, premium, if any, and interest on such Bond or Parity Bond, as and when the same shall become due and payable; or (c) by depositing with the Trustee or another escrow bank appointed by the District, in trust, federal securities described in subparagraph (1) of the definition of Authorized Investments, in which the District may lawfully invest its money, in such amount as will be sufficient, together with the interest to accrue thereon and moneys then on deposit in the Special Tax Fund (exclusive of the Administrative Expense Account) and available for such purpose, together with the interest to accrue thereon, to pay and discharge the principal of, premium, if any, and interest on such Bond or Parity Bond, as and when the same shall become due and payable.
If paid as provided above, then, at the election of the District, and notwithstanding that any Outstanding Bonds and Parity Bonds shall not have been surrendered for payment, all obligations of the District under this Indenture and any Supplemental Indenture with respect to such Bond or Parity Bond shall cease and terminate, except for the obligation of the Trustee to pay or cause to be paid to the Owners of any such Bond or Parity Bond not so surrendered and paid all sums due thereon, and except for the covenants of the District contained in Section 5.2(f) or any covenants in a Supplemental Indenture relating to compliance with the Code. Notice of such election shall be filed with the Trustee not less than ten days prior to the proposed defeasance date, or such shorter period of time as may be acceptable to the Trustee. In connection with a defeasance under (c) above, there shall be provided to the District a verification report from an independent nationally recognized certified public accountant stating its opinion as to the sufficiency of the moneys or securities deposited with the Trustee or the escrow bank to pay and discharge the principal of, premium, if any, and interest on all Outstanding Bonds and Parity Bonds to be defeased in accordance with this Section, as and when the same shall become due and payable, and an opinion of Bond Counsel (which may rely upon the opinion of the certified public accountant) to the effect that the Bonds or Parity Bonds being defeased have been legally defeased in accordance with this Indenture and any applicable Supplemental Indenture.
Upon a defeasance, the Trustee, upon request of the District, shall release the rights of the Owners of such Bonds and Parity Bonds which have been defeased under this Indenture and any Supplemental Indenture and execute and deliver to the District all such instruments as may be desirable to evidence such release, discharge and satisfaction. In the case of a defeasance hereunder of all Outstanding Bonds and Parity Bonds, the Trustee shall pay over or deliver to the District any funds held by the Trustee at the time of a defeasance, which are not required for the purpose of paying and discharging the principal of or interest on the Bonds and Parity Bonds when due. The Trustee shall, at the written direction of the District, mail, first class, postage prepaid, a notice to the Owners whose Bonds or Parity Bonds have been defeased, in the form directed by the District, stating that the defeasance has occurred.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 159
Menifee Mayor and City Council
May 6, 2026
Page
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Section 9.2. Conditions for the Issuance of Parity Bonds and Other Additional Indebtedness. The District may at any time after the issuance and delivery of the Bonds hereunder 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 hereunder or under any Supplemental Indenture; 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, or for other purposes of the District in a principal amount not to exceed $_______. Parity Bonds may be issued subject to the following additional specific conditions, which are hereby made conditions precedent to the issuance of any such Parity Bonds:
(a) The District shall be in compliance with all covenants set forth in this 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) if issued for the purpose of refunding Bonds and/or Parity Bonds, the maturity of the Parity Bonds to be issued shall not exceed the maturity of the Bonds and Parity 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
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 160
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May 6, 2026
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(9) such other provisions as are necessary or appropriate and not inconsistent with this Indenture.
(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 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 this 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) this Indenture creates the valid pledge which it purports to create of the Net Taxes and other amounts as provided in this Indenture, subject to the application thereof to the purposes and on the conditions permitted by this 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 this Indenture and the Supplemental Indenture executed and delivered in connection with such Parity Bonds and are entitled to the benefits of this 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 this Indenture and such Supplemental Indenture; (4) a certificate of the District containing such statements as may be reasonably necessary to show compliance with the requirements of this Indenture; (5) where the Parity Bonds are issued to refund the Bonds or other Parity Bonds, 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; (6) where the Parity Bonds are being issued other than to refund the Bonds or other Parity Bonds, a Certificate of the Special Tax Administrator certifying that (i) the maximum Special Taxes that may be levied in each Fiscal Year is not less than 110% of the Annual Debt Service in the Bond Year that begins in such Fiscal Year; and (ii) the Value of District Property is not less than four (4) times the sum of Direct Debt for District Property plus Overlapping Debt allocable to all property in Improvement Area No. 1 of the District subject to the Special Tax. For purposes of the foregoing Certificate of the Special Tax Administrator, all calculations shall consider the Parity Bonds proposed to be issued to be Outstanding; and
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 161
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(7) such further documents, money and securities as are required by the provisions of this Indenture and the Supplemental Indenture providing for the issuance of such Parity Bonds.
ARTICLE X
MISCELLANEOUS
Section 10.1. Cancellation of Bonds and Parity Bonds . All Bonds and Parity Bonds surrendered to the Trustee for payment upon maturity or for redemption shall be upon payment therefor, and any Bond or Parity Bond purchased by the District as authorized herein and delivered to the Trustee for such purpose shall be, cancelled forthwith and shall not be reissued. The Trustee shall destroy such Bonds and Parity Bonds, as provided by law, and, upon request of the District, furnish to the District a certificate of such destruction.
Section 10.2. Execution of Documents and Proof of Ownership . Any request, direction, consent, revocation of consent, or other instrument in writing required or permitted by this Indenture to be signed or executed by Owners may be in any number of concurrent instruments of similar tenor and may be signed or executed by such Owners in person or by their attorneys appointed by an instrument in writing for that purpose, or by the bank, trust company or other depository for such Bonds. Proof of the execution of any such instrument, or of any instrument appointing any such attorney, and of the ownership of Bonds or Parity Bonds shall be sufficient for the purposes of this Indenture (except as otherwise herein provided), if made in the following manner:
(a) The fact and date of the execution by any Owner or his or her attorney of any such instrument, and of any instrument appointing any such attorney, may be proved by a signature guarantee of any bank or trust company located within the United States of America. Where any such instrument is executed by an officer of a corporation or association or a member of a partnership on behalf of such corporation, association or partnership, such signature guarantee shall also constitute sufficient proof of his authority.
(b) As to any Bond or Parity Bond, the person in whose name the same shall be registered in the Bond Register shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the principal of any such Bond or Parity Bond, and the interest thereon, shall be made only to or upon the order of the registered Owner thereof or his or her legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond or Parity Bond and the interest thereon to the extent of the sum or sums to be paid. Neither the District nor the Trustee shall be affected by any notice to the contrary.
Nothing contained in this Indenture shall be construed as limiting the Trustee or the District to such proof, it being intended that the Trustee or the District may accept any other evidence of the matters herein stated which the Trustee or the District may deem sufficient. Any request or consent of the Owner of any Bond or Parity Bond shall bind every future Owner of the same Bond or Parity Bond in respect of anything done or suffered to be done by the Trustee or the District in pursuance of such request or consent.
Section 10.3. Unclaimed Moneys . Anything in this Indenture to the contrary notwithstanding, any money held by the Trustee in trust for the payment and discharge of any of the Outstanding Bonds and Parity Bonds which remain unclaimed for two years after the date when such Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 162
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May 6, 2026
Page
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Outstanding Bonds or Parity Bonds have become due and payable, if such money was held by the Trustee at such date, or for two years after the date of deposit of such money if deposited with the Trustee after the date when such Outstanding Bonds or Parity Bonds become due and payable, shall be repaid by the Trustee to the District, as its absolute property and free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look only to the District for the payment of such Outstanding Bonds or Parity Bonds; provided, however, that, before being required to make any such payment to the District, the Trustee, at the expense of the District, shall cause to be mailed by first -class mail, postage prepaid, to the registered Owners of such Outstanding Bonds or Parity Bonds at their addresses as they appear on the registration books of the Trustee a notice that said money remains unclaimed and that, after a date named in said notice, which date shall not be less than 30 days after the date of the mailing of such notice, the balance of such money then unclaimed will be returned to the District.
Section 10.4. Provisions Constitute Contract; Governing Law; Venue . The provisions of this Indenture shall constitute a contract between the District and the Owners and the provisions hereof shall be governed by and construed in accordance with the laws of the State of California.
The parties hereby (i) irrevocably submit to the exclusive jurisdiction of any federal or state court sitting in the State of California, (ii) waive any objection to laying of venue in any such action or proceeding in such courts, and (iii) waive any objection that such courts are in inconvenient forum or do not have jurisdiction over any party.
In case any suit, action or proceeding to enforce any right or exercise any remedy shall be brought or taken and, should said suit, action or proceeding be abandoned, or be determined adversely to the Owners or the Trustee, then the District, the Trustee and the Owners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken.
After the issuance and delivery of the Bonds, this Indenture shall be irrepealable, but shall be subject to modifications to the extent and in the manner provided in this Indenture, but to no greater extent and in no other manner.
Section 10.5. Future Contracts. Nothing herein contained shall be deemed to restrict or prohibit the District from making contracts or creating bonded or other indebtedness payable from a pledge of the Net Taxes which is subordinate to the pledge hereunder, or which is payable from the general fund of the District or from taxes or any source other than the Net Taxes and other amounts pledged hereunder.
Section 10.6. Further Assurances. The District will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture, and for the better assuring and confirming unto the Owners of the Bonds or any Parity Bonds the rights and benefits provided in this Indenture.
Section 10.7. Entire Agreement; Severability. This Indenture and the exhibits hereto set forth the entire agreement and understanding of the parties related to this transaction and supersedes all prior agreements and understandings, oral or written. If any covenant, agreement or provision, or any portion thereof, contained in this Indenture, or the application thereof to any person or circumstance, is held to be unconstitutional, invalid or unenforceable, the remainder of this Indenture and the application of any such covenant, agreement or provision, or portion thereof, to other persons Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
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or circumstances, shall be deemed severable and shall not be affected thereby, and this Indenture, the Bonds and any Parity Bonds issued pursuant hereto shall remain valid and the Owners shall retain all valid rights and benefits accorded to them under the laws of the State of California.
Section 10.8. Notices. Any notices required to be given to the District with respect to the Bonds or this Indenture shall be mailed, first class, postage prepaid, or personally delivered to the City Manager of the City of Menifee , 29844 Haun Road, Menifee, California 92586, all notices to the Trustee in its capacity as Trustee shall be mailed, first class, postage prepaid, or personally delivered to the Trustee, Wilmington Trust, National Association, 650 Town Center Drive, Suite 800 Costa Mesa, California 92626.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 164
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May 6, 2026
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IN WITNESS WHEREOF, COMMUNITY FACILITIES DISTRICT NO. 2022-3 (LEGADO) OF THE CITY OF MENIFEE has caused this Indenture to be signed by an Authorized Representative of the District and Wilmington Trust, National Association in token of its acceptance of the trust created hereunder, has caused this Indenture to be signed in its corporate name by its officers identified below, all as of the day and year first above written.
COMMUNITY FACILITIES DISTRICT NO. 2022 -3
(LEGADO) OF THE CITY OF MENIFEE
By:
Mayor of the City of Menifee, acting as the
legislative body of Community Facilities
District No. 2022-3 (Legado) of the City of
Menifee
ATTEST:
City Clerk of the City of Menifee , acting
as the legislative body of Community
Facilities District No. 2022-3 (Legado) of
the City of Menifee
WILMINGTON TRUST, NATIONAL
ASSOCIATION, as Trustee
By:
Authorized Signatory
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 165
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May 6, 2026
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EXHIBIT A
FORM OF SPECIAL TAX BOND
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE DISTRICT OR TRUSTEE FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
R-____ $___________
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
COMMUNITY FACILITIES DISTRICT NO. 2022-3
(LEGADO) OF THE CITY OF MENIFEE
IMPROVEMENT AREA NO. 1
SPECIAL TAX BOND, SERIES 2026A
INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP:
_____% September 1, 20__ _____, 2026 ___
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: __________________ DOLLARS
COMMUNITY FACILITIES DISTRICT NO. 2022-3 (LEGADO) OF THE CITY OF MENIFEE (the “District”) which was formed by the City of Menifee (the “City”) and is situated in the County of Riverside , State of California, FOR VALUE RECEIVED, hereby promises to pay, solely from certain amounts held under the Indenture (as hereinafter defined), to the Owner named above, or registered assigns, on the Maturity Date set forth above, unless redeemed prior thereto as hereinafter provided, the Principal Amount set forth above, a nd to pay interest on such Principal Amount from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication hereof, unless: (i) the date of authentication is an Interest Payment Date, in which event interest shall be payable from such date of authentication; (ii) the date of authentication is after a Record Date (as hereinafter defined) but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication; or (iii) the date of authentication is prior to the close of Item Title: 12.1
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business on the first Record Date, in which event interest shall be payable from the Dated Date set forth above. Notwithstanding the foregoing, if at the time of authentication of this Bond interest is in default, interest on this Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment, interest on this Bond shall be payable from the Dated Date set forth above.
Interest will be paid s emiannually on September 1, 2026 and each March 1 and September 1 thereafter (each an “Interest Payment Date”), at the Interest Rate set forth above, until the Principal Amount hereof is paid or made available for payment.
The principal of and premium, if any, on this Bond are payable to the Owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at the Principal Office of the Trustee (as such term is defined in the Indenture), initially Wilmington Trust, National Association, (the “Trustee”). Interest on this Bond shall be paid by check of the Trustee mailed, by first class mail, postage prepaid, or in certain circumstances described in the Indenture by wire transfer to an account within the United States of America, to the Owner hereof as of the close of business on the fifteenth day of the month preceding the month in which the Interest Payment Date occurs (the “Record Date”) at such Owner’s address as it appears on the registration books maintained by the Trustee.
This Bond is one of a duly authorized issue of “ Community Facilities District No. 2022 -3 (Legado) of the City of Menifee Improvement Area No. 1 Special Tax Bonds, Series 2026A ” (the “Bonds”) issued in the aggregate principal amount of $_________ pursuant to the Mello- Roos Community Facilities Act of 1982, as amended, being Section 53311 et seq. of the California Government Code (the “Act”) for the purpose of financing public improvements, funding a reserve account and paying certain costs related to the issuance of the Bonds. The issuance of the Bonds and the terms and conditions thereof are provided for by a resolution adopted by the City Council of the City, acting in its capacity as the legislative body of the District (the “Legislative Body”), on May 6, 2026, and a Bond Indenture executed in connection therewith dated as of May 1, 2026 (the “Indenture”), by and between the District and the Trustee, and this reference incorporates the Indenture herein, and by acceptance hereof the Owner of this Bond assents to said terms and conditions. The Indenture is adopted under and this Bond is issued under, and both are to be construed in accordance with, the laws of the State of California.
Pursuant to the Act and the Indenture, the principal of, premium, if any, and interest on this Bond are payable solely from the portion of the annual special taxes authorized under the Act to be levied and collected within Improvement Area No. 1 (the “Special Taxes”) and certain other amounts pledged to the repayment of the Bonds as set forth in the Indenture. Any amounts for the payment hereof shall be limited to the Net Taxes pledged and collected or foreclosure proceeds received following a default in payment of the Special Taxes and other amounts deposited to the Special Tax Fund (other than the Administrative Expense Account therein) established under the Indenture, except to the extent that other provision for payment has been made by the Legislative Body, as may be permitted by law. The District has covenanted for the benefit of the owners of the Bonds that under certain circumstances described in the Indenture it will commence and diligently pursue to completion appropriate foreclosure proceedings in the event of delinquencies of Special Tax installments levied for payment of principal and interest on the Bonds.
The Bonds may be redeemed at the option of the District from any source of funds (other than prepayments of the Special Tax by property owners) on any Interest Payment Date on or after September 1, 2032, in whole or in part, from such maturities as are selected by the District and by lot Item Title: 12.1
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May 6, 2026
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within a maturity, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the date of redemption:
Redemption Date Redemption Price
September 1, 2032 and March 1, 2033 103%
September 1, 2033 and March 1, 2034 102
September 1, 2034 and March 1, 2035 101
September 1, 2035 and any Interest Payment Date thereafter 100
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 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 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 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 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.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 168
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May 6, 2026
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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 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 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, 2045
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 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 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 under the Indenture, on September 1, 20__, and on each Item Title: 12.1
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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 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 September 1, 2026, and shall be redeemed by the Trustee, from Prepayments deposited to the Redemption Account plus amounts transferred from the Reserve Account in connection with such transfers, 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
Interest Payment Dates through and including March 1, 2033 103% September 1, 2033 and March 1, 2034 102
September 1, 2034 and March 1, 2035 101
September 1, 2035 and any Interest Payment Date thereafter 100
Notice of redemption with respect to the Bonds to be redeemed shall be mailed to the registered owners thereof not less than 30 nor more than 45 days prior to the redemption date by first class mail, postage prepaid, to the addresses set forth in the registration books; provided, however, so long as the Bonds are registered in the name of the Nominee, such notice shall be given in such manner as complies with the requirements of the Depository. Neither a failure of the Owner hereof to receive such notice nor any defect therein will affect the validity of the proceedings for redemption. All Bonds or portions thereof so called for redemption will cease to accrue interest on the specified redemption date, provided that funds for the redemption are on deposit with the Trustee on the redemption date. Thereafter, the registered owners of such Bonds shall have no rights except to receive payment of the redemption price upon the surrender of the Bonds.
This Bond shall be registered in the name of the Owner hereof, as to both principal and interest, and the District and the Trustee may treat the Owner hereof as the absolute owner for all purposes and shall not be affected by any notice to the contrary.
The Bonds are issuable only in fully registered form in the denomination of $5,000 or any integral multiple thereof and may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations of the same issue and maturity, all as more fully set forth in the Item Title: 12.1
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Indenture. This Bond is transferable by the Owner hereof, in person or by his attorney duly authorized in writing, at the Principal Office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, upon surrender and cancellation of this Bond. Upon such transfer, a new registered Bond of authorized denomination or denominations for the same aggregate principal amount of the same issue and maturity will be issued to the transferee in exchange therefor.
The Trustee shall not be required to register transfers or make exchanges of: (i) any Bonds for a period of 15 days next preceding any selection of the Bonds to be redeemed; or (ii) any Bonds chosen for redemption.
The rights and obligations of the District and of the registered owners of the Bonds may be amended at any time, and in certain cases without notice to or the consent of the registered owners, to the extent and upon the terms provided in the Indenture.
THE BONDS DO NOT CONSTITUTE GENERAL OBLIGATIONS OF THE CITY OR OF THE DISTRICT. NEITHER THE CITY NOR THE DISTRICT IS OBLIGATED TO LEVY OR
PLEDGE, OR HAS LEVIED OR PLEDGED, GENERAL OR SPECIAL TAXES, OTHER THAN THE SPECIAL TAXES REFERENCED HEREIN. THE BONDS ARE LIMITED OBLIGATIONS
OF THE DISTRICT PAYABLE FROM THE PORTION OF THE SPECIAL TAXES AND OTHER
AMOUNTS PLEDGED UNDER THE INDENTURE BUT ARE NOT A DEBT OF THE CITY,
THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR RESTRICTION.
This Bond shall not become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the Trustee.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by law, and that the amount of this Bond, together with all other indebtedness of the District, does not exceed any debt limit prescribed by the laws or Constitution of the State of California.
Item Title: 12.1
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IN WITNESS WHEREOF, Community Facilities District No. 2022-3 (Legado) of the City of Menifee has caused this Bond to be dated the Dated Date, to be signed on behalf of the District by the Mayor of the City by his facsimile signature and attested by the facsimile signature of the City Clerk of the City.
Mayor of the City of Menifee, acting as the legislative body of Community Facilities District No. 2022-3
(Legado) of the City of Menifee
ATTEST:
City Clerk of the City of Menifee , acting as
the legislative body of Community Facilities
District No. 2022-3 (Legado) of the City of
Menifee
[FORM OF TRUSTEE’S CERTIFICATE
OF AUTHENTICATION AND REGISTRATION]
This is one of the Bonds described in the within-defined Indenture.
Dated: ______, 2026 WILMINGTON TRUST, NATIONAL
ASSOCIATION, as Trustee
By:
Authorized Signatory
[FORM OF LEGAL OPINION]
The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth LLP, in connection with the issuance of, and dated as of the date of the original delivery of, the Bonds. A signed copy is on file in my office.
City Clerk of the City
Item Title: 12.1
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Item Page Number: 172
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[FORM OF ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto
whose tax identification number is ,
the within-mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s)
attorney to transfer the same on the books of the Trustee with full power of substitution in the premises.
Dated:
Signature guaranteed:
NOTE: Signature(s) must be guaranteed by an
eligible guarantor institution.
NOTE: The signatures(s) on this Assignment
must correspond with the name(s) as written on
the face of the within B ond in every particular
without alteration or enlargement or any change
whatsoever.
Item Title: 12.1
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B-1
4937-3233-3711v5/200299-0031
EXHIBIT B-1
FORM OF REQUISITION FOR DISBURSEMENT OF PROJECT COSTS
$_________
COMMUNITY FACILITIES DISTRICT NO. 2022-3
(LEGADO) OF THE CITY OF MENIFEE
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2026A
Wilmington Trust, National Association (the “Trustee”), is hereby requested to pay from the [City Facilities][Water Facilities] Account of the Community Facilities District No. 2022-3 (Legado) of the City of Menifee Improvement Area No. 1 Acquisition and Construction Fund, established by the Bond Indenture, dated as of May 1, 2026, by and between the Trustee and Community Facilities District No. 2022-3 (Legado) of the City of Menifee (the “District”), the amount specified to the payee named below for payment of the Project Costs set forth in Attachment No. 1 hereto.
Payee:
Address:
Purpose:
Amount: $
The amount is due and payable under purchase order, contract or other authorization and has not formed the basis of any prior request for payment. The conditions for the release of this amount from the [City Facilities][Water Facilities] Account, including those conditions in Section 3.9(b) of the Indenture have been satisfied.
There has not been filed with nor served upon the District notice of any lien, right to lien or attachment upon, or stop notice or claim affecting the right to receive payment of the amount specified above which has not been released or will not be released simultaneously with the payment of such amount, other than materialmen’s or mechanic’s liens accruing by mere operation of law.
Dated: COMMUNITY FACILITIES DISTRICT NO. 2022 -3
(LEGADO) OF THE CITY OF MENIFEE
By:
Name:
Title: _____________________________________
Item Title: 12.1
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4936-1685-8270v1/200299-0031
DISTRICT CONTINUING DISCLOSURE CERTIFICATE
THIS CONTINUING DISCLOSURE CERTIFICATE (this “Disclosure Certificate”) dated as of May 1, 2026 is executed and delivered by Community Facilities District No. 2022-3 (Legado) of the City of Menifee (the “District”) in connection with the issuance and delivery by the District of its $______ Improvement Area No. 1 Special Tax Bonds, Series 2026A (the “Bonds”). The Bonds are being issued pursuant to a Resolution of Issuance adopted on May 6, 2026, by the City Council of the City of Menifee, acting as the legislative body of the District, and the Bond Indenture, dated as of May 1, 202 (the “Indenture”), by and between the District and Wilmington Trust, National Association, as trustee. The District covenants as follows:
Section 1. Purpose of the Disclosure Certificate . This Disclosure Certificate is being executed and delivered by the District for the benefit of the Owners and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule.
Section 2. Definitions. In addition to the definitions set forth in the Indenture and the Rate and Method of Apportionment, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall h ave the following meanings:
“Annual Report” shall mean any Annual Report provided by the District pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Beneficial Owner” shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income purposes.
“City” shall mean the City of Menifee, County of Riverside, California. “Disclosure Representative” shall mean the Chief Financial Officer of the City, or his or her designee, or such other officer or employee as the District shall designate in writing to the Dissemination Agent from time to time.
“Dissemination Agent” shall mean, initially, Spicer Consulting Group, LLC, or any successor Dissemination Agent designated in writing by the District and which has filed with the then current Dissemination Agent a written acceptance of such designation. “District” shall mean Community Facilities District No. 2022 -3 (Legado) of the City of Menifee.
“EMMA” shall mean the Electronic Municipal Market Access System of the Municipal Securities Rulemaking Board, which can be found at www.emma.msrb.org, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission in the future system of the MSRB.
“Financial Obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term Financia l Obligation shall not include municipal Item Title: 12.1
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2 securities as to which a final official statement has been provided to the MSRB consistent with the Rule.
“Improvement Area” means Improvement Area No. 1 of the District. “Listed Events” shall mean any of the events listed in Section 5 of this Disclosure Certificate. “MSRB” shall mean the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule.
Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org.
“Official Statement” shall mean that certain Official Statement for the Bonds dated _____, 2026.
“Owners” shall mean the registered owners of the Bonds as set forth in the registration books maintained by the Trustee.
“Participating Underwriter” shall mean Stifel, Nicolaus & Company, Incorporated. “Rate and Method of Apportionment” shall mean that certain Rate and Method of Apportionment of Special Tax for the Improvement Area approved pursuant to the Resolution of Formation.
“Resolution of Formation” shall mean the resolutions adopted by the City Council pursuant to which the City Council formed the District and designated the Improvement Area therein. “Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. “State” shall mean the State of California.
“Trustee” shall mean Wilmington Trust, National Association or such other entity appointed by the District pursuant to the Indenture to act as the trustee under the Indenture.
Section 3. Provision of Annual Reports.
(a) Not later than March 1 of each year commencing March 1, 2027, the District shall, or shall cause the Dissemination Agent to provide to EMMA an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. If the Dis semination Agent is other than the District, then not later than 15 business days prior to the date referred to in the prior sentence hereof, the District shall provide the Annual Report (in a form suitable for filing with EMMA) to the Dissemination Age nt. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statemen ts of the District, if any exist, may be submitted separately from and later than the balance of the Annual Report if they are not available by the date required above for the filing of the Annual Report.
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3 (b) In the event that the Dissemination Agent is an entity other than the District, then the provisions of this Section 3(b) shall apply. Not later than fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report, the District shall provide the Annual Report to the Dissemination Agent. If by fifteen (15) Business Days prior to the due date for an Annual Report the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contac t the District to determine if the District will be filing the Annual Report in compliance with subsection (a). The District shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the District and shall have no duty or obligation to review such Annual Report.
(c) If the Dissemination Agent is other than the District and if the Dissemination Agent is unable to verify that an Annual Report has been provided to EMMA by the date required in subsection (a), the Dissemination Agent shall send, in a timely manner, a noti ce to EMMA of the failure to file the Annual Report in the form required by EMMA. If the District acts as its own Dissemination Agent, it shall file a notice with EMMA no later than the date specified in subsection (a) for filing an Annual Report if the District fails to file the Annual Report by that date. (d) If the Dissemination Agent is other than the District, the Dissemination Agent shall:
(i) determine each year prior to the date for providing the Annual Report the name and address of the repository if other than the MSRB through EMMA; and (ii) promptly after receipt of the Annual Report, file a report with the District certifying that the Annual Report has been provided to EMMA and the date it was provided. (e) Notwithstanding any other provision of this Disclosure Certificate, all filings shall be made in accordance with the MSRB’s EMMA system or in another manner approved under the Rule.
Section 4. Content of Annual Reports . The District’s Annual Report shall contain or include by reference the following:
(a) Financial Statements. The audited financial statements of the District for the prior fiscal year, if any have been prepared and which, if prepared, shall be prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the District’s audited financial statements, if any are prepared, are not available by the time the Annual Report is required to be filed pursuant to Section 3(a) , the Annual Report shall contain unaudited financial statements, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.
(b) Financial and Operating Data . The Annual Report shall contain or incorporate by reference the following information:
(i) the principal amount of the Bonds outstanding as of the September 2 preceding the filing of the Annual Report;
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4 (ii) the balance in each fund under the Indenture as of the September 2 preceding the filing of the Annual Report;
(iii) the aggregate assessed valuation of the Taxable Property within the Improvement Area;
(iv) any changes to the Rate and Method of Apportionment of Special Tax approved or submitted to the qualified electors for approval prior to the filing of the Annual Report; (v) a table setting forth the annual Special Tax delinquency rate within the Improvement Area at June 30 of each fiscal year for which a delinquency exists, listing for each fiscal year, the total Special Tax levy, the amount delinquent and the percent delinquent; (vi) an update of the value-to-lien of the property within Improvement Area No. 1 based on the assessed value and the Special Tax levy for the then current fiscal year, which update may be provided in a form similar to Table 2 in the Official Statement; provid ed that such update need not include overlapping special tax, assessment or general obligation indebtedness; and
(vii) the status of any foreclosure actions being pursued by the District with respect to delinquent Special Taxes within the Improvement Area. (c) Any or all of the items listed in (a) or (b) above may be included by specific reference to other documents, including official statements of debt issues of the District or related public entities, which have been submitted to EMMA or the Securities and E xchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB through EMMA.
The District shall clearly identify each such other document so included by reference.
Section 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the District shall give, or cause the Dissemination Agent to give, notice to EMMA in a timely manner not in excess of ten (10) business days after the occurrence of any of the following events with respect to the Bonds:
1. principal and interest payment delinquencies;
2. unscheduled draws on debt service reserves reflecting financial difficulties;
3. unscheduled draws on credit enhancements reflecting financial difficulties;
4. substitution of credit or liquidity providers, or their failure to perform;
5. adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds;
6. defeasances;
7. tender offers;
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5 8. ratings changes; and
9. bankruptcy, insolvency, receivership or similar proceedings.
Note: for the purposes of the event identified in subparagraph (9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S.
Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person.
10. default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the obligated person, any of which reflect financial difficulties.
(b) Additionally, the District shall give or cause the Dissemination Agent to give notice to EMMA in a timely manner not in excess of ten (10) business days after the occurrence of any of the following events with respect to the Bonds, if material:
1. mergers, consolidations, acquisitions, the sale of all or substantially all of the assets of the obligated persons or their termination;
2. appointment of a successor or additional fiscal agent or the change of the name of a fiscal agent;
3. nonpayment related defaults;
4. modifications to the rights of Bondholders;
5. bond calls;
6. release, substitution or sale of property securing repayment of the Bonds; and
7. incurrence of a Financial Obligation of the obligated person, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the obligated person, any of which affect security holders.
(c) In the event that the District’s fiscal year changes, the District shall report or shall instruct the Dissemination Agent to report such change in the same manner and to the same parties as Listed Events would be reported pursuant to this Section.
(d) The District hereby agrees that the undertaking set forth in this Disclosure Certificate is the responsibility of the District, and the Dissemination Agent, if other than the District, shall not be Item Title: 12.1
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6 responsible for determining whether the District’s instructions to the Dissemination Agent under this Section comply with the requirements of the Rule.
Section 6. Termination of Reporting Obligation. The obligations of the District and the Dissemination Agent under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the District shall give notice of such termination in the same manner as for a Listed Event under Section 5.
Section 7. Dissemination Agent. The District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemina tion Agent. The Dissemination Agent, if other than the District, shall not be responsible in any manner for the content of any notice or report prepared by the District pursuant to this Disclosure Certificate. The initial Dissemination Agent shall be Spicer Consulting Group, LLC. The Dissemination Agent may resign by providing (i) thirty (30) days written notice to the District and the Trustee and (ii) upon appointment of a new Dissemination Agent hereunder.
Section 8. Amendment; Waiver.
(a) This Disclosure Certificate may be amended, by written agreement of the parties, without the consent of the Owners, and any provision of this Disclosure Certificate may be waived, if all of the following conditions are satisfied: (1) such amendment or waiver is made in connection with a change in circumstances that arises from a change in legal (including regulatory) requirements, a change in law, or a change in the identity, nature or status of the District or the type of business conducted thereby, (2) the undertakings in this Disclosure Certificate as so amended or waived would, in the opinion of a nationally recognized bond counsel, have complied with the requirements of the Rule as of the date of this Disclosure Certificate, after taking into accou nt any amendments or interpretations of the Rule, as well as any change in circumstances, and (3) the amendment or waiver either (i) is approved by the Owners of the Bonds in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Owners or (ii) does not, in the determination of the District, materially impair the interests of the Owners or Beneficial Owners of the Bonds.
(b) To the extent any amendment to this Disclosure Certificate results in a change in the type of financial information or operating data provided pursuant to this Disclosure Certificate, the first Annual Report provided thereafter shall include a narrative e xplanation of the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.
(c) If an amendment is made to the basis on which financial statements are prepared, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new account ing principles and those prepared on the basis of the former accounting principles. Such comparison shall include a quantitative and, to the extent reasonably feasible, qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information.
Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the District from disseminating any other information, using the means of dissemination set Item Title: 12.1
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7 forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the District chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the District shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
Section 10. Default. In the event of a failure of the District or the Dissemination Agent to comply with any provision of this Disclosure Certificate, any Owner or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the District and/or the Dissemination Agent to comply with their respective obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the District or the Dissemination Agent to comply with this Disclosure Certificate shall be an action to compel performance.
Section 11. Duties, Immunities and Liabilities of Dissemination Agent. Where an entity other than the District is acting as the Dissemination Agent, the Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the District agrees to indemnify and save the Disseminati on Agent and its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of the ir powers and duties hereunder, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. Any Dissemination Agent shall be paid (i) compensation by the District for its services provided hereunder in accordance with a schedule of fees to be mutually agreed to; and (ii) all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the District pursuant to this Disclosure Certificate. The obligations of the District under this Section shall survive resignat ion or removal of the Dissemination Agent and payment of the Bonds. No person shall have any right to commence any action against the Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Certificate. The Dis semination Agent shall not be liable under any circumstances for monetary damages to any person for any breach under this Disclosure Certificate.
Section 12. Notices. Any notices or communications to or among any of the parties to this Disclosure Certificate may be given as follows:
District: Community Facilities District No. 2022-3 (Legado) City of Menifee
29844 Haun Road
Menifee, CA 92586
Attn: Chief Financial Officer
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8 Underwriter: Stifel, Nicolaus & Company, Incorporated 2121 Avenue of the Stars, Suite 2150
Los Angeles, CA 90067
Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s) to which subsequent notice or communications should be sent.
Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the District, the Trustee, the Dissemination Agent, the Participating Underwriter and Owners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other p erson or entity.
Section 14. Merger. Any person succeeding to all or substantially all of the Dissemination Agent’s business shall be the successor Dissemination Agent without the filing of any paper or any further act.
This Disclosure Certificate is executed as of the date and year first set forth above.
COMMUNITY FACILITIES DISTRICT NO. 2022 -3
(LEGADO) OF THE CITY OF MENIFEE
By:
Travis Hickey
Disclosure Representative
Item Title: 12.1
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1 $__________
COMMUNITY FACILITIES DISTRICT NO. 2022-2 (LEGADO)
OF THE CITY OF MENIFEE
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2026A
BOND PURCHASE AGREEMENT
________, 2026
City of Menifee
Community Facilities District No. 2022-3
(Legado) of the City of Menifee
29844 Haun Road
Menifee, California 92586
Ladies and Gentlemen:
Stifel, Nicolaus & Company, Incorporated, as underwriter (the “Underwriter”), acting not as a fiduciary or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Agreement (this “Purchase Agreement”) with Community Facilities District No. 2022 -3 (Legado) of the City of Menifee (the “ Community Facilities District ”) on behalf of Improvement Area No. 1 (the “Improvement Area ”), which upon acceptance will be binding upon the Underwriter and the Community Facilities District. The agreement of the Underwriter to purchase the Bonds (as hereinafter defined) is contingent upon the Community Facilities District satisfying all of the obligations imposed upon them under this Purchase Agreement. This offer is made subject to the Community Facilities District’s acceptance by the execution of this Purchase Agreement and its delivery to the Underwriter at or before 11:59 P.M., local time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the Community Facilities District at any time prior to the acceptance hereof by the Community Facilities District. All capitalized terms used herein, which are not otherwise defined, shall have the meaning provided for such terms in the Bond Indenture, dated as of June 1, 2026 (the “ Indenture”), by and between the Community Facilities District and Wilmington Trust, National Association, as trustee (the “Trustee”).
1. Purchase, Sale and Delivery of the Bonds.
Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein: (i) the Underwriter hereby agrees to purchase from the Community Facilities District and the Community Facilities District hereby agrees to sell to the Underwriter all (but not less than all) of the $__________ aggregate principal amount of the Community Facilities District No. 2022-3 (Legado) of the City of Menifee Improvement Area No. 1 Special Tax Bonds, Series 2026A (the “Bonds”), dated the Closing Date (as hereinafter defined), bearing interest at the rates and maturing on the dates and in the principal amounts set forth in Exhibit A hereto. The purchase price for the Bonds shall be $________ (being 100% of the aggregate principal amount thereof, less a net original issue discount of $_______ and less an Underwriter’s discount of $_______).
Item Title: 12.1
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2 The Underwriter agrees to make a bona fide public offering of all of the Bonds initially at the public offering prices (or yields) set forth in Exhibit A attached hereto and incorporated herein by reference. Subsequent to the initial public offering, the Underwriter reserves the right to change the public offering prices (or yields) as it deems necessary in connection with the marketing of the Bonds subject to Section 2 hereof, provided that the Underwriter shall not change the interest rates set forth in Exhibit A. The Bonds may be offered and sold to certain dealers at prices lower than such initial offering prices.
The Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of, and shall be payable from the Net Taxes as provided in the Indenture, the Preliminary Official Statement (as hereinafter defined), and the Mello-Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the Government Code of the State of California) (the “Community Facilities District Act”). The issuance of the Bonds has been duly authorized by the City Council of the City of Menifee (the “ City”), as the legislative body for the Community Facilities District (for and on behalf of the Improvement Area within the Community Facilities District), pursuant to a resolution (the “ Community Facilities District Resolution of Issuance ”) adopted on ________, 2026.
The proceeds of the Bonds will be used to: (i) finance certain public improvements needed with respect to the development of property located within the Community Facilities District, including public improvements to be owned by the City, and water and sewer facilities to be owned and operated by the Eastern Municipal Water District; (ii) fund a reserve account for the Bonds; and (iii) pay costs of issuance for the Bonds.
The Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of, and shall be payable from special taxes as provided in the Indenture (the “ Special Taxes”).
A. The Community Facilities District hereby acknowledges that the Underwriter is entering into this Purchase Agreement in reliance on the representations, warranties and agreements made by the Community Facilities District herein, and the Community Facilities District shall take all action necessary to enforce its rights hereunder for the benefit of the Underwriter and shall immediately notify the Underwriter if it becomes aware that any representation, warranty or agreement made by the Community Facilities District herein is incorrect in any material respect.
