DRAFT_Official Statement (Moreno Valley 2024 Lease Revenue Refunding Bonds), 4872-9371-4101_4.pdf

Stradling Yocca Carlson & Rauth
Draft of 5/14/24
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PRELIMINARY OFFICIAL STATEMENT DATED _____, 2024
NEW ISSUE—BOOK-ENTRY ONLY RATINGS:

S&P: “_____” (INSURED)
S&P: “_____” (UNDERLYING)
(See “RATINGS” herein)
In the opinion of Stradling Yocca Carlson & Rauth LLP, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described in this Official Statement, interest (and original issue discount) on the Series 2024A Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. In the further opinion of Bond Counsel, interest (and original issue discount) on the Series 2024A Bonds is exempt from State of California personal income tax. See the caption “TAX MATTERS” with respect to tax consequences relating to the Series 2024A Bonds, including with respe ct to the alternative minimum tax imposed on certain large corporations. $__________

MORENO VALLEY PUBLIC FINANCING AUTHORITY
LEASE REVENUE REFUNDING BONDS, SERIES 2024A
Dated: Date of Delivery Due: November 1, as shown on inside cover The Moreno Valley Public Financing Authority Lease Revenue Refunding Bonds, Series 2024A (the “Series 2024A Bonds”) are payable from base rental payments (the “ Base Rental Payments”) to be made by the City of Moreno Valley (the “City”) for the right to use certai n City-owned property (the “Property”) pursuant to a Lease Agreement, dated as of August 1, 2024 ( the “Lease Agreement”), by and between the City, as lessee, and the Moreno Valley Public Financing Authority (the “Authority”), as lessor. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2024A BONDS.”
The Series 2024A Bonds are being issued to provide funds to (i) refund the outstanding Moreno Valley Public Financing Authority Lease Revenue Refunding Bonds, Series 2014; (ii) purchase a municipal bond insurance policy to guarantee payment of the principal of and interest on the Series 2024A Bonds when due, ( iii) purchase a debt service reserve insurance policy for deposit in the Reserve Fund for the Series 2024A Bonds, and (iv) pay the costs incurred in connection with the issuance of the Series 2024A Bonds. See “SOURCES AND USES OF FUNDS.”
The City has covenanted under the Lease Agreement to make all Base Rental Payments provided for therein, to include all such payments in its annual budgets, and to make all the necessary annual appropriations for such Base Rental Payments. The City’s obligation to make Base Rental Payments is subject to abatement during any period in which, by reason of material damage to, or destruction or condemnation of, the Property, or any defects in title to the Property, there is substantial interference with the City’s right to use and occupy any portion of the Property. See “RISK FACTORS—Abatement.”
The Series 2024A Bonds are being issued in full y registered book -entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). Interest on the Series 2024A Bonds is payable semiannually on May 1 and November 1 of each year, commencing November 1, 2024. Purchasers will not receive certificates representing their interest in the Series 2024A Bonds. Individual purchases of the Series 2024A Bonds may be made in principal amounts of $5,000 or integral multiples thereof. Principal of and interest and premium, if any, on the Series 2024A Bonds will be paid by Wilmington Trust, National Association, as trustee (the “Trustee”) to DTC for subsequent disbursement to DTC Participants who are obligated to remit such pay ments to the Beneficial Owners of the Series 2024A Bonds. See “THE SERIES 2024A BONDS—Book-Entry Only System” herein.

The Series 2024A Bonds will be issued pursuant to an Indenture, dated as of August 1, 2024, (the “Indenture”), by and among the City, the Authority and the Trustee. The Series 2024A Bonds and any additional bonds issued pursuant to the Indenture (“Additional Bonds”) are collectively referred to herein as the “Bonds.” See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2024A BONDS.” The Series 2024A Bonds are not subject to optional redemption prior to maturity. The Series 2024A Bonds are subject to extraordinary and mandatory sinking fund redemption prior to maturity. See “THE SERIES 2024A BONDS—Redemption.” [The scheduled payment of principal of and interest on the Series 2024A Bonds when due will be guaranteed under a municipal bond insurance policy to be issued concurrently with the delivery of the Insured Series 2024A Bonds by __________.] [BAM LOGO]
The Bonds are special obligations of the Authority, payable solely from Base Rental Payments and the other assets pledged therefor under the Indenture. Neither the faith and credit nor the taxing power of the Authority, the City or the State of C alifornia, or any political subdivision thereof, is pledged to the payment of the Bonds.

The obligation of the City to make the Base Rental Payments does not constitute a debt of the City or the State of California or of any political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which the City or the State of California is obligated to levy or pledge any form of taxation or for which the City or the State of California has levied or pledged any form of taxation. The Authority has no power to tax.

THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION.

The Series 2024A Bonds will be offered when, as and if issued and received by the Underwriter, subject to the approval as to their validity by Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, Bond Counsel. Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, is also acting as Disclosure Counsel to the City. Certain legal matters will be passed upon for the City and the Authority by the City Attorney of the City, for the Underwriter by Kutak Rock, LLP, Irvine, California for the Trustee by its counse l and for the Insurer by its counsel. It is anticipated that the Series 2024A Bonds will be available in book-entry form through the facilities of DTC in New York, New York on or about _____, 2024.

 Preliminary, subject to change.

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

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[Stifel Logo]
Dated: _____, 2024

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$__________

MORENO VALLEY PUBLIC FINANCING AUTHORITY
LEASE REVENUE REFUNDING BONDS, SERIES 2024A

MATURITY SCHEDULE
BASE CUSIP†: 61685P
Maturity Date
(November 1) Principal Amount Interest Rate Yield Price CUSIP†

$__________ _____% Term Bonds due November 1, 20__ Yield: _____% Price: _____ CUSIP† _____

 Preliminary, subject to change.
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by FactSet Research Systems Inc. Copyright(c) 2024 CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitu te for the CGS database. CUSIP® numbers are provided for convenience of reference only. None of the Authority, the City nor the Underwriter or their agents or counsel assume responsibility for the accuracy of such numbers.

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No dealer, broker, salesperson or other person has been authorized by the City or the Authority to give any information or to make any representations in connection with the offer or sale of the Series 2024A Bonds other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by the City or the Authorit y. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Series 