The Community Facilities District acknowledges and agrees that (i) the purchase and sale of the Bonds pursuant to this Purchase Agreement is an arm’s -length commercial transaction between the Community Facilities District and the Underwriter, (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as principal and not as the agent or fiduciary of the Community Facilities District, (iii) the Underwriter has not assumed an advisory or fiduciary responsibility in favor of the Community Facilities District with respect to (a) the offering of the Bonds or the process leading thereto (whether or not the Underwriter, or any affiliate of the Underwriter, has advised or is currently advising the Community Facilities District on other matters) or (b) any other obligations to the Community Facilities District with respect to the offering contemplated hereby, except the obligations expressly set forth in this Purchase Agreement or otherwise imposed by law, (iv) the Underwriter has financial interests that differ from those of the Community Facilities District and (v) the Community Facilities District has consulted with their own legal, financial and other advisors to the extent they have deemed appropriate in connection with this Item Title: 12.1
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3 transaction. The Community Facilities District acknowledges that it has previously provided the Underwriter with an acknowledgement of receipt of the required Underwriter disclosure under Rule G-17 of the Municipal Securities Rulemaking Board (“ MSRB”). The Community Facilities District acknowledges and represents that it has engaged Urban Futures , Inc. as its municipal advisor (the “Municipal Advisor”) (as defined in Securities and Exchange Commission Rule 15Ba1) and will rely solely on the financial advice of Urban Futures, Inc. with respect to the Bonds.
B. Pursuant to the authorization of the Community Facilities District, the Underwriter has distributed copies of the Preliminary Official Statement dated [POS Date], relating to the Bonds, which, together with the cover page, inside cover page and appendices thereto is herein called the “Preliminary Official Statement.” By its acceptance of this Purchase Agreement, the Community Facilities District hereby ratifies the use by the Underwriter of the Preliminary Official Statement, and the Community Facilities District agrees to execute a final official statement relating to the Bonds (including any supplements and/or amendments thereto, the “ Official Statement”) which will consist of the Preliminary Official Statement with such changes as may be made thereto, with the approval of Stradling Yocca Carlson & Rauth LLP , Bond Counsel (“ Bond Counsel ”), Stradling Yocca Carlson & Rauth LLP , Disclosure Counsel (“ Disclosure Counsel ”), and the Underwriter, and to provide copies thereof to the Underwriter as set forth herein. The Community Facilities District hereby authorizes and requires the Underwriter to use and promptly distribute, in connection with the offer and sale of the Bonds, the Preliminary Official Statement, the Official Statement and any supplement or amendment thereto. The Community Facilities District further authorizes the Underwriter to use and distribute, in connection with the offer and sale of the Bonds, the Indenture, the Continuing Disclosure Certificate executed by the Community Facilities District in connection with the Bonds (the “Continuing Disclosure Certificate”), this Purchase Agreement and all information contained herein, and all other documents, certificates and statements furnished by or on behalf of the Community Facilities District to the Underwriter in connection with the transactions contemplated by this Purchase Agreement.
C. To assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2- 12(b)(5) (the “ Rule”), the Community Facilities District will undertake pursuant to the Continuing Disclosure Certificate, in the form attached to the Official Statement as Appendix F, to provide annual reports and notices of certain enumerated events. A description of this undertaking is set forth in the Preliminary Official Statement and will also be set forth in the Official Statement.
D. Except as the Underwriter and the Community Facilities District may otherwise agree, the Community Facilities District will deliver to the Underwriter, at the offices of Bond Counsel in Newport Beach, California, or at such other location as may be mutually agreed upon by the Underwriter and the Community Facilities District, the documents hereinafter mentioned; and the Community Facilities District will deliver to the Underwriter through the facilities of The Depository Trust Company (“ DTC”), the Bonds, in definitive form (all Bonds bearing CUSIP numbers), duly executed by the Community Facilities District and authenticated by the Trustee in the manner provided for in the Indenture and the Community Facilities District Act at 8:00 a.m. California time, on [Closing Date] (the “Closing Date”), and the Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in paragraph (A) of this Section by wire transfer, payable in federal or other immediately available funds (such delivery and payment being herein referred to as the “ Closing”). The Bonds shall be in fully registered book- entry form (which may be typewritten) and shall be registered in the name of Cede & Co., as nominee of DTC.
Item Title: 12.1
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4 2. Establishment of Issue Price.
A. The Underwriter agrees to assist the Community Facilities District in establishing the issue price of the Bonds and shall execute and deliver to the Community Facilities District at Closing an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit D , with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Community Facilities District and Bond Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds.
B. Except as otherwise set forth in Exhibit A attached hereto, the Community Facilities District will treat the first price at which 10% of each maturity of the Bonds (the “ 10% test”) is sold to the public as the issue price of that maturity (if different interest rates apply within a maturity, each separate CUSIP number within that maturity will be subject to the 10% test). At or promptly after the execution of this Purchase Agreement, the Underwriter shall report to the Community Facilities District the price or prices at which it has sold to the public each maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the Community Facilities District the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until the 10% test has been satisfied as to the Bonds of that maturity or until all Bonds of that maturity have been sold to the public.
C. The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Agreement at the offering price or prices (the “ initial offering price”), or at the corresponding yield or yields, set forth in Exhibit A attached hereto. Exhibit A also sets forth, as of the date of this Purchase Agreement, the maturities, if any, of the Bonds for which the Underwriter represents that (i) the 10% test has been satisfied (assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement) and (ii) the 10% test has not been satisfied and for which the Community Facilities District and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Community Facilities District to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold-the-offering-price rule”). So long as the hold-the- offering-price rule remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following:
1. the close of the fifth (5th) business day after the sale date; or
2. the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.
The Underwriter shall promptly advise the Community Facilities District when it has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public, if that occurs prior to the close of the fifth (5th) business day after the sale date.
D. The Underwriter confirms that:
Item Title: 12.1
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5 (i) any selling group agreement and any third-party distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such third-party distribution agreement, as applicable:
(A)(i) to report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter and (ii) to comply with the hold- the-offering-price rule, if applicable, if and for so long as directed by the Underwriter,
(B) to promptly notify the Underwriter of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below), and (C) to acknowledge that, unless otherwise advised by the dealer or broker-dealer, the Underwriter shall assume that each order submitted by the dealer or broker -dealer is a sale to the public.
(ii) any selling group agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer that is a party to a third-party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker -dealer that is a party to such third -party distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the hold- the-offering-price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires.
E. The Community Facilities District acknowledges that, in making the representation set forth in this section, the Underwriter will rely on (i) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the requirements for establishing the issue price of the Bonds, including, but not limited to, its agreement to comply with the hold- the- offering-price rule, if applicable to the Bonds, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a third-party distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the requirements for establishing the issue price of the Bonds, including, but not limited to, its agreement to comply with the hold- the-offering-price rule, if applicable to the Bonds, as set forth in the third-party distribution agreement and the related pricing wires.
F. The Underwriter acknowledges that sales of any Bonds to any person that is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such Item Title: 12.1
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6 term being used as defined below) shall not constitute sales to the public for purposes of this section.
Further, for purposes of this section:
1. “public” means any person other than an underwriter or a related party;
2. “underwriter” means (A) any person that agrees pursuant to a written contract with the Community Facilities District (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a third- party distribution agreement participating in the initial sale of the Bonds to the public);
3. a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (A) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (B) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (C) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other); and
4. “sale date” means the date of execution of this Purchase Agreement by all parties.
3. Representations, Warranties and Covenants of the Community Facilities District .
The Community Facilities District represents, warrants and covenants to the Underwriter on behalf of itself and the City that:
A. The City is duly organized and validly existing as a general law city under the Constitution and laws of the State of California and has duly authorized the formation of the Community Facilities District pursuant to resolutions duly adopted by the City Council (the “Community Facilities District Formation Resolution ” and, together with the Community Facilities District Resolution of Issuance, the “Community Facilities District Resolutions”) and the Community Facilities District Act. The City Council, as the legislative body of the City and the Community Facilities District, has duly adopted the Community Facilities District Formation Resolution, and has caused to be recorded in the real property records of the County of Riverside, notice of special tax lien, and any required amendments thereof (collectively, the “ Notice of Special Tax Lien”) (the Community Facilities District Formation Resolution and Notice of Special Tax Lien being collectively referred to herein as the “ Formation Documents ”), and has duly adopted the Community Facilities District Resolution of Issuance on behalf of the Improvement Area . Each of its Formation Documents remains in full force and effect as of the date hereof and has not been amended. The Community Facilities District is duly organized and validly existing as a Community Facilities District under the laws of the State of California. The Community Facilities District has, and at the Closing Date will have, as the case may be, full legal right, power and authority: (i) to execute, deliver and perform its obligations under this Purchase Agreement, the Continuing Disclosure Certificate and the Indenture, and to carry out all transactions contemplated by each of Item Title: 12.1
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7 such agreements; (ii) to issue, sell and deliver the Bonds as provided herein; and (iii) to carry out, give effect to and consummate the transactions contemplated by the Formation Documents, the Indenture, the Bonds, the Continuing Disclosure Certificate, this Purchase Agreement and the Official Statement.
This Purchase Agreement, the Indenture, the Bonds and the Continuing Disclosure Certificate are collectively referred to herein as the “Community Facilities District Documents.” B. The Community Facilities District and the City, as applicable, have each complied, and will at the Closing Date be in compliance in all material respects, with the Formation Documents and the Community Facilities District Documents, and any immaterial noncompliance by the Community Facilities District and the City, if any, will not impair the ability of the Community Facilities District and the City, as applicable, to carry out, give effect to or consummate the transactions contemplated by the foregoing. From and after the date of issuance of the Bonds, the Community Facilities District will continue to comply with the covenants of the Community Facilities District contained in the Community Facilities District Documents.
C. The information in the Preliminary Official Statement and in the Official Statement relating to the Community Facilities District and the Bonds (other than information under the captions “PROPERTY OWNERSHIP AND THE DEVELOPMENT,” CONTINUING DISCLOSURE — Developer Continuing Disclosure and “UNDERWRITING,” Appen dix D and Appendix H, information provided by Lennar Homes of California, LLC (the “ Developer”), the Appraiser and the Special Tax Consultant (as each such terms are defined herein) and statements pertaining to the book entry system, as to which no view is expressed), is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and, upon delivery and up to and including 25 days after the End of the Underwriting Period (as defined in paragraph (D) below), the Official Statement will be amended and supplemented so as to contain no misstatement of any material fact or omission of any statement necessary to make the statements contained therein, in the light of the circumstances in which such statements were made, not misleading.
D. Up to and including 25 days after the End of the Underwriting Period (as defined below), the Community Facilities District will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter, which consent will not be unreasonably withheld. The Community Facilities District will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise materially affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds. As used herein, the term “End of the Underwriting Period” means the later of such time as: (i) the Bonds are delivered to the Underwriter; or (ii) the Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Unless the Underwriter gives notice to the contrary, the End of the Underwriting Period shall be deemed to be the Closing Date. Any notice delivered pursuant to this provision shall be written notice delivered to the Community Facilities District at or prior to the Closing Date and shall specify a date (other than the Closing Date) to be deemed the “End of the Underwriting Period.” E. Except as described in the Preliminary Official Statement and Official Statement, the Community Facilities District is not, in any respect material to the transactions Item Title: 12.1
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8 referred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a party or is otherwise subject or bound, and the performance of its obligations under the Community Facilities District Documents and compliance with the provisions of each thereof, or the performance of the conditions precedent to be performed by the Community Facilities District pursuant to this Purchase Agreement, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a party or is otherwise subject or bound, in any manner which would materially and adversely affect the performance by the Community Facilities District of its obligations under the Community Facilities District Documents or the performance of the conditions precedent to be performed by the Community Facilities District pursuant to this Purchase Agreement.
F. Except as may be required under the “blue sky” or other securities laws of any jurisdiction, all approvals, consents, authorizations, elections and orders of, or filings or registrations with, any governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the Community Facilities District of its obligations under the Community Facilities District Documents, and the performance of the conditions precedent to be performed by the Community Facilities District pursuant to this Purchase Agreement, have been or will be obtained at the Closing Date and are or will be in full force and effect at the Closing Date.
G. The Community Facilities District Documents conform as to form and tenor to the descriptions thereof contained in the Official Statement.
H. The Bonds are payable from the Special Tax of the Improvement Area , as set forth in the Indenture, the levy of which has been duly and validly authorized pursuant to the Community Facilities District Act and the Community Facilities District will covenant in the Indenture to levy the Special Taxes within the Improvement Area in an amount which, together with other available funds, is required for the payment of the principal of, and interest on, the Bonds when due and payable, all as provided in the Indenture.
I. The Indenture creates a valid pledge of, first lien upon and security interest in, the Net Taxes, and in the moneys in the Special Tax Fund (other than the Administrative Expense Account) established pursuant to the Indenture, on the terms and conditions set forth in the Indenture.
J. Except as disclosed in the Preliminary Official Statement, there are, to the best of the Community Facilities District’s knowledge, no entities with outstanding assessment or special tax liens against any of the properties within the Improvement Area or which are senior to or on a parity with the Special Taxes of the Improvement Area referred to in paragraph (I) hereof.
K. The Preliminary Official Statement was deemed final by a duly authorized officer of the Community Facilities District prior to its delivery to the Underwriter, except for the omission of such information as is permitted to be omitted in accordance with paragraph (b)(1) of the Item Title: 12.1
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9 Rule. The Community Facilities District hereby covenants and agrees that, within seven (7) business days from the date hereof, or upon reasonable written notice from the Underwriter within sufficient time to accompany any confirmation requesting payment from any customers of the Underwriter, the Community Facilities District shall cause a final printed form of the Official Statement to be delivered to the Underwriter in sufficient quantity to comply with paragraph (b)(4) of the Rule and Rules G-12, G-15, G-32 and G-36 of the Municipal Securities Rulemaking Board.
L. At the time of acceptance hereof there is and as of the Closing there will be no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body (collectively and individually, an “ Action”) pending (notice of which has been served on the Community Facilities District) or to the best knowledge of the Community Facilities District or the City threatened, in which any such Action: (i) in any way questions the existence of the Community Facilities District or the titles of the officers of the Community Facilities District to their respective offices; (ii) affects, contests or seeks to prohibit, restrain or enjoin the issuance or delivery of the Bonds or the payment or collection of Special Taxes or any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contests or affects the validity of the Community Facilities District Documents or the consummation of the transactions on the part of the Community Facilities District contemplated thereby; (iii) contests the exemption of interest on the Bonds from federal or State income taxation or contests the powers of the Community Facilities District which may result in any material adverse change relating to the financial condition of the Community Facilities District; or (iv) contests the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserts that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and as of the time of acceptance hereof there is and, as of the Closing Date, there will be no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) of this sentence.
M. Any certificate signed on behalf of the Community Facilities District by any officer or employee of the Community Facilities District authorized to do so shall be deemed a representation and warranty by the Community Facilities District to the Underwriter on behalf of itself and the Community Facilities District as to the statements made therein.
N. At or prior to the Closing the Community Facilities District will have duly authorized, executed and delivered the Continuing Disclosure Certificate in substantially the form attached as Appendix F to the Official Statement. Based upon a review of its previous undertakings, and except as disclosed in the Preliminary Official Statement, the Community Facilities District has not failed to comply in all respects with any previous undertakings with regard to the Rule to provide annual reports or notices of enumerated events in the last five years.
O. The Community Facilities District will apply the proceeds of the Bonds in accordance with the Indenture and as described in the Official Statement.
P. Until such time as moneys have been set aside in an amount sufficient to pay all then outstanding Bonds at maturity or to the date of redemption if redeemed prior to maturity, plus unpaid interest thereon and premium, if any, to maturity or to the date of redemption if redeemed prior to maturity, the Community Facilities District will faithfully perform and abide by all of the covenants, undertakings and provisions contained in the Indenture.
Item Title: 12.1
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10 Q. Between the date of this Purchase Agreement and the date of Closing, the Community Facilities District will not offer or issue any bonds, notes or other obligations for borrowed money not previously disclosed to the Underwriter.
The Community Facilities District hereby approves the preparation and distribution of the Official Statement, consisting of the Preliminary Official Statement with such changes as are noted thereon and as may be made thereto, with the approval of Bond Counsel, Disclosure Counsel and the Underwriter, from time to time prior to the Closing Date.
The execution and delivery of this Purchase Agreement by the Community Facilities District shall constitute a representation by the Community Facilities District to the Underwriter that the representations and warranties contained in this Section 3 with respect to the Community Facilities District are true as of the date hereof.
4. Conditions to the Obligations of the Underwriter . The obligation of the Underwriter to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the representations and warranties on the part of the Community Facilities District contained herein, to the accuracy in all material respects of the statements of the officers and other officials of the Community Facilities District made in any certificates or other documents furnished pursuant to the provisions hereof, to the performance by the Community Facilities District of its obligations to be performed hereunder at or prior to the Closing Date, and in reliance upon the representations and covenants of the Developer contained in the certificates delivered as of the Closing Date, and to the following additional conditions:
A. At the Closing Date, the Community Facilities District Resolutions and the Community Facilities District Documents shall be in full force and effect, and shall not have been amended, modified or supplemented, except as may have been agreed to in writing by the Underwriter, and there shall have been taken in connection therewith, with the issuance of the Bonds and with the Bonds, and with the transactions contemplated thereby, and by this Purchase Agreement, all such actions as, in the opinion of Bond Counsel, shall be necessary and appropriate.
B. At the Closing Date, except as described in the Official Statement, the City shall not be, in any respect material to the transactions referred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound, and the performance of the conditions precedent to be performed hereunder will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound, in any manner which would materially and adversely affect the performance of the conditions precedent to be performed by the City hereunder.
C. At the Closing Date, except as described in the Official Statement, the Community Facilities District shall not be, in any respect material to the transactions referred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or Item Title: 12.1
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Item Page Number: 192
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11 regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a party or is otherwise subject or bound, and the performance by the Community Facilities District of its obligations under the Bonds, the Community Facilities District Resolutions, the Indenture, and any other instruments contemplated by any of such documents, and compliance with the provisions of each thereof, or the performance of the conditions precedent to be performed hereunder, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State of California, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Community Facilities District is a party or is otherwise subject or bound, in any manner which would materially and adversely affect the performance by the Community Facilities District of its obligations under the Indenture, the Bonds or the performance of the conditions precedent to be performed by the Community Facilities District hereunder.
D. The information contained in the Official Statement is, as of the Closing Date and as of the date of any supplement or amendment thereto pursuant hereto, will be true and correct in all material respects and does not, as of the Closing Date or as of the date of any supplement or amendment thereto, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
E. Between the date hereof and the Closing Date, the market price or marketability, at the initial offering prices set forth on the inside cover page of the Official Statement, of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds, shall not have been materially adversely affected, in the judgment of the Underwriter (evidenced by a written notice to the Community Facilities District terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds), by reason of any of the following:
1. Legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America or recommended to the Congress by the President of the United States, the Department of the Treasury, the Internal Revenue Service, or any member of Congress, or favorably reported for passage to either House of Congress by any committee of such House to which such legislation had been referred for consideration, or a decision rendered by a court established under Article III of the Constitution of the United States of America or by the Tax Court of the United States of America, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Treasury Department of the United States of America or the Internal Revenue Service, with the purpose or effect, directly or indirectly, of imposing federal income taxation upon such interest as would be received by any owners of the Bonds beyond the extent to which such interest is subject to taxation as of the date hereof; or
2. Legislation introduced in or enacted (or resolution passed) by the Congress or an order, decree or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 193
Menifee Mayor and City Council
May 6, 2026
Page
519 of 714
12 Bonds, including any or all underlying arrangements, are not exempt from registration under or other requirements of the Securities Act of 1933, as amended, or that the Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligations of the general character of the Bonds, including any or all underlying arrangements, as contemplated hereby or by the Official Statement or otherwise is or would be in violation of the federal securities laws as amended and then in effect; or
3. A general suspension of trading on the New York Stock Exchange or other major exchange shall be in force, or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on any such exchange, whether by virtue of determination by that exchange or by order of the SEC or any other governmental authority having jurisdiction; or
4. The introduction, proposal or enactment of any amendment to the Federal or California Constitution or any action by any Federal or California court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the Community Facilities District, its property, income, securities (or interest thereon), the validity or enforceability of Special Taxes, or the ability of the Community Facilities District to issue the Bonds as contemplated by the Indenture and the Official Statement; or
5. Any event occurring, or information becoming known which, in the judgment of the Underwriter, makes untrue in any material respect any statement or information contained in the Preliminary Official Statement or in the Official Statement, or has the effect that the Preliminary Official Statement or the Official Statement contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; or
6. Any national securities exchange, the Comptroller of the Currency, or any other governmental authority, shall impose as to the Bonds, or obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, the Underwriter; or
7. There shall have occurred (1) an outbreak or escalation of hostilities or the declaration by the United States of a national emergency or war or (2) any other calamity or crisis in the financial markets of the United States or elsewhere or the escalation of such calamity or crisis; or
8. Except as disclosed in or contemplated by the Official Statement, any material adverse change in the affairs of the City or Community Facilities District shall have occurred; or
9. Any event or circumstance shall exist that either makes untrue or incorrect in any material respect any statement or information in the Official Statement (other than any statement provided by the Underwriter) or is not reflected in the Official Statement but should be reflected therein in order to make the statements therein, in the light of the circumstances under which they were made, not misleading and, in either such event, the Community Facilities District refuses to permit the Official Statement to be supplemented to supply such statement or information, or the effect of the Official Statement as so supplemented is to materially adversely affect the market price Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 194
Menifee Mayor and City Council
May 6, 2026
Page
520 of 714
13 or marketability of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; or
10. A general banking moratorium shall have been declared by federal or State authorities having jurisdiction and be in force; or
11. A material disruption in securities settlement, payment or clearance services affecting the Bonds shall have occurred; or
12. Any new restriction on transactions in securities materially affecting the market for securities (including the imposition of any limitation on interest rates) or the extension of credit by, or a charge to the net capital requirements of, underwriters shall have been established by the New York Stock Exchange, the SEC, any other federal or State agency or the Congress of the United States, or by Executive Order; or
13. A decision by a court of the United States shall be rendered, or a stop order, release, regulation or no-action letter by or on behalf of the SEC or any other governmental agency having jurisdiction of the subject matter shall have been issued or made, to the effect that the issuance, offering or sale of the Bonds, including the underlying obligations as contemplated by this Purchase Agreement or by the Official Statement, or any document relating to the issuance, offering or sale of the Bonds, is or would be in violation of any provision of the federal securities laws at the Closing Date, including the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Trust Indenture Act of 1939, as amended; or
14. Any proceeding shall have been commenced or be threatened in writing by the Securities and Exchange Commission against the City or the Community Facilities District; or
15. The commencement of any Action.
F. At or prior to the Closing Date, the Underwriter shall have received a counterpart original or certified copy of the following documents, in each case satisfactory in form and substance to the Underwriter:
1. The Official Statement, executed on behalf of the Community Facilities District by an authorized officer;
2. The Indenture, duly executed and delivered by the Community Facilities District and the Trustee;
3. The Community Facilities District Resolution, the Community Facilities District Documents and the Formation Documents, together with a certificate dated as of the Closing Date of the City Clerk to the effect that the Community Facilities District Resolutions are true, correct and complete copies of the ones duly adopted by the City Council;
4. The Continuing Disclosure Certificate executed and delivered by an authorized officer the Community Facilities District;
5. An unqualified approving opinion for the Bonds, dated the Closing Date and addressed to the Community Facilities District, of Bond Counsel, to the effect that the Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 195
Menifee Mayor and City Council
May 6, 2026
Page
521 of 714
14 Bonds are the valid, legal and binding obligations of the Community Facilities District and that the interest thereon is excluded from gross income for federal income tax purposes and exempt from personal income taxes of the State of California, in substantially the form included as Appendix C to the Official Statement, together with a letter of Bond Counsel, dated the Closing Date and addressed to the Underwriter, to the effect that such opinion addressed to the Community Facilities District may be relied upon by the Underwriter to the same extent as if such opinion was addressed to it;
6. A supplemental opinion or opinions, dated the Closing Date and addressed to the Underwriter, of Bond Counsel, to the effect that:
(i) this Purchase Agreement and the Continuing Disclosure Certificate have been duly authorized, executed and delivered by the Community Facilities District and, assuming due authorization, execution and delivery by the other parties thereto, as applicable, constitutes the legal, valid and binding obligations of the Community Facilities District and are enforceable in accordance with their terms, except to the extent that enforceability may be limited by moratorium, bankruptcy, reorganization, insolvency or other similar laws affecting creditors’ rights generally or by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases and by limitations on legal remedies against public agencies in the State;
(ii) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended;
(iii) the information contained in the Official Statement on the cover and under the captions “THE BONDS” (other than the caption “Debt Service Schedule”), “SOURCES OF PAYMENT FOR THE BONDS,” “TAX MATTERS” and “LEGAL OPINION” and in Appendices C and E to the Official Statement, are accurate insofar as such statements purport to summarize certain provisions of the Bonds, the Indenture, and Bond Counsel’s final approving opinion.
7. The letter of Disclosure Counsel, dated the Closing Date and addressed to the Community Facilities District and to the Underwriter, to the effect that, without having undertaken to determine independently the accuracy or completeness of the statements contained in the Official Statement, but on the basis of their participation in conferences with representatives of the Community Facilities District, the Special Tax Consultant and others, and their examination of certain documents, nothing has come to their attention which has led them to believe that the Preliminary Official Statement as of its date and the date of this Purchase Agreement and the Official Statement as of its date and as of the Closing Date contained or contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except that no opinion or belief need be expressed as to any financial statements or other financial, statistical or engineering data or forecasts, numbers, charts, estimates, projections, assumptions, or expressions of opinion, any information about valuation, appraisals, absorption, archeological or environmental matters, or any information with respect to the City, or any information with respect to prior compliance by the Developer with continuing disclosure undertakings under the Rule or about DTC or the book-entry-only system); Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 196
Menifee Mayor and City Council
May 6, 2026
Page
522 of 714
15 8. A certificate dated the Closing Date and signed by an authorized representative of the Community Facilities District or an authorized designee, on behalf of the Community Facilities District to the effect that: (i) the representations and warranties made by the Community Facilities District contained herein are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date; (ii) to the best knowledge of such officer, no event has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purpose for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; and (iii) the Community Facilities District has complied with all the agreements and satisfied all the conditions on its part to be satisfied under this Purchase Agreement, the Community Facilities District Resolutions, and the Community Facilities District Documents at or prior to the Closing Date;
9. An opinion of the City Attorney dated the date of Closing and addressed to the Underwriter and the City, to the effect that:
(i) The City is a municipal corporation and general law city, duly organized and existing under the Constitution and laws of the State of California; (ii) The Community Facilities District Resolutions have been duly adopted at meetings of the City Council, which were called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the Community Facilities District Resolutions are in full force and effect and have not been modified, amended, rescinded or repealed since the respective dates of their adoption; (iii) The Community Facilities District Documents and the Official Statement have been duly authorized, executed and delivered by the City and the Community Facilities District Documents constitute the legal, valid and binding obligations of the Community Facilities District enforceable against the Community Facilities District in accordance with their terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights, to the application of equitable principles where equitable remedies are sought and to the exercise of judicial discretion in appropriate cases; (iv) Except as may be stated in the Official Statement, there is no action, suit, proceeding or investigation before or by any court, public board or body pending (notice of which has been served on the City or the Community Facilities District) or, to such counsel’s knowledge, threatened wherein an unfavorable decision, ruling or finding would: (a) affect the creation, organization, existence or powers of the City, or the titles of its members and officers to their respective offices; or (b) affect the validity of the Community Facilities District Documents or restrain or enjoin the repayment of the Bonds or in any way contest or affect the validity of the Community Facilities District Documents or contest the authority of the Community Facilities District to enter into or perform its obligations under any of the Community Facilities District Documents, questions the right of the Community Facilities District to use Special Taxes levied within the Improvement Area for the repayment of the Bonds or affects in any manner the right or ability of the Community Facilities District to collect the Special Taxes or pledge the Net Taxes levied within the Improvement Area for the repayment of the Bonds;
10. A certificate dated the Closing Date from Kitty Siino & Associates, Inc. (the “Appraiser”) to the effect that: (i) the statements in the Official Statement provided by the Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 197
Menifee Mayor and City Council
May 6, 2026
Page
523 of 714
16 Appraiser and all information supplied by it for use in the Official Statement were as of the date of the Official Statement and are as of the Closing Date true and correct, and do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading and (ii) no events or occurrences have been ascertained by the Appraiser or have come to the Appraiser’s attention since March 3, 2026 that would materially change the opinion set forth in the Appraisal;
11. A certificate dated the Closing Date from Spicer Consulting Group, LLC (the “ Special Tax Consultant”) to the effect that: (i) the Special Tax if collected in the maximum amounts permitted pursuant to the Rate and Method of Apportionment of Special Taxes of the Improvement Area as of the Closing Date would generate at least 110% of the annual debt service payable with respect to the Bonds plus the Administrative Expenses Cap in each year, based on such assumptions and qualifications as shall be acceptable to the Underwriter; and (ii) the statements in the Official Statement provided by the Special Tax Consultant concerning Special Taxes in the Improvement Area and all information supplied by it for use in the Official Statement were as of the date of the Official Statement and are as of the Closing Date true and correct, and do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;
12. Certified copies of the general resolution of the Trustee authorizing the execution and delivery of certain documents by certain officers of the Trustee, which resolution authorizes the execution of the Indenture and the authentication of the Bonds;
13. A certificate of the Trustee, dated the Closing Date, to the effect that:
(i) the Trustee is authorized to carry out corporate trust powers, and ha s full power and authority to perform its duties under the Indenture; (ii) the Trustee is duly authorized to execute and deliver the Indenture, to accept the obligations created by the Indenture and to authenticate the Bonds pursuant to the terms of the Indenture; (iii) no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Trustee that has not been obtained is or will be required for the authentication of the Bonds or the consummation by the Trustee of the other transactions contemplated to be performed by the Trustee in connection with the authentication of the Bonds and the acceptance and performance of the obligations created by the Indenture; and (iv) to the best of its knowledge, compliance with the terms of the Indenture will not conflict with, or result in a violation or breach of, or constitute a default under, any loan agreement, indenture, bond, note, resolution or any other agreement or instrument to which the Trustee is a party or by which it is bound, or any law or any rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over the Trustee or any of its activities or properties;
14. An opinion of counsel to the Trustee dated the Closing Date, addressed to the Underwriter, and the Community Facilities District to the effect that the Trustee is a national banking association duly organized and validly existing under the laws of the United States having full power and being qualified to enter into, accept and agree to the provisions of the Indenture, and that such documents has been duly authorized, executed and delivered by the Trustee, and, assuming due execution and delivery by the other parties thereto, constitutes the legal, valid and binding obligation of the Trustee, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors’ rights in general and except as such enforceability may be limited by the application of equitable principles if equitable remedies are sought;
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 198
Menifee Mayor and City Council
May 6, 2026
Page
524 of 714
17 15. A certificate of the Community Facilities District dated the Closing Date, in a form acceptable to Bond Counsel and the Underwriter, that the Bonds are not arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended;
16. An opinion of counsel to the Developer, dated the date of the Closing, addressed to the Underwriter and the Community Facilities District, in form and substance acceptable to the Underwriter and Bond Counsel;
17. A Letter of Representations from the Developer, dated the date of the Preliminary Official Statement, substantially in the form attached hereto as Exhibit B;
18. A Closing Certificate of the Developer, dated the date of the Closing, substantially in the form attached as Exhibit C hereto or as such Closing Certificate may be modified with the approval of the Underwriter and Disclosure Counsel;
19. The Continuing Disclosure Certificate executed and delivered by the Developer in substantially the form attached as Appendix G to the Official Statement;
20. An opinion of Kutak Rock LLP, counsel to the Underwriter (“Underwriter’s Counsel”), dated the date of Closing and addressed to the Underwriter in form and substance acceptable to the Underwriter; and
21. Such additional legal opinions, certificates, instruments and other documents as the Underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the Closing Date, of the material representations and warranties of the Community Facilities District contained herein, and of the statements and information contained in the Official Statement and the due performance or satisfaction by the Community Facilities District at or prior to the Closing of all agreements then to be performed and all conditions then to be satisfied by the Community Facilities District in connection with the transactions contemplated hereby and by the Indenture and the Official Statement.
If the Community Facilities District shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds contained in this Purchase Agreement, or if the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds shall be terminated for any reason permitted by this Purchase Agreement, this Purchase Agreement shall terminate and neither the Community Facilities District nor the Underwriter shall be under any further obligation hereunder, except that the respective obligations of the Underwriter and the Community Facilities District set forth in Section 5 hereof shall continue in full force and effect.
5. Expenses. Whether or not the transactions contemplated by this Purchase Agreement are consummated, the Underwriter shall be under no obligation to pay, and the Community Facilities District shall pay only from the proceeds of the Bonds, or any other legally available funds of the City, or the Community Facilities District, but only as the Community Facilities District and such other party providing such services may agree, all expenses and costs of the Community Facilities District incident to the performance of its obligations in connection with the authorization, execution, sale and delivery of the Bonds to the Underwriter, including, without limitation, printing costs, rating agency fees and charges, initial fees of the Trustee, including fees and disbursements of its counsel, if any, fees and disbursements of Bond Counsel, Disclosure Counsel and other professional advisors employed by the City, costs of preparation, printing, signing, transportation, delivery and safekeeping Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 199
Menifee Mayor and City Council
May 6, 2026
Page
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18 of the Bonds and for expenses (included in the expense component of the Underwriter’s discount) incurred by the Underwriter on behalf of the City’s employees which are incidental to implementing this Purchase Agreement, including, but not limited to, meals, transportation, lodging, and entertainment of those employees. The Underwriter shall pay all out -of-pocket expenses of the Underwriter, including, without limitation, advertising expenses, the California Debt and Investment Advisory Commission fee, CUSIP Services Bureau charges, regulatory fees imposed on new securities issuers and any and all other expenses incurred by the Underwriter in connection with the public offering and distribution of the Bonds, including fees and disbursements of Underwriter’s Counsel. Any meals in connection with or adjacent to meetings, rating agency presentations, pricing activities or other transaction-related activities shall be considered an expense of the transaction and included in the expense component of the Underwriter’s discount.
6. Notices. Any notice of other communication to be given to the Community Facilities District or the City under this Purchase Agreement may be given by delivering the same in writing to the City of Menifee , 29844 Haun Road, Menifee, California 92586, Attention: City Manager; any notice or other communication to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in writing to Stifel, Nicolaus & Company, Incorporated, 2121 Avenue of the Stars, Suite 2150, Los Angeles, California 90067, Attention: Public Finance Department.
7. Parties In Interest . This Purchase Agreement is made solely for the benefit of the Community Facilities District and Underwriter (including any successors or assignees of the Underwriter) and no other person shall acquire or have any right hereunder or by virtue hereof.
8. Survival of Representations and Warranties . The representations and warranties of the Community Facilities District under this Purchase Agreement shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing and regardless of any investigations made by or on behalf of the Underwriter (or statements as to the results of such investigations) concerning such representations and statements of the Community Facilities District and regardless of delivery of and payment for the Bonds.
9. Execution in Counterparts. This Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.
10. No Prior Agreements . This Purchase Agreement supersedes and replaces all prior negotiations, agreements and understanding among the parties hereto in relation to the sale of the Bonds by the Community Facilities District.
11. Governing Law. This Purchase Agreement shall be governed by the laws of the State of California.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 200
Menifee Mayor and City Council
May 6, 2026
Page
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S-1
12. Effective Date. This Purchase Agreement shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the Community Facilities District and shall be valid and enforceable as of the time of such acceptance.
Very truly yours,
STIFEL, NICOLAUS & COMPANY,
INCORPORATED
By:
Its: Authorized Officer
The foregoing is hereby agreed to and accepted as of the date first above written:
COMMUNITY FACILITIES DISTRICT
NO. 2022-3 (LEGADO) OF THE CITY OF
MENIFEE
By:
Authorized Officer
Time of Execution: _____________ California time
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 201
Menifee Mayor and City Council
May 6, 2026
Page
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A-1
EXHIBIT A
COMMUNITY FACILITIES DISTRICT NO. 2022-3 (LEGADO)
OF THE CITY OF MENIFEE
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2026A
MATURITY SCHEDULE
Maturity
(September 1)
Principal
Amount
Interest
Rate Yield Price
10% Test
Satisfied*
10% Test
Not
Satisfied
Subject to
Hold-The-
Offering-
Price Rule
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
20__(T)
20__(T)
20__(T)
20__(T)
_________________
(T) Term Bond.
(C) Priced to optional call at [par] on September 1, 20__. * At the time of execution of this Purchase Agreement and assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement .
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 202
Menifee Mayor and City Council
May 6, 2026
Page
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B-1
EXHIBIT B
COMMUNITY FACILITIES DISTRICT NO. 2022-3 (LEGADO)
OF THE CITY OF MENIFEE
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2026A
LETTER OF REPRESENTATIONS OF LENNAR HOMES OF CALIFORNIA, LLC [POS Date]
Community Facilities District No. 2022-3 (Legado)
of the City of Menifee
29844 Haun Road
Menifee, California 92586
Stifel, Nicolaus & Company, Incorporated
2121 Avenue of the Stars, Suite 2150
Los Angeles, California 90067
Ladies and Gentlemen:
The undersigned certifies and represents that he or she is duly authorized on behalf of Lennar Homes of California, LLC, a California limited liability company (the “ Developer”), to execute and deliver this Letter of Representations of Lennar Homes of California, LLC (this “ Letter of Representations”) in connection with the issuance, sale and delivery by Community Facilities District No. 2022-3 (Legado) of the City of Menifee (the “ Community Facilities District”) of the Bonds captioned above (the “Bonds”).
Capitalized terms used but not defined in this Letter of Representations have the same meanings as are set forth in the Bond Purchase Agreement with respect to the Bonds between Stifel, Nicolaus & Company, Incorporated, as underwriter (the “ Underwriter”), and the Community Facilities District (the “Bond Purchase Agreement”).
This Letter of Representations is delivered pursuant to and in satisfaction of Section 4(F )(17) of the Bond Purchase Agreement.
As used in this Letter of Representations, the phrase “ Actual Knowledge of the Undersigned” means, as of the date of this Letter of Representations, the actual (as opposed to constructive) knowledge that the undersigned currently has or has obtained through (i) interviews with such current officers and responsible employees of the Developer as the undersigned has reasonably determined are likely, in the ordinary course of their respective duties, to have knowledge of the matters set forth in this Letter of Representations, and/or (ii) review of documents reasonably available to the undersigned and which the undersigned reasonably deemed necessary for the undersigned to obtain knowledge of the matters set forth in this Letter of Representations. The undersigned has not conducted any extraordinary inspection or inquiry other than such inspections or inquiries as are prudent and customary in connection with the ordinary course of the Developer’s Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 203
Menifee Mayor and City Council
May 6, 2026
Page
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B-2
current business and operations. The undersigned has not contacted individuals who are no longer employed by the Developer or its Affiliates.
As used in this Letter of Representations, the term “ Affiliate” of the Developer means any other Person (i) who presently directly, or indirectly through one or more intermediaries, is currently controlling, controlled by or under common control with the Developer, and (ii) for whom information, including financial information or operating data concerning such Person is material to potential investors in their evaluation of the Community Facilities District and investment decision regarding the Bonds (i.e., information regarding such Person’s assets or funds that would materially affect the Developer’s ability to develop the Property as described in the Preliminary Official Statement or to pay its Special Tax (as defined herein) on the portion of the Property then owned by, or under option to, the Developer (to the extent the responsibility of the Developer) prior to delinquency). “ Person” means an individual, a corporation, a partnership, a limited liability company, an association, a joint stock company, a trust, any unincorporated organization, or a government or political subdivision thereof. For purposes hereof, the term “ control” (including the terms “ controlling,” “ controlled by, ” or “ under common control with ”) means the 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. In addition, KL LB BUY 1 LLC, a Delaware limited partnership (“KL LB BUY”), the land bank under an option agreement (the “Option Agreement”) with the Developer, is not an Affiliate of the Developer.
As used in this Letter of Representations, the term “ Property” means the property currently owned by, or under option to, the Developer within Improvement Area No. 1 of the Community Facilities District, as further described in the Preliminary Official Statement.
The undersigned certifies that he or she is familiar with the facts herein certified and is authorized and qualified to certify the same as an authorized officer or representative of the Developer, and the undersigned, on behalf of the Developer, further certifies as follows:
1. The Developer is duly organized and validly existing under the laws of the State of California and in good standing under the laws of the State of California, and has all requisite limited liability company right, power and authority: (i) to execute and deliver this Letter of Representations; (ii) to execute and deliver the Developer Continuing Disclosure Certificate to be executed by the Developer (the “ Continuing Disclosure Certificate”); and (iii) to undertake all of the transactions on its part described in the Preliminary Official Statement.
2. As set forth in the Preliminary Official Statement, title to the Property within Improvement Area No. 1 of the Community Facilities District is held in the name of the Developer and KL LB BUY, the land bank under the Option Agreement with the Developer. The undersigned, on behalf of the Developer, makes the representations herein with respect to all such Property. Except as otherwise described in the Preliminary Official Statement (including, but not limited to, the discussion of the Option Agreement and the land bank arrangement with KL LB BUY), the Developer is and the Developer’s current expectations are that the Developer shall remain the party responsible for the development of the Property. The Developer has not entered into an agreement for development or management of the Property by any other entity, except such subcontracts, consultant agreements, and similar agreements for land development activities associated with the Developer’s development plan as are entered into in the ordinary course of business.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 204
Menifee Mayor and City Council
May 6, 2026
Page
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3. Except as set forth in the Preliminary Official Statement, no action, suit, proceeding, inquiry, or investigation at law or in equity, before or by any court, regulatory agency, or public board, or body is pending against the Developer (with proper service of process to the Developer having been accomplished) or, to the Actual Knowledge of the Undersigned, is pending against any current Affiliate (with proper service of process to such Affiliate having been accomplished) or to the Actual Knowledge of the Undersigned is threatened in writing against the Developer or any such Affiliate (a) to restrain or enjoin the collection of Special Taxes or other sums pledged or to be pledged to pay the principal of and interest on the Bonds (e.g., a reserve account established under the Indenture), (b) to restrain or enjoin the development of the Property as described in the Preliminary Official Statement, (c) in any way contesting or affecting the validity of the Special Taxes, or (d) which, if successful, is reasonably likely to materially and adversely affect the Developer’s ability to develop and sell the Property as described in the Preliminary Official Statement or to pay the Special Taxes levied against the portion of the Property then owned by, or under option to, the Developer (to the extent the responsibility of the Developer) prior to delinquency or which challenges or questions the validity or enforceability of the Bonds or the Continuing Disclosure Certificate to be executed by the Developer in connection with the issuance of the Bonds.
4. As of the date of the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, the information contained therein solely with respect to the Developer, its Affiliates, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Affiliates (including, if material to the Developer’s development plan or the Developer’s financing plan, other loans of such Affiliates) as set forth under the sections of the Preliminary Official Statement captioned “INTRODUCTION – The District and Improvement Area No. 1” (Third, fourth and fifth paragraphs only), “THE DISTRICT AND IMPROVEMENT AREA NO. 1 – General Description of the District and Improvement Area No. 1” (Third and fourth paragraphs only), “PROPERTY OWNERSHIP AND THE DEVELOPMENT” and “CONTINUING DISCLOSURE – Developer Continuing Disclosure” (excluding therefrom in all cases information regarding the Appraisal Report (as defined herein), market value ratios and annual special tax ratios, and information which is identified as having been provided by a source other than the Developer), is true and correct in all material respects and did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
5. Except as described in the Preliminary Official Statement, there are no material loans outstanding and unpaid and no material lines of credit of the Developer or its Affiliates, that are secured by an interest in the Property. Neither the Developer nor, to the Actual Knowledge of the Undersigned, any of its Affiliates is currently in material default on any loans, lines of credit, or other obligation to repay borrowed money related to the development of the Property or any other project which default is reasonably likely to materially and adversely affect the Developer’s ability to develop the Property as described in the Preliminary Official Statement or to pay the Special Taxes levied against the portion of the Property then owned by, or under option to, the Developer (to the extent the responsibility of the Developer) prior to delinquency.
6. To the Actual Knowledge of the Undersigned, the Developer is not aware that any of the Property has a current liability with respect to the presence of a substance presently classified as hazardous under the federal Comprehensive Environmental Response, Compensation and Item Title: 12.1
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Liability Act of 1980 or applicable California law or is adversely affected by the presence of endangered or threatened species or habitat for endangered or threatened species.
7. The Developer covenants that, while the Bonds or any refunding obligations related thereto are outstanding, the Developer and its Affiliates which it controls will not bring any action, suit, proceeding, inquiry, or investigation at law or in equity, before any court, regulatory agency, public board, or body, that in any way seeks to challenge or overturn the formation of the Community Facilities District, to challenge the adoption of the ordinance of the Community Facilities District levying Special Taxes within Improvement Area No. 1 of the Community Facilities District, to invalidate the Community Facilities District or any of the Bonds or any refunding bonds related thereto, or to invalidate the special tax liens imposed under Section 3115.5 of the Streets and Highways Code based on recordation of the notices of special tax lien relating thereto. The foregoing covenant shall not prevent the Developer and its Affiliates in any way from bringing any other action, proceeding, inquiry, or investigation at law or in equity, before any court, regulatory agency, public board, or body including, without limitation, (a) an action or suit contending that the Special Tax has not been levied in accordance with the methodologies contained in the Rate and Method of Apportionment of Special Taxes pursuant to which Special Taxes are levied, (b) an action or suit with respect to the application or use of the Special Taxes levied and collected, or (c) an action or suit to enforce the obligations of the City and/or the Community Facilities District under the Community Facilities District Resolution of Issuance, the Indenture, the Continuing Disclosure Certificate or any other agreements among the Developer or its Affiliates, the City and/or the Community Facilities District or to which the Developer or its Affiliates is a party or beneficiary.
8. The Developer consents to the issuance of the Bonds. The Developer expects that the proceeds of the Bonds will be used as described in the Preliminary Official Statement.
9. The Developer intends to comply with the provision of the Mello-Roos Community Facilities District Act of 1982, as amended relating to the Notice of Special Tax described in Government Code Section 53341.5 in connection with the sale of the Property, or portions thereof.
10. To the Actual Knowledge of the Undersigned, the Developer is able to pay its bills as they become due and no legal proceedings are pending against the Developer (with proper service of process having been accomplished) or, to the Actual Knowledge of the Undersigned, threatened in writing in which the Developer may be adjudicated as bankrupt or discharged from any and all of its debts or obligations, or granted an extension of time to pay its debts or obligations, or be allowed to reorganize or readjust its debts, or be subject to control or supervision of the Federal Deposit Insurance Corporation.
11. To the Actual Knowledge of the Undersigned, Affiliates of the Developer are able to pay their bills as they become due and no legal proceedings are pending against any Affiliate of the Developer (with proper service of process having been accomplished) or to the Actual Knowledge of the Undersigned, threatened in writing in which the Affiliates of the Developer may be adjudicated as bankrupt or discharged from any or all of their debts or obligations, or granted an extension of time to pay their debt or obli gations, or be allowed to reorganize or readjust their debts or obligations, or be subject to control or supervision of the Federal Deposit Insurance Corporation, which is reasonably likely to materially and adversely affect the Developer’s ability to develop the Property as described in the Preliminary Official Statement or Item Title: 12.1
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to pay the Special Taxes levied against the portion of the Property then owned by, or subject to an option in favor of, the Developer (to the extent the responsibility of the Developer) prior to delinquency.
12. The Developer has been developing or has been involved in the development of numerous projects over an extended period of time. It is likely that the Developer has been delinquent at one time or another in the payment of ad valorem property taxes, special taxes, or special assessments. However, to the Actual Knowledge of the Undersigned, during the last five years, neither the Developer nor any current Affiliate has, during the period of its ownership, been delinquent to any material extent in the payment of any ad valorem property tax, special assessment, or special tax on property in California owned by, or under option to, the Developer or any such Affiliate (during the period of their ownership and to the extent the responsibility of the Developer) included within the boundaries of a community facilities district or an assessment district in California that (a) caused a draw on a reserve fund relating to such assessment district or community facilities district financing or (b) resulted in a foreclosure action being commenced against the delinquent Developer or Affiliate by a court filing.
13. The Developer has not filed for the reassessment of the assessed value of portions of the Property, other than in connection with the sale of homes to individual homebuyers.
14. To the Actual Knowledge of the Undersigned, there are no claims, disputes, suits, actions or contingent liabilities by and among the Developer, its Affiliates, or any contractors working on the development of the Property which is reasonably likely to materially and adversely affect the Developer’s ability to develop the Property as described in the Preliminary Official Statement or to pay the Special Taxes levied against the portion of the Property then owned by, or under option to, the Developer (to the extent the responsibility of the Developer) prior to delinquency.
15. Based upon the current development plans, including, without limitation, the current budget and subject to economic conditions and risks generally inherent in the development of real property, including, but not limited to, the risks described in the Preliminary Official Statement under the section entitled “SPECIAL RISK FACTORS,” to the Actual Knowledge of the Undersigned, the Developer presently anticipates that it will have sufficient funds to complete the development of the Property as described in the Preliminary Official Statement and to pay the Special Taxes levied against the portion of the Property then owned by, or under option to, the Developer (to the extent the responsibility of the Developer) prior to delinquency and does not anticipate that the City or the Community Facilities District will be required to resort to a draw on the reserve account for payment of principal of or interest on the Bonds due to the Developer’s nonpayment of Special Taxes. However, neither the Developer nor any of its Affiliates are obligated to pay the Special Taxes or to make any additional capital contribution or loan to the Developer at any time, and the Developer reserves the right to change its respective development plan and financing plan for the Property at any time without notice, and there is no recourse against the Developer for the failure to pay the Special Taxes other than the filing of a foreclosure action.
16. An appraisal of the taxable properties within Improvement Area No. 1 of the Community Facilities District, dated _______, 202 6 (the “ Appraisal Report”), with a date of value of March 3, 2026 (the “Date of Value ”), was prepared by Kitty Siino & Associates, Inc. (the “ Appraiser”). The Appraisal Report estimates the market value of the appraised taxable Item Title: 12.1
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properties within Improvement Area No. 1 of the Community Facilities District as of the Date of Value. To Actual Knowledge of the Undersigned, all information submitted by, or on behalf of and authorized by, the Developer to the Appraiser and contained in the sections of the Appraisal Report highlighted in yellow or circled in Exhibit A attached hereto, was true and correct in all material respects as of the Date of Value.
17. If between the date hereof and the Closing Date any event relating to or affecting the Developer, its Affiliates, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Affiliates (including, if material to the Developer’s development plan or the Developer’s financing plan, other loans of such Affiliates) shall occur of which the Developer has actual knowledge which would cause the information under the sections of the Preliminary Official Statement indicated in paragraph 4 hereof (and subject to the limitations and exclusions contained in paragraph 4 hereof), to contain an untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Developer shall notify the City, the Community Facilities District and the Underwriter and if in the opinion of counsel to the City or the Underwriter such event requires the preparation and publication of a supplement or amendment to the information described in the section of the Preliminary Official Statement referenced in paragraph 4 hereof (and subject to the limitations and exclusions contained in paragraph 4 hereof), the Developer shall reasonably cooperate with the City and the Community Facilities District in the preparation of an amendment or supplement to the Preliminary Official Statement in form and substance satisfactory to counsel to the City, the Community Facilities District and to the Underwriter.
18. The Developer agrees to deliver a Closing Certificate dated the date of issuance of the Bonds at the time of issuance of the Bonds in substantially the form attached as Exhibit C to the Bond Purchase Agreement.
19. On behalf of the Developer, the undersigned has reviewed the contents of this Letter of Representations and has consulted with counsel to the Developer regarding the meaning of its contents. The undersigned acknowledges and understands that a variety of state and federal securities laws, including but not limited to the Securities Act of 1933 and Rule 10b- 5 promulgated under the Securities Exchange Act of 1934, may apply to the Developer and that under some circumstances certification as to the matters set forth in this Letter of Representations, without additional disclosures or other action, may not fully discharge all duties and obligations of the Developer under such securities laws.
The undersigned has executed this Letter of Representations solely in his or her capacity as an authorized officer or representative of the Developer and he or she will have no personal liability arising from or relating to this Letter of Representations. Any liability arising from or relating to this Letter of Representations may only be asserted against the Developer.
Item Title: 12.1
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LENNAR HOMES OF CALIFORNIA, LLC,
a California limited liability company
By:
Name:
Title:
Item Title: 12.1
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EXHIBIT A
EXCERPTS FROM THE APPRAISAL REPORT
(to be attached)
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EXHIBIT C
$____________
COMMUNITY FACILITIES DISTRICT NO. 2022-3 (LEGADO)
OF THE CITY OF MENIFEE
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2026A
CLOSING CERTIFICATE OF
LENNAR HOMES OF CALIFORNIA, LLC
[Closing Date]
Community Facilities District No. 2022-3 (Legado)
of the City of Menifee
29844 Haun Road
Menifee, California 92586
Stifel, Nicolaus & Company, Incorporated
2121 Avenue of the Stars, Suite 2150
Los Angeles, California 90067
Ladies and Gentlemen:
Reference is made to the above -captioned bonds (the “ Bonds”) and to the Bond Purchase Agreement, dated [BPA Date] (the “ Bond Purchase Agreement ”), entered into in connection therewith. This Closing Certificate of Lennar Homes of California, LLC (the “ Closing Certificate”) is delivered pursuant to and in satisfaction of Section 4 (F)(18) of the Bond Purchase Agreement.
Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Letter of Representations of Lennar Homes of California, LLC (the “ Letter of Representations ”), dated [POS Date] , delivered by Lennar Homes of California, LLC, a California limited liability company (the “Developer”).
The undersigned certifies that he or she is familiar with the facts herein certified and is authorized and qualified to certify the same as an authorized officer or representative of the Developer, and the undersigned, on behalf of the Developer, further certifies as follows:
1. The Developer has received the final Official Statement relating to the Bonds, dated [BPA Date] (the “ Official Statement ”). To the Actual Knowledge of the Undersigned, each statement, representation and warranty made in the Letter of Representations is true and correct in all material respects on and as of the date hereof with the same effect as if made on the date hereof, except that all references therein to the Preliminary Official Statement shall be deemed to be references to the final Official Statement.
2. To the Actual Knowledge of the Undersigned, no event has occurred since the date of the Preliminary Official Statement affecting the statements and information described in paragraph 4 of the Letter of Representations (and subject to the limitations and exclusions contained in paragraph Item Title: 12.1
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4 of the Letter of Representations) relating to the Developer, its Affiliates, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Affiliates (including, if material to the Developer’s development plan or the Developer’s financing plan, other loans of such Affiliates), which should be disclosed in the Official Statement for the purposes for which it is to be used in order to make such statements and information contained in the Official Statement not misleading in any material respect.
3. For the period through 25 days after the “ end of the underwriting period” as defined in the Bond Purchase Agreement to mean the Closing Date unless the Underwriter gives notice to the contrary, if any event relating to or affecting the Developer, its Affiliates, the proposed development of the Property, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Affiliates (including, if material to the Developer’s development plan or the Developer’s financing plan, other loans of such Affiliates) shall occur as a result of which it is necessary, in the opinion of the Underwriter or counsel to the City or the Community Facilities District, to amend or supplement the Official Statement in order to make the information under the sections of the Official Statement indicated in paragraph 4 of the Letter of Representations (and subject to the limitations and exclusions contained in paragraph 4 of the Letter of Representations) not misleading in the light of the circumstances under which they were made, the Developer shall reasonably cooperate with the City, the Community Facilities District and the Underwriter in the preparation and publication of a supplement or amendment to the information described in the section of the Official Statement referenced in paragraph 4 of the Letter of Representations (and subject to the limitations and exclusions contained in paragraph 4 of the Letter of Representations), in form and substance satisfactory to the Underwriter and counsel to the City and the Community Facilities District which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
4. The Developer has duly executed and delivered the Continuing Disclosure Certificate.
The undersigned has executed this Closing Certificate solely in his or her capacity as an authorized officer or representative of the Developer and he or she will have no personal liability arising from or relating to this Closing Certificate. Any liability arising from or relating to this Closing Certificate may only be asserted against the Developer.
LENNAR HOMES OF CALIFORNIA, LLC,
a California limited liability company
By:
Name:
Title:
Item Title: 12.1
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EXHIBIT D
$__________
COMMUNITY FACILITIES DISTRICT NO. 2022-3 (LEGADO)
OF THE CITY OF MENIFEE
IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS, SERIES 2026A
FORM OF ISSUE PRICE CERTIFICATE
The undersigned, on behalf of Stifel, Nicolaus & Company, Incorporated (“Stifel”) hereby certifies as set forth below with respect to the sale and issuance of the above -captioned bonds (the “Bonds”).
1. Sale of the Bonds. As of the date of this certificate, for each Maturity of the Bonds, the first price at which at least 10% of such Maturity was sold to the Public is the respective price listed in Schedule A.
2. Defined Terms.
(a) Issuer means the Community Facilities District No. 2022-3 (Legado) of the City of Menifee.
(b) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate maturities.
(c) Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter.
The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (c) Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).
The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Ramirez’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by Stradling Yocca Carlson & Rauth LLP in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.
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STIFEL, NICOLAUS & COMPANY,
INCORPORATED
By:
Name:
By:
Name:
Dated: [Closing Date]
Item Title: 12.1
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SCHEDULE A
SALE PRICES
(To be attached)
Item Title: 12.1
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APPRAISAL REPORT
COMMUNITY FACILITIES DISTRICT NO. 2022-3 IMPROVEMENT AREA 1
OF THE CITY OF MENIFEE
(Legado, Improvement Area 1)
2026 Series Bonds
City of Menifee, Riverside County, California
(Appraiser’s File No. 2026-1313)
Prepared For
City of Menifee
29844 Haun Road
Menifee, California 92586
Prepared By
Kitty Siino & Associates, Inc.
115 East Second Street, Suite 100
Tustin, California 92780
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KITTY SIINO & ASSOCIATES, INC.
REAL ESTATE APPRAISERS & CONSULTANTS
April 2, 2026
Travis Hickey, Chief Financial Officer
City of Menifee
29844 Haun Road
Menifee, California 92586
Reference: Appraisal Report – City of Menifee
Community Facilities District No. 2022-3 Improvement Area 1 Legado Improvement Area 1 (2026 Bond Financing)
Menifee, California
Dear Mr. Hickey:
At the request and authorization of the City of Menifee, we have completed an Appraisal Report for Community Facilities District No. 2022-3 (Legado Improvement Area 1) of the City of Menifee (“Menifee CFD No. 2022-3 IA 1”) for the 2026 series bonds. Menifee CFD No. 2022-3 IA 1 consists of Improvement Area 1 of the new master planned community known as Legado being developed by Lennar Homes of California, LLC (“Lennar”). It is our understanding this is the first of two issues of bonds to be sold on Menifee CFD No. 2022-3 IA 1. Improvement Area 1 of Legado includes a total of 491 proposed single-family detached homes within four neighborhoods known as: Sonrisa at Legado (“Sonrisa”), Tesoro at Legado (“Tesoro”), Armonia at Legado (“Armonia”) and Belleza at Legado (“Belleza”). Sonrisa includes 162 proposed homes and is the smallest product line. Tesoro includes 99 proposed homes and are all single-story homes. Armonia includes 119 proposed homes while Belleza includes 111 proposed homes which are the largest sized homes. Out of the total 491 homes within Menifee CFD No. 2022-3 IA 1, 127 have closed to individuals and an additional 32 are in escrow and due to close upon completion. The lots which have not yet closed are owned by Lennar or KL LB Buy 1 LLC, a Delaware limited liability company (“KL LB”), a land bank company working with Lennar. The condition of these Lennar or KL LB owned lots range from model homes to production homes over 95 percent complete to production homes under construction and to generally finished lots. The valuation method used in this report is the Sales Comparison Approach along with a mass appraisal technique as defined within this report. The fee simple estate of the subject property has been valued subject to the Menifee CFD No. 2022-3 IA 1 special tax lien. This report is written with the hypothetical condition that the subject property is enhanced by the improvements and/or fee credits to be funded by bonds issued by City of Menifee CFD No. 2022-3 IA 1. As a result of our investigation, the concluded market value for the subject property is shown on the following page.
115 East Second Street, Suite 100, Tustin, California 92780 (714) 544-9978 - Phone, (714) 544-9985 – Fax, E-Mail: [email protected] Item Title: 12.1
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Travis Hickey
CITY OF MENIFEE
April 2, 2026
Legado Improvement Area 1
Lennar Ownership (36 lots & 38 houses) $ 19,748,119 KL LB Ownership (290 lots) 45,766,480
Individual Owners (127 houses) 68,723,148
Total Aggregate Value Menifee CFD No. 2022-3 IA 1 $ 134,237,747
The above values are stated subject to the Assumptions and Limiting Conditions of this report, the Appraiser’s Certification and as of March 3, 2026.
Some supporting documentation concerning the data, reasoning and analyses may be retained in the appraiser’s files. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. This Appraisal Report is intended to comply with both the Uniform Standards of Professional Appraisal Practice (“USPAP” January 2022) and with the Appraisal Standards of the California Debt and Investment Advisory Commission (“CDIAC”). The appraiser is not responsible for unauthorized use of this report. The appraised value contained within this report is being estimated with the hypothetical condition of the special tax lien of the 2026 series of Menifee CFD No. 2022-3 IA 1 bonds.
This letter of transmittal is part of the attached report, which sets forth the data and analyses upon which our opinion of value is, in part, predicated.
Respectfully submitted,
KITTY SIINO & ASSOCIATES, INC.
Kitty S. Siino, MAI
California State Certified General
Real Estate Appraiser (AG004793)
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TABLE OF CONTENTS
Assumptions and Limiting Conditions............................................................................... i Hypothetical Condition .................................................................................................... iii Extraordinary Assumption ............................................................................................... iii Aerial Photo of Menifee CFD No. 2022-3 IA 1 ................................................................. iv Purpose of the Appraisal ................................................................................................ 1 The Subject Property ...................................................................................................... 1 Intended Use of the Report ............................................................................................ 3 Definitions ...................................................................................................................... 3 Property Rights Appraised ............................................................................................. 5 Effective Date of Value ................................................................................................... 6 Date of Report ................................................................................................................ 6 Scope of Appraisal ........................................................................................................ 6 Regional Area Map.......................................................................................................... 9 County of Riverside Area Description ........................................................................... 10 Menifee Area Map ......................................................................................................... 19 City of Menifee Description ........................................................................................... 20 Legado Specific Plan and Immediate Surroundings ...................................................... 24 Community Facilities District No. 2022-3 ....................................................................... 27 Subject Property Description ......................................................................................... 30 Riverside County Housing Market ................................................................................. 39 Highest and Best Use Analysis ..................................................................................... 52 Valuation Analyses and Conclusions ............................................................................ 57 Appraisal Report Summary ........................................................................................... 85 Appraiser’s Certification ............................................................................................... 86
ADDENDA
CFD No. 2022-3 IA 1 Boundary Map
Tract Map Nos. 37408-1, 37408-2, 37408-3, 37408-4, 37409-1, 37409-2 and 37409-3 Cal Fire High Fire Hazard Severity Map
Discounted Cash Flow Analyses
Residential Land Sales Map and Summary Chart
Improved Residential Sales Map and Summary Chart
Appraiser’s Qualifications
Item Title: 12.1
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_________________________________________________________________________________________________________ Menifee CFD No. 2022-3 IA 1 (Legado IA 1) - 2026 Series Bonds Kitty Siino & Associates, Inc. Page i
ASSUMPTIONS AND LIMITING CONDITIONS
1. This report might not include full discussions of the data, reasoning and analyses that were used in the appraisal process to develop the appraiser’s opinion of value. Some supporting documentation concerning the data, reasoning and analyses may be retained in the appraiser’s files. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. The appraiser is not responsible for unauthorized use of this report.
2. No responsibility is assumed for legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated in this report.
3. The property is appraised subject to the special tax lien of the 2026 series of bonds for City of Menifee CFD No. 2022-3 IA 1.
4. Responsible ownership and competent property management are assumed unless otherwise stated in this report.
5. The information furnished by others is believed to be reliable, however, no warranty is given for its accuracy.
6. All engineering is assumed to be correct. Any plot plans and illustrative material used in this report are included only to assist the reader in visualizing the property and may not be to scale.
7. It is assumed that there are no hidden or unapparent conditions of the property, subsoil or structures that would render it more or less valuable. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required to discover them.
8. It is assumed that there is full compliance with all applicable federal, state and local environmental regulations and laws unless otherwise stated in this report.
9. It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless nonconformity has been stated, defined and considered in this appraisal report.
10. It is assumed that all required licenses, certificates of occupancy or other legislative or administrative authority from any local, state or national governmental or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report are based.
11. Any sketch included in this report may show approximate dimensions and is included only to assist the reader in visualizing the properties. Maps and exhibits found in this report are provided for reader reference purposes only. No guarantee regarding accuracy is expressed or implied unless otherwise stated in this report. No survey has been made for the purpose of this report.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 220
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May 6, 2026
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12. It is assumed that the utilization of the land and improvements are within the boundaries or property lines of the property described and that there is no encroachment or trespass unless otherwise stated in this report.
13. The appraiser is not qualified to detect hazardous waste and/or toxic materials. Any comment by the appraiser that might suggest the possibility of the presence of such substances should not be taken as confirmation of the presence of hazardous waste and/or toxic materials. Such determination would require investigation by a qualified expert relating to asbestos, urea-formaldehyde foam insulation or other potentially hazardous materials that may affect the value of the property. The appraiser’s value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value unless otherwise stated in this report. No responsibility is assumed for any environmental conditions or for any expertise or engineering knowledge required to discover them. The appraiser’s descriptions and resulting comments are the result of the routine observations made during the appraisal process.
14. Proposed improvements, if any, are assumed to be completed in a good workmanlike manner in accordance with the submitted plans and specifications.
15. The distribution, if any, of the total valuation in this report between land and improvements applies only under the stated program of utilization. The separate allocations for land and buildings, if any, must not be used in conjunction with any other appraisal and are invalid if so used.
16. The Americans with Disabilities Act (“ADA”) became effective on January 26, 1992.
The appraiser has made no specific compliance survey and analysis of the property to determine whether they conform to the various detailed requirements of the ADA, nor is the appraiser a qualified expert regarding the requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the ADA. If so, this fact could have a negative effect upon the value of the property. Since the appraiser has no direct evidence relating to this issue, a possible noncompliance with requirements of the ADA in estimating the value has not been considered.
17. It is assumed there are no environmental concerns that would slow or thwart development of the subject property and that the soils are adequate to support the highest and best use conclusion.
18. Possession of this report, or a copy thereof, does not carry with it the right of publication. It may not be used for any purpose by any person other than the party to whom it is addressed without the written consent of the appraiser, and in any event, only with proper qualification and only in its entirety. Permission is given for this appraisal to be published as a part of the Official Statement or similar document in association with the Menifee CFD No. 2022-3 IA 1 Special Tax Bonds.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 221
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May 6, 2026
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HYPOTHETICAL CONDITION
1. It is assumed that all improvements and/or benefits to the subject property, which are to be funded by the 2026 series of the Menifee CFD No. 2022-3 IA 1 Special Tax Bond proceeds, are completed and in place or have accrued to the property.
EXTRAORDINARY ASSUMPTION
1. It is an extraordinary assumption that the reported sales and remaining land development costs as received from the builder are true and accurate. We have reviewed both the sales and cost information and they appear reasonable. We have reviewed sample sales against public records in order to verify the sample sales, however we have not reviewed each sale against public record. Additionally, we are not experts in cost estimating and if the cost estimates change, it may change the value conclusions.
It is an extraordinary assumption that the two parks, Westside Park and Eastside Park along with the recreation center are completed in a timely manner and do not slow or thwart development, sale or closing of any homes within Menifee CFD No. 2022-3 IA 1.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 222
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May 6, 2026
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Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado Item Page Number: 223
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May 6, 2026
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PURPOSE OF THE APPRAISAL
The purpose of this appraisal report is to estimate the value of the fee simple interest of the subject property, subject to the special tax lien of the City of Menifee CFD No. 2022- 3 IA 1, 2026 Series Special Tax Bonds.
THE SUBJECT PROPERTY
The subject property is located along the south side of Rouse Road, east of I-215. The subject is encompassed by Menifee CFD No. 2022-3 IA 1 and is proposed for 491 single- family detached homes spread over seven tract maps (Tract Map Nos. 37408-1, 37408- 2, 37408-3, a portion of 37408-4, 37409-1, 37409-2 and 37409-3) being built out as Improvement Area 1 of the master planned community of Legado. Legado is proposed for 1,022 single family detached homes with Improvement Area 1 generally the northern portion of the entire master plan. Within Improvement Area 1 Lennar is now building and selling homes within four product lines: Sonrisa, Tesoro, Armonia and Belleza. Within Improvement Area No. 1, Sonrisa consists of 162 proposed homes; Tesoro consists of 99 proposed homes; Armonia consists of 119 proposed homes and Belleza consists of 111 proposed homes, for a total of 491 proposed homes. KL LB Buy 1 LLC (a related entity to Kennedy Lewis) is a holding company which Lennar is using as the land banker.
As of the date of value, Lennar has taken down 201 Lots (127 of those have been closed to homebuyers) with 290 lots under the KL LB Buy 1 LLC ownership. As of the date of value of this report, Legado Improvement Area No. 1 (including all four product lines) has a total of 127 completed homes closed to individuals, eight model homes, 30 production homes over 95 percent complete (21 in escrow), 77 houses under construction (11 in escrow), and 249 additional finished lots (none in escrow). On the following page is a more detailed table showing the status and ownership of each lot Item Title: 12.1
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Item Page Number: 224
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Description No. Lots Owner Condition/Status
Sonrisa - Lots 1-73 of Tract 37408-1, Lots 1-3 of Tract 37408-2 and Lots 1-86 of 37409-1 Lots 1-22, 44-50, 65-73 of Tract 37408-1 38 Individuals Completed Homes Lots 1-3 of Tract 37408-2 3 Lennar Model Homes (0 in escrow) Lots 51-52 and 63-64 of Tract 37408-1 4 Lennar Over 95% Complete (4 in escrow)
Lots 23-27, 39-43, 53-54 and 61-62 of
Tract 37408-1
14 Lennar Under Constr. (6 in escrow
Lots 28-31 and 35-38 of Tract 37408-1 8 KL LB Under Const. (0 in escrow) Lot 32-34 and 55-60 of Tract 37408-1 and
1-86 of Tract 37409-1
95 KL LB Finished Lots
Sonrisa Subtotal 162
Tesoro Lots 8-47 of Tract 37408-2 and Lots 1-59 of Tract 37409-3 Lots 9-29, 36-42 of Tract 37408-2; 28 Individuals Completed Homes Lot 45 of Tract 37408-2 1 Lennar Model Home
Lots 41-42 and 57-59 of Tract 37409-3 5 Lennar Over 95% Complete (5 in escrow)
Lots 43-56 of Tract 37409-3 14 Lennar Under Const. (1 In escrow) Lots 17-22 and 39-40 of Tract 37409-3 8 KL LB Under Const. (0 in escrow) Lots 8, 30-35, 43-44 and 46-47 of Tract
37408-2 and 1-16, 23-38 of Tract 37409-3
43 KL LB Finished Lots
Tesoro Subtotal 99
Armonia – Lots 6-7 and 48-49 of Tract 37408-2 and Lots 1-115 of Tract 37408-3 Lots 1-24 and 77-81, 87, 88-89 of Tract
37408-3
32 Individuals
Completed Homes
Lots 6-7 of 37408-2 2 Lennar Model Homes
Lots 82-86, 90-96 of Tract 37408-3 12 Lennar Over 95% Complete (4 in escrow)
Lots 97-100 of Tract 37408-3 4 Lennar Under Const. (0 in escrow) Lots 58-61 and 72-76 of Tract 37408-3 9 KL LB Under Const. (0 in escrow) Lots 48-49 of Tract 37408-2, Lots 25-57,
62-71 and 101-115 of Tract 37408-3.
60 KL LB Finished Lots
Armonia Subtotal 119
Belleza – Lots 4-5 of Tract 37408-2; Lots 1-42 of Tract 37408-4 and Lots 1-67 of Tract 37409-2 Lots 1-26 and 40-42 pf Tract 37408-4 29 Individuals Completed Homes Lots 4-5 of 37408-2 2 Lennar Model Homes
Lots 27-31, 36-39 of Tract 37408-4 9 Lennar Over 95% Complete (8 in escrow)
Lots 32-35 of Tract 37408-4 4 Lennar Under Const. (1 in escrow) Lots 42-47 and 58-67 of Tract 37409-2 16 KL LB Under Const. (3 in escrow Lots 1-41 and 48-57 of Tract 37409-2 51 KL LB Finished Lots Belleza Subtotal 111
Menifee CFD No. 2022-3 IA 1 Total 491
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 225
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May 6, 2026
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INTENDED USE OF THE REPORT
It is the appraiser’s understanding that the client, the City of Menifee, will utilize this report in disclosure documents associated with selling the first series of bonds for Menifee CFD No. 2022-3 IA 1 and that this report is to be included in the Official Statement or similar document to be distributed in connection with the offering of the bonds. It is the appraiser’s understanding that there are no other intended uses of this report.
DEFINITIONS
Market Value
The term “Market Value” as used in this report is defined as:
"The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:
1. buyer and seller are typically motivated;
2. both parties are well informed or well advised, and each acting in what he or she considers his or her own best interest;
3. a reasonable time is allowed for exposure in the open market;
4. payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
5. the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.”1
Inherent in the Market Value definition is exposure time or the time the property would have had to have been exposed on the open market prior to the appraisal in order to sell at the concluded values. In the case at hand and considering current market conditions the exposure time for the builder-owned lots and houses or for an individually owned home is under one year.
1 The Appraisal of Real Estate, 13th Edition
Item Title: 12.1
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Item Page Number: 226
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Minimum Market Value
The term “Minimum Market Value” as used in this report is defined as:
“The base market value of a home. That is, most buyers purchase some upgrades, options and/or lot premiums when purchasing a new home. The sales price for the new home typically includes the base price for the plan, plus any upgrades, options or lot premiums, less concessions, if any, which were given or paid for by the builder. The concluded minimum market value is for the base value of the plan only, not taking into consideration any upgrades, options or premiums; however, does take into consideration concessions given by the builder.”
Mass Appraisal
The term “Mass Appraisal” as used in this report is defined as:
“The process of valuing a universe of properties as of a given date using standard methodology employing common data and allowing for statistical testing”2
In the case at hand, the statistical testing included reviewing all original builder sales, reviewing the Multiple Listing Service for re-sales and current escrows (if any) and determining the actual range of sales and escrow prices for each plan type which is utilized in the valuation process.
Hypothetical Condition
The term “Hypothetical Condition” is defined by USPAP as:
“That which is contrary to what exists but is supposed for the purpose of the analysis”
The Hypothetical Condition within this report is that subject property is enhanced by the improvements and/or fee credits to be funded by bonds issued by the 2026 series of bonds for Menifee CFD No. 2022-3 IA 1.
Extraordinary Assumption
The term “extraordinary assumption” is defined by USPAP as:
“An assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser’s opinions or conclusion”
2 USPAP 2020-2021 Edition
Item Title: 12.1
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The first extraordinary assumption in this report is that the reported sales information and remaining land development cost information, as received from the builder, are true and accurate. We have reviewed the sales information and verified samples against public record information; however, all sales have not been verified through public record. In addition, we have reviewed the costs and they appear reasonable; however, we are not experts in the field of cost estimating. It should be noted that these costs were relied upon in the valuation of the subject properties and if the actual costs differ, it could alter the value conclusions.
The second extraordinary assumption in this report is that the completion of Westside and Eastside parks along with the completion of the recreation center does not slow or thwart the obtaining of building permits or certificate of occupancy permits on the homes.
Per the current development agreement Lennar can obtain 200 occupancy permits in the west side tracts (37408-1, 37408-2, 37408-3 and 37408-4) prior to Westside Park being completed and 95 occupancy permits in the eastside tracts (37409-1, 37409-2 and 37409-3) prior to Eastside Park being completed. Westside Park is currently estimated to be completed in the fall of 2026 and Eastside Park by year-end. The builder does not believe this condition of development will hinder the project and believes the parks will be completed or the city will work with the builder to release permits prior to the parks being completed. To date, individuals own 127 homes in the west side tracts and no homes in the east side tracts within Legado, Improvement Area No. 1. It is assumed that construction, completion and occupancy of the homes is not affected by this issue.
PROPERTY RIGHTS APPRAISED
The property rights being appraised are of a fee simple interest, subject to easements of record and both series of Menifee CFD No. 2022-3 IA 1 bonds. The definition of “fee simple estate” is defined by USPAP as:
“absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.”
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 228
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May 6, 2026
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EFFECTIVE DATE OF VALUE
The subject property is valued as of March 3, 2026.
DATE OF REPORT
The date of this report is April 2, 2026.
SCOPE OF APPRAISAL
As previously stated, the purpose of this appraisal is to report the appraiser’s best estimate of the market value for the subject properties. This appraisal will be presented in the following format:
County of Riverside Description
City of Menifee Description
Immediate Surroundings
Brief Description of City of Menifee CFD No. 2022-3 IA 1 Subject Property Description
Riverside County Housing Market Discussion
Highest and Best Use Analysis
Valuation Procedures, Analyses and Conclusions
Appraisal Report Summary
The subject property consists of 491 proposed single-family houses within seven contiguous tract maps being built out into four communities. Between all four communities there are 127 homes completed and closed to individuals, eight models, 30 production homes over 95 percent complete (21 in escrow), 77 homes under construction (11 in escrow), and 249 lots. In valuing the subject property, the value estimates will be based upon the highest and best use conclusion using the Sales Comparison Approach. The Sales Comparison Approach to value is defined as:
“…a set of procedures in which a value indication is derived by comparing the property being appraised to similar properties that have been sold recently, then applying appropriate units of comparison and making adjustments to the sale prices of the comparables based on the elements of comparison. The sales comparison approach may be used to value improved properties, vacant land, or Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
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land being considered as though vacant; it is the most common and preferred method of land valuation when an adequate supply of comparable sales is available.”3
In the Sales Comparison Approach, market value is estimated by comparing properties similar to the subject property that have recently been sold, are listed for sale or are under contract. Along with the Sales Comparison Approach, a Discounted Cash Flow Analysis is considered for the builder-owned existing homes. Due to the number of homes under a single ownership, a bulk value is needed in order to determine the current market value.
Neither a cost nor income approach was utilized as they were not considered necessary to arrive at credible results.
The due diligence of this appraisal assignment included the following:
1. Compiled demographic information and related that data to the subject properties to perform a feasibility/demand analysis.
2. Gathered and analyzed information on the subject marketplace, reviewed several real estate brokerage publications on historical and projected growth in the subject market and researched the micro and macroeconomics within Riverside County and the Menifee area.
3. Inspected the subject property between January 15, 2026, and March 3, 2026.
4. Had the property flown for an aerial photograph on February 12, 2026.
5. Interviewed representatives from the builder to obtain available information on the subject property.
6. Reviewed Preliminary Title Reports on the subject property.
7. Reviewed the City of Menifee General Plan Land Use Map, Zoning Map, tentative map/site plan and recorded Tract Maps regarding entitlements and allowances on the subject site.
8. Reviewed the Legado Specific Plan.
9. Searched the area for relevant comparable new home residential projects, including sales prices and concessions and interviewed representatives from each comparable neighborhood.
3Dictionary of Real Estate Appraisal, 4th Edition, 2002 Item Title: 12.1
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Item Page Number: 230
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10. Reviewed sales brochures and sales information on each of the subject neighborhoods.
11. Reviewed actual builder sales information on all closed homes and current escrows for each neighborhood.
12. Reviewed Multiple Listing Service (“MLS”) information on re-sales and current listings of existing homes within City of Menifee CFD No. 2022-3 IA 1.
13. Inspected the subject property for any for-sale or property listing signs that may not be listed on the MLS yet.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 231
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May 6, 2026
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REGIONAL AREA MAP
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 232
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COUNTY OF RIVERSIDE AREA DESCRIPTION
Location
The subject property is located in the southwestern portion of Riverside County (the “County”) east of I-215 along the south side of Rouse Road, north of McCall Boulevard at Sherman Road in the northern portion of the City of Menifee (“City”). The County encompasses approximately 7,300 square miles, and includes large expanses of undeveloped deserts, valleys, canyons, and mountains. The County is a major beneficiary of outward urban pressure from Orange and Los Angeles Counties as well as growth from San Diego County to the south. Although located at the periphery of most urban activity in Southern California, Riverside County, particularly the western area, has been a major growth area and is perceived by most observers as an area expected to continue to grow. Riverside and San Bernardino Counties are considered distinct from Los Angeles and Orange Counties and belong to the same Metropolitan Statistical Area (“MSA”). This area, consisting of San Bernardino and Riverside Counties, is commonly referred to as the Inland Empire.
Transportation
The subject property is situated northeast of I-15, just east of I-215, along the south side of Rouse Road in the northern portion of the City. I-15 travels in a generally northerly/southerly direction and provides access to Barstow and Nevada to the north and San Diego to the south. The intersection of Highway 74 and I-15 is about nine miles southwest of the subject. Highway 74 provides access to the west into Orange County on what is also known as Ortega Highway and access to the east into the cities of Perris and Hemet. Interstate 215 is approximately 0.20 miles west, travels in a northerly/southerly direction within the County, branching off from I-15 and heading generally north where it parallels I-15 to the east and merges back into I-15 approximately 35 miles northwest of the subject in San Bernardino County. In addition, the 60 Freeway runs in an east-west direction approximately 15 miles north of the subject providing access into Los Angeles County to the west and merges with Interstate 10 to the east which provides access across California and into Arizona.
Item Title: 12.1
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The County is served by Amtrak and Metrolink as well as several rail freight lines. The Ontario International Airport provides regional air service and is located approximately 30 miles northwest of the subject property while the Orange County Airport is located approximately 40 miles west and the San Diego International Airport is located about 55 miles south. In addition, the County has extensive trucking corridors along the previously referred to interstates, highways, and state freeways.
Population
The County has experienced population growth for several decades and is anticipated to continue to do so in the foreseeable future. Per the California Department of Finance, January 1, 2025 (most recent available), County population was 2.495 million, representing a one-year increase of 0.2 percent. This compares to an average annual growth rate over the past fourteen years of about 0.7 percent, and an average annual growth rate of approximately 2.5 percent for the previous eighteen-year period. It should be noted however, California’s overall population increased for the first time in 2024 by
0.2 percent following three years of decreasing population statewide. Current State projections for Riverside County suggest the population is anticipated to reach approximately 2.533 million by 2030, indicating an average annual increase of approximately 0.26 percent over the next five years. The forecasted population for 2030 was reduced from an estimated 0.7 percent annual growth rate over the past year. Future growth is predicted assuming a more stable market than was seen prior to the Great Recession.
Economy
The U.S. economy has experienced challenging times in the past five years due to reactions from the COVID disruption and changes in the federal administration. These economic challenges include significant inflation, volatile interest rates, banks’ instability, the unknowns on tariff agreements and reaching an agreement on the debt ceiling which shut down the government for 43 days ending November 12, 2025.
During COVID, the Federal, State, County and City Governments (“Governments”) originally shut down non-essential businesses and areas where social gatherings occur Item Title: 12.1
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in order to slow the spread of the virus. This created a strain on small and large businesses alike. Restaurants and hotels were hit hard and travel reduced drastically as citizens were urged to stay home. Layoffs occurred with reports of 40 million people filing for unemployment in the first few months of the pandemic. The Governments attempted to curtail the job losses and hardships with the approval of over $5.6 trillion in COVID relief to our nation. In addition, the Federal Reserve Board (“Board”) reduced interest rates and started quantitative easing by buying bonds. This legislation helped shore up the U.S. economy; however, due to the significant amount of new money introduced into the economy, inflation began occurring at a rate not seen for 40 years. In June 2022 the national inflation rate hit a peak of 9.1 percent with the current (January 2026) rate at 2.4 percent. This compares to a 1.4 percent annual inflation rate for 2020, a 4.7 percent annual rate for 2021, a 8.0 percent annual rate for 2022, a 4.1 percent annual rate for 2023, a 2.9 percent annual rate for 2024 and a 2.7 percent annual rate of 2025. This compares to an average of 1.74 percent annual rate for 2010 until 2020. Whether it was a result of world turmoil, supply chain issues due to the COVID disruption, additional money entering the economy or tariffs, inflation hit Americans hard.
In an effort to curb inflation, the Board began raising interest rates. Between March 2022 and August 2023, there were eleven interest rate increases rising the Federal Funds Rate (“FFR”) from 0.25 – 0.50 percent to 5.25 – 5.50 percent. The Board kept rates at 5.25 –
5.50 percent from September 2023 until September 2024 with three decreases occurring through December 2024, ending with the rate at 4.25 – 4.50 percent. This rate continued until September, October and December 2025, with three additional decreases bringing the current FFR to 3.50 – 3.75 percent. At the first Board meeting of 2026, they kept the rate steady as they are closely watching all signs of the economy and do not want to create additional inflation. While the eleven increases appeared to help slow inflation, the quick, significant increases strained bank balance sheets and created significant volatility on home mortgages. The FFR increases which occurred between March 2022 and August 2023, increased a typical 30-year fixed mortgage rate from 2.98 percent as of November 10, 2021, to the high of 7.79 percent as of October 2023; however, the rate has dropped to 6.1 percent as of January 29, 2026 (per Federal Reserve Economic Data- St. Louis) with mortgage rates generally between 6.0 and 6.5 percent since October 2025.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 235
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This steep increase which occurred in mortgage interest rates significantly affected the real estate market. The first-time homebuyer pool grew up thinking interest rates were always sub-four percent and are still reeling from shock over the recent 6.0 to 7.0 percent rates. In order to combat the unaffordability of these higher rates, many homebuilders however, have been “buying down” the mortgage rates in order to keep new home sales going. This will be discussed further in the Riverside County Housing Market section later within this report.
On October 1, 2025, the US government shut down due to the government being unable to reach agreement on a spending plan. The main issue was the extension of health care subsidies which began during the COVID pandemic due to healthcare costs skyrocketing.
After a 43-day shutdown, an agreement was reached which extended money for most federal agencies until January 30, 2026, along with funding for food aid, the Department of Agriculture, Congress and veterans affairs until September 2026. While the government is again open and working, it appears there may be an additional partial shutdown as Congress cannot agree on Department of Homeland Security funding. No long-term decisions have been reached.
The COVID disruption to the economy also caused extreme volatility in the stock market with the Dow Jones Industrial Average (“DJIA”) dropping from 29,398 in February 2020 to 19,174 in March 2020, a drop of 37 percent. Government interventions resulted in a bounce back in the DJIA to 27,111 by June 2020 with the stock market then climbing up to a peak of 36,799 in January 2022. In February 2022, Russia began invading Ukraine which caused volatility in world economics followed by U.S. inflation resulting in a 20 percent drop to a low on September 30, 2022 (28,150) with a bounce back to between 33,000 and 34,000 throughout the majority of 2023. On October 7, 2023, Israel declared war on Hamas which added to the strain causing another drop of around eight percent with the low on October 27, 2023, to 32,417. The FFR rate increases began helping to stabilize the economy (reducing inflation) to a point where analysts began predicting decreases in the FFR in 2024. This occurred in late 2024 with three reductions which buoyed the stock market with a new high of 44,910 which was reached in late 2024. In 2025 the stock market saw volatility due to the new administration’s uncertain tariffs (hit Item Title: 12.1
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annual low of 38,315 in April), followed by a generally steady increase mostly due to the NASDAQ (tech heavy index) increasing about 50 percent, partially due to the race for Artificial Intelligence (“AI”). On February 28, 2026, the U.S. and Israel launched airstrikes on Iran, and it is too soon to tell how this will affect the U.S. economy. As of March 3, 2026, the DJIA is at 48,501, near the all-time high of 49,590 on January 12, 2026. It should be noted that the dollar has weakened with gold and silver at or near all-time highs.
Current concerns on the U.S. economy include the nation’s debt, global wars, tariff uncertainties and the debt limit which can only be increased through government approvals.
The significant increase in mortgage rates between 2022 and 2023 is just one part of the puzzle affecting the impact of new housing on the broader economy. Additional risks include homebuilders trying to find balanced inventory levels, supply chain issues, both wage and price increases, unknown tariffs on building materials, construction workers immigration status, the affordability index at all-time lows and persistent inflation. Over the past 25 years, the Inland Empire economy saw significant cycles with home prices almost doubling from 1995 to 2005, then falling by over 50 percent during the Great Recession, taking prices back to 2002 levels in 2011. Home values appeared to hit bottom in 2009 then remained essentially flat for two to three years with the majority of the Inland Empire housing market seeing an improvement beginning in mid-2012. Contrary to homebuilders’ original thoughts of a slowdown due to the pandemic, new home buyers stepped up in the spring of 2020 and new home sales were significantly higher during the second half of 2020 versus the previous year and continued extremely strong throughout 2021. This exceptional activity in new home sales was the one bright spot in the COVID recession and is thought to be due to several factors, including: a tight supply of resale homes; historically low interest rates; millennials finally buying homes; and the work from home factor which began during the pandemic and allowed residents to live in more suburban areas without long commutes. As rates began increasing in early 2022, there was a significant slowdown in home sales within the Inland Empire, with year-over-year decreases in home listings of about 30 percent between October 2022 and October 2023 as homeowners did not want to give up their low-interest mortgages. The scarcity of existing home listings put pressure on pricing as the demand for homes continued with Item Title: 12.1
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median home prices in the Inland Empire increasing about 50 percent from 2019 levels.
It should be noted however, the increase in pricing has slowed substantially with most indexes reporting a slight decrease over the past year.
While most jobs have come back, job losses were significant during the COVID recession as the Nation’s unemployment rate went from 3.5 percent in February 2020 to 14.4 percent in April 2020 with decreases through the fall season of 2020. Since that time the national unemployment rate generally ranged between 3.5 percent and 4.5 percent between December 2021 and today with the December 2025 National unemployment rate at 4.4 percent. The unemployment rate for the MSA was estimated at 5.1 percent (as of December 2025, most recent available per the Employment Development Department). This reflects a decrease from the peak during the Great Recession of 15.1 percent in 2010 and a decrease from the peak during COVID of 14.9 percent. As of December 2025, Riverside County’s unemployment rate was 5.2 percent and San Bernardino County had a 5.0 percent unemployment rate. The current unemployment rate for the MSA of 5.1 percent is the same as the California rate at 5.1 percent and higher than the December 2025 National rate of 4.4 percent. Below is a table comparing Riverside County’s unemployment rate to the unemployment rates of the surrounding counties as of December 2025.
Jurisdiction As of Unemployment Rate*
Los Angeles County Dec-2025 5.0%
Riverside County Dec-2025 5.2%
San Bernardino County Dec-2025 5.0%
Orange County Dec-2025 3.9%
San Diego County Dec-2025 4.4%
Source: State of California E.D.D.; *Not Seasonally Adjusted
The latest UCLA Anderson Forecast (“Forecast”) was issued December 3, 2025, with conflicting information as AI-driven investment continues to fuel growth however they state tariffs, immigration policy and weak labor markets are restraining momentum across key sectors. They anticipate a US economy which is expected to soften through the first quarter of 2026 before regaining strength later in the year. The AI-related investment was originally estimated at $250 billion in 2025 had surpassed $405 billion in December with further increases expected in 2026. Offsetting this, employment growth has slowed Item Title: 12.1
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sharply, they predict inflation to peak at 3.5 percent in early 2026, driven by pass-throughs from earlier tariff hikes. Overall GDP growth is anticipated to soften in early 2026, partly due to the temporary effects from the federal government shutdown, however later in 2026, GDP growth is expected to rebound.
California’s economy continues to outpace the nation’s in high-productivity sectors such as AI, aerospace and advanced manufacturing. Nearly 70 percent of all U.S. venture funding in early 2025 went to California and seven of the ten largest investment deals in the Americas in 2025 occurred in-state. This strength masks a growing divide as construction, non-durable goods manufacturing, retail and leisure and hospitality remain under pressure from federal spending reductions, tariffs, elevated costs and the early effects of deportation policies. Payroll job losses through the first eight months of 2025 (latest available at time of the Forecast) marked the first sustained decline since the pandemic. Housing remains a significant constraint within the State. Building permits have stayed subdued despite the elevation in home prices and the urgent need for new construction following the December 2024 and January 2025 wildfires. Workforce shortages tied to deportations, tariff-driven input costs and persistently high financing costs all contribute to slow progress in residential building. Goods movement offers a bright spot as air cargo volume is reflecting steady demand in higher-income households and businesses linked to the state’s technology sector. The Forecast calls for a gradual improvement beginning in late 2026 with unemployment rates averaging 5.5 percent in 2025, 5.5 percent in 2026 and 4.6 percent in 2027, employment growth at 0.6 percent in 2025, 0.7 percent in 2026 and 2.0 percent in 2027. Higher interest rates, shortages of construction labor and the rebuilding of damaged and destroyed homes lowered the residential construction forecast which is now anticipated to be 101,000 new permits in 2025 and grow to 121,000 by the end of 2027. These permit estimates are significantly down from the June 2024 Forecast when they anticipated 155,000 new homes in 2025.
As interest rates rose in 2022, existing homeowners didn’t want to give up their sub-four percent mortgages, so existing home listings slowed substantially which increased new home sales. This increase in sales was in addition to the COVID disruption increase in Item Title: 12.1
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new home sales. While new homes historically captured 10–13 percent of total home sales; over the past few years, new homes captured 25-30 percent of total home sales.
As a final indicator of overall economic activity for the region, we have reviewed the rise and fall of TEUs (Twenty-foot Equivalent Units – i.e., containers) being processed in the local ports. This is especially important for the Inland communities, as it represents much of the growth in development of West Coast distribution centers and warehouses in the Inland Empire linked to supply-chain nodes in the Pacific Rim. The chart below shows TEU activity at the Port of Long Beach. Generally, there had been increases since 2009 except for slight dips in 2016, 2019, 2022 followed by an over 12 percent dip in 2023 due to cooling consumer demand. The calendar year 2024 saw an over 20 percent increase while in 2025 there was a 2.5 percent increase, back to a typical overall trendline.
Government
A Board of Supervisors oversees the County as the governing body of the County, certain County special districts, and the County Housing Authority. The Supervisors enact ordinances and resolutions, adopt the annual budget, approve contracts, and appropriate funds, determine land use zoning for unincorporated areas, and appoint certain County officers and members of various boards and commissions. The Board of Supervisors is elected from five different districts within the County.
4.05.06.07.08.09.010.011.0'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 25TEU's (millions)YearPort of Long Beach TEUs Item Title: 12.1
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Education
Menifee Union School District (K thru 8th) and the Perris Union High School District serve the subject area. The Menifee Union School District operates 11 elementary schools and four middle schools, one K-8 school (Harvest Hill STEAM Academy), two alternative schools and one preschool. It should be noted that Hans Middle School (which serves the subject area) will be teaching K-8 beginning in the 2026/27 school year. Perris Union High School District covers a larger area than Menifee Union and operates five high schools, four alternative high schools and one alternative middle school to serve the greater Perris area including Menifee. Higher education is available within an hour’s drive at the University of California campuses at Riverside and Irvine or California State University campuses in San Bernardino, San Marcos, Fullerton, and Pomona along with several additional private colleges. The closest community college is Mt. San Jacinto College, which has a campus in Menifee.
Conclusion
Population in the County has increased over the past 20 years with predictions for continued population growth. The Nation’s economy has been slowing after the Federal Reserve Board increased the Federal Funds Rate over five percent to fight historical inflation which began during COVID. One bright spot during COVID was housing. The region’s relative affordability and low interest rates, coupled with the rising prices in the coastal market and the demand for housing, set up a new housing boom in the Inland Empire. This was followed by a significant drop in existing home sales due to existing homeowners being unwilling to give up their low-rate mortgages, which turned out to be a boon for new homes. Current concerns for the Inland Empire economy include the unknowns of the new Administration, inflation, the high prices of homes, mortgage interest rates, supply chain issues, unknowns of labor, and world conflicts, which are all creating volatility in both local and global financial markets. In conclusion, the County is expected to continue to grow in population due to its Southern California location, the availability of land, and the relatively lower land and housing prices in comparison to adjacent Orange, Los Angeles, and San Diego Counties.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 241
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MENIFEE AREA MAP
Item Title: 12.1
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CITY OF MENIFEE DESCRIPTION
The subject property is situated in the northern portion of the City of Menifee, which is located in the southwestern portion of the County. Menifee became a city in October 2008 after voting to incorporate. Menifee was the 26th city within the County of Riverside and is located along both sides of I-215 between Murrieta and Perris. The City includes the diverse lifestyle communities of Menifee, Sun City, Quail Valley, and portions of Romoland. The City is bordered by unincorporated lands and the City of Murrieta to the south, the cities of Lake Elsinore and Canyon Lake to the west, the City of Perris, area of Winchester and unincorporated lands to the north and unincorporated lands (portion known as the French Valley and portion known as Winchester) to the east.
In the 1960s, early development of the Menifee Valley began when the concept of an active retirement community was envisioned for Sun City. Since that time the Menifee Valley has grown substantially. At incorporation in 2008, the City of Menifee had a total population of 60,000 residents. The Menifee Valley includes some portions of Romoland that are not included within the city limits. Although this area currently serves as a bedroom community for the workforces of North San Diego County, Temecula, Riverside, Corona and Orange County, economic development groups are in the process of recruiting future quality employers to relocate in the Menifee Valley. Per the City’s website, the “Business Friendly” City is investing more than $484 million in infrastructure and traffic improvement projects over the next five years. There have been many new commercial developments in the past 15 years on the I-215 corridor south of McCall Boulevard. In addition, there are about twenty residential projects either under construction or in planning or engineering with Legado (subject property - proposed for 1,022 new homes) and Underwood (543 new homes) at McCall and I-215, Menifee Valley (1,718 residential units) at Matthews and Briggs, Salt Creek (325 proposed units) at Briggs and Simpson, the Menifee Village SPA Amendment to increase residential units, Banner Park II (182 new homes), Rockport Ranch (305 units), Nautical Cove (239 proposed units) and 394 proposed units in the Cantalena Specific Plan. This list includes only the larger (150 or more units) developments on the east side of I-215 in Menifee, Item Title: 12.1
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which total over 4,500 proposed single family residential units either under construction or in the planning stages.
Between 1990 and 2003, there was an extraordinary growth rate of 48 percent in the community of Menifee. The population is estimated at 115,316 as of January 2025 per the California Department of Finance (most recent available), representing a growth of
1.3 percent year-over-year. This compares to the Riverside County past year’s growth of
0.2 percent from January 2024 to January 2025. The City’s higher growth rate than the County is due to the wide expanses of land available for development within the city, and because of the currently selling planned communities such as Cimarron Ridge (Pulte), Ladera (KB Home) and Quartz Trail (Lennar) west of I-215 and east of I-215 is Legado (subject - Lennar), Banner Park II (Pulte) and Nautical Cove (KB Home). Additionally, just outside of the city limits to the east in the unincorporated area of Winchester there is Acadia (Beazer), La Ventana (DR Horton), Creekstone (KB Home), Leon Ridge (Beazer), The Woods (Richmond American and Foremost) and Outlook (TriPointe) while in the French Valley area (south of Winchester) there are Canterwood (DR Horton and KB Home) and Brevarde (Richmond American).
In the past 15 years Menifee has had exceptional growth in the commercial and retail sector. Prior to the Great Recession several shopping centers were either constructed or planned. Included are the Town Center Marketplace, which is anchored by Aldi Market, PetSmart, and several national restaurants (located at the southwest corner of Haun and Newport Roads), and the popular Menifee Countryside Marketplace, which is anchored by Target, Lowe’s, Kohls, Ulta, TJ Maxx, Best Buy and Home Goods along with numerous restaurants (located at the southwest quadrant of I-215 and Newport Road). The Town Center Specific Plan (“TCSP”) includes 170 acres of mixed use with a proposed City Hall, a Fairfield Inn & Suites by Marriott on Town Center Drive (now open), the Family and Civil Courthouse, along with several completed new home neighborhoods and Riverwalk Village at Town Center by Richmond American which is currently selling. While the Krikorian retail center and partially completed theaters were demolished in 2025 after several years of litigation, other new commercial development has proceeded within TCSP, with both Center Pointe (retail northwest of the theaters) and Menifee Plaza (retail Item Title: 12.1
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northeast of theaters), which front Newport Road, opening in 2025. Along the north side of Newport at Haun Road is a newer commercial area that houses the Menifee Union School District’s administration building, the existing City Hall, a Post Office, and several national chain restaurants. In the subject’s immediate area, WalMart has proposed a new store at the northeast quadrant of I-215 and McCall Boulevard.
The Menifee community also benefits from its proximity to Diamond Valley Lake, which was dedicated on March 18, 2000, and initially filled by the end of 2002. Diamond Valley Lake is located approximately five miles east of the City and is a 13,000-acre site with a 4,500-acre reservoir for boating and fishing. There is no swimming, water skiing or personal watercraft allowed in Diamond Valley Lake. The reservoir contains 800,000 acre-feet (260 billion gallons) of water and is owned by the Metropolitan Water District.
Access to Diamond Valley Lake is via Newport Road which becomes Domenigoni Parkway about 1.5 miles east of I-215 near Winchester.
Land prices in the Menifee area have been historically lower than prices in the Murrieta and Temecula areas. As housing prices increased during the COVID disruption, the price difference narrowed between Menifee and Murrieta/Temecula, however, there is still a variance. The price difference appears to be due to the Murrieta/Temecula area being along the I-15 corridor, which commands a premium due to easier commuting to adjacent counties. Menifee is located along the I-215 corridor, which creates a slightly longer commute to employment centers.
As discussed under the economy section under County of Riverside Area Description, new home sales had prospered during the COVID pandemic and Menifee is no exception.
Per the February 22, 2026, Ryness Report (a new home sales tracking and research company), there are 44 new home projects currently selling in the South Riverside submarket with 19 of the 44 new home projects located in Menifee. This compares to 46 new home projects within the South Riverside submarket selling one year ago, with 16 in Menifee. In further review, nine of the communities in Menifee in February 2025 have sold out and closed and 12 new communities have opened, suggesting Menifee is a strong market with new home communities opening in the past year. The average sales rate per Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
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project year to date for the week ending February 22, 2026, in the South Riverside submarket was 3.4 homes per month which is the same as in 2025. In comparing the South Riverside Submarket with the overall Inland Empire, the average sales rate per project year to date as of February 22, 2026, the sales rate per month was 3.0 sales while the average 2025 sales rate per project was slightly higher at 3.3 sales per month.
In summary, the future growth of Menifee should continue. While there are a slightly higher number of new home communities currently selling in the city compared to one year ago, several have sold out and closed and new communities have opened.
Additionally, there are a significant number of new home communities in the planning stages, suggesting population growth. Housing is less expensive than the Murrieta/Temecula neighboring communities, which is attractive to homebuyers as price points are important in today’s Inland Empire housing market. Diamond Valley Lake is another asset to the Menifee Valley area. The lower land prices and the availability of land for development combine to make Menifee an excellent candidate for future growth.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 246
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LEGADO SPECIFIC PLAN / IMMEDIATE SURROUNDINGS
The subject property is located within The City of Menifee Legado Specific Plan (SP2017- 187 “Specific Plan”) which was adopted June 17, 2020. The entire Specific Plan covers an estimated 331 acres and is proposed for 1,061 total dwelling units. This appraisal is for Improvement Area 1 of Legado or generally the northern portion of the entire Specific Plan. Below is an outline of the entire Legado Specific Plan with the subject area outlined in red.
The entire Specific Plan is generally bounded by Encanto Drive and I-215 to the west, Rouse Road to the north, Antelope Road to the east and Chambers Avenue to the south (with the exception of the community park site and a commercial site which are along the south side of Chambers Avenue). Per the Specific Plan, there are 20.1 acres of commercial use (along the west side of the project with I-215 Freeway visibility) and 216 acres of residential use. In the above map, the red areas along Encanto Drive on the western border are zoned for commercial use. Below is a table showing the residential Planning Areas, their acreage, number of units allowed and minimum lot size with the subject property in shaded grey.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 247
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P.A. Min. Lot Size Acres Density # DUs
West Village
1 5,000 sf 14.2 5.2 74
2 6,000 sf 10.6 4.7 50
3 5,500 sf 23.8 4.9 117
4 7,000 sf 10.9 3.9 43
5 7,000 sf 4.3 4.7 20
6 5,000 sf 17.9 5.5 99
7 6,000 sf 17.2 4.7 80
East Village
8 5,000 sf 15.6 5.6 88
9 7,000 sf 18.0 3.8 68
10 5,500 sf 12.9 4.7 60
11 5,500 sf 18.7 5.1 96
12 7,000 sf 12.4 4.5 56
13 5,000 sf 14.6 5.5 81
14 7,000 sf 12.5 4.7 59
15 5,500 sf 13.3 5.3 70
Totals 216 4.9 Avg. 1,061
While there are 500 dwelling units allowed within the subject seven planning areas, the recorded tract maps allow for 491 residential units which is within the allowed number of units. The Legado master planned community’s amenities include a proposed pool, playground, soccer field, clubhouse, tot lot, community center, sport court, picnic area, dog park, greenbelt, trail and BBQ areas.
The subject site is located along the southern side of Rouse Road, east of I-215 in the northern portion of the City of Menifee. The project has access from I-215, east on McCall Boulevard, north on Encanto Drive to Rouse Road and east to the subject site. There are three entrances into the subject property off Rouse Road, which are Rockabilly Road, Sherman Road and Ballad Boulevard. North of the Specific Plan beyond Rouse Road are existing residences and a vacant parcel proposed for residential development. To the west is the commercial designated parcel which is vacant and a detention basin, beyond which is Encanto Road, beyond which is I-215 with existing residences in the area known as Sun City west of I-215. To the south is the Hans Middle School (expanding to a K-8 school in the 2026/27 school year), existing residences, a skilled nursing facility, a mobile home park and a vacant parcel on the southeastern border. East of the Specific Plan are existing residences and a vacant hilly parcel which is open space within Shadow Mountain, the master plan to the east which was developed by KB Home over the past five years.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 248
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Access is excellent with an offramp from I-215 at McCall Boulevard and east to Encanto Drive (frontage road to I-215) and north to Rouse Road, or east to Sherman Road and north to the subject. South of McCall Boulevard is generally existing residential along with some vacant commercial zoned parcels. There is a gas station at the northeast corner of I-215 and McCall Boulevard with a large vacant parcel at the northeast corner of Encanto Drive and McCall Boulevard which is planned for a new WalMart. Further east on McCall Boulevard is the Menifee Global Medical Center Hospital, the aforementioned Shadow Hills Development by KB Home, Boulder Ridge Elementary, Heritage Village, which was developed by Lennar and Heritage Lake, a large master planned development which was built out by several homebuilders over the past 20 years.
The nearest shopping center is available about one-half mile west at a Stater Bros. anchored neighborhood shopping center which is adjacent to a Von’s Supermarket anchored center, both located generally at the southwest quadrant of I-215 and McCall Boulevard. More regional shopping is available within three miles south at the southwest quadrant of I-215 and Newport Road at Countryside Marketplace which is anchored by Home Goods, Lowe’s Home Improvement, Target and Kohls along with many national restaurant chains. In addition, there is an Aldi supermarket across from the Countryside Marketplace beyond which is Menifee Town Center with a new Sprouts Farmers Market.
Approximately twelve miles south is Promenade Temecula, a major shopping mall anchored by Macy’s and JC Penney, located off the I-15 near the intersection of I-215 and Winchester Road (State Route 79). Future neighborhood shopping is anticipated to be at the proposed WalMart center at I-215 and McCall Boulevard.
The subject property is located within the Menifee Union School District (K-8th) and the Perris Union High School District (9th -12th). The community is served by Heritage High School, about two miles northeast; Hans Middle School located adjacent to the Legado Specific Plan to the south at Sherman Road and Chambers Avenue and Freedom Crest Elementary School located about 2.5 miles southeast of the subject. Beginning in the 2026/27 school year, Hans Middle School will house both TK – 5th grade and 6-8th graders and will be known as Hans Christensen Academy and is located adjacent to the Legado Specific Plan.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 249
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May 6, 2026
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CITY OF MENIFEE CFD NO. 2022-3 IA 1 (LEGADO)
Menifee CFD No. 2022-3 IA 1 (Legado) Improvement Areas 1 and 2 was formed per the Resolution of Formation of the City Council of the City of Menifee dated September 21, 2022. Additionally, the City Council adopted a change of proceedings to divide Improvement Area 2 into Improvement Areas 2 and 3. Per the City of Menifee CFD No. 2022-3 CFD Report, the CFD is comprised of approximately 263 gross acres anticipated to include a total of 1,022 residential properties at buildout. The commercial lands within Legado are not included. Menifee CFD No. 2022-3 IA 1 is divided into three tax zones and is encompassed by Tract Maps 37408-1, 37408-2, 37408-3, Lots 1-42 of 37408-4, 37409-1, 37409-2 and 37409-3 which total 491 proposed single family detached residential properties (subject property). The boundary map is shown below with a red star on Improvement Area 1, generally the north portion. A larger version of the boundary map is located in the Addenda.
Per the CFD Report prepared by Spicer Consulting Group and dated November 6, 2024, the types of facilities that are proposed by Menifee CFD No. 2022-3 consist of the Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
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construction, purchase, modification, rehabilitation, expansion and/or improvement of (i) drainage, library, park, roadway, traffic, administration and general government facilities, animal shelter facilities, fire and safety and other public facilities of the City including the foregoing public facilities which are included in the City’s fee programs with respect to such facilities and authorized to be financed under the Mello-Roos Community Facilities Act of 1982, as amended (the “City Facilities”); (ii) water and sewer facilities including the acquisition of capacity in the sewer system and/or water system of the Eastern Municipal Water District which are included in EMWD’s water and sewer capacity and connection fee programs (the “Water District Facilities”) and (iii) interim and permanent school facilities of the Menifee Union School District and Perris Union High School District, including classrooms, multi-purpose facilities, administration and auxiliary space at school facilities, athletic fields, playgrounds and recreational facilities and improvements thereto, landscaping, access roadways, drainage, sidewalks and gutters and utility lines, furniture, equipment and technology, including technology upgrades and mobile devices and infrastructure therefore, with a useful life of at least five (5) years at such school facilities (the “School Facilities” and together, with the City Facilities and the Water Facilities, the “Facilities”), and all appurtenances and appurtenant work in connection with the foregoing Facilities, including the cost of engineering, planning, designing, materials testing, coordination, construction staking, construction management and supervision for such Facilities. In addition, incidental expenses include the cost of engineering, planning and designing the Facilities; and all costs including costs of the property owner petitioning to form the District, associated with the creation of the District, the issuance of the bonds, the determination of the amount of special taxes to be levied and costs otherwise incurred in order to carry out the authorized purposes of the District and any other expenses incidental to the construction, acquisition, modification, rehabilitation, completion and inspection of the Facilities.
Per the CFD Report, the Cost Estimate of facilities to be financed through the issuance of CFD No. 2022-3 bonds is estimated to be $23,079,160 for Improvement Area 1, $9,595,492 for Improvement Area 2 and $14,954,029 for Improvement Area 3. The Estimated Bond Allocation per the CFD Report is as shown on the following page.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
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May 6, 2026
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IA 1 IA 2 IA 3 Bond
Allocation
Total Eligible Fees/Improvements $23,079,160 $9,595,492 $14,954,029 $47,628,681 Incidental Financing Costs $3,565,840 $1,649,508 $2,410,971 $7,626,319 Total Funded by Bond Proceeds $26,645,000 $11,245,000 $17,365,000 $55,255,000
The above amounts are allocated based upon estimated bond sizing and may change based upon market conditions at time of bond issuance. The above dollars are based on fiscal year 2024/2025 dollars. It is the appraiser’s understanding that the Improvement Area 1 bonds will be issued in two series, and this appraisal is for the first series of bonds.
Per the CFD Report, the Assigned Special Tax within Menifee CFD No. 2022-3 IA 1 for Tax Zone 1 ranges from $2,588 to $3,139 per residential unit; for Tax Zone 2 ranges from $2,731 to $3,195 per residential unit and for Tax Zone 3 ranges from $2,847 to $3,484 per residential unit with all amounts based on building square footage. For Improvement Area 1, on each July 1, commencing on July 1, 2023, the assigned special tax shall increase by two percent of the amount in effect in the prior fiscal year.
Per the latest sources and uses of funds for the first series of bonds for Menifee CFD No. 2022-3 IA 1 (Legado) dated April 2, 2026, they are projecting a bond par amount of $15,445,000 which is adjusted by the Net Original Issue Discount amount of $84,713, plus the collected net special taxes of $92,639 totaling $15,452,926. The expenditures include $13,618,680 of project fund deposits, a debt service reserve fund of $1,376,183 and costs of issuance and underwriter’s discount of $458,062 (all estimated amounts subject to change).
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 252
Menifee Mayor and City Council
May 6, 2026
Page
578 of 714
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SUBJECT PROPERTY DESCRIPTION
The subject property consists of 491 proposed single-family homes which is comprised of Improvement Area 1 of the Legado Specific Plan. Lennar is building and marketing the homes. The 491 lots are divided among seven tract maps and include four single-family detached neighborhoods within the Legado master plan: Sonrisa, Tesoro, Armonia and Belleza. Below is a phasing map showing all of Legado with the subject property outlined in red.
Location: South side of Rouse Road at Sherman Road, Menifee, California
Legal Description: Lots 1-73 of Tract No. 37408-1; Lots 1-49 of Tract No. 37408-2; Lots 1-115 of Tract 37408-3; Lots 1-42 of Tract 37408-4; Lots 1-86 of Tract 37409-1; Lots 1-67 of Tract 37409-2 and Lots 1-59 of Tract 37409-3, all located in City of Menifee, County of Riverside, California.
Owner of Record: Individual owners as to 1-22, 44-50 and 65-73 of Tract 37408-1; Lots 9-29, 36-42 of Tract 37408-2; Lots 1-24, 77-81 and 87-89 of Tract 37408-3; Lots 1-26 and 40-42 of Tract 37408-4.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 253
Menifee Mayor and City Council
May 6, 2026
Page
579 of 714
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Lennar Homes of California LLC as to Lots 23-27, 39-43, 51-54 and 61-64 of Tract 37408-1; Lots 1-7 and 45 of Tract 37408-2; Lots 82- 86 and 90-100 of Tract 37408-3; Lots 27-39 of Tract 37408-4; Lots 41-59 of Tract 37409-3
KL LB Buy 1 LLC as to Lots 28-38 and 55-60 of Tract 37408-1; Lots 8, 30-35, 43-44 and 46-49 of Tract 37408-2; Lots 25-76 and 101-115 of Tract 37408-3; Lots 1-86 of Tract 37409-1; Lots 1-67 of Tract 37409-2; Lots 1-40 of Tract 37409-3.
Three-Year
Sales History: Lennar Homes of California, LLC, a California limited liability company purchased the entire subject property (Improvement Area 1 of Legado) from BLC Fleming LLC, a Delaware limited liability company with the date of contract being August 2023. The transaction was reportedly based on a finished lot price of $232,000 per representatives of Lennar Homes. The condition of the property at time of sale was rough graded. Lennar then transferred the property to KL LB Buy 1 LLC, a Delaware limited liability company (a land bank entity related to Kennedy Lewis). As of March 3, 2026, Lennar Homes of California, LLC has “taken down” 201 lots from KL LB Buy 1 LLC. Between August 20, 2025 and March 2, Lennar has closed 127 completed homes to individuals with an additional 32 homes in escrow.
It should be noted that Improvement Areas 2 and 3 were originally anticipated to be purchased by Lennar, however they have decided not to purchase the remaining Improvement Areas. They will be marketed to Lennar at a later date or to other builders.
Assessor’s Parcel
Numbers: The subject 491 lots encompass Assessor’s Parcel 344-020-001 thru 012; 344-021-001 thru 061; 344-030-001 thru 019; 344-031-001 thru 030; 344-040-001 thru 007; 344-041-001 thru 018; 344-042-001 thru 020; 344-043-001 thru 020; 344-050-001 thru 011; 344-051-001 thru 012; 344-052-001 thru 018; 344-053-001 thru 009; 344-060-001 thru 007; 344-061-001 thru 035; 344-410-001 thru 026; 344-411-001 thru 027; 344-412-001 thru 033; 344-430-001 thru 059; 344-420-001 thru 031; 344-421-001 thru 020 and 344-422-001 thru 016.
Property Taxes: We have reviewed the Riverside County Tax Collector’s 2025 tax bill for APN 344-030-002 which is one of the model homes owned by Lennar. There are two 2025 tax bills, one original and one supplemental. The total taxes for both tax invoices are $2,337.87 for ad valorem taxes, $307.81 for debt (total for M. San Jacinto Jr.
College, MWD East, Perris Union HS and Menifee School) and Special Assessments of $4,879.88 which includes $3,019.00 for CFD 2022-3 (subject), $1,076.14 for CFD 2017-1 (City Maintenance for Tax Zone 12), $420.08 for Menifee USD 2022-1 and $342.98 for Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 254
Menifee Mayor and City Council
May 6, 2026
Page
580 of 714
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Perris Union HS CFD 92-1 along with $21.68 for miscellaneous services. It appears there will be a further updated supplement as the assessed value was based on $233,788. It is the appraiser’s understanding that the subject homes will have overall tax rates in the 1.90 – 2.00 percent range which is typical for new homes in the subject market area.
Flood Zone: Per FEMA Flood Map 06065C2060H effective August 18, 2014, the subject site is shown as Flood Hazard Zone X (area of minimal flood hazard).
Size and Shape: The subject site is irregular in shape and contains approximately 148.99 gross acres and 104.47 net acres per recorded tract maps.
It should be noted that the acreage for 37408-4 is estimated as it is a portion of the tract map. The difference between the gross and net acreages reported above includes internal streets, water quality and detention basins, two parks and the social club parcel along with some open space/landscaping lots, surrounding streets and setback areas.
Zoning: Per the City of Menifee Land Use Map, the subject site is shown as within the Legado Specific Plan (SP2017-187) which was adopted June 17, 2020. The Specific Plan designates the subject property as Planning Areas 1, 2, 3, 4, 8, 9 and 10 which when combined allow for up to 500 single family detached residential units on lot sizes ranging from 5,000 to 7,000 square feet. Per SP2017-187 the acreage for these planning areas totals 106.00 which suggests an overall density of 4.72 dwelling units per acre.
Entitlements: The subject property is covered by Tract Map Nos. 37408-1, 37408- 2, 37408-3, a portion of 37408-4, all recorded November 21, 2024, and Tract Nos. 37409-1, 37409-2 and 37409-3 which all recorded April 23, 2025. The maps are detailed in the table below
Tract No. Gross Ac. Net Ac. No. Lots Density
37408-1 15.87 10.47 73 4.6
37408-2 13.11 8.11 49 3.7
37408-3 45.88 36.73 115 2.5
37408-4* 15.43* 9.07* 42 2.9*
37409-1 23.35 15.61 86 3.7
37409-2 20.18 13.67 67 3.3
37409-3 16.17 10.81 59 3.6
Totals 148.99* 104.47* 491 4.7
*It should be noted that only a portion of Tract 37408-4 is within the subject property. The acreage has been adjusted downwards of 5.96 gross acres and 4.3 net acres from the actual -4 recorded tract map due to estimates on the acreage that is within Improvement Area 2.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 255
Menifee Mayor and City Council
May 6, 2026
Page
581 of 714
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Dividing the 491 total lots over the 148.99 gross acres equates to an overall density of 3.3 dwelling units per acre which is within the allowed density per the Specific Plan. Copies of the above tract maps are located within the Addenda of this report.
Topography: The original topography was generally level to sloping. The property has been graded into 491 single family lots. The property is generally level with street grade of Rouse Road and Sherman Road, the northern border and central bisecting arterial. There is one hilly area to the northeast and the east which are open space areas within Shadow Mountain, a master plan built out by KB Home in the past few years. The lands have been graded and developed into single- family detached lots with sizes ranging from 5,000 to 7,000 square feet (minimum lot sizes). Drainage is within an engineered street drainage system with drainage outlets and retention basins where needed. There is a large water quality/detention basin located in Tract Map 37409-1 at the southeast corner of Sherman Road and Rouse Road. Ther are additional detention/water quality basins located outside of the subject property (Improvement Area 1), however within Legado which will serve the subject area.
Soils Condition: We have reviewed the Preliminary Geotechnical Evaluation for the 331-acre Fleming Ranch (former name of Legado) prepared by LGC Geotechnical Inc. and dated March 16, 2017. The report concludes that the proposed residential development is feasible from a geotechnical standpoint, provided that the recommendations presented in the report are incorporated in the design and construction of the project. It is an assumption of this report that the soils are adequate to support the highest and best use conclusion and that all recommendations made within any soil’s reports were adhered to during construction. This is supported by existing development on the subject lands which was overseen by City inspectors.
Seismic
Conditions: Per the County of Riverside, the subject is not located in a Fault Zone or in a Liquefaction Area.
Fire Hazard Map: Per the Cal Fire - Fire Hazard Severity Zone Map of Menifee, a small portion of the subject is located in a Very High Fire Hazard Severity Zone, a small portion of the site is located in a High Fire Hazard Severity Zone and a small portion of the site is located in a Moderate Fire Hazard Severity Zone while the major portion of the site is not located within a designated fire zone. A copy of the map with the subject property’s approximate boundary outlined in blue is located in the Addenda for your review.
Environmental
Conditions: We have received information regarding the 401 permit, the 404 permit, the burrowing owl survey and the cultural resources Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 256
Menifee Mayor and City Council
May 6, 2026
Page
582 of 714
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monitoring program on the subject site. All appear to conclude that development of the subject site is feasible. We have not received a Phase I environmental assessment on the site. This appraisal assumes that there are no environmental issues that would slow or thwart development of the site. This is supported by existing development on the subject lands which was overseen by City inspectors.
Easements/
Encumbrances: We have reviewed seven Preliminary Title Reports which cover Tracts 37408-1, 37408-2, 37408-3, 37408-4. 37409-1, 37409-2 and 37409-3, all prepared by Lennar Title and dated September 15, 2025 (37408-2), December 2, 2025 (37409-2) and January 28, 2026 for the remaining of the tracts. The exceptions appear typical for subject- type lands in the area.
It is an assumption in this appraisal report that the subject lands are free and clear of any liens and/or encumbrances except for Menifee CFD No. 2022-3 IA 1 and the aforementioned assessments and CFDs. The appraiser is not a title expert, and it is recommended that any concerns relating to title should be addressed to the appropriate experts.
Utilities: All normal utilities serve the subject site by the following companies:
Electrical: Southern California Edison Company
Natural Gas: The Gas Company
Sewer/Water: Eastern Municipal Water District
Schools: Menifee Union School District /
Perris Union High School District
Streets/Access: Access to the subject property is via I-215 to McCall Boulevard, east to Encanto Drive (about 500 feet), then north about 0.75 miles to Rouse Road. There are three entrances off Rouse Road via Rockabilly Road, Sherman Road and Ballad Boulevard. The main access into the entire master plan of Legado will be from McCall Boulevard, east to Sherman Road and north to the entrance of Legado at Chambers Avenue which will take you into Improvement Area 3.
I-215 is a major Southern California Freeway beginning at the I-15 in Murrieta in Southern Riverside County and providing access north through Riverside and into San Bernardino where it combines with I- 15 once again.
McCall Boulevard is an east/west arterial with on/off ramps from I- 215 and provides access into the northern portion of Menifee. West of I-215 McCall provides access through the original Sun City area of Menifee and terminates at Valley Boulevard. To the east McCall Boulevard provides access to Legado and further east to Heritage Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 257
Menifee Mayor and City Council
May 6, 2026
Page
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Lakes, a large master planned community and terminates at Briggs Road at the City limits.
Rouse Road is an east/west access road that begins from the east at Menifee Road in Heritage Lakes, provides access through Heritage Village, Shadow Mountain, Legado and stops at Encanto Road (at I-215). Across I-215 Rouse Road begins again providing access to residential areas and terminates at Byers Road.
Sherman Road is a north/south access road generally beginning at McCall Boulevard and providing access into the City of Perris, north of the subject site.
Internal streets within the subject site include Two Cellos Way, Sitar Circle, Ukulele Circle, Pennywhistle Way, Rockabilly Road, Cowbell Court, Fiddle Lane, Twist Street, Lute Lane, Zither Way, Duet Drive, Keyboard Court, Didgeridoo Drive, Lullaby Lane, Banjo Street, Paseo Legado, Sherman Road, Bongo Way, Maracas Way,
Tumbadora Drive, Ballad Boulevard, Percussion Road, Verato Drive, Allegro Court, Leggero Lane, Percussion Road, Flat Street, Stanza Lane, Glockenspiel Court, Timpani Place, Xaphoon Circle and Marimba Court.
Current Condition: The subject property has been developed into 491 single-family detached lots with minimum sizes ranging from 5,000 to 7,000 square feet. The lots have been graded with streets completed and utilities stubbed to each lot. As of March 3, 2026, 201 of the lots have closed to Lennar and 127 of those are completed homes which have closed to homebuyers. In addition, there are eight completed model homes, an additional 30 production homes over 95 percent complete, 77 homes under construction (under 95 percent complete) and 249 generally finished lots.
Conditions of
Approval: It is the appraiser’s understanding that there are three remaining conditions that may affect the subject property. Per Lennar representatives, Westpark has to be completed prior to the 200th certificate of occupancy within any of the 37408 tracts, Eastpark needs to be completed prior to the 95th certificate of occupancy on the lots within the 37409 tracts, and the recreation center needs to be completed prior to the 500th building permit being pulled. The builder anticipates that these three issues will not slow or thwart development, sales or closings within the subject property. It is an Extraordinary Assumption of this report that no building permits or certificates of occupancy are held up due to the completion of the parks or recreation center.
Remaining
Costs: The majority of the subject lots are in a physically finished lot condition with estimated remaining hard costs and fees for land Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 258
Menifee Mayor and City Council
May 6, 2026
Page
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development including development fees (not funded by Menifee CFD 2022-3 2026 series bonds), parks/landscaping, walls, common area, streets, wet and dry utilities, grading, engineering costs and fees are estimated to be $29,915,179. This takes into account the CFD funded fees and improvements. The remaining costs for the subject property of $29,915,179 are associated with all of the builder/land bank-owned property which includes 364 lots (eight model homes, 30 homes over 95 percent complete, 77 lots with homes under construction and 249 remaining lots) suggesting an average amount of $82,184.55 per lot in remaining costs for each of the builder-owned parcels. These costs will be taken into consideration in the valuation section later within this report.
HOA Amounts: There is a Homeowner’s Association at Legado which will maintain the community pool and clubhouse, community lighting, the parks, the drainage basins landscaped areas and landscaping. The HOA monthly assessment for the overall community is currently estimated at $150 per month per home. Per Lennar representatives, the HOA amount may be reduced in the future if Lennar develops
Improvement Areas 2 and 3. For purposes of this analysis we are anticipating a $150 per month HOA fee.
Improvement
Description: Legado by Lennar includes four neighborhoods known as Sonrisa, Tesoro, Armonia and Belleza.
.
Sonrisa includes four floor plans on minimum 5,000 square foot lots with one single-story plan and three two-story plans with home sizes ranging from 1,539 to 2,069 square feet with two-car attached garages. Tesoro includes four floor plans which are all one-story on minimum 5,500 – 6,000 square feet lots. It should be noted that Tesoro Plan 1 is the same size and floorplan as Sonrisa Plan 1. The home sizes within Tesoro range from 1,539 to 2,231 square feet.
Armonia includes four floor plans with one single-story plan and three two-story plans, located on minimum 5,500 square foot lots. Armonia home sizes range from 1,936 to 2,589 with Plan 1 being identical to Plan 2 in Tesoro. Belleza includes four floor plans (however Plan 4 is not being offered at this time) with one single story plan and three two-story plans, all on minimum 7,000 square foot lots. Belleza home sizes range from 2,662 up to 4,184 square feet with the largest home being a next generation home which has a unit with a separate entrance and a kitchenette attached.
Sonrisa is more the “basic” model with additional upgrades included in Tesoro, Armonia and Belleza with Belleza having the most executive-type amenities. The information below is taken from the features listings on the Everything’s Included brochures for each neighborhood. All of the homes offer attached garages with finished walls, concrete tile roofs and roll-up insulated garage doors. Kitchens Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 259
Menifee Mayor and City Council
May 6, 2026
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include granite or quartz countertops, white thermofoil cabinets with finished interiors, concealed hinges and bar pulls, stainless steel appliances and a stainless sink. Upgrades in Tesoro and Armonia include double ovens while Belleza also includes upgraded appliances. All owner’s suites include dual top mounted sinks, Moen chrome faucets and 42” mounted mirrors along with a semi- frameless clear glass enclosed tub/shower and elongated toilets in a separate room and walk-in closets. The upper end homes include undermount sinks with some having separate soaking tubs and showers. Interiors include vinyl flooring at entry, kitchen, dining room, laundry and bathrooms, Shaw carpeting and upgraded 2-panel doors throughout and bullnose corners. The upper-end homes include ceramic tile flooring at entries Exteriors are either Spanish Colonial, Craftsman or Farmhouse influenced architecture for Sonrisa, Tesoro and Belleza with Armonia also having a Prairie option. All have side and rear vinyl fencing with a block return with vinyl gates and exterior coach lights. Energy efficiency includes electric water heaters, electric heat pump HVAC systems, dual glazed vinyl windows, low flow aerators on all bathroom faucets and low flow toilets. All homes have interior laundry rooms.
One hundred and twenty-seven of the 491 proposed homes have closed to individual homebuyers with closing dates between August 21, 2025, and March 2, 2026. Actual sales prices (including premium, upgrades, options, and all incentives) within Legado Improvement Area 1 ranged from $450,520 to $800,686. There are an additional 32 homes in escrow with estimated pricing from $601,990 to $826,377. Base pricing at Legado’s grand opening on April 26, 2025, ranged from $543,990 to $855,990 with current base pricing ranging from $534,990 to $851,990. It should be noted that Lennar is offering concessions including an interest rate buy-down for quick move-in homes. Total concessions per home within Legado have ranged from $0 to upwards of $130,000 with the average total concession equating to about $75,000 per home. All plans have seen small adjustments to base pricing ranging from a decrease of 2.5 percent to an increase of 1.4 percent.
Our search of the MLS revealed no closed resales and no homes listed on the resale market within Legado. Our physical search noted all homes appeared to be in excellent condition. The plans are detailed on the following page.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 260
Menifee Mayor and City Council
May 6, 2026
Page
586 of 714
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*One of each of these plans is a model home. There are an additional 77 homes under construction, and 249 additional finished lots.
Plan
Bd/Ba
Floors/
Parking
Sq. Ft.
Ind.
Owned
Homes
Bldr.
Owned
Homes
Sonrisa – 5,000 sf min lots
1 3 / 2 1 / 2 1,539 9 2*
2 3 / 2.5 2 / 2 1,696 10 1
3 3 / 2.5 2 / 2 1,862 10 2*
4 4 / 3 2 / 2 2,069 9 2*
Subtotal Sonrisa 38 7
Tesoro – 5,500 to 6,000 sf min lots
1 3 / 2 1 / 2 1,539 8 1
2 3 / 2 1 / 2 1,936 7 1
3 4 / 2 1 / 2 2,084 6 2
4 4 / 2 1 / 2 2,231 7 2*
Subtotal Tesoro 28 6
Armonia – 5,500 sf min. lots
1 3 / 2 1 / 2 1,936 9 3*
2 4 / 3 2 / 2 2,200 7 4
3 4 / 3 2 / 2 2,468 8 3*
4 4 / 3 2 / 2 2,589 8 4
Subtotal Armonia 32 14
Belleza – 7,000 sf lots
1 4 / 3 2 / 2 2,662 8 2
2 4 / 3.5 1 / 2 2,760 8 2
3 5 / 3 2 / 2 3,010 6 4*
4 5 / 3.5 2 / 3 4,184 7 3*
Subtotal Belleza 29 11
Total Legado 127 38
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 261
Menifee Mayor and City Council
May 6, 2026
Page
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RIVERSIDE COUNTY HOUSING MARKET
In analyzing the County’s housing market, population growth and economic conditions need to first be considered.
Population
The County has experienced population growth for several decades and is anticipated to continue to do so in the foreseeable future. Per the California Department of Finance, the January 1, 2025, County population was 2.495 million, representing a one-year increase of 0.2 percent. This compares to an average annual growth rate over the previous four years of about 0.7 percent, and an average annual growth rate of approximately 2.3 percent for the previous twenty-year period. It should be noted however, that California’s overall population decreased between 2020 and 2022 (during COVID) with the current population still not back up to the peak of 2020. Current State projections for Riverside County suggest the population is expected to reach approximately 2.533 million by 2030, indicating an average annual increase of approximately 0.3 percent over the next five years. It should be noted that the forecasted population for 2030 was recently reduced from an estimated 0.7 percent annual growth rate to 0.3 percent in the past year.
Economic Conditions
Over the past twenty-five years the Inland Empire has seen various cycles in the housing market. The Great Recession impacted the Inland Empire significantly and resulted in a longer recovery period than that of other Southern California regions. The rise and then fall of housing prices in the Inland Empire between 2004 and 2009 were considerably steeper than almost anywhere in the State. Unfortunately, this meant that the people who bought near the peak of the market likely faced significant negative equity. After essentially remaining flat for a few years, housing prices began to increase in late 2012 through January 2020. Once the COVID pandemic hit in March 2020, the economy entered what is now known as the COVID disruption. The housing market slowed down significantly early on, but by May 2020, new homes were going under contract and selling at well above average absorption rates from May 2020 through spring of 2022 in the region. Beginning in mid-2022, the new home market saw a slowdown in absorption rates Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 262
Menifee Mayor and City Council
May 6, 2026
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due to the increasing interest rates, the high prices of homes, and the high rate of inflation which was shaking consumer confidence. As interest rates and home prices remain elevated, sale absorption rates for 2025 continue to perform slightly lower than average.
While the economy is still challenging with inflation higher than two percent and unemployment generally on the rise, the new home market is holding steady with generally good absorption rates. The average absorption rate for the Inland Empire from 2020 – 2024 was 4.3 sales per month per project while the absorption rate for 2025 was
2.8 sales per project per month which is roughly a 33% decrease from the previous 5- year period average. The year-to-date monthly average for 2026 is 3.0 sales per project which suggests that sales may be picking up as January and February are typically slow sales months (Ryness Report dated February 22, 2026).
Economic growth in the Inland Empire was strong generally between 2015 (after the Great Recession), and until the economic shutdown due to COVID. The second half of 2020 and all of 2021 saw economic growth, however the first two quarters of 2022 saw GDP shrinking as interest rates rose and consumer confidence slowed. The most recent unemployment rate for the MSA is 5.1 percent (per the December 2025 EDD report most recent) which is lower than the previous month (5.4 percent) and slightly higher than one year prior (4.9%). While unemployment rates are still near historical lows, the inflation factor has significantly affected the economy.
The housing market played a large role in the past two recessions. In the Great Recession, due to increased interest rates and rising home prices between June 2004 and mid-2006, the market reaction was to create non-conventional financing alternatives, such as sub-prime and non-conventional mortgages, to artificially maintain the boom housing market of 2004 and 2005. By 2007, the housing market saw a shake-up because of the problems in the sub-prime and non-conventional mortgage markets, which played a role in the 2008 upheaval of Wall Street and contributed significantly to the U.S. economic downturn of the Great Recession. Due to stricter income verification on new loans and the lack of available credit, coupled with job losses and declining home prices, sales of new homes slowed for the next few years and essentially remained flat until mid- 2012 when home prices began a steady climb.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 263
Menifee Mayor and City Council
May 6, 2026
Page
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During the COVID disruption, new home sales were one of the brightest spots in both the local and national economies. While new home sales slowed in March and April 2020 due to the onset of the COVID pandemic, both sales and prices increased significantly due to strong demand from May 2020 throughout COVID until spring 2022 when interest rate increases began affecting the home-buying market. A combination of increasing home prices and falling consumer confidence, added to the significant interest rate increases, began slowing new home sales significantly in mid-2022. Due to significantly higher mortgage interest rates, existing homeowners were not moving, which stifled the existing home market, making the new home market the only option for some. Both new home and existing home sales have slowed considerably from mid-2022 through the end of 2025. In January 2022 mortgage rates were 3.22 percent (for a typical 30-year fixed conventional mortgage) while as of February 26, 2026, the rate for the same loan is 5.98 percent, the lowest rate since late-2022. On a $500,000 fixed rate 30-year mortgage, the monthly payment for this loan has increased from $2,167 to $2,977 or over 37 percent.
The average 30-year fixed mortgage rate hit a high in November 2023 of 7.76 percent.
Per the Zonda National New Home Market Update in January 2026, the new home market in 2025 remained effectively flat relative to 2024. Buyers remained paralyzed by poor affordability and low confidence. With affordability improving, sales struggled to gain traction despite supply growth. This forced builders to lean heavily on aggressive price cuts and financing incentives to maintain sales momentum, move standing inventory and sell future homesites. They state that heading into 2026 the outlook is mixed. While the labor market is cooling, mortgage rates are finally showing signs of improvement.
Builders have also remained disciplined with supply which has helped prevent the type of surplus seen in past cycles. They believe that if lower rates succeed in drawing entry- level and high-equity buyers back into the market, the market may finally find its floor however the key unknown is employer hiring and firing plans.
On a more micro level, we have reviewed the Zonda Riverside-San Bernardino-Ontario (Inland Empire) Market Report dated January 2026. Per the New Home Pending Sales Index the year over Year change is a decrease of 9.4 percent, however the month-over- Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 264
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May 6, 2026
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month change is an increase of 8.7 percent. According to Zonda, affordability is the main driver in the slow sales with the current home price value 22 percent over the income supported price (based on both new and existing sales). The new home average closing price (both attached and detached houses) in the market is $595,000 or 4.9 percent below one year ago, while the average closing price of an existing home (again both attached and detached) was $565,000 which is a decrease of 0.9 percent from one year ago. Per Zonda there were 46,067 existing home closings during 2025 in the Inland Empire which is 1.6 percent higher than the prior year and 8,321 new home closings which is 26.5 percent lower than the prior year. Resale activity picked up in 2025, however remains sluggish once again, and new home sales are down compared to this time last year.
Zonda data also reveals that both overall quick move-in (QMI) housing supply and QMIs per community are up year-over-year. Correspondingly, home prices are generally trending down in many areas when you include all incentives being offered.
The larger public homebuilders began offering significant interest rate buy-downs in early 2023 in order to keep absorption rates steady, which reportedly cost between $30,000 and $100,000 in incentives with the past few months increasing to above the high-end of the range in some communities. The question is, how long can builders continue to offer these significant incentives. From conversations with active public homebuilders in the regions, they fully expect rate buy-downs to be prevalent in the new home buying process until rates come down to the mid to low 5.0% range. Although rate-buy downs are setting new home communities apart from the resale market, it is very costly for the builder to absorb which is greatly affecting their profitability.
Home loan mortgage rates have been and are still playing a huge part in the housing market. The Board held mortgage rates at all-time lows after the Great Recession and again after the COVID Recession in an attempt to assist the housing market’s recovery.
Low rates greatly helped home sales during this time. However, first-time buyers are now having a hard time entering the housing market due to rising prices and higher interest rates. Mortgage applications had been spiking in late 2020 and 2021 due to the low rates and the fear rates were going to start ticking up, which began happening in March 2022.
The Board increased the rate eleven times between March 2022 and August 2023, which Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 265
Menifee Mayor and City Council
May 6, 2026
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increased the FFR from 0-0.25 percent to 5.25-5.50 percent. From August 2023 to August 2024 the FFR was held flat. From September 2024 through December 2024, The Board lowered rates from 5.25% - 5.50% to 4.25% - 4.50%. Rates then stayed unchanged between January 2025 and September 2025, with the September, October and December meeting each delivering a 0.25 percent cut to the current FFR of 3.50-3.75% percent. At the January 2026 meeting the Board held rates steady.
Residential Land Development
While there had been little land development going on in most of the Inland Empire during the Great Recession years 2008-2011, the second half of 2012 saw a resurgence in the more coveted areas of the Inland Empire. The increase in housing prices since 2012 combined with the limited availability of supply made land development feasible once again for homebuilders. It is thought that the increase in regulations, which has significantly increased the timeline for processing entitlements, has limited the master developers’ further entitlement of developable land in California. While prior to the recession it was not unusual to see numerous large master-planned communities selling lots to various builders, there are few currently available in the subject area such as Spring Mountain Ranch (Perris). The majority of land sales over the past few years include single tracts of land with maps ready to record (such as Banner Park I and Banner Park II) or a public builder purchasing a larger piece of land but developing the land for its own use (such as Cimarron Ridge and Legado in Menifee). The lack of master-planned communities delivering finished lots to home builders has greatly decreased the new home supply in the Inland Empire and is not expected to change in the near future.
Land sales in the Inland Empire slowly grew from 2012 up to a peak in 2017, with 2018 and 2019 showing fewer land transactions. Once home sales exploded in May 2020, land sales followed with a significant number of residential land sales to builders in the Inland Empire during the second half of 2020 and throughout 2021. In late 2021 and early 2022, prior to the FFR increases, builders were paying significantly more for residential land that was ready to develop as demand was strong, and supply was shrinking. The beginning of 2022 continued with strong residential land sales until May, when land sales began to fall sharply due to climbing interest rates which was slowing new home sales.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 266
Menifee Mayor and City Council
May 6, 2026
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Land Sales in the Inland Empire bounced back in a positive way in 2024 with 12 residential land sales in the subject area, but 2025 saw a significant decrease in builder land transaction activity with six closings in the same area. Thus far in 2026 there have been two land sale closings in the subject market which would suggest a higher number of sales than in 2025. However, it should be noted that while Lennar was originally intending to purchase all of Legado, they have cancelled their options to purchase Improvement Areas 2 and 3 at this time. The seller has owned the property for a long time and can afford to wait out the bottom of this cycle. It is anticipated that as Improvement Area 1 in Legado builds and sells out, either Lennar or other homebuilders will be interested in purchasing Improvement Area 2 and 3.
On a national scale, according to the National Association for Home Builders (“NAHB”), Builder Confidence in the market for January 2026 was 37, down two points from December but up from 32 in August 2025, one of the lowest ratings since the Great Recession. The NAHB/Wells Fargo Housing Market Index is designed to gauge and track the pulse of the single-family housing market and is based on a monthly survey of builders being asked to rate present sales of new single-family homes, expected sales of homes for the next six months and traffic of prospective buyers. For reference, 2022 averaged a score of 59, 2023 averaged a score of 44, 2024 averaged a score of 45 and 2025 averaged a score of 37. The latest Housing Market Index survey also revealed that 40% of builders reported cutting prices in January and sixty-five percent of builders stated they are using incentives in January, the 10th consecutive month this share has exceeded 60 percent.
New Home Sales and Pricing
We have researched new single-family homes within the subject market in order to reflect residential trends. It should be noted these sales numbers and prices pertain to new home sales while later in this section we discuss existing home sales. In reviewing new home sales in the Inland Empire market area, per the February 22, 2026, Ryness Report, the year-to-date average sales rate (3.0 sales per month) is three percent lower than the same time period of the previous year (3.1 sales per month). There are many reasons impacting the slow sales rates of 2025 and into 2026, but one of the main reasons is that Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 267
Menifee Mayor and City Council
May 6, 2026
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the Inland Empire Metro has an affordability issue. According to Zonda, the new home affordability ratio is near its 10-year annual low. A few key factors that contributed to the affordability problem are increased mortgage rates, stagnant job and wage growth, inflation, tariffs, and increased insurance costs.
When comparing the February 22, 2026, Inland Empire Ryness Report to one year prior, there are fifteen additional projects (215 in February 2025 and 230 in February 2026) and sales are about three percent lower year-to-date than the previous year with the current year at 3.0 per month. Looking back, in 2025 the average sales rate per project was 3.0 sales per month, in 2024 the average sales rate per month was 4.1, in 2023 the average sales rate was 4.0, 2022 the average sales rate was 4.3, in 2021 the average sales rate was 4.9 homes per month, and in 2020 the average sales rate was 4.1 homes per month.
Again, the slowdown is due to affordability problems, mortgage rates, stagnant job and wage growth and inflation.
New single-family home pricing (combines both attached and detached) in the Inland Empire has also seen changes. The median new home price in the Inland Empire changed from the peak value of $437,200 in the third quarter of 2006 to $268,155 in early 2009 (during the Great Recession, a decrease of 39 percent) while the current Inland Empire median new home price is $595,000 which is down 4.9 percent from one year ago. In addition to decreasing prices, builders are buying down interest rates which cost the builder at times, upwards of $100,000, however, this amount is not reflected in the recorded sales price. New home sale prices fluctuate based on the land value and competition more than on the cost of building the home. While finishes and sizes of homes can change, the basic costs on a per square foot basis typically do not fluctuate as much as land values; however, there have been inflationary increases in construction costs adding to this increase. Construction materials have increased an estimated 50 percent since 2019. The subject community has needed significant incentives to close homes and keep the absorption rates up. This has resulted in the builder dropping out of escrow on the purchase of the next two improvement areas within Legado.
Within our search for the most comparable actively selling new home communities, we searched the subject’s Ryness submarket of South Riverside which houses Lake Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 268
Menifee Mayor and City Council
May 6, 2026
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Elsinore, Wildomar, Menifee, the French Valley and Winchester. The South Riverside submarket has 44 new home communities which have an average sales rate year to date of 3.4 homes per month. This is slightly stronger than the Inland Empire average of 3.0 sales per month. Out of the 44 total new home communities in the South Riverside submarket, Menifee houses 19 of them. KB Home has three neighborhoods which includes two in Nautical Cove. Lennar has six new neighborhoods, including the subject four in the master plan of Legado, one known as Heritage Village and one known as Quartz Trail. Pulte has eight new home communities, three in Banner Park II and five in Cimarron Ridge which includes two Del Webb neighborhoods. Finally, Richmond American owns two neighborhoods, one in Town Center and one at Braverde (nearing sell-out). We are also including a portion of the area just north of Menifee known as Romoland which has one new project currently selling due to its close proximity to the subject property In our analysis we have utilized twelve comparable new home communities including the four subject neighborhoods in Legado, three new home communities in Cimarron Ridge in Menifee, three from Banner Park (also in Menifee), one stand alone project in central Menifee and one in Romoland. The comparable projects have base prices ranging from $517,990 to $916,936. The subject’s most recent base pricing is from $534,990 to $851,990, which falls within the comparables price range.
Existing Homes Sales and Pricing
While the previous section looked at new home sales and pricing, this section refers to existing homes in the Inland Empire. According to the California Association of Realtors’ most recent sales data within overall Southern California, the median price paid for an existing single-family home in January 2026 ($845,530) reflects a decrease of 1.1 percent from the previous month and a slight decrease (0.6 percent) from the previous year ($850,500 in January 2025). Existing home sales in Southern California overall in January 2026 were down 27.8 percent from December 2025 and down 4.4 percent year over year.
The significant decrease month to month in January is probably due to the record- breaking storms which occurred. The overall Southern California numbers compare to Riverside County with $639,440 as the median price paid for an existing home in the County in January 2026, a 0.7 percent increase from the previous month, however a 0.9 percent decrease for year-over-year. Sales within the County are down 26.7 percent month over month and down 0.9 percent year over year, again, the significant decrease Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 269
Menifee Mayor and City Council
May 6, 2026
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in month over month probably due to weather. Historically, the new home market captures 10-13 percent of the overall home sales; however, in the past few years due to the limited availability of existing homes, new home sales were capturing closer to 20-30 percent of total home sales. Below is a table showing the sales and prices for the Southern California area by County per the California Association of Realtors.
Southern California Existing Home Sales
County Jan 2026 Dec 2025 Jan 2025
Price MTM
% Change
Price YTY
% Change
Sales YTY
% Change
Los Angeles $879,720 $890,910 $886,400 -1.3% -0.8% -8.5% Orange $1,410,000 $1,390,000 $1,430,000 1.4% -1.4% -3.4% Riverside $639,440 $635,000 $645,000 0.7% -0.9% -9.0%
San Bernardino $500,990 $500,970 $505,000 0.0% -0.8% 25.1% San Diego $1,050,000 $1,000,000 $1,030,000 5.0% 1.9% -7.3% Ventura $917,500 $913,000 $875,000 0.5% 4.9% -2.4%
Southern Calif. $845,530 $855,000 $850,500 -1.1% -0.6% -4.4% Source: California Association of Realtors
Based on January 2026, median existing homes prices, in comparison to the majority of the surrounding counties, Riverside County has a definite price advantage. The “Riverside County Advantage” (price difference between Riverside and surrounding counties) is $240,280 as compared to Los Angeles County, $278,060 as compared to Ventura County, $410,560 as compared to San Diego County and $770,560 as compared to Orange County. That is, in January 2026, the median priced home in Riverside County was $770,560 less (or over 50 percent less) than the median priced home in Orange County ($1,410,000). However, San Bernardino County has a $138,450 price advantage over Riverside County. Typically, as the price advantage widens, homebuyers are more open to commuting to further out areas. With the work-from-home concept, the suburban areas have seen more growth which puts pressure on home prices in the Inland Empire.
In a separate attempt to capture the neighborhood specific price changes, the resale activity of existing homes in the subject area (per Redfin.com’s Housing Market Trends) has been reviewed. The number of sales and sale prices of existing homes within market areas in the immediate area of the subject are shown in the table on the following page.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 270
Menifee Mayor and City Council
May 6, 2026
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ZIP Code/Community
Name
Border
To
Subject
Sales of
Homes
Jan
2026
Sales %
Change
from
Jan 2025
Jan 2026
Price
Median
Price %
Change
from Jan
2025
Jan.
2026
PSF
Median
92584 (Menifee proper) South 172 13.2% $615,000 -0.7% $282 92586 (Sun City/N. Menifee) Subject 103 -5.5% $389,000 4.9% $274 92587 (Canyon Lake) West 52 -10.3% $714,500 8.39% $307
92596 (Winchester) East 178 -7.3% $598,105 -1.9% $287
92563 (Murrieta Hot Springs) South 141 -10.2 $675,000 -1.5% $294 92595 (Wildomar) Southwest 47 34.3% $675,000 2.6% $262
92585 (Perris) North 88 8.6% $575,000 0.2% $298
Source: Redfin.com Housing Market Trends January 2026
The median price of a detached resale home in the subject’s ZipCode is $389,000, which is much lower than the surrounding areas as it includes the Sun City area which includes a significant number of mobile home neighborhoods and manufactured housing neighborhoods. The Menifee proper ZipCode with a median price of $615,000 better reflects the subject property. The above price fluctuations from year-to-year relate to the California Association of Realtors overall Riverside County detached home resale price of $639,440 decreasing 0.9 percent year-over-year.
Legado Improvement Area 1 Sales, Pricing and Competition Legado sales began in April 2025 with opening base pricing ranging from $543,990 to $855,990. The current base pricing at Legado ranges from $534,990 to $851,990, with all plans showing slight changes since the grand opening. It should be noted that the net- closed prices within Legado ranged from $450,520 to $800,686, significantly lower than base pricing. The net-closed prices include all upgrades, premiums and options purchased, less all concessions and incentives given by the builder including any mortgage rate buydown and closing cost help. The mortgage rate buy-downs and closing cost help do not show up in the recorded sales price, however it is a cost to the builder.
The four plans within Sonrisa at Legado had original base pricing from $543,990 to $578,990 while current base pricing is $534,990 to $572,990 reflecting slight decreases from $6,000 to $14,000 depending on the plan or decreases of 1.0 to 2.5 percent. Actual net-closed prices within Sonrisa including options, upgrades, and premiums, along with taking all concessions into consideration, ranged from $450,520 to $532,683 with the average net price for the 38 closed homes being $490,111. There are 10 Sonrisa homes in escrow with net pricing ranging from $475,866 to $552,720 with an average net escrow Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 271
Menifee Mayor and City Council
May 6, 2026
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price for the 10 homes being $511,272. It should be noted that the net escrow prices are as reported as of the date of value and may change prior to escrow closings as additional options are purchased and/or as additional concessions are given.
The four plans within Tesoro at Legado had original base pricing from $548,990 to $603,990 with current base pricing from $540,990 to $612,990 reflecting slight increases with one plan decreasing. The smallest plan had a decrease of $8,000 (1.4 percent) while the other three plans had increases from $2,000 to $9,000. Actual net-closed prices within Tesoro including options, upgrades, and premiums, along with taking all concessions into consideration, ranged from $464,443 to $575,106 with the average net price for the 28 closed homes being $524,643. There are six Tesoro homes in escrow with net pricing ranging from $498,369 to $565,567 with an average net escrow price for the six homes being $530,618. It should be noted that the net escrow prices are as reported as of the date of value and may change prior to escrow closings as additional options are purchased and/or as additional concessions are given.
The four plans within Armonia at Legado had original base pricing from $579,990 to $625,990 while current base pricing is $580,990 to $626,990 reflecting slight increases of $1,000 to $3,000 depending on the plan or increases of 0.2 to 0.5 percent. Actual net- closed prices within Armonia including options, upgrades, and premiums, along with taking all concessions into consideration, ranged from $500,846 to $603,768 with the average net price for the 32 closed homes being $550,890. There are four Armonia homes in escrow with net pricing ranging from $536,935 to $590,514 with an average net escrow price for the four homes being $556,632. It should be noted that the net escrow prices are as reported as of the date of value and may change prior to escrow closings as additional options are purchased and/or as additional concessions are given.
The four plans within Belleza at Legado had original base pricing from $664,990 to $855,990 while current base pricing is $651,990 to $851,990 reflecting slight decreases from $1,000 to $13,000 or from 0.1 percent to 1.9 percent. Actual net-closed prices within Belleza including options, upgrades, and premiums, along with taking all concessions into consideration, ranged from $545,075 to $800,686 with the average net price for the 29 Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 272
Menifee Mayor and City Council
May 6, 2026
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closed homes being $648,270. There are 12 Belleza homes in escrow with net pricing ranging from $605,194 to $804,717 with an average net escrow price for the 12 homes being $708,564. It should be noted that the net escrow prices are as reported as of the date of value and may change prior to escrow closings as additional options are purchased and/or as additional concessions are given.
Within Improvement Area 1 of Legado, Lennar has closed 127 homes to individuals with the first sale date being April 2025, with an additional 32 homes currently in escrow. The total of 159 sales over the past 11 months equates to an overall average absorption rate of 14.45 homes per month between the four communities. When looking at each project, Sonrisa has sold 48 homes, reflecting an average sales rate of 4.4 homes per month; Tesoro has sold 34 homes, reflecting an average sales rate of 3.1 homes per month; Armonia has sold 36 homes, reflecting an average sales rate of 3.3 and Belleza has sold 41 homes, reflecting an average sales rate of 3.7 homes per month. The homes within Tesoro are the single-story line and have sold at the lowest absorption rates. It should be noted that two miles west of the subject in Cimarron Ranch there are two Del Webb communities with all single-story homes in an age qualified community with significant amenities for seniors which may be pulling from the single-story buyers in Legado. The sales rates of the subject homes range from 3.1 to 4.4 sales per month. The average sales rates of the comparable projects range from 1.3 to 4.5 sales per month with the subject sales rates within the comparables’ range. The average for the Inland Empire for year-end 2025 was 3.0 average sales per project per month while thus far in 2026 the average in the Inland Empire has also been 3.0 sales per month. Within the subject sub- market area of South Riverside, the 2025 year-end average sales rate per project per month was 3.1 while thus far in 2026 the average sales per project per month in South Riverside is 3.4, slightly higher than the overall averages within the Inland Empire and slightly higher than the 2025 average in the submarket. All of the subject projects are selling at or above the average for the Inland Empire.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 273
Menifee Mayor and City Council
May 6, 2026
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Summary
Riverside County has seen a substantial increase in pricing since 2012 with most areas, including the subject, showing astronomical increases from mid-2020 into 2025, however there have been some small decreases in the past year. While existing home sales were originally down when COVID began in spring/early summer 2020, new home sales subsequently shot up due to the existing home market supply being constrained and interest rates hitting all-time lows. The past three years have seen a slowdown in sales which appeared to be due to limited inventory, high pricing and high interest rates.
However, buyers appear to be resilient to the increases. The subject market area saw a slight increase in pricing while much of Southern California has seen prices decrease over the past year. While sales slowed and prices softened due to uncertainty in the economy over the past year, mortgage rates have been decreasing, which should help the new home market. Despite uncertainty hitting the housing market due to the uncertainty in the national administration, interest rates and inflation, most observers agree that the Inland Empire housing market is healthy, and population growth is still estimated to occur in the area. It is believed that as the population continues to increase, housing growth will also continue.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 274
Menifee Mayor and City Council
May 6, 2026
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HIGHEST AND BEST USE ANALYSIS
The highest and best use is a basic concept in real estate valuation due to the fact that it represents the underlying premise (i.e., land use) upon which the estimate of value is based. In this report, the highest and best use is defined as:
"the reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value”4
Proper application of this analysis requires the subject properties to first be considered “As If Vacant” in order to identify the “ideal” improvements in terms of use, size and timing of development. The existing improvements (if any) are then compared to the “ideal” improvements to determine if the use should be continued, altered or demolished preparatory to redevelopment of the site with a more productive or ideal use.
“As If Vacant”
In the following analysis, we have considered the site’s probable uses, or those uses which are physically possible; the legality of use, or those uses which are allowed by zoning or deed restrictions; the financially feasible uses, or those uses which generate a positive return on investment; and the maximally productive uses, or those probable permissible uses which combine to give the owner of the land the highest net return on value in the foreseeable future.
Physically Possible Uses
The subject property consists of an estimated 148.99 gross acres in an irregular- shaped parcel at the southwest corner of Rouse Road and Antelope Road in Menifee. The site has access from I-215 via McCall Boulevard to Encanto Road to Rouse Road. The site was generally level at surrounding street grade. The property has been graded and developed into 491 generally level, finished lots with internal streets in and utilities stubbed to each lot. The property is surrounded by two hilly, undeveloped parcels to the north east along with Shadow Mountain, an existing residential master plan. To the south is the undeveloped portion of Legado known as Improvement Area 2 and Improvement
4 The Appraisal of Real Estate, 11th Edition
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 275
Menifee Mayor and City Council
May 6, 2026
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Area 3 beyond which is an undeveloped parcel, an existing residential neighborhood, a middle school, a mobile home park and a skilled nursing facility. To the west is the undeveloped commercial zoned parcel within Legado beyond which is Encanto Road (a frontage road along I-215), then I-215 beyond which is existing housing in the area known as Sun City. North of the subject is Rouse Road beyond which is existing housing. We have reviewed a geotechnical report which concluded that development of the site as proposed was feasible. We have not received a Phase I Environmental Assessment for our review. It is an assumption of this report that the soils are adequate to support the highest and best use conclusion and that there are no environmental issues which would slow or thwart development of the site. This is evidenced by City approvals along with City inspectors on site during construction. There are water quality/detention basins within the subject property to allow drainage into an engineered water system which appears to have been designed to alleviate any potential flooding problems and to control project water runoff. All standard utilities serve the subject property. There is neighborhood shopping and major shopping centers within two miles of the subject site.
Based on the physical analysis, the size, access, and topography make the subject property physically suited for numerous types of development; however, the grading and development that has occurred on the site along with the surrounding uses, suggests single-family residential use.
Legality of Use
The subject property is located within the City of Menifee, the entity responsible for land use and zoning regulation. Per the City’s Land Use Map, the subject site is designated as within the Legado Specific Plan. Per the Specific Plan, the subject lands are referred to as Planning Areas 1, 2, 3 and 4, along with Planning Areas 8, 9 and 10 which allow for up to 500 single-family detached homes with an overall density of at most, 4.9 dwelling units per acre. In addition, recorded Tract Map Nos. 37408-1, 37408-2, 37408-3, a portion of 37408-4, 37409-1, 37409-2 and 37409-3 subdivide the subject 148.99 estimated gross acres into 491 single-family lots with sizes ranging from 5,000 square feet to upwards of 7,000 square feet. This equates to a density of 3.3 dwelling units per acre. The approved mapping is consistent with the current Specific Plan entitlements on the property. There is a limitation on the number of certificates of occupancy which can be issued prior to the Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 276
Menifee Mayor and City Council
May 6, 2026
Page
602 of 714
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builder completing the neighborhood parks, however the builder does not anticipate any issues due to these conditions. It is an extraordinary assumption of this report that this limitation does not slow or thwart construction or sales of the homes as discussed under the property description section. Based on the legality of use analysis, the type of development for which the subject properties can be utilized is narrowed to residential use. This is consistent with the findings of the physically possible uses.
Feasibility of Development
The third and fourth considerations in the highest and best use analysis are economic in nature, i.e., the use that can be expected to be most profitable. As discussed under the Riverside County Housing Market section earlier within this report, the market had shown strong increases in both sales and pricing since COVID. There was a slowdown in sales in late 2022 when high home prices and increasing interest rates began to slow sales.
Overall home sales have slowed down significantly, partially due to existing homeowners not moving due to the higher interest rates, which stifled the existing home market, at times leaving new homes the only option for homebuyers. Interest rates have dropped by around 50 basis points in the past four months and appear to have stabilized in the 6.0 percent range which is bringing new home buyers back into the marketplace.
Within Menifee CFD No. 2022-3 IA 1, out of 491 proposed houses, there have been 159 home sales to date. All structures appear to be in excellent condition with no physical depreciation apparent. Within the new home market in Menifee and the surrounding area, we found eight additional projects to be comparable to the four subject communities within Legado. Homebuilding had not been able to keep up with the demand during COVID with low interest rates, millennials joining the home buying market and the work from home factor all adding to the demand. As interest rates increased, the market softened, however the limited supply of existing homes on the market increased the capture of new homes in the overall real estate market. The Menifee housing market is priced slightly higher when compared to the nearby areas of Perris and Lake Elsinore, however lower than Murrieta and Temecula (adjoining north San Diego County). Population growth is still occurring in the area and will continue to create the need for housing. Our search of the Menifee and immediately surrounding area for comparable land sales resulted in six land sales in the subject marketplace in the past 14 months, including neighboring Winchester Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 277
Menifee Mayor and City Council
May 6, 2026
Page
603 of 714
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and Perris. It should be noted that Lennar, the buyer for Improvement Area No. 1 in Legado recently cancelled their escrow/option agreement to purchase Improvement Areas 2 and 3. This is due to the uncertainty in today’s consumer confidence. As Improvement Area No. 1 is built and sold out, it is thought that either Lennar or another homebuilder will purchase the remainder of the Legado Specific Plan.
Based on the above analysis, the highest and best use for the subject property appears to be for single-family detached residential development at the right price points.
Maximum Productivity
Based on the market activity of residential lands in the immediate area, we have concluded there is a need/demand for residential lands.
Highest and Best Use Conclusion – “As If Vacant”
The final determinant of highest and best use, as vacant, is the interaction of the previously discussed factors (i.e., physical, legal, financial feasibility and maximum productivity considerations). Based upon the foregoing analysis, it is our opinion that the highest and best use for the subject property “As if Vacant” is for residential development.
Highest and Best Use – “As Improved”
The subject property consists of Improvement Area 1 of the community known as Legado which has four neighborhoods known as Sonrisa, Tesoro, Armonia and Belleza, all being built, marketed, and sold by Lennar. Legado began sales in April 2025, suggesting a total combined rate over the four projects of 14.45 sales per month with each project’s sales ranging from 3.1 to 4.4 sales per month. This is generally higher than both the Inland Empire average and the subject’s South Riverside submarket’s average. There are 44 actively marketing new home communities in the subject’s South Riverside submarket (19 of those within Menifee) that have a year-to-date average absorption rate of about 3.4 sales per month (according to the Ryness Report dated February 22, 2026). Within the subject Tesoro has a sales rate lower than the submarket’s average while the other three have sales rates similar or higher than the average. It should be noted that substantial incentives and concessions are being offered which appear to keep Legado’s sales rates Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 278
Menifee Mayor and City Council
May 6, 2026
Page
604 of 714
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up. It appears that Legado homes are selling at or near the correct price points for the area when considering the sales incentives and concessions. Our search within the subject area found eight additional projects considered to be comparable with similar sized homes in the Menifee market area. The absorption or sales rates within the comparable projects used in our analysis range from 1.3 to 4.5 sales per month.
Base pricing within the four neighborhoods within Legado have all had minimal base price adjustments from grand opening pricing (April 2025) and today’s pricing, ranging from a reduction of $14,000 to an increase of $9,000. These changes range from a decrease of
2.5 percent to an increase of 1.4 percent. Incentives within Legado have averaged a little over $75,000 per home. This is typical for public builders in the Inland Empire as they attempted to keep their absorption rates up as mortgage rates increased between mid- 2022 and late 2025. As interest rates have been declining for the past few months, you would expect incentives to get reduced; however, we have not seen this in Legado at this time.
The sales rates within the subject and the competitive projects in the immediate area suggest there is demand for the subject homes in the current market at the right price points. All of the homes are of good design and appear to be of good quality workmanship. In addition, there are a significant number of homes in escrow. Based on Legado’s sales rates, current demand and the condition of the homes, it is our conclusion that the highest and best use for the subject property is for the continued use of new homes for sale, as improved.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 279
Menifee Mayor and City Council
May 6, 2026
Page
605 of 714
_________________________________________________________________________________________________________ Menifee CFD No. 2022-3 IA 1 (Legado IA 1) - 2026 Series Bonds Kitty Siino & Associates, Inc. Page 57
VALUATION ANALYSIS AND CONCLUSIONS
The Sales Comparison Approach will be used to value the subject property. This approach compares similar properties that have recently sold or are in escrow. In determining the value for the property, a unit of comparison needs to be addressed. For single-family detached lots, the lots are typically sold on a finished lot basis. That is, the sales price is determined by a finished lot value and then the remaining costs to develop the property to a finished lot condition are considered in the sales price. Therefore, in determining a current market value for the residential lands, the current condition of the lots will be considered. In the case of the existing home valuations, a single home sale is the unit of comparison. In determining the value for each existing house, a base value will be concluded for each plan which will be considered a minimum market value as most buyers typically purchase some premiums, upgrades or options which increase the price of the home. In addition, the incentives and/or concessions, including mortgage rate buy- downs and help with closing costs will be considered in the analysis as they are an additional cost to the homebuilder.
The valuation will be presented as follows. First, a discussion of the single-family detached lot market data will be given. Each of the comparable market data (on a finished lot basis) will be detailed along with a comparison discussion of their relationship to the subject property. The remaining construction costs and development fees for the subject site will be taken into consideration. This analysis will be followed by a finished lot value conclusion for the subject property. Houses which are under construction (under 95 percent complete) will be valued on the basis of a finished lot rather than attribute value to a partially complete improvement.
In the case of the completed (over 95 percent complete) builder-owned models and production units, the homes will be valued using a DCF due to the “bulk” or single ownership of the homes. The DCF will consider the fair market value of the completed homes (utilizing the Sales Comparison Approach), any remaining land development costs and fees, the marketing and carrying costs associated with selling off the homes, a profit due to the developer of the homes, and a discount rate reflecting both the risk associated Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 280
Menifee Mayor and City Council
May 6, 2026
Page
606 of 714
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with selling off the homes along with the time value of money during the estimated absorption period.
In the case of the individually owned homes, a concluded base value will be used for each plan and a mass appraisal technique will be addressed. In determining the concluded base value, new home sales in the area will be reviewed and compared with sales of the subject completed homes using standard methodology and statistical testing. In addition, resales, if any, will be taken into consideration. All of the value conclusions will take into consideration improvements funded by the Menifee CFD No. 2022-3 IA 1 Special Tax Bonds and their lien. A summary of the final value conclusions will be reported at the end of this valuation section.
Market Data Discussion – Detached Residential Lots
Legado consists of 127 individually owned homes, eight model homes, 30 production homes over 95 complete (21 in escrow), 77 homes under construction (under 95 percent complete, 11 in escrow) and 249 remaining lots which are generally in a finished condition. The lots have a minimum size of 5,000 square feet, 5,500 square feet, 6,000 square feet and 7,000 square feet depending on the tract. We will utilize a blended price for the lots which generally range from 5,000 to 7,500 square feet. The homes under construction (under 95 percent complete) will be valued on the basis of a finished lot rather than attribute value to a partially completed improvement, therefore, we will value 326 lots (249 lots plus 77 lots with homes under construction that are under 95 percent complete) in this section. Lennar currently owns 36 of the lots and KL LB owns 290 of the lots. We have searched the area and found the six land transactions summarized in the Addenda. A discussion of each transaction in relation to the subject site is below.
Land Sale No. 1 refers to the most recent land closing in the immediate area. KB Home took down the final phase they purchased in a community known as Canterwood which consisted of 94 lots with a lot size of 5,500 square feet on February 6, 2026. D.R. Horton purchased the first phase within Canterwood back in 2022 based on an estimated finished lot of $175,000, significantly below market value due to the location and amount of infrastructure needed in the immediate area. The site is located about five miles southeast Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 281
Menifee Mayor and City Council
May 6, 2026
Page
607 of 714
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of the subject. D.R. Horton began selling homes in Canterwood in late 2023 which brought people to the neighborhood. KB Home purchased what is known as Canterwood Phase 2 and Phase 3 in two takedowns with the first encompassing 53 lots and closing in June 2024 based on a finished lot price of $227,500. The second take-down which this land sale refers to was also based on the finished lot price of $227,500, however KB did renegotiate due to cost increases since 2024 which decreased the per lot price about $10,000 per lot with the finished lot price remaining the same. KB Home is now selling their Hudson and Willow Pointe neighborhoods with base pricing from $565,990 to $674,990. The property will have an overall tax rate in the 2 percent range, similar to the subject property. In comparison to the subject property this transaction is considered to be inferior due to the date of negotiation on the price back in 2024 however the market, which appeared stronger just a few months ago is softening once again. In addition, these lots are minimum 5,500 square feet which is considered slightly inferior to the subject lots which range from 5,000 to 7,000 minimum lot size.
Land Sale No. 2 refers to the final takedown of lots within the Nautical Cove neighborhood, about four miles southeast of the subject along Briggs Road at Holland Road. KB Home negotiated the transaction for a total of 243 lots with closings in three takedowns, the first in July 2024 for 120 lots, the second in August 2025 for 61 lots and this final purchase of 52 lots in January 2026. The finished lot price for the 6,000 square foot lots was negotiated back in 2024. The original takedown was at $253,000 per finished lot in July 2024, however when the second takedown occurred, it was renegotiated to $250,000 per finished lot for the second and third takedowns. The site is adjacent to an elementary school, making it a coveted location. KB Home is now selling their Amelia and Gatsby neighborhoods with base pricing from $584,990 to $741,990. The property will have an overall tax rate in the 2 percent range, similar to the subject property. In comparison to the subject property, this location is surrounded by recently closed homes and closer to the new shopping areas of Menifee which are where Newport Road and Scott Road intersect I-215. These facts make its location superior to the subject site.
While the original price was negotiated in 2024, the latest price was negotiated in August 2025.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 282
Menifee Mayor and City Council
May 6, 2026
Page
608 of 714
_________________________________________________________________________________________________________ Menifee CFD No. 2022-3 IA 1 (Legado IA 1) - 2026 Series Bonds Kitty Siino & Associates, Inc. Page 60
Land Sale No. 3 refers to the September 2025 closing of a large 150+ acre site just north of Canterwood, about five miles southeast of the subject property at the northeast corner of Leon and Holland Roads in unincorporated Riverside County in the area known as Winchester. The property was in an unimproved condition with major infrastructure needed and approved final mapping in place. KB Home purchased the entire site mapped for 510 lots which range from 4,000 to 6,000 square feet for $7,000,000 or $13,725 per lot, however due to the significant improvements needed, the finished lot was estimated at $240,000. The site is adjacent to Canterwood with homes currently selling by D.R.
Horton and KB Home. The property will have an overall tax rate in the 2 percent range, similar to the subject property. In comparison to the subject property this transaction is considered to be inferior due to the risk associated with the development and the lot size.
That is, while the estimated costs to finish the lots are taken into account, there is risk due to the significant off-site infrastructure which needs to be completed. In addition, the lots range in size from 4,000 to 6,000 square feet in size while the subject lots range from 5,000 to 7,000 square feet. Finally, this transaction is also considered slightly inferior due to the number of lots. Most builders expect a “bulk value” or a discount if there are more than 350 lots due to the time value of money during the absorption period.
Land Sale No. 4 refers to the Meritage Homes purchase of 310 lots located at the southwest corner of Briggs Road and Simpson Road about three miles southeast of the subject property. The site is mapped for 310 lots with cluster lots, 4,500 square foot lots and 5,000 square foot lots. Meritage purchased the site in May 2025 for $15,000,000 or $48,387 per lot based on a finished lot estimate of $228,000 assuming a similar overall tax rate. The property is just south of the master planned community of Heritage Lake in the northern portion of Menifee which is now built out. In comparison to the subject property this transaction is considered to be inferior due to lot size. The subject has 5,000 to 7,000 square foot lots, while these range from cluster (typically around 3,000 square feet) to 5,000 square feet.
Land Sale No. 5 refers to the May 2025 purchase of 96 mapped lots located northwest of Rouse Road and Byers Road in Menifee, about 1.5 miles west of the subject site.
Richmond American Homes purchased the 96 mapped lots for $10,055,000 or $104,740 Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 283
Menifee Mayor and City Council
May 6, 2026
Page
609 of 714
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per lot based on a finished lot price of $260,000 assuming a similar CFD on the site. The lots closed with an approved final map in an unimproved condition. The site is adjacent to Pulte’s successful Cimarron Ridge, a currently selling master planned community with some age-qualified product. The lots have a minimum lot size of 7,200 square feet which is considered slightly superior to the subject’s 5,000 to 7,000 square foot lots.
Land Sale No. 6 pertains to the KB Homes purchase of 184 lots in December 2024, located south of Nuevo Road at Evans Road in Perris, about five miles north of the subject site. The property was in a blue-topped condition with an approved final map at time of sale. KB Home purchased the lots for $34,478,042 or $187,381 per lot based on a finished lot estimate of $257,500 per lot. The 184 lots have a minimum lot size of 5,000 square feet. KB Home is now selling their Lennox at Park West community with homes from $530,000 to $645,000. In comparison to the subject property, these lots are considered to be slightly inferior in lot size and slightly inferior in location as Perris is further out for commuters from San Diego and Orange Counties.
The chart below summarizes the considerations used in adjusting the market data to the subject lot.
Data
No.
Location
Date of
Sale Lot Size Finished
Lot Price Comparison to Subject
1 Winchester 2 / 26 5,500 $227,500
Inferior – Date of Negotiation
Slightly Inferior – Location & Lot
Size
2 Menifee 1 / 26 6,000 $250,000 Inferior – Date of Negotiation 3 Winchester 9 / 25 4,000 –
6,000 $240,000 Inferior – Condition, Lot Size,
Location and Number of Lots
4 Menifee 5 / 25 Cluster –
5,000 $228,000 Inferior – Lot Size, Location
5 Menifee 5 / 25 7,200 $260,000 Inferior - Location
Superior – Lot Size
6 Perris 12 / 24 5,000 $257,500
Inferior – Location & Lot Size
The market data has an overall finished lot range from $227,500 to $260,000. Data No. 1, at the lowest end of the range, is located in Winchester, in a location that is considered to be slightly inferior due to it being further out for shopping in a less developed area.
Data No. 3 is adjacent to Data No. 1 (to the north) and sold for $240,000, partly due to Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 284
Menifee Mayor and City Council
May 6, 2026
Page
610 of 714
_________________________________________________________________________________________________________ Menifee CFD No. 2022-3 IA 1 (Legado IA 1) - 2026 Series Bonds Kitty Siino & Associates, Inc. Page 62
additional development in the area. It should be noted that Data No. 3 also has smaller lots when compared to the subject and was considered a bulk sale as KB purchased 510 lots in one purchase. Data No. 5, located about 2 miles west of the subject property is the most comparable transaction when compared to the subject property, however the lots are slightly superior in size. It should be noted that some builders have recently backed out of escrows and/or options and others have renegotiated the most recent takedowns to a lessor purchase price. The subject lots are generally in a physically finished condition with no remaining development risk. The above market data is considered to be good and plentiful. We have concluded that the subject lots have a current market value of $240,000 as a blended price for the subject 5,000 to 7,000 square foot lots. As discussed under the Property Description Section, there are remaining costs associated with developing the subject property into true finished lots. These costs are estimated at $82,184.55 per lot. The value conclusion for the lots within Legado is calculated below:
Lennar-Owned Lots –
36 Lots x $240,000 $ 8,640,000
Less: Remaining Costs ($82,184.55 x 36) ( 2,958,643) Current Value for Lennar Lots $ 5,681,357
KL LB-Owned Lots –
290 Lots x $240,000 $ 69,600,000
Less: Remaining Costs ($82,184.55 x 290) (23,833,520) Current Value for KL LB Lots $ 45,766,480
Retail House Valuations
Due to the single ownership of multiple houses by Lennar, including model homes and production homes over 95 percent complete, a Discounted Cash Flow (“DCF”) analysis is needed in order to arrive at a bulk sale value for each ownership. First, a retail value for each plan will be concluded followed by a DCF for the builder-owned lots, which will consider the absorption time to sell off the houses, the costs associated with selling off the homes and any remaining costs owed by the builder. The resulting revenue will be discounted using an appropriate rate to determine the builder-owned bulk value. The DCF analyses will be followed by a reporting of the concluded values for the individually owned homes using the concluded base retail value for each plan with a separate check of the analysis utilizing a mass appraisal technique based on actual sales prices of the homes and considering any re-sale market data.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 285
Menifee Mayor and City Council
May 6, 2026
Page
611 of 714
_________________________________________________________________________________________________________ Menifee CFD No. 2022-3 IA 1 (Legado IA 1) - 2026 Series Bonds Kitty Siino & Associates, Inc. Page 63
Legado Improvement Area 1 consists of 127 individually owned homes, eight model homes, 30 homes over 95 percent complete (21 in escrow), 77 houses under construction owned by Lennar and KL LB (11 in escrow), and 249 additional finished lots owned by KL LB. The homes under construction and the lots have been valued above. The 38 builder-owned homes over 95 percent complete (including eight model homes) are addressed in this section with a separate valuation for each plan.
Below is a summary of the floor plans within Sonrisa, Tesoro, Armonia and Belleza at Legado. A listing of the improved residential comparable properties is located in the Addenda of this report. All of the improved residential properties are located within the subject area of Menifee or nearby in the Romoland area. Our search of the subject property and the local Multiple Listing Service (MLS) has resulted in no closed resales and no current resale listings within Legado. The plans are detailed below.
*One of each of these plans is a model home. There are an additional 77 homes under construction, and 249 additional finished lots.
Plan
Bd/Ba
Floors/
Parking
Sq. Ft.
Ind.
Owned
Homes
Bldr.
Owned
Homes
Sonrisa – 5,000 sf min lots
1 3 / 2 1 / 2 1,539 9 2*
2 3 / 2.5 2 / 2 1,696 10 1
3 3 / 2.5 2 / 2 1,862 10 2*
4 4 / 3 2 / 2 2,069 9 2*
Subtotal Sonrisa 38 7
Tesoro – 5,500 to 6,000 sf min lots
1 3 / 2 1 / 2 1,539 8 1
2 3 / 2 1 / 2 1,936 7 1
3 4 / 2 1 / 2 2,084 6 2
4 4 / 2 1 / 2 2,231 7 2*
Subtotal Tesoro 28 6
Armonia – 5,500 sf min. lots
1 3 / 2 1 / 2 1,936 9 3*
2 4 / 3 2 / 2 2,200 7 4
3 4 / 3 2 / 2 2,468 8 3*
4 4 / 3 2 / 2 2,589 8 4
Subtotal Armonia 32 14
Belleza – 7,000 sf lots
1 4 / 3 2 / 2 2,662 8 2
2 4 / 3.5 1 / 2 2,760 8 2
3 5 / 3 2 / 2 3,010 6 4*
4 5 / 3.5 2 / 3 4,184 7 3*
Subtotal Belleza 29 11
Total Legado 127 38
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 286
Menifee Mayor and City Council
May 6, 2026
Page
612 of 714
_________________________________________________________________________________________________________ Menifee CFD No. 2022-3 IA 1 (Legado IA 1) - 2026 Series Bonds Kitty Siino & Associates, Inc. Page 64
The most appropriate new home comparable data for Sonrisa Plan 1 is shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 1 3 / 2 1 / 2 1,539 --
1 2 3 / 2.5 2 / 2 1,696 $315.44
2 1 3 / 2 1 / 2 1,539 $351.52
2 2 3 / 2 1 / 2 1,936 $300.61
3 1 3 / 2 1 / 2 1,936 $300.10
5 2 5 / 3 1 / 2 2,118 $278.09
7 1 2 / 2 1 / 2 1,579 $328.05
9 1 3 / 2 1 / 2 2,191 $285.25
11 3 4 / 2 1 / 2 2,084 $283.39
All new home comparables are located within Menifee or Romoland. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $278.09 to $351.52 per square foot with the smallest sized home at the high-end of the price per square foot range and the larger sized homes at the low-end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. Sonrisa Plan 1 has a current base asking price of $349.57 per square foot. There have been nine closings of Plan 1 with net sales prices ranging from $292.74 to $324.27 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan, less concessions including interest rate buydowns. The average incentive/concession given by the builder within Sonrisa was $75,427 or $49.01 per square foot on Plan 1. There are currently three Plan 1 escrows with a price range of $322.65 to $334.68 per square foot, however all options and concessions may not be included in the escrow prices as negotiations may be ongoing. All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Sonrisa Plan 1 has a base current market value of $315.00 per square foot. This calculates as follows:
1,539 sf x $315.00 = $484,785
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 287
Menifee Mayor and City Council
May 6, 2026
Page
613 of 714
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The most appropriate new home comparable data for Sonrisa Plan 2 is shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 2 3 / 2.5 2 / 2 1,696 --
1 1 3 / 2 1 / 2 1,539 $349.57
1 3 3 / 2.5 2 / 2 1,862 $299.14
1 4 4 / 3 2 / 2 2,069 $276.94
2 1 3 / 2 1 / 2 1,539 $351.52
3 1 3 / 2 1 / 2 1,936 $300.10
3 2 4 / 3 2 / 2 2,200 $270.45
All new home comparables are located within Menifee. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $270.45 to $351.52 per square foot with the smallest sized homes at the high-end of the price per square foot range and the larger sized homes at the low-end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. Sonrisa Plan 2 has a current base asking price of $315.44 per square foot. There have been ten closings of Plan 2 with net sales prices ranging from $270.66 to $295.49 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan, less concessions including interest rate buydowns.
The average incentive/concession given by the builder within Sonrisa was $75,427 or $44.47 per square foot on Plan 2. There are currently three Plan 2 escrows with a price range of $280.58 to $296.86 per square foot, however all options and concessions may not be included in the escrow prices as negotiations may be ongoing. All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Sonrisa Plan 2 has a base current market value of $280.00 per square foot. This calculates as follows:
1,696 sf x $280.00 = $474,880
The most appropriate new home comparable data for Sonrisa Plan 3 is shown below.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 288
Menifee Mayor and City Council
May 6, 2026
Page
614 of 714
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Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 3 3 / 2.5 2 / 2 1,862 --
1 1 3 / 2 1 / 2 1,539 $349.57
1 2 3 / 2.5 2 / 2 1,696 $315.44
1 4 4 / 3 2 / 2 2,069 $276.94
2 1 3 / 2 1 / 2 1,539 $351.52
3 1 3 / 2 1 / 2 1,936 $300.10
3 2 4 / 3 2 / 2 2,200 $270.45
3 3 4 / 3 2 / 2 2,468 $250.81
4 1 4 / 3 2 / 2 2,662 $244.92
All new home comparables are located within Menifee. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $244.92 to $351.52 per square foot with the smallest sized homes at the high-end of the price per square foot range and the larger sized homes at the low-end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. Sonrisa Plan 3 has a current base asking price of $299.14 per square foot. There have been ten closings of Plan 3 with net sales prices ranging from $252.68 to $285.74 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan, less concessions including interest rate buydowns.
The average incentive/concession given by the builder within Sonrisa was $75,427 or $40.51 per square foot on Plan 3. There is currently one Plan 3 escrow with a price of $268.65 per square foot, however all options and concessions may not be included in the escrow prices as negotiations may be ongoing. All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Sonrisa Plan 3 has a base current market value of $263.00 per square foot. This calculates as follows:
1,862 sf x $263.00 = $489,706
The most appropriate new home comparable data for Sonrisa Plan 4 is shown below.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 289
Menifee Mayor and City Council
May 6, 2026
Page
615 of 714
_________________________________________________________________________________________________________ Menifee CFD No. 2022-3 IA 1 (Legado IA 1) - 2026 Series Bonds Kitty Siino & Associates, Inc. Page 67
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 4 4 / 3 2 / 2 2,069 --
1 2 3 / 2.5 2 / 2 1,696 $315.44
1 3 3 / 2.5 2 / 2 1,862 $299.14
2 3 4 / 2 1 / 2 2,084 $284.54
3 1 3 / 2 1 / 2 1,936 $300.10
3 2 4 / 3 2 / 2 2,200 $270.45
3 3 4 / 3 2 / 2 2,468 $250.81
4 1 4 / 3 2 / 2 2,662 $244.92
All new home comparables are located within Menifee. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $244.92 to $315.44 per square foot with the smallest sized homes at the high-end of the price per square foot range and the larger sized homes at the low-end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. Sonrisa Plan 4 has a current base asking price of $276.94 per square foot. There have been nine closings of Plan 4 with net sales prices ranging from $231.69 to $254.82 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan, less concessions including interest rate buydowns.
The average incentive/concession given by the builder within Sonrisa was $75,427 or $36.46 per square foot on Plan 4. There are currently three Plan 4 escrows with a price range of $247.65 to $267.14 per square foot, however all options and concessions may not be included in the escrow prices as negotiations may be ongoing. All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Sonrisa Plan 3 has a base current market value of $245.00 per square foot. This calculates as follows:
2,069 sf x $245.00 = $506,905
Tesoro Plan 1 is identical to Sonrisa Plan 1. We have used the same analysis for the valuation. The most appropriate new home comparable data for Tesoro Plan 1 is shown below.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 290
Menifee Mayor and City Council
May 6, 2026
Page
616 of 714
_________________________________________________________________________________________________________ Menifee CFD No. 2022-3 IA 1 (Legado IA 1) - 2026 Series Bonds Kitty Siino & Associates, Inc. Page 68
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 1 3 / 2 1 / 2 1,539 --
1 1 3 / 2 1 / 2 1,539 $349.57
1 2 3 / 2.5 2 / 2 1,696 $315.44
2 2 3 / 2 1 / 2 1,936 $300.61
3 1 3 / 2 1 / 2 1,936 $300.10
5 2 5 / 3 1 / 2 2,118 $278.09
7 1 2 / 2 1 / 2 1,579 $328.05
9 1 3 / 2 1 / 2 2,191 $285.25
11 3 4 / 2 1 / 2 2,084 $283.39
All new home comparables are located within Menifee or Romoland. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $278.09 to $349.57 per square foot with the smallest sized home at the high-end of the price per square foot range and the larger sized homes at the low-end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. Tesoro Plan 1 has a current base asking price of $351.52 per square foot. There have been eight closings of Plan 1 with net sales prices ranging from $301.78 to $329.92 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan, less concessions including interest rate buydowns. The average incentive/concession given by the builder within Tesoro was $75,988 or $49.37 per square foot on Plan 1. There are currently two Plan 1 escrows with a price range of $323.83 to $327.37 per square foot, however all options and concessions may not be included in the escrow prices as negotiations may be ongoing. All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Tesoro Plan 1 has a base current market value of $315.00 per square foot. This calculates as follows:
1,539 sf x $315.00 = $484,785
The most appropriate new home comparable data for Tesoro Plan 2 is shown below.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 291
Menifee Mayor and City Council
May 6, 2026
Page
617 of 714
_________________________________________________________________________________________________________ Menifee CFD No. 2022-3 IA 1 (Legado IA 1) - 2026 Series Bonds Kitty Siino & Associates, Inc. Page 69
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 2 3 / 2 1 / 2 1,936 --
1 1 3 / 2 1 / 2 1,539 $349.57
1 2 3 / 2.5 2 / 2 1,696 $315.44
2 1 3 / 2 1 / 2 1,539 $351.52
2 3 4 / 2 1 / 2 2,084 $284.54
2 4 4 / 2 1 / 2 2,231 $274.76
3 1 3 / 2 1 / 2 1,936 $300.10
5 2 5 / 3 1 / 2 2,118 $278.09
7 1 2 / 2 1 / 2 1,579 $328.05
9 1 3 / 2 1 / 2 2,191 $285.25
11 3 4 / 2 1 / 2 2,084 $283.39
All new home comparables are located within Menifee or Romoland. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $274.76 to $351.52 per square foot with the smallest sized home at the high-end of the price per square foot range and the larger sized homes at the low-end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. Tesoro Plan 2 has a current base asking price of $300.61 per square foot. There have been seven closings of Plan 2 with net sales prices ranging from $259.78 to $289.90 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan, less concessions including interest rate buydowns. The average incentive/concession given by the builder within Tesoro was $75,988 or $39.25 per square foot on Plan 2. There is currently one Plan 2 escrow with a price of $263.65 per square foot, however all options and concessions may not be included in the escrow prices as negotiations may be ongoing.
All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Tesoro Plan 2 has a base current market value of $262.00 per square foot.
This calculates as follows:
1,936 sf x $262.00 = $507,232
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 292
Menifee Mayor and City Council
May 6, 2026
Page
618 of 714
_________________________________________________________________________________________________________ Menifee CFD No. 2022-3 IA 1 (Legado IA 1) - 2026 Series Bonds Kitty Siino & Associates, Inc. Page 70
The most appropriate new home comparable data for Tesoro Plan 3 is shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 3 4 / 2 1 / 2 2,084 --
1 2 3 / 2.5 2 / 2 1,696 $315.44
2 4 4 / 2 1 / 2 2,231 $274.76
3 1 3 / 2 1 / 2 1,936 $300.10
5 2 5 / 3 1 / 2 2,118 $278.09
5 3 5 / 3 1 / 2 2,277 $267.09
6 1 5 / 3 1 / 2 2,641 $248.77
8 1 2 / 2 1 / 2 2,056 $271.40
9 1 3 / 2 1 / 2 2,191 $285.25
11 3 4 / 2 1 / 2 2,084 $283.39
All new home comparables are located within Menifee or Romoland. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $248.77 to $315.44 per square foot with the smallest sized home at the high-end of the price per square foot range and the larger sized homes at the low-end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. Tesoro Plan 3 has a current base asking price of $284.54 per square foot. There have been six closings of Plan 3 with net sales prices ranging from $233.72 to $270.81 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan, less concessions including interest rate buydowns. The average incentive/concession given by the builder within Tesoro was $75,988 or $36.46 per square foot on Plan 3. There are currently two Plan 3 escrows with a price range of $261.61 to $268.87 per square foot, however all options and concessions may not be included in the escrow prices as negotiations may be ongoing. All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Tesoro Plan 3 has a base current market value of $245.00 per square foot. This calculates as follows:
2,084 sf x $245.00 = $510,580
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 293
Menifee Mayor and City Council
May 6, 2026
Page
619 of 714
_________________________________________________________________________________________________________ Menifee CFD No. 2022-3 IA 1 (Legado IA 1) - 2026 Series Bonds Kitty Siino & Associates, Inc. Page 71
The most appropriate new home comparable data for Tesoro Plan 4 is shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 4 4 / 2 1 / 2 2,231 --
1 4 4 / 3 2 / 2 2,069 $276.94
2 2 3 / 2 1 / 2 1,936 $300.61
2 3 4 / 2 1 / 2 2,084 $284.54
3 1 3 / 2 1 / 2 1,936 $300.10
5 2 5 / 3 1 / 2 2,118 $278.09
5 3 5 / 3 1 / 2 2,277 $267.09
6 1 5 / 3 1 / 2 2,641 $248.77
8 1 2 / 2 1 / 2 2,056 $271.40
9 1 3 / 2 1 / 2 2,191 $285.25
11 3 4 / 2 1 / 2 2,084 $283.39
All new home comparables are located within Menifee or Romoland. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $248.77 to $300.61 per square foot with the smallest sized home at the high-end of the price per square foot range and the larger sized homes at the low-end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. Tesoro Plan 4 has a current base asking price of $274.76 per square foot. There have been seven closings of Plan 4 with net sales prices ranging from $240.30 to $257.78 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan, less concessions including interest rate buydowns. The average incentive/concession given by the builder within Tesoro was $75,988 or $34.06 per square foot on Plan 4. There is currently one Plan 4 escrows with a price of $253.50 per square foot, however all options and concessions may not be included in the escrow prices as negotiations may be ongoing.
All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Tesoro Plan 4 has a base current market value of $242.00 per square foot.
This calculates as follows:
2,231 sf x $242.00 = $539,902
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 294
Menifee Mayor and City Council
May 6, 2026
Page
620 of 714
_________________________________________________________________________________________________________ Menifee CFD No. 2022-3 IA 1 (Legado IA 1) - 2026 Series Bonds Kitty Siino & Associates, Inc. Page 72
Armonia Plan 1 is identical to Tesoro Plan 2 We have used the same analysis for the valuation. The most appropriate new home comparable data for Armonia Plan 1 is shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 1 3 / 2 1 / 2 1,936 --
1 1 3 / 2 1 / 2 1,539 $349.57
1 2 3 / 2.5 2 / 2 1,696 $315.44
2 1 3 / 2 1 / 2 1,539 $351.52
2 2 3 / 2 1 / 2 1,936 $300.61
2 3 4 / 2 1 / 2 2,084 $284.54
2 4 4 / 2 1 / 2 2,231 $274.76
3 1 3 / 2 1 / 2 1,936 $300.10
5 2 5 / 3 1 / 2 2,118 $278.09
7 1 2 / 2 1 / 2 1,579 $328.05
9 1 3 / 2 1 / 2 2,191 $285.25
11 3 4 / 2 1 / 2 2,084 $283.39
All new home comparables are located within Menifee or Romoland. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $274.76 to $349.57 per square foot with the smallest sized home at the high-end of the price per square foot range and the larger sized homes at the low-end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. Armonia Plan 1 has a current base asking price of $300.10 per square foot. There have been nine closings of Plan 1 with net sales prices ranging from $258.70 to $280.35 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan, less concessions including interest rate buydowns. The average incentive/concession given by the builder within Armonia was $74,962 or $38.72 per square foot on Plan 1. There is currently one Plan 1 escrow with a price of $277.34 per square foot, however all options and concessions may not be included in the escrow prices as negotiations may be ongoing.
All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Armonia Plan 1 has a base current market value of $262.00 per square foot.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 295
Menifee Mayor and City Council
May 6, 2026
Page
621 of 714
_________________________________________________________________________________________________________ Menifee CFD No. 2022-3 IA 1 (Legado IA 1) - 2026 Series Bonds Kitty Siino & Associates, Inc. Page 73
This calculates as follows:
1,936 sf x $262.00 = $507,232
The most appropriate new home comparable data for Armonia Plan 2 is shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 2 4 / 3 2 / 2 2,200 --
1 2 3 / 2.5 2 / 2 1,696 $315.44
1 3 3 / 2.5 2 / 2 1,862 $299.14
1 4 4 / 3 2 / 2 2,069 $276.94
2 3 4 / 2 1 / 2 2,084 $284.54
3 3 4 / 3 2 / 2 2,468 $250.81
3 4 4 / 3 2 / 2 2,589 $242.17
4 1 4 / 3 2 / 2 2,662 $244.92
10 1 4 / 2.5 2 / 2 2,391 $262.23
All new home comparables are located within Menifee. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $242.17 to $315.44 per square foot with the smallest sized homes at the high-end of the price per square foot range and the larger sized homes at the low-end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. Armonia Plan 2 has a current base asking price of $270.45 per square foot. There have been seven closings of Plan 2 with net sales prices ranging from $235.47 to $247.96 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan, less concessions including interest rate buydowns. The average incentive/concession given by the builder within Armonia was $74,962 or $34.07 per square foot on Plan 2. There is currently one Plan 2 escrow with a price of $241.84 per square foot, however all options and concessions may not be included in the escrow prices as negotiations may be ongoing. All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Armonia Plan 2 has a base current market value of $240.00 per square foot. This calculates as follows:
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 296
Menifee Mayor and City Council
May 6, 2026
Page
622 of 714
_________________________________________________________________________________________________________ Menifee CFD No. 2022-3 IA 1 (Legado IA 1) - 2026 Series Bonds Kitty Siino & Associates, Inc. Page 74
2,200 sf x $240.00 = $528,000
The most appropriate new home comparable data for Armonia Plan 3 is shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 3 4 / 3 2 / 2 2,468 --
1 3 3 / 2.5 2 / 2 1,862 $299.14
1 4 4 / 3 2 / 2 2,069 $276.94
2 3 4 / 2 1 / 2 2,084 $284.54
3 2 4 / 3 2 / 2 2,200 $270.45
3 4 4 / 3 2 / 2 2,589 $242.17
4 1 4 / 3 2 / 2 2,662 $244.92
10 1 4 / 2.5 2 / 2 2,391 $262.23
10 2 4 / 2.5 2 / 2 2,654 $244.91
All new home comparables are located within Menifee. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $242.17 to $299.14 per square foot with the smallest sized homes at the high-end of the price per square foot range and the larger sized homes at the low-end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. Armonia Plan 3 has a current base asking price of $250.81 per square foot. There have been eight closings of Plan 3 with net sales prices ranging from $221.13 to $239.28 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan, less concessions including interest rate buydowns. The average incentive/concession given by the builder within Armonia was $74,962 or $30.37 per square foot on Plan 3. There are currently two Plan 3 escrows with a price range of $229.76 to 239.27 per square foot, however all options and concessions may not be included in the escrow prices as negotiations may be ongoing. All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Armonia Plan 3 has a base current market value of $228.00 per square foot. This calculates as follows:
2,468 sf x $228.00 = $562,704
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 297
Menifee Mayor and City Council
May 6, 2026
Page
623 of 714
_________________________________________________________________________________________________________ Menifee CFD No. 2022-3 IA 1 (Legado IA 1) - 2026 Series Bonds Kitty Siino & Associates, Inc. Page 75
The most appropriate new home comparable data for Armonia Plan 4 is shown below.
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 4 4 / 3 2 / 2 2,589 --
1 4 4 / 3 2 / 2 2,069 $276.94
2 3 4 / 2 1 / 2 2,084 $284.54
3 2 4 / 3 2 / 2 2,200 $270.45
3 3 4 / 3 2 / 2 2,468 $250.81
4 1 4 / 3 2 / 2 2,662 $244.92
10 1 4 / 2.5 2 / 2 2,391 $262.23
10 2 4 / 2.5 2 / 2 2,654 $244.91
11 1 4 / 2.5 2 / 3 2,845 $239.36
All new home comparables are located within Menifee. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $239.36 to $284.54 per square foot with the smallest sized homes at the high-end of the price per square foot range and the larger sized homes at the low-end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. Armonia Plan 4 has a current base asking price of $242.17 per square foot. There have been eight closings of Plan 4 with net sales prices ranging from $210.37 to $233.21 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan, less concessions including interest rate buydowns. The average incentive/concession given by the builder within Armonia was $74,962 or $28.95 per square foot on Plan 4. There are no current escrows of Plan 4. All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Armonia Plan 4 has a base current market value of $220.00 per square foot.
This calculates as follows:
2,589 sf x $220.00 = $569,580
The most appropriate new home comparable data for Belleza Plan 1 is shown below.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 298
Menifee Mayor and City Council
May 6, 2026
Page
624 of 714
_________________________________________________________________________________________________________ Menifee CFD No. 2022-3 IA 1 (Legado IA 1) - 2026 Series Bonds Kitty Siino & Associates, Inc. Page 76
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 1 4 / 3 2 / 2 2,662 --
1 4 4 / 3 2 / 2 2,069 $276.94
3 3 4 / 3 2 / 2 2,468 $250.81
3 4 4 / 3 2 / 2 2,589 $242.17
4 3 5 / 3 2 / 2 3,010 $232.22
5 5 6 / 3.5 2 / 2 3,280 $210.06
10 1 4 / 2.5 2 / 2 2,391 $262.23
10 2 4 / 2.5 2 / 2 2,654 $244.91
10 3 5 / 3 2 / 2 2,824 $235.48
11 1 4 / 2.5 2 / 3 2,845 $239.36
12 2 4 / 3.5 2 / 3 3,010 $231.98
All new home comparables are located within Menifee. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $210.06 to $276.94 per square foot with the smallest sized homes at the high-end of the price per square foot range and the larger sized homes at the low-end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. Belleza Plan 1 has a current base asking price of $244.92 per square foot. There have been eight closings of Plan 1 with net sales prices ranging from $204.76 to $238.35 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan, less concessions including interest rate buydowns. The average incentive/concession given by the builder within Belleza was $81,149 or $30.48 per square foot on Plan 1. There is currently one Plan 1 escrow with a price of $227.35 per square foot, however all options and concessions may not be included in the escrow prices as negotiations may be ongoing. All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Belleza Plan 1 has a base current market value of $220.00 per square foot. This calculates as follows:
2,662 sf x $220.00 = $585,640
The most appropriate new home comparable data for Belleza Plan 2 is shown below.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 299
Menifee Mayor and City Council
May 6, 2026
Page
625 of 714
_________________________________________________________________________________________________________ Menifee CFD No. 2022-3 IA 1 (Legado IA 1) - 2026 Series Bonds Kitty Siino & Associates, Inc. Page 77
Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 1 4 / 3.5 1 / 2 2,760 --
2 3 4 / 2 1 / 2 2,084 $284.54
2 4 4 / 2 1 / 2 2,231 $274.76
4 1 4 / 2 2 / 2 2,662 $244.92
4 3 5 / 3 2 / 2 3,010 $232.22
5 3 5 / 3 1 / 2 2,277 $267.01
6 1 5 / 3 1 / 2 2,641 $248.77
8 3 3 / 2.5 1 / 2 2,311 $248.81
9 3 3 / 2.5 1 / 2 2,462 $268.88
12 1 4 / 3.5 1 / 2 2,760 $248.87
All new home comparables are located within Menifee or Romoland. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $232.22 to $284.54 per square foot with the smallest sized homes at the high-end of the price per square foot range and the larger sized homes at the low-end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. Belleza Plan 2 has a current base asking price of $245.29 per square foot. There have been eight closings of Plan 2 with net sales prices ranging from $206.60 to $236.19 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan, less concessions including interest rate buydowns. The average incentive/concession given by the builder within Belleza was $81,149 or $29.40 per square foot on Plan 2. There are currently two Plan 2 escrows with a price range of $227.56 to $235.07 per square foot, however all options and concessions may not be included in the escrow prices as negotiations may be ongoing. All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Belleza Plan 2 has a base current market value of $222.00 per square foot. This calculates as follows:
2,760 sf x $222.00 = $612,720
The most appropriate new home comparable data for Belleza Plan 3 is shown below.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 300
Menifee Mayor and City Council
May 6, 2026
Page
626 of 714
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Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 3 5 / 3 2 / 2 3,010 --
3 4 4 / 3 2 / 2 2,589 $242.17
4 1 4 / 3 2 / 2 2,662 $244.92
4 4 5 / 3.5 2 / 3 4,184 $203.63
6 2 5 / 3.5 2 / 3 3,047 $225.46
6 3 5 / 4 2 / 3 3,336 $213.43
11 2 5 / 3.5 2 / 3 3,047 $232.03
11 3 5 / 3.5 2 / 3 3,237 $223.66
12 2 4 / 3.5 2 / 3 3,010 $231.98
All new home comparables are located within Menifee. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $203.63 to $244.92 per square foot with the smallest sized homes at the high-end of the price per square foot range and the larger sized homes at the low-end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. Belleza Plan 3 has a current base asking price of $232.22 per square foot. There have been six closings of Plan 3 with net sales prices ranging from $198.86 to $224.21 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan, less concessions including interest rate buydowns.
The average incentive/concession given by the builder within Belleza was $81,149 or $26.96 per square foot on Plan 3. There are currently three Plan 3 escrows with a price range of $207.28 to $213.10 per square foot, however all options and concessions may not be included in the escrow prices as negotiations may be ongoing. All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Belleza Plan 3 has a base current market value of $205.00 per square foot. This calculates as follows:
3,010 sf x $205.00 = $617,050
The most appropriate new home comparable data for Belleza Plan 4 is shown below.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 301
Menifee Mayor and City Council
May 6, 2026
Page
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Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF
Subj. 4 5 / 3.5 2 / 3 4,184 --
3 4 4 / 3 2 / 2 2,589 $242.17
4 3 5 / 3 2 / 2 3,010 $232.22
6 2 5 / 3.5 2 / 3 3,047 $225.46
6 3 5 / 4 2 / 3 3,336 $213.43
11 2 5 / 3.5 2 / 3 3,047 $232.03
11 3 5 / 3.5 2 / 3 3,237 $223.66
12 3 5 / 3 2 / 3 3,418 $220.42
12 4 5 / 3.5 2 / 3 4,134 $221.80
All new home comparables are located within Menifee. All are of similar quality, design, and appeal. Adjustments were considered (when applicable) for location, master plan amenities, lot size, stories, sales concessions, CFD taxes, common area benefits, total square footage, room count, garage space and other amenities. The new home comparables have a base price range from $213.43 to $242.17 per square foot with generally the smallest sized homes at the high-end of the price per square foot range and the larger sized homes at the low-end of the price per square foot range. This is typical due to the economies of scale which are obtained during construction. Belleza Plan 4 has a current base asking price of $203.63 per square foot. There have been seven closings of Plan 4 with net sales prices ranging from $167.06 to $191.37 per square foot. It should be noted that the reported sales prices include upgrades, premiums, and options along with any concessions given by the builder while the concluded value relates to a base price for the plan, less concessions including interest rate buydowns. The average incentive/concession given by the builder within Belleza was $81,149 or $19.40 per square foot on Plan 4. There are currently seven Plan 4 escrows with a price range of $182.80 to $192.33 per square foot, however all options and concessions may not be included in the escrow prices as negotiations may be ongoing.
All of the homes appear to be in excellent condition with no depreciation visible. It has been concluded that Belleza Plan 4 has a base current market value of $180.00 per square foot.
This calculates as follows:
4,184 sf x $180.00 = $753,120
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 302
Menifee Mayor and City Council
May 6, 2026
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Bulk Sales Value – Lennar Ownership
Due to the number of homes under a single ownership (Lennar owns 30 production homes over 95 percent complete along with eight model homes), a Discounted Cash Flow Analysis needs to be considered.
Retail Value
Within Legado there are 38 builder-owned homes over 95 percent complete which includes eight model homes. Per interviews with builders, upgrades, and landscape/hardscape of up to $150,000 are installed in the model homes, however, the builders generally consider this a marketing cost and do not anticipate recovering this investment on a dollar-for-dollar basis. Based on actual sales information of the subject model homes and the current real estate market, a consideration of a $75,000 premium has been included with each of the model homes. As concluded above, the retail base value conclusions for the builder-owned homes are calculated as follows:
Sonrisa:
Plan 1 (2 x $484,785) $ 969,570 Plan 2 (1 x $474,880) 474,880
Plan 3 (2 x $489,706) 979,412
Plan 4 (2 x $506,905) 1,013,810
Tesoro:
Plan 1 (1 x $484,785) $ 484,785
Plan 2 (1 x $507,232) 507,232
Plan 3 (2 x $510,580) 1,021,160
Plan 4 (2 x $539,902) 1,079,804
Armonia:
Plan 1 (3 x $507,232) $ 1,521,696 Plan 2 (4 x $528,000) 2,112,000
Plan 3 (3 x $562,704) 1,688,112
Plan 4 (4 x $569,580) 2,278,320
Belleza:
Plan 1 (2 x $585,640) $ 1,171,280 Plan 2 (2 x $612,720) 1,225,440
Plan 3 (4 x $617,050) 2,468,200
Plan 4 (3 x $753,120) 2,259,360
Model Upgrades (8 x $75,000) 600,000
Retail Value $21,855,061
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 303
Menifee Mayor and City Council
May 6, 2026
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Absorption Period
In order to arrive at an absorption period for the 38 builder-owned homes, the absorption rate for the subject neighborhoods along with the surrounding developments has been reviewed. Legado had the first sale in April 2025, and 159 homes have sold to date which results in an overall average of 14.5 homes per month between the four communities. The average sales rate per community is 4.4 per month within Sonrisa, 3.1 sales per month within Tesoro, 3.3 sales per month within Armonia and 3.7 sales per month within Belleza.
Per the Ryness Report dated February 22, 2026, within the overall Inland Empire the average sales rate per project in 2025 was 3.1 sales per month. Within the subject’s market area of South Riverside, the average sales per project were also 3.1 sales per month in 2025. It appears that one community (Tesoro) is selling at the average rate with the other three communities selling at higher absorption rates than the area average. Twenty-one of the 38 builder-owned homes are in escrow with closings scheduled as the homes are completed. Taking into consideration the product and concluded sales prices along with the current escrows and current market conditions, it is the appraiser’s opinion that the 38 builder-owned homes will be absorbed within a four-month period at the concluded values.
Remaining Costs
As discussed under the property description section above, there is $82,184.55 per lot remaining for land development costs and fees associated with the builder-owned property. For the 38 builder-owned homes, this equates to $3,123,013 ($82,184.55 x 38) in remaining costs. For analysis purposes this will be spread evenly over the four-month absorption period.
Expenses
In determining the expense rate, several builders in the subject area have been interviewed as to their expenses on selling existing inventory. Expenses include marketing and general administrative costs. These costs typically range from six to ten percent depending on varying factors such as absorption period, intensity of marketing, etc. Due to the negotiations for possible buy-downs of interest and help with closing costs in the current market, an eight percent marketing cost is estimated along with two percent for general and administrative costs for a total of ten percent in expenses for this analysis.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 304
Menifee Mayor and City Council
May 6, 2026
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Profit
Several interviews with merchant builders in the area were conducted in order to determine an appropriate profit percentage for the subject properties. In the early 2000s, developers typically attempted to achieve a 10 to 12 percent profit based on gross sales proceeds. During the Great Recession, this range was lowered considerably to six to 10 percent with some builders drastically lowering their profit potential in order to maintain their work force. The subject has experienced an above average sales rate. A ten percent profit is considered appropriate in the analysis for this project.
Discount Rate
In selecting a discount rate, the following was completed:
1. Interviews with merchant builders in the Menifee area
2. Review of current market conditions including current market rates as well as yields reflected in other markets (i.e., municipal bonds, corporate bonds, etc.)
3. The quality, construction, historical sales, and product on the subject property
The homes within Legado began sales in April 2025, with the product being well received in the marketplace with over fourteen homes per month being sold to date between the four communities. Based on the sales rate within the subject project, the competition, the product and location, and our concluded values, a ten percent discount rate is considered appropriate for this analysis.
Discounted Cash Flow Summary
The discounted revenue (see DCF Analysis in addenda) for the Lennar-owned homes is $14,066,762.
Lennar Ownership Final Valuation
The Lennar-owned property within Legado Improvement Area 1 consists of eight models along with 30 production homes over 95 percent complete and 36 lots with homes under construction which have been valued as a finished lot rather than attribute value to a partially complete improvement. The final valuation of the Lennar owned property is shown on the following page.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 305
Menifee Mayor and City Council
May 6, 2026
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_________________________________________________________________________________________________________ Menifee CFD No. 2022-3 IA 1 (Legado IA 1) - 2026 Series Bonds Kitty Siino & Associates, Inc. Page 83
36 Lots $ 5,681,357
38 Houses 14,066,762
Total Lennar Ownership $ 19,748,119
KL LB Ownership Final Valuation
The KL LB-owned property within Legado Improvement Area 1 consists of 41 lots with homes under construction (under 95 percent complete) and 249 additional lots. The homes under construction have been valued on the basis of a finished lot rather than attribute value to a partially complete improvement. The final valuation of the KL LB owned property is shown below.
290 Lots $ 45,766,480
Total KL LB Ownership $ 45,766,480
Individual Owned Homes Valuation Conclusion
There are 127 individually owned homes within Legado Improvement Area 1. Based on the concluded value for each plan, the individually owned homes are valued as:
Sonrisa:
Plan 1 (9 x $484,785) $ 4,363,065 Plan 2 (10 x $474,880) 4,748,800
Plan 3 (10 x $489,706) 4,897,060
Plan 4 (9 x $506,905) 4,562,145
Tesoro:
Plan 1 (8 x $484,785) $ 3,878,280
Plan 2 (7 x $507,232) 3,550,624
Plan 3 (6 x $510,580) 3,063,480
Plan 4 (7 x $539,902) 3,779,314
Armonia:
Plan 1 (9 x $507,232) $ 4,565,088 Plan 2 (7 x $528,000) 3,696,000
Plan 3 (8 x $562,704) 4,501,632
Plan 4 (8 x $569,580) 4,556,640
Belleza:
Plan 1 (8 x $585,640) $ 4,685,120 Plan 2 (8 x $612,720) 4,901,760
Plan 3 (6 x $617,050) 3,702,300
Plan 4 (7 x $753,120) 5,271,840
Total Individual Owned $68,723,148
In additional review, we have reviewed the original builder sales prices for the homes within Legado Improvement Area 1. Closings for the 127 homes occurred between Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 306
Menifee Mayor and City Council
May 6, 2026
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August 20, 2025, and March 3, 2026. The reported closing prices by the builder for the homes total $69,686,541. The builder’s reported prices include premiums, upgrades and purchased options as well as taking into consideration all incentives and concessions given by the builder. All of the plans have had slight base price increases or decreases as the builder tried to find the correct price point with the largest increase on a plan being
1.4 percent and the largest decrease being 2.5 percent. The difference between the concluded value of $68,723,148 and the reported sales prices of $69,686,541 (which equates to 1.4 percent) is due to three factors. The premiums, upgrades and options purchased, the concessions given and the appreciation or depreciation of the homes. The above valuation is for the minimum market value as it takes into consideration the base plan price only and does not consider any options, premiums or upgrades which were purchased by the buyers; however, it does take into consideration the incentives and/or concessions which are needed in the subject marketplace to sell the homes. It is our conclusion that the original builder’s sales prices further substantiate the concluded minimum market value for the individually owned homes.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 307
Menifee Mayor and City Council
May 6, 2026
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APPRAISAL REPORT SUMMARY
The appraisal assignment was to value the subject property which is within the boundaries of Menifee CFD No. 2022-3 IA 1. The property is being developed into Improvement Area 1 of Legado with four neighborhoods known as Sonrisa, Tesoro, Armonia and Belleza, all by Lennar Homes. All four communities have been well received in the marketplace and are selling with current escrows in place.
Legado Improvement Area 1 includes a total of 491 single-family proposed homes with 127 closed to individuals and an additional 32 houses in escrow to individuals which are due to close upon completion. We have reviewed the builder sales and reviewed the area’s Multiple Listing Service. Our search resulted in no closed resale homes and no current listings of resale homes within the subject property. All homes appear to be in excellent condition with no depreciation apparent. The 127 home closings occurred between August 20, 2025, and March 3, 2026. There are eight models and 30 production homes over 95 percent complete, with an additional 77 homes under construction and 249 finished lots. Lennar is using KL LB as a land banker on the project.
The subject property was valued using the Sales Comparison Approach to value and a mass appraisal technique. A minimum value was determined for the existing homes by concluding at a base value for each plan. The valuation considered the improvements/benefits to be funded by both the Menifee CFD No. 2022-3 IA 1 bond proceeds, along with the Menifee CFD No. 2022-3 IA 1 special tax lien. As a result of our investigation, the concluded market value for the subject property is:
Legado Improvement Area 1
Lennar Ownership (36 lots & 38 houses) $ 19,748,119 KL LB Ownership (290 lots) 45,766,480
Individual Owners (127 houses) 68,723,148
Total Aggregate Value Menifee CFD No. 2022-3 IA 1 $ 134,237,747
The above values are stated subject to the Assumptions and Limiting Conditions of this report, the Appraiser’s Certification and as of March 3, 2026.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 308
Menifee Mayor and City Council
May 6, 2026
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APPRAISER’S CERTIFICATION
The appraiser certifies that to the best of his knowledge and belief:
1. The statements of fact contained in this report are true and correct.
2. The reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, unbiased, professional analyses, opinions, and conclusions.
3. The appraiser has no present or prospective interest in the property that is the subject of this report, and no personal interest or bias with respect to the parties involved.
4. The appraiser’s compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result or the occurrence of a subsequent event.
5. This appraisal was not based on a requested minimum valuation, a specific valuation or the approval of a loan.
6. The analyses, opinions and conclusions were developed, and this report was prepared, in conformity with the Uniform Standards of Professional Appraisal Practice.
7. Kitty Siino has made a personal inspection of the property that is the subject of this report.
8. Kitty Siino has not performed appraisal services on the subject property in the past three years.
9. No other appraisers have provided significant professional assistance to the persons signing this report.
10. The reported analyses, opinions and conclusions were developed, and this report was prepared, in conformity with the requirements of the Appraisal Institute’s Code of Professional Ethics and Standards of Professional Appraisal Practice, which include the Uniform Standards of Professional Appraisal Practice.
11. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.
12. As of the date of this report, Kitty Siino has completed the requirements of the continuing education program of the Appraisal Institute.
Kitty S. Siino, MAI
State Certified General
Real Estate Appraiser (AG004793)
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 309
Menifee Mayor and City Council
May 6, 2026
Page
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ADDENDA
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 310
Menifee Mayor and City Council
May 6, 2026
Page
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BOUNDARY MAP
CITY OF MENIFEE CFD NO. 2022-3
(Improvement Area 1 northern portion)
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 311
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May 6, 2026
Page
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Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado Item Page Number: 312
Menifee Mayor and City Council
May 6, 2026
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TRACT MAP NOS. 37408-1, 37408-2, 37408-
3, 37408-4, 37409-1, 37409-2 and 37409-3
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 313
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May 6, 2026
Page
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Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 314
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May 6, 2026
Page
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Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 315
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May 6, 2026
Page
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Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 316
Menifee Mayor and City Council
May 6, 2026
Page
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Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 317
Menifee Mayor and City Council
May 6, 2026
Page
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Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 318
Menifee Mayor and City Council
May 6, 2026
Page
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Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 319
Menifee Mayor and City Council
May 6, 2026
Page
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Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 320
Menifee Mayor and City Council
May 6, 2026
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CAL FIRE
HIGH FIRE HAZARD SEVERITY AREA MAP
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 321
Menifee Mayor and City Council
May 6, 2026
Page
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Cal Fire High Fire Hazard Severity Map
(Blue outline approximate Subject Property Outline)
Red = Very High
Orange = High
Yellow = Moderate
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 322
Menifee Mayor and City Council
May 6, 2026
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RESIDENTIAL LAND SALES MAP
& SUMMARY CHART
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 323
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May 6, 2026
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RESIDENTIAL LAND SALES MAP
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado Item Page Number: 324
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May 6, 2026
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FINISHED LOT LAND SALES SUMMARY CHART
Data
No. Location / APN / Buyer / Seller City Sales #
Lots Lot Size Sales Price /
Est.
Finished Comments
Date Price per Lot Lot Price
1 Canterwood Phase 3 / NWC of
Leon Road and Craig Avenue,
Winchester / 466-310-026 / KB
Home / Ambient
Winchester
Feb-26
94 5,500
$10,650,000 /
$113,297
$227,500
Closing with a Final Map in process
in an unimproved condition. This
was the final phase at Canterwood.
Phase 2 closed in June 2024.
2 Nautical Cove Phase 3, NWC
Briggs Road and Holland Road,
Menifee / 364-200-009 / KB Home
/ Ambient
Menifee
January
2026
52 6,000
$2,506,110 /
$48,194
$250,000
Closed in an unimproved condition
with an approved final map. This
was the final takedown of three
(first 7/24 and second 8/25).
3 San Pedro Farms, NEC of Leon
Road and Holland Road,
Winchester / 466-350-019 / KB
Home / Rancon
Winchester
September /
2025
510
4,000 -
6,000
$7,000,000 /
$13,725
$240,000
Closed with an approved final map
and in an unimproved condition.
4 Salt Creek, SWC of Briggs Road
and Simpson Road, Menifee / 333-
200-062 / Meritage Homes /
Rancho De Los Cazadores
Menifee May 2025 310 Cluster
- 5,000
$15,000,000 /
$48,387 $228,000
Closed with an Approved Tentative
Tract Map in an unimproved
condition. Three Lot Segmentations
(Cluster, 4,500, 5,000 SF lots).
5 Menifee Vista, NW of Rouse Road
and Byers Road, Menifee / 330-
230-023 / Richmond American
Homes / JEN Partners
Menifee May 2025 96 7,200 $10,055,000 /
$104,740 $260,000 Closed with an approved Final Map
in an unimproved condition.
6 Park West Planning Area 4 / south
of Nuevo Road at Evans Road,
Perris / 310-180-072 / KB Home /
Mission Pacific Perris December
2024 184 5,000 $34,478,042 /
$187,381 $257,500
Closed in a blue-topped condition
with an approved final map. KB
Home now selling their Lennox at
Park West Community with homes
from $530K to $645K.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado Item Page Number: 325
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May 6, 2026
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IMPROVED RESIDENTIAL SALES MAP
& SUMMARY CHART
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 326
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May 6, 2026
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IMPROVED RESIDENTIAL SALES MAP
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado Item Page Number: 327
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May 6, 2026
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IMPROVED RESIDENTIAL SALES SUMMARY CHART
Data
No.
Project Name
Location/Developer Plan Room
Count Floors/Parking Size
(SF)
Lot Size or
Density /
Absorption
Base Sales
Price Price/SF
1 Sonrisa at Legado / Rouse and
Sherman Roads, Menifee / Lennar
1 2
3 4
3 / 2
3 / 2.5
3 / 2.5
4 / 3
1 / 2
2 / 2
2 / 2
2 / 2
1,539
1,696
1,862
2,069
5,000 sf
4.4 sales/mo
$537,990
$534,990
$556,990
$572,990
$349.57
$315.44
$299.14
$276.94
2 Tesoro at Legado / Rouse and
Sherman Roads, Menifee / Lennar
1 2
3 4
3 / 2
3 / 2
4 / 2
4 / 2
1 / 2
1 / 2
1 / 2
1 / 2
1,539
1,936
2,084
2,231
5,500 sf
3.1 sales/mo
$540,990
$581,990
$592,990
$612,990
$351.52
$300.61
$284.54
$274.76
3 Armonia at Legado / Rouse and
Sherman Roads, Menifee / Lennar
1 2
3 4
3 / 2
4 / 3
4 / 3
4 / 3
1 / 2
2 / 2
2 / 2
2 / 2
1,936
2,200
2,468
2,589
5,500 sf
3.3 sales/mo
$580,990
$594,990
$618,990
$626,990
$300.10
$270.45
$250.81
$242.17
4 Belleza at Legado / Rouse and
Sherman Roads, Menifee / Lennar
1 2
3 4
4 / 3
4 / 3.5
5 / 3
5 / 3.5
2 / 2
1 / 2
2 / 2
2 / 3
2,662
2,760
3,010
4,184
7,000 sf
3.7 sales/mo
$651,990
$676,990
$698,990
$851,990
$244.92
$245.29
$232.22
$203.63
5 Pacific Parkview / NWC Mapes and
Antelope Road, Romoland / Pacific
Communities
1 2
3 4
5 4 / 2
5 / 3
5 / 3
5 / 3
6 / 3.5
1 / 2
1 / 2
1 / 2
1 / 2
2 / 2
1,974
2,118
2,277
2,661
3,280
6,500 sf
N/A
N/A
$588,990
$607,990
N/A
$688,990
N/A
$278.09
$267.01
N/A
$210.06
6 Trailview at Cimarron Ridge,
Goldenrod Ave and Valley Blvd,
Menifee / Pulte
1 2
3 5 / 3
5 / 3.5
5 / 4
1 / 2
2 / 3
2 / 3
2,641
3,047
3,336
7,000 sf lots
1.3 sales/mo
$656,990
$686,990
$711,990
$248.77
$225.46
$213.43
7 Arbor at Cimarron Ridge, NEC
Goetz Road and Valley Blvd,
Menifee / Del Webb
1 2
3 2 / 2
2 / 2
2 / 2
1 / 2
1 / 2
1 / 2
1,579
1,731
1,865
6,500 sf lots
1.4 sales/mo
$517,990
$532,990
$545,990
$328.05
$307.91
$292.76
8 Trellis at Cimarron Ridge, NWC
Goetz Road and Valley Blvd,
Menifee / Del Webb
1 2
3 2 / 2
3 / 2
3 / 2.5
1 / 2
1 / 2
1 / 2
2,056
2,191
2,311
7,000 sf lots
1.7 sales/mo
$557,990
$564,990
$574,990
$271.40
$257.87
$248.81
9 Heritage at Banner Park / Domenigoni
Pkwy and Lindenberger Road, Menifee
/ Pulte Homes
1 2
3 3 / 2
3 / 2.5
3 / 2.5
1 / 2
1 / 2
1 / 3
2,191
2,311
2,462
7,900 sf lots
2.2 sales/mo
$624,990
$637,990
$661,990
$285.25
$276.07
$268.88
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado Item Page Number: 328
Menifee Mayor and City Council
May 6, 2026
Page
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10 Merit at Banner Park / Domenigoni
Pkwy and Lindenberger Road, Menifee
/ Pulte Homes
1 2
3 4 / 2.5
4 / 2.5
5 / 3
2 / 2
2 / 2
2 / 2
2,391
2,654
2,824
6,000 sf lots
1.9 sales/mo
$626,990
$649,990
$664,990
$262.23
$244.91
$235.48
11 Crest at Banner Park / Domenigoni
Pkwy and Lindenberger Road, Menifee
/ Pulte Homes
1 2 (NG)
3 (NG)
4 / 2.5
5 / 3.5
5 / 3.5
2 / 3
2 / 3
2 / 3
2,845
3,047
3,237
6,500 sf lots
2.0 sales/mo $680,990
$706,990
$723,990
$239.36
$232.03
$223.66
12 Quartz Trail / SEC Holland Road and
Evans Road, Menifee / Lennar
1 2
3 4
4 / 3.5
5 / 3
5 / 3
5 / 3.5
1 / 2
2 / 3
2 / 3
2 / 3
2,760
3,010
3,418
4,134
6,000 sf lots
4.5 sales/mo
$686,890
$698,265
$753,390
$916,936
$248.87
$231.98
$220.42
$221.80
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado Item Page Number: 329
Menifee Mayor and City Council
May 6, 2026
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APPRAISER’S QUALIFICATIONS
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 330
Menifee Mayor and City Council
May 6, 2026
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QUALIFICATIONS OF KITTY S. SIINO, MAI
Education
Bachelor of Arts in Business Administration, Financial Investments, California State University, Long Beach, California (1980)
Post-Graduate Study, Real Estate Development, University of California, Irvine, California
Appraisal Institute Classes: Uniform Standards of Professional Appraisal Practice, A & B; Appraisal Principles; Appraisal Procedures; Basic Income Capitalization; Advanced Income Capitalization; Narrative Report Writing; Advanced Applications, Case Studies.
Successfully completed all classes in addition to successfully completing the writing of a Demonstration Report and taking the Comprehensive Exam. Became a Member of the Appraisal Institute in December 1996. Have completed over 100 hours of continuing education through the Appraisal Institute every five years.
Employment
1988 - Present:
Self-Employed Real Estate Appraiser. Duties include the appraisal of various types of properties such as commercial, retail, industrial and vacant land. More complex assignments include easements, right-of-ways and special assessment districts. From 1996 to present, specialized in special assessment districts and community facilities districts appraisals for public entities, including Jurupa Community Services District, Corona Norco Unified School District, City of Corona, City of Chula Vista, City of San Marcos, and City of Moreno Valley.
1986-1988:
Project Manager of Development for Ferguson Partners, Irvine, California. Duties included land acquisitions; review of fee appraisals and valuations; analysis of proposed development; planning and design; and management of development, construction and lease-up. The types of properties developed were commercial and industrial. Duties ranged from raw, vacant site development through property management of recently developed projects.
1981 - 1986
Manager of Finance, Construction for Community Development Division, The Irvine Company, Irvine, California. Duties included originating and managing a newly formed division of finance to bridge between the accounting functions and project management functions. Worked with analysis and budgets for Community Development Division. Coordinated with cities in forming new Assessment Districts and Community Facilities Districts to finance major infrastructure improvements.
Types of properties were apartments and single-family residential lots on a for sale basis to apartment and homebuilders.
1980 - 1981
Investment Counselor, Newport Equity Funds, Newport Beach, California. Duties included obtaining private financing for residential properties, working with appraisals of properties and analyzing the investments.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 331
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May 6, 2026
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Licenses
Real Estate Sales Person, State of California, 1980
Certified General Appraiser, State of California (#AG004793)
Organizations
MAI #11145 - The Appraisal Institute
Public Financing
CASTOFF Meetings, 2006, 2007, 2008, 2009, 2010, 2011, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2022 and 2024
Speaker, Mello-Roos & Special Assessment Financing, UCLA Extension Public Policy Program, February 2009 and March 2011
Education
Bachelor of Arts in Business Administration, Financial Investments, California State University, Long Beach, California (1980)
Post-Graduate Study, Real Estate Development, University of California, Irvine, California
Appraisal Institute Classes: Uniform Standards of Professional Appraisal Practice, A & B; Appraisal Principles; Appraisal Procedures; Basic Income Capitalization; Advanced Income Capitalization; Narrative Report Writing; Advanced Applications, Case Studies.
Successfully completed all classes in addition to successfully completing the writing of a Demonstration Report and taking the Comprehensive Exam. Became a Member of the Appraisal Institute in December 1996. Have completed over 100 hours of continuing education through the Appraisal Institute every five years.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 332
Menifee Mayor and City Council
May 6, 2026
Page
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4870-5138-7646v2/022007-0434
FIRST AMENDMENT TO
JOINT COMMUNITY FACILITIES AGREEMENT
RELATING TO COMMUNITY FACILITIES DISTRICT NO. 2022-3 (LEGADO)
OF THE CITY OF MENIFEE
THIS FIRST AMENDMENT TO JOINT COMMUNITY FACILITIES AGREEMENT RELATING TO COMMUNITY FACILITIES DISTRICT NO. 2022-3 (LEGADO) OF THE CITY OF MENIFEE (the “First Amendment”) is made and entered into by and among CITY OF MENIFEE (the “City”), acting for and on behalf of itself and COMMUNITY FACILITIES DISTRICT NO. 2022- 3 (LEGADO) OF THE CITY OF MENIFEE (the “Community Facilities District” or “CFD”), EASTERN MUNICIPAL WATER DISTRICT (“EMWD”) and BLC FLEMING, LLC, a Delaware limited liability company (“Property Ow ner”), each individually a “Party” and collectively the “Parties.”
WHEREAS, the City originally established the CFD and designated Improvement Area No. 1 (“IA No. 1”) and Improvement Area No. 2 therein (“Original IA No. 2”) pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended (the “Act”); and WHEREAS, in conjunction with the formation of the CFD, the City, on behalf of itself and the CFD, EMWD and the Property Owner entered into a Joint Community Facilities Agreement Relating to Community Facilities District No. 2022-3 (Legado) of the City of Menifee dated September 21, 2022 (the “Original JCFA”) providing for, among other things, the payment of the construction and/or acquisition of certain improvements to be owned, operated or maintained by EMWD with the special taxes and proceeds of bonds of IA No. 1 and Original IA No. 2; and WHEREAS, subsequent to the formation of the District, the Property Owner sold all of the land in IA No. 1 to Lennar Homes of California, LLC (“Lennar”) and in connection therewith entered into a Partial Assignment and Assumption Agreement dated as of March 8, 202 4 by and between the Property Owner and Lennar pursuant to which the Property Owner assigned to, and Lennar assumed all rights and obligations under, the Original JCFA with respect to IA No. 1 only. The Property Owner retained all rights, duties and obligations under the Original JCFA relating to Original IA No. 2 and the proceeds of special taxes and bonds of Original IA No. 2; and WHEREAS, at the request of the Property Owner, the City has completed proceedings to modify the CFD by replacing the Original IA No. 2 with a new Improvement Area No. 2 (“New IA No. 2”) and a new Improvement Area No. 3 (“IA No. 3”), which together encompass the a rea of land within Original IA No. 2; and
WHEREAS, the purpose of this First Amendment is to amend the Original JCFA solely as it relates to IA No. 2 so as to now apply to New IA No. 2 and IA No. 3.
NOW, THEREFORE, it is mutually agreed between the respective Parties as follows:
1. Definitions. Except as modified below, all capitalized terms used in this First Amendment and not otherwise defined shall have the meaning ascribed to them in the Original JCFA.
2. Amendment. All references to “Improvement Area No. 2” in the Original JCFA shall mean each of New IA No. 2 and IA No. 3. Nothing in this First Amendment shall modify or otherwise affect the rights, duties and obligations of Lennar with respect to the Original JCFA and IA No. 1.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
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May 6, 2026
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2 4870-5138-7646v2/022007-0434
3. Counterparts. This First Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute but one instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and year written below.
DATED: __________________, 2026
EASTERN MUNICIPAL WATER DISTRICT
By:
Joe Mouawad, P.E., General Manager
ATTEST:
By:
Sheila Zelaya, Board Secretary
BLC FLEMING, LLC,
A Delaware limited liability company
By:
By:
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
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CITY OF MENIFEE, a political subdivision of
the State of California
By:
Armando G. Villa, City Manager
ATTEST:
By:
Stephanie Roseen, City Clerk
APPROVED AS TO FORM:
CITY ATTORNEY FOR THE CITY OF
MENIFEE
By:
Jeffrey T. Melching, City Attorney
Item Title: 12.1
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#220807 v1 9246.2
COMMUNITY FACILITIES DISTRICT NO. 2022-3 (LEGADO)
OF THE CITY OF MENIFEE
SECOND AMENDMENT TO
ACQUISITION, CONSTRUCTION AND FUNDING AGREEMENT
THIS SECOND AMENDMENT TO ACQUISITION, CONSTRUCTION AND FUNDING AGREEMENT (the “First Amendment”) is made and entered into by and between CITY OF MENIFEE (the “City”), acting for and on behalf of itself and COMMUNITY FACILITIES DISTRICT NO. 2022-3 (LEGADO) OF THE CITY OF MENIFEE (the “Community Facilities District” or “CFD”) and BLC FLEMING, LLC, a Delaware limited liability company (the “Developer”), each individually a “Party” and collectively the “Parties.” WHEREAS, the City originally established the CFD and designated Improvement Area No. 1 (“IA No. 1”) and Improvement Area No. 2 therein (“Original IA No. 2”) pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended (the “Act”); and WHEREAS, in conjunction with the formation of the CFD, the City, on behalf of itself and the CFD, and the Developer entered into an Acquisition, Construction and Funding Agreement dated September 22, 2022, as amended by the First Amendment to Acquisition, Construction and Funding Agreement dated November 5, 2025 (together, the “Original Acquisition Agreement”), providing for, among other things, the payment of the construction and/or acquisition of certain improvements to be owned, operated or maintained by the City and the Eastern Municipal Water District with the special taxes and proceeds of bonds of IA No. 1 and Original IA No. 2; and WHEREAS, subsequent to the formation of the District, the Developer sold all of the land in IA No. 1 to Lennar Homes of California, LLC (“Lennar”) and in connection therewith entered into a Partial Assignment and Assumption Agreement dated as of March 8, 2024, by and between the Developer, the City and Lennar pursuant to which the Developer assigned to, and Lennar assumed all rights and obligations under, the Original Acquisition Agreement with respect to IA No. 1 only. The Developer retained all rights, duties and obligations under the Original Acquisition Agreement relating to Original IA No. 2 and the proceeds of special taxes and bonds of Original IA No. 2; and WHEREAS, at the request of the Developer, the City has completed proceedings to modify the CFD by replacing the Original IA No. 2 with a new Improvement Area No. 2 (“New IA No. 2”) and a new Improvement Area No. 3 (“IA No. 3”), which together encompass the area of land within Original IA No. 2; and
WHEREAS, the purpose of this First Amendment is to amend the Original Acquisition Agreement solely as it relates to IA No. 2 so as to now apply to New IA No. 2 and IA No. 3.
NOW, THEREFORE, it is mutually agreed between the respective Parties as follows:
1. Definitions. Except as modified below, all capitalized terms used in this Second Amendment and not otherwise defined shall have the meaning ascribed to them in the Original Acquisition Agreement.
2. Amendment. All references to “Improvement Area” in the Original Acquisition Agreement shall mean each of IA No. 1, New IA No. 2 and IA No. 3 and all references to “Improvement Areas” shall mean all of IA No. 1, New IA No. 2 and IA No. 3. Nothing in this Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
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#220807 v1 9246.2 2
Second Amendment shall modify or otherwise affect the rights, duties and obligations of Lennar with respect to the Original Acquisition Agreement and IA No. 1.
3. Counterparts. This Second Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute but one instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and year written below.
DATED: __________________, 2026
CITY OF MENIFEE, a political subdivision of
the State of California
By:
Armando G. Villa, City Manager
ATTEST:
By:
Stephanie Roseen, City Clerk
APPROVED AS TO FORM:
CITY ATTORNEY FOR THE CITY OF
MENIFEE
By:
Jeffrey T. Melching, City Attorney
BLC FLEMING, LLC,
A Delaware limited liability company
By:
Name:
Title:
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 357
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May 6, 2026
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4879-5200-2131/200299-0015
COMMUNITY FACILITIES DISTRICT NO. 2023-1 (ROCKPORT RANCH)
OF THE CITY OF MENIFEE
ACQUISITION, CONSTRUCTION AND FUNDING AGREEMENT
THIS ACQUISITION, CONSTRUCTION AND FUNDING AGREEMENT (the “Agreement”) is made and entered into by and between CITY OF MENIFEE (the “City”), acting for and on behalf of itself and COMMUNITY FACILITIES DISTRICT NO. 2023-1 (ROCKPORT RANCH) OF THE CITY OF MENIFEE (the “Co mmunity Facilities District” or “CFD”) and LENNAR HOMES OF CALIFORNIA, LLC, a California limited liability company (the “Developer”), each individually a “Party” and collectively the “Parties.” WHEREAS, AG EHC II (LEN) CA 1, L.P., a Delawa re limited partnership (the “AG Land Bank”), as the landowner within the CFD, has requested that the City consider the formation of the CFD pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended (the “Act”), and undertake proceedings for the author ization of special taxes and issuance of bonded indebtedness for the payment of the construction and/or acquisition of certain improvements to be owned, operated or maintained by the City, Eastern Municipal Water District (the “Water District”) and Menifee Union School District (the “Menifee Union School District”), as well as overhead utility undergrounding improvements required by the City as a condition of development (the “Utility Undergrounding”), and incidental expenses in accordance with the Act; and WHEREAS, Lennar Homes of California, Inc. (the predecessor to the Developer) entered into an Option Agreement (Rockport Ranch, California) dated December 28, 2021 with the AG Land Bank (the “Option Agreement”). The Developer is the successor-in-interest by conversion to Lennar Homes of California, Inc. and is, by virtue of that c onversion, a party to the Option Agreement. Under the Option Agreement, the Developer has the option to acquire various lots of the Property (as defined below) according to a takedown schedule. As of the date hereof, the Developer has acquired 74 of the 305 lots comprising the Property; and
WHEREAS, in order to proceed in a timely way with development of the property within the CFD which is described in the attached Exhibit “A” (the “Property”), Developer desires to fund through the Community Facilities District (i) the City’s acquisition or construction of certain improvements that are to be owned, operated and maintained by the City or are otherwise required to be constructed by the City (i.e., the Utility Undergrounding) (“City Improvements”), as more particularly set forth and described in the Description of Cost Estimates attached hereto as Exhibit “B,” (ii) improvements included in the City’s fee programs (the “City Fee Facility Improvements”), as more particularly set forth and described in Exhibit “B,” and (iii) the improvements of the Water District and the Menifee Union School District described in Exhibit “C” hereto (the “Miscellaneous Improvements” and together with the City Improvements and the City Fee Facilities Improvements, collectively the “Improvements”); and WHEREAS, the City is authorized by the Act to form the CFD and to issue bonds secured by Special Taxes (as defined in Section 2.2) of the CFD (the “Bonds”) to fund the Improvements; and WHEREAS, the City Council has adopted the City’s policies and procedures concerning the use of special district financing programs to finance the Improvements (the “Policy”); and Item Title: 12.1
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May 6, 2026
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WHEREAS, the purpose of this Agreement is to constitute a formal understanding between Developer and the City (pursuant to the requirements of Government Code Section 53313.51 and other provisions of the Act and the Policy) concerning financial and other obligations and responsibilities related to the formation of the Community Facilities District and the Improvements to be financed by the Community Facilities District, when and if formed, to the extent funds are available, and to set forth the conditions upon which (1) the Community Facilities District will reimburse Developer or its designee for the cost of the City Improvements constructed by or on behalf of the Developer and (2) the Community Facilities District will fund the City Fee Facility Improvements thereby satisfying corresponding City fees; and (3) the Community Facilities District will also fund the Miscellaneous Improvements described in Exhibit
NOW, THEREFORE, it is mutually agreed between the respective Parties as follows:
1. Feasibility Study. The City has retained,
consultants to analyze the proposed formation of the CFD, including an engineer, special tax consultant, financial advisor, bond counsel, market absorption consultant, appraiser and other consultants deemed necessary by the City. The Developer has advanced to the City a sum of money for such costs, all or a part of which may be eligible for reimbursement from the CFD in accordance between the Developer and the City.
2. Sale of Bonds.
2.1 City Policies
policies and procedures concerning the use of special district financing programs to finance the Improvements. Pursuant to the Policy, the total annual amount of the special taxes to be collected with respect to a parcel within the CFD and all other taxes and assessments which will be collected with respect to such parcel from the secured tax roll must not exceed two percent (2%) of the Fair Market Value (as defined in the Policy) of such parcel at the time of CFD formation.
The Parties hereby agree that, unless waived by the City, at the time of issuance of the Bonds, the ratio of the value of all parcels of property for which the Bonds are being issued to the amount of outstanding community facilities district or assessment district bonds attributable to such parcels (the -to- -to-one (4:1). Unless waived by the City, the Fair Market Value of the property within the Community Facilities District for purposes of determining the foregoing ratio will be determined based on the appraised value of the property based on the appraisal made by an appraiser selected by the City with a valuation date within three (3) months of the issuance of the Bonds, or, with respect to developed projects (as determined in the sole discretion of the City) or issuance of refunding bonds, the assessed value of the property, or some combination thereof.
Subject to satisfaction of the Policy and the requirements of this Agreement, the City shall use reasonable efforts to issue and sell the Bonds in one or more series in an amount sufficient to fund the Improvements in accordance with the schedule for development of the Property. The ultimate decision as to issuance and sizing lies in the sole legislative discretion of the City.
2.2 Security for Payment of Special Taxes.
(a) Concurrently with the issuance and sale of each series of the Bonds, the owner of any land within the Community Facilities District (or for land owned by the AG Land Bank during the term of the Option Agreement, the Developer) which the City has determined, in its sole discretion, Item Title: 12.1
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3 4879-5200-2131v6/200299-0015
, together with any Sizing Property
the then-current fiscal year (as defined in the Rate and Method of Apportionment of Special Tax for the Community Faci
Taxes authorized to be levied on the Sizing Property in such fiscal year, shall deliver, or cause to be delivered, to the City either (i) a renewable irrevocable instrument of credit from a financial institution cash in-
shall be in an amount equal to 200% of the product of the maximum annual debt service on the Bonds proposed to be issued times a fraction the numerator of which is the aggregate Maximum Special Taxes on the Sizing Property in the then current fiscal year applicable to the land owned by the Account Party (or owned by the AG Land Bank during the term of the Option Agreement if the Account Party is the Developer) and the denominator of which is the total Maximum Special Taxes applicable to all of the Sizing Property in s
Account Party in each fiscal year until terminated in accordance with Section 2.2(c) below. While the Security is still required, the Stated Amount of such Security shall be reduced as set forth in a Certificate of Reduction or Termination (as defined in Section 2.2(c) below).
The Security shall name the Fiscal Agent as a beneficiary and shall provide that the Fiscal Agent may draw an amount equal to any delinquencies in payment of semiannual installments of the Special Taxes levied on property owned by the Account Party (or owned by the AG Land Bank during the term of the Option Agreement if the Account Party is the Developer) in the Community Facilities District. The total amount to be drawn under the Security shall not exceed an amount equal to the Special Taxes owed by the Account Party with respect to property within the Community Facilities District that is delinquent at the time the draw is made. The amount drawn on the Security shall be applied in the same manner and for the same purposes as the delinquent Special Taxes would have been applied; provided, however the payment of a draw under the Security will not be deemed to cure the delinquency in payment of the Special Taxes.
If, subsequent to a draw on the Security and prior to the satisfaction of any reimbursements due
City receives payment of all or a portion of the delinquent Special Taxes or the proceeds of a sale of delinquent real property pursuant to foreclosure pro
which the Security has been drawn, the Security Provider (or its designee, which may be the Developer) collection. The Security Provider is intended by the Parties to be a third party beneficiary of this Section 2.2.
(b) The Security shall be renewed, or a substitute Security reasonably satisfactory hirty (30) calendar days prior to the
expiration of the Security or Substitute Security then in effect. If the Account Party provides a Substitute Security to the City, then the Fiscal Agent shall return any existing Security on the effective date of the Substitute Security to the Security Provider.
If the Security is not renewed within thirty (30) days prior to its expiration date and the requirements for release or termination of the Security as set forth in Section 2.2(c) below have not then been met, the full amount of the Security may be drawn by the Fiscal Agent and deposited in an account established under the Indenture (as hereinafter defined) or in such account established with a financial institution selected by the City. Thereafter, amounts in such account shall be held as security, Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
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May 6, 2026
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and if Special Taxes owed by the Account Party with respect to property within the Community Facilities District are not paid prior to delinquency, then such amounts in such account may be applied by the City to pay the delinquent Special Taxes owed by the Account Party with respect to such property on the same terms and conditions applicable hereunder to draws on the Security.
At such time as the Security is renewed, or a Substitute Security is accepted by the Fiscal Agent, or the requirement for the Security has been terminated pursuant to this section, the City or its designee, shall release all amounts in the Security account to the Security Provider (or its designee, which may be the Developer) within ten (10) calendar days from the date of renewal or acceptance. (c) Following the sale or transfer by the Account Party of any property to a person other than the Account Party, or upon the prepayment of the Special Tax obligation for a parcel owned by the Account Party (or owned by the AG Land Bank during the term of the Option Agreement if the Account Party is the Developer), the Account Party shall notify the Community Facilities District of such event, in writing, and, if requested by the Account Party, the Stated Amount of the Security shall be reduced and be recalculated in accordance with this Section 2.2; provided, however, that any costs associated with the recalculation and reduction shall be borne by the Account Party. Subject to Section 2.2(d) below, the Stated Amount may be reduced to an amount equal to 200% of the product of the maximum annual debt service on the outstanding Bonds times a fraction the numerator of which is the aggregate Maximum Special Taxes applicable to the Sizing Property owned by, or under option to, the Account Party and the denominator of which is the total Maximum Special Taxes to all of the Sizing Property as of the date of calculation. The Security shall be terminated when the Account Party has paid (or cause to be paid) all Special Taxes in the current fiscal year and the Sizing Property owned by, or under option to, the Account Party is expected to be responsible for less than 20% of the Maximum Special Taxes in the next fiscal year.
Reduction or termination of a Security shall occur automatically upon submission to the of the Certificate of Reduction or Termination by the City. The City shall direct that the Fiscal Agent deliver to the Security Provider such Certificate of Reduction or Termination promptly upon receiving from the Account Party a certification which shall be made under penalty of perjury and which shall indicate (i) the legal description of all Sizing Property owned by, or under option to, the Account Party, and either (ii) a recalculation of the new Stated Amount that the Account Party proposes be applicable to the Security or (iii) if termination of the Security is requested, a statement that one of the requirements set forth in the preceding paragraph for termination of the Security has been satisfied.
The Account Party shall notify the City of any events that will result in a reduction of the Stated Amount of the Security and shall provide the City with verification of said events. The Account Party may provide the Fiscal Agent with a Substitute Security in the reduced amount, and the Fiscal Agent shall release and return to the Security Provider the Security then in effect. The Parties expressly acknowledge that the A
prescribed herein shall in no way effect or invalidate sale or transfer of property, or recordation of maps on property.
(d) If the Sizing Property is sold or transferred by an Account Party with the result for 20% or more of the aggregate Maximum Special Taxes of all Sizing Property, a Security on the same terms specified in Section 2.2(a) above will be furnished by Transferee with respect to all land owned by such Transferee with respect to the Sizing Property. Any applicable purchase and sale Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 361
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May 6, 2026
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agreement and/or escrow instructions shall notify the Transferee of this Security requirement and obligate the Transferee to provide such Security, if applicable. The Security of the Account Party will not be reduced to reflect the sale or transfer of such Sizing Property until a Security is furnished by the Transferee and accepted by the Fiscal Agent. The issuing financial institution and the form and terms of said Security will be subject to reasonable prior approval by the City. All terms provided in this Section
be an express third party beneficiary of the provisions of this Section 2.2. Notwithstanding the foregoing, the Developer shall not be considered a Transferee upon the sale of property to the Developer pursuant to the Option Agreement if the Developer is the Account Party for the property owned by the AG Land Bank.
Any costs related to the holding or maintaining the Security, including any fees of a fiscal agent, trustee or other depository shall be borne by the Account Party.
2.3 Major Landowner Initial and Continuing Disclosure. An owner of land which is responsible for twenty percent (20%) or more of the Maximum Special Taxes applicable to the Sizing Property in the fiscal year in which the Bonds are issued or in the fiscal year following the to be provided, all information regarding the development of its property, including the financing plan for such development, which is necessary to ensure that the official statement for such Bonds complies with the requirements of Rule 15c2-
all other applicable federal and state securities laws. Additionally, Developer acknowledges that, if it is a Major Landowner at the time of issuance of the Bonds, it will be necessary that Developer enter into a continuing disclosure agreement to provide such continuing disclosure pertaining to the development of the land owned by, or under option to, Developer within the CFD to assist in the marketing of the Bonds. During the term of the Option Agreement, the Developer may enter into a continuing disclosure agreement to provide information on the property owned by, or under option to, the Developer, and, in such case, the AG Land Bank will not be required to enter into any continuing disclosure agreement pursuant to this Section 2.3.
2.4 Bond Issuance Parameters. The terms and conditions upon which each series of the Bonds shall be issued and sold, the method of sale of the Bonds and the pricing of the Bonds shall be determined solely by the City in its legislative discretion in conformance with the Act, the Policy, and this Agreement. Each series of Bonds shall be issued with a term not to exceed 35 years from the date of issuance of the Bonds. The proceeds of the Bonds shall be used in the following priority to (1) fund a reserve fund for the payment of principal and interest with respect to the Bonds in an amount equal to the least of (i) ten percent (10%) of the total bond issue, (ii) maximum annual debt service on Bonds, or (iii) 125% of average annual debt service; (2) fund capitalized interest through the interest payment date on the Bonds for which Special Taxes are not available for payment of debt service on the Bonds or such longer period as requested by the Developer and approved by the City, subject to the Act; (3) reimburse the Developer or its designee pursuant to Section 1 hereof for CFD formation costs advanced by the Developer pursuant to the Reimbursement Agreement which have not already been reimbursed to the Developer from collected Special Tax; (4) pay for costs of issuance
disclosure counsel fees, appraisal and special tax consultant fees, printing, fiscal agent fees, and reasonable Developer legal and financial consultant costs; (5) pay for the costs of forming the Community Facilities District; and (6) pay for the actual costs of the Improvements. The Community Facilities District shall maintain records relating to the disbursements of proceeds of the sale of the Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 362
Menifee Mayor and City Council
May 6, 2026
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Bonds. The Indenture or
Bonds shall establish an acquisition and construction fund or improvement fund (herein, the ited
initially the proceeds of the Bonds net of the amount of proceeds required to fund items (1) through (5) in the second preceding sentence. The Indenture shall also establish separate accounts of the described in Exhibit into which shall be deposited such portions of the Improvement Fund as agreed by the Parties and directed by the City in writing at or subsequent to the closing of the sale of the Bonds consistent with the following:
(a) An amount to be agreed upon between Developer and the CFD sufficient to fund the reasonable, current estimated cost of the City Fee Facility Improvements anticipated to be funded out of the Bonds being issued shall be deposited in the City Fee Facility Improvements Account (any Special Taxes levied in the CFD and collected by the CFD remaining after the payment of administrative expenses of the CFD and the reimbursement of the Developer for CFD formation costs pursuant to Section 1 hereof shall be deposited into the City Fee Facility Improvements Account at the time of Bond issuance, unless otherwise directed in writing by the Developer); (b) If applicable, an amount to be agreed upon between Developer and the CFD prior to the issuance of Bonds sufficient to fund the reasonable, current estimated costs of the City Improvements (including the Utility Undergrounding) shall be deposited, or later transferred, to the City Improvements Account; and
(c) If applicable, an amount to be agreed upon between Developer and the CFD prior to the issuance of Bonds sufficient to fund the reasonable, current estimated cost of the Miscellaneous Improvements described in Exhibit hereto, anticipated to be funded out of the Bonds being issued shall be deposited, or later transferred, to the applicable Miscellaneous Improvement Account(s).
Interest earned on moneys deposited in each of the City Fee Facility Improvements Account, the City Improvements Account and the Miscellaneous Improvement Account(s) shall remain in such accounts until such time as all of the Improvements have been funded. Additionally, the Developer may direct the CFD to transfer excess moneys in any of the City Fee Facility Improvements Account, the City Improvements Account or the Miscellaneous Improvement Account(s) to another Account.
The Indenture shall provide that amounts remaining in the Improvement Fund after funding all proposed Improvements (such completion of funding to be agreed by the City and the Developer) shall be deposited in the special tax fund or bond service fund and be applied to pay debt service on the Bonds and/or to call Bonds in advance of maturity.
3. Allocation of Special Taxes. Prior to the issuance of the last series of Bonds, the City Council of the City, acting as the legislative body of the Community Facilities District, shall levy Special Taxes on all parcels classified as Developed Property pursuant to the Rate and Method. Prior to the issuance of the first series of Bonds, such Special Taxes collected by the City shall first be applied to fund annual administrative expenses of the Community Facilities District and then to fund Improvements in the same manner as the proceeds of Bonds as set forth herein. Upon sale and delivery of the Bonds, such Special Taxes collected by the City shall be applied as provided for in documents pursuant to which the Bonds were issued. Following the issuance of the last series of Bonds, the City Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
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May 6, 2026
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shall have no obligation to levy Special Taxes on Developed Property to reimburse the Developer for the costs of any Improvements not paid for from Bond proceeds.
4. Notice of Special Tax. Developer shall provide written notice to all potential initial purchasers of lots from the Developer advising of the special tax obligation applicable to the Property in the form required by Section 53341.5 of the Government Code.
5. Design Plans and Specifications. The requirements of this Section shall not apply to any City Improvement that was complete (as determined by the City Council) prior to the adoption by the City Council of the resolution forming the CFD, but they shall apply to all other City Improvements.
All plans, specifications and bid documents for
subject to approval by the applicable public agency. Costs for preparation of the Plans will be eligible for reimbursement, conditioned upon the final approval of the applicable public agency and the availability of funds. Reimbursement of costs for plan revisions will be considered on a case by case basis. All facilities which were not complete prior to the formation of the District, as determined by 7 to be eligible for
reimbursement.
6. Construction of Improvements. The requirements of this Section shall not apply to any City Improvement that was complete (as determined by the City Council) prior to the adoption by the City Council of the resolution forming the CFD, but they shall apply to all other City Improvements.
6.1 Acquisition of City Improvements. Upon the approval of Plans for a City Improvement, the Developer will provide for construction of such City Improvement in accordance with Sections 6.2 and 7 of this Agreement. Sections 6.2 and 7 specify the requirements for construction of the City Improvements that the City believes are necessary to ensure that such City Improvements are constructed as if they had been constructed under the direction and supervision, or under the authority of the City.
6.2 Acquisition. With respect to City Improvements, a qualified engineering firm to City a complete set of grade sheets listing all locations, offsets, etc., in accordance with good surveys and/or proposed facility design changes. City shall have the right, but not the obligation, to review, evaluate and analyze whether such results comply with applicable specifications.
As necessary as determined by City, a full-time soil-testing firm, approved by City, shall be employed by the Developer to conduct soil compaction testing and certification. The Developer shall promptly furnish results of all such compaction testing to the City for its review, evaluation and decision as to compliance with applicable specifications. In the event the compaction is not in compliance with applicable specifications, the Developer shall be fully liable and responsible for the costs of achieving compliance. A final report certifying all required compaction in accordance with the specifications shall be a condition of final approval of facilities.
The costs of all surveying, testing and reports associated with the City Improvements furnished Improvements Account.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 364
Menifee Mayor and City Council
May 6, 2026
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The City shall not be responsible for conducting any environmental, archaeological, biological, or cultural studies or any mitigation requirements that may be requested by appropriate Federal, State, and/or local agencies. Any such work shall be paid for and conducted by the Developer and reimbursed out of the City Improvements Account.
Should the Developer notify the City in writing that the Developer is unable to complete such City Improvement, the City shall have the right but not the obligation to require the Developer to make an irrevocable offer of dedication to the City of the land owned by the Developer for the City Improvement identified in the notice and to assume responsibility for the work to be performed thereunder. In the event the City elects to assume the responsibility for any work on a previously awarded contract as described in the preceding sentence, the following will occur: (i) the Developer will make an irrevocable offer of dedication to the City of the land owned by the Developer for such City Improvement identified in the notice; (ii) to the extent permitted by law and the applicable contract, the Developer will assign all of the contracts for the work performed to date on the City Improvement identified in the notice to the City, if requested to do so by the City Manager; the City will use its best efforts to complete the City Improvement within a reasonable time frame; and upon completion of the City Improvement, to the extent there are Special Taxes or proceeds of the Bonds available following payment to the City for the costs of completing such City Improvement, the Developer will be reimbursed for the lesser of the cost or value of the previously unreimbursed satisfactory work performed or paid for by the Developer. The cost of such work will be determined by taking the unreimbursed amounts expended by the Developer under the contract(s) taken over by the City and deducting any incremental cost incurred by the City to complete the work under the contracts in question. Incremental cost shall be costs in excess of the sum of the original contract cost plus change orders approved by the City.
7. Public Works Requirements.
City Requirements. The requirements of this Section shall not apply to any City Improvement that was complete (as determined by the City Council) prior to the adoption by the City Council of the resolution forming the CFD, but they shall apply to all other City Improvements. In order that the City Improvements may be properly and readily acquired by the City, the Developer shall comply with all of the requirements in this Section 7.1 with respect to any such City Improvements to be acquired with funds in the City Improvements Account and the Developer shall provide such proof to the City as the City may reasonably require and at such intervals and in such form as the City may reasonably require, that the requirements under this Section 7.1 have been satisfied as to all such City Improvements.
Notwithstanding the foregoing, City Improvements shall only be eligible for financing by the CFD if the City determines that the conditions under Section 53313.5 have been satisfied with respect to such City Improvements. City approval is a condition prior to initiation of contract work for City Improvements bid after the effective date of this Agreement. (a) The Developer shall prepare a bid package for review, comment and approval the effective date of this Agreement.
(b) For any City Improvements bid after the effective date of this Agreement, the Developer shall, after obtaining sealed bids for the construction of the City Improvements in conformance with the procedures and requirements of the City, submit to the City written evidence of such competitive bidding procedure, including evidence of the means by which bids were solicited, a listing of all responsive bids and their amounts, and the name or names of the contractor or contractors Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 365
Menifee Mayor and City Council
May 6, 2026
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to whom the Developer proposes to award the contracts for such construction, which shall be the lowest responsible bidder.
(c) For any City Improvements bid after the effective date of this Agreement, the following provisions apply: the City Representative shall attend the bid opening for such City Improvements. If unable to attend the bid opening, the City Representative shall approve or disapprove of a contractor or contractors, in writing, within five (5) business days after receipt from the Developer of the name or names of such contractor or contractors recommended by the Developer. If the City Representative disapproves of any such contractor, the Developer shall select the next lowest responsible bidder from the competitive bids received who is acceptable to the City Representative. (d) The specifications and bid and contract documents shall require all such contractors to pay prevailing wages and to otherwise comply with applicable provisions of the Labor Code, the Government Code and the Public Contract Code relating to public works projects constructed by private parties and as required by the procedures and standards of the City with respect to the construction of its public works projects.
(e) The Developer shall submit faithful performance and payment bonds in form and substance reasonably acceptable to the City with respect to the City Improvements. (f) The Developer and its contractor and subcontractors shall be required to provide proof of insurance coverage throughout the term of the construction of the City Improvements, equirements. The
20 herein.
(g) The Developer and all such contractors shall comply with such other requirements relating to the construction of the City Improvements which the City may impose by written notification delivered to the Developer and each such contractor at the time either prior to the receipt of bids by the Developer for the construction of such City Improvements or, to the extent required as a result of changes in applicable laws, during the progress of construction thereof; provided that such other requirements shall only be imposed to the extent the City reasonably determines they are required in order to comply with applicable law. In accordance with Section 7, the Developer shall be deemed the awarding body and shall be solely responsible for compliance and enforcement of the provisions of the Labor Code, Government Code, and Public Contract Code. (h)
a change in the w
to a contractor authorizing a change in the work to be performed where such Change Order is larger than 10% of the contract amount for such City Improvement. After the effective date of this Agreement, the Developer shall receive comments from the City Representative prior to the deny the Significant Change Order request within fifteen (15) business days of receipt of all necessary conditioned or withheld. The Developer shall not be entitled to be compensated for costs associated with a Significant Change Order that has not been approved by the City Representative.
Developer shall provide proof to the City, at such intervals and in such form as the City may reasonably require, that the foregoing requirements have been satisfied as to all of the City Improvements which are funded through Bond proceeds or Special Taxes.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 366
Menifee Mayor and City Council
May 6, 2026
Page
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10 4879-5200-2131v6/200299-0015
8. Inspection; Completion of Construction. The requirements of this Section shall not apply to any City Improvement that was complete (as determined by the City Council) prior to the adoption by the City Council of the resolution forming the CFD, but they shall apply to all other City Improvements.
The City shall have primary responsibility for inspecting the City Improvements to assure that the work is being accomplished in accordance with the Plans. Such inspection does not include personnel shall be granted access to each construction site at all reasonable times for the purpose of the City in writing that a City Improvement has been completed in accordance with the Plans. Any actual costs reasonably incurred by the City for inspection not previously paid by the Developer shall be reimbursed from funds in the City Improvements Account.
Within three (3) business days of receipt of written notification from City inspectors that a City Improvement has been completed in accordance with the Plans, the City Representative shall notify the Developer in writing that such City Improvement has been satisfactorily completed. Upon receiving such notification, the Developer shall file a Notice of Completion with the County of Riverside Recorders Office, pursuant to the provisions of Section 3093 of the Civil Code. The Developer shall furnish to the City a duplicate copy of each such Notice of Completion showing ty will in turn file a notice
with the County for acceptance.
9. Liens. With respect to any City Improvement that was complete (as determined by the City Council) prior to the adoption by the City Council of the resolution forming the CFD, prior to any payment by the CFD to the Developer for such City Improvement, the Developer shall provide to the City such evidence or proof as the City shall require that all persons, firms and corporations supplying work, labor, materials, supplies and equipment for the construction of the City Improvements have been paid, and that no claims of liens have been recorded by or on behalf of any such person, firm or corporation. With respect to City Improvements, upon the earlier of (i) receipt of all applicable lien releases, or (ii) expiration of the time for the recording of claim of liens as prescribed by Sections 3115 and 3116 of the Civil Code the Developer shall provide to the City such evidence or proof as the City shall require that all persons, firms and corporations supplying work, labor, materials, supplies and equipment for the construction of the City Improvements have been paid, and that no claims of liens have been recorded by or on behalf of any such person, firm or corporation.
10. Acquisition; Acquisition Price; Source of Funds. The acquisition price of a City Improvement that was complete (as determined by the City Council) prior to the adoption by the City Assistant General Manager or his or her designee, as of the date of acquisition. The City shall consider input and data provided by the Developer prior to determining the final fair market value. The Actual Cost (as defined below) of the City Improvement shall be presumed to be its fair market value unless there is reasonable evidence that a lower amount is the fair market value.
The costs eligible to be included in the acquisition price of a City Improvement that is not described in the preceding paragraph shall be the actual costs incurred by the Developer for such City
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 367
Menifee Mayor and City Council
May 6, 2026
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(i) The actual hard costs for the construction of such City Improvement as established by the City-approved construction contracts, Change Orders, and approved Significant Change Orders, including costs of payment, performance and maintenance bonds and insurance costs, pursuant to this Agreement;
(ii) The design and engineering costs of such City Improvement including, without limitation, the costs incurred in preparing the Plans; (iii) The costs of environmental evaluations and public agency permits and approvals attributable to the City Improvement;
(iv) Costs incurred by the Developer for construction management and supervision of such City Improvement, not to exceed five percent (5%) of the actual construction cost; (v) Professional costs associated with the City Improvement such as engineering, inspection, construction staking, materials, testing and similar professional services; and (vi) Costs approved by the City in accordance with the Act of acquiring any real property or interests therein required for the City Improvement including, without limitation, temporary construction easements, temporary by-pass road and maintenance easements.
Provided the Developer has complied with the requirements of this Agreement, the City agrees to pay the acquisition price of a completed City Improvement to the Developer or its designee within thirty (30) days after the Developer
but only to the extent there are sufficient funds available in the City Improvements Account. Except in the case of a City Improvement described in the first paragraph of this Section, the acquisition price to be paid from Bond proceeds or Special Taxes for the acquisition of a City Improvement by the City shall be the least of (1) the value of the City Improvement; or (2) the total of the Actual Costs of the
to be its Acquisition Price unless there is reasonable evidence that a lower amount is the actual value, isition Price that is
not paid in full by the then-available Bond proceeds and Special Taxes shall be paid upon receipt by the City of additional available Bond proceeds and Special Taxes, if any.
As a condition to the payment of the Acquisition Price, the ownership of the completed City Improvement shall be transferred to the City by grant deed, bill of sale or such other documentation as such public agency may require free and clear of all taxes, liens, encumbrances, and assessments, but subject to any exceptions determined by the City to not interfere with the actual or intended use of the land or interest therein (including the lien of a community facilities district so long as the subject property is exempt from taxation or is otherwise not taxable by such community facilities district).
Upon the transfer of ownership of City Improvements or any portion thereof to the City, the City shall be responsible for the maintenance of such City Improvements or the portion transferred.
Notwithstanding the foregoing, the Acquisition Price of a City Improvement may be paid prior to transfer of ownership and acceptance of the City Improvement if it is substantially completed at the hen it has been
reasonably determined by the City to be usable, subject to final completion of such items as the final lift or any other items not essential to the primary use or operation of the City Improvement.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 368
Menifee Mayor and City Council
May 6, 2026
Page
694 of 714
12 4879-5200-2131v6/200299-0015
Upon completion of the construction of a City Improvement, the Developer shall deliver or cause to be delivered to the City a Disbursement Request Form in substantially the form of Exhibit attached hereto, copies of the contract(s) with the contractor(s) who have constructed the City Improvement and other relevant documentation with regard to the payments made to such contractor(s) and each of them for the construction of the City Improvement, documentation evidencing payment of prevailing wages, and shall also provide to the City invoices and purchase orders with respect to all equipment, materials and labor purchased for the construction of the City Improvements. The City shall require the Engineer to complete its determination of the value of the City Improvements as promptly as is reasonably possible.
Notwithstanding the preceding provisions of this Section, the source of funds for the acquisition of the City Improvements or any portion thereof shall be funds in the City Improvements Bonds are not sold, the City shall not be
required to acquire the City Improvements from the Developer, except to the extent of funds from the collection of Special Taxes. In such event, the Developer shall design and construct those City Improvements that are required by the conditions of development for the Property, but need not construct any portion of the City Improvements which it is not so required to construct.
Reimbursement for these facilities would be made from the collection of Special Taxes over time.
In addition to the foregoing, the City shall have the right to withhold payment for acquisition of a City Improvement, if:
(a) the Developer or any of its affiliates is delinquent in the payment of any Special Taxes levied by the Community Facilities District on properties then owned by, or under option to, the Developer or any of its affiliates within the CFD, or
(b) the Developer is not then in substantial compliance with a condition or obligation imposed upon the Property owned by, or under option to, the Developer by the City, including but not limited to, payment of all applicable fees, dedication of all applicable rights-of-way or other property and construction requirements.
The City shall immediately provide written notice to the Developer of the decision to withhold any such payment and shall specify the reason for such decision. If the payment is withheld as a result of the delinquency in the payment of Special Taxes, the notice shall identify the delinquent parcels and the amount of such delinquency. If the payment is withheld as a result of substantial non-compliance with a condition or obligation, the notice shall specify such condition or obligation and what action will be necessary by the Developer to substantially comply with such condition or obligation. Upon receipt of evidence reasonably satisfactory to the City that the Developer has paid the delinquent Special Taxes or complied with the subject condition or obligation, the City shall forthwith make all payments which have been withheld pursuant to the provisions of this Section.
11. Easements and/or Fee Title Ownership Deeds
rights to reimbursement for such grants pursuant to Section 10 above, the Developer shall, at the time the City acquires the City Improvements as provided in Section 10 hereof, grant or cause to be granted to the City, by appropriate instruments prescribed by the City, all easements across private property and/or fee title ownership deeds which may be reasonably necessary for the proper operation and maintenance of such City Improvements, or any part thereof, but only to the extent located within the Property.
Item Title: 12.1
Issuance of Special Tax Bonds for Improvement Area 1 of Community Facilities District 2022-3, Legado
Item Page Number: 369
Menifee Mayor and City Council
May 6, 2026
Page
695 of 714
13 4879-5200-2131v6/200299-0015
12. Permits. The Developer shall be responsible for obtaining all necessary construction permits from the City and/or the County (as appropriate) covering construction and installation of the City Improvement.
13. Maintenance. Prior to the transfer of ownership of a City Improvement by the Developer to the City, as provided in Section 10 hereof, the Developer shall be responsible for the maintenance thereof and shall require its contractor(s) to repair all facilities damaged by any party other than the City, prior to acceptance by the City and/or make corrections determined to be necessary ll not be permitted to place any City Improvement in
service prior to acceptance of the same, unless the Developer otherwise consents in writing.
14. Inspection of Records. The City shall have the right to review all books and records of the Developer pertaining to the costs and expenses incurred by the Developer for the design and construction of the City Improvements during normal business hours by making arrangements with the Developer. The Developer shall have the right to review all books and records of the City pertaining to costs and expenses incurred by the City for services of the Engineer by making arrangements with the City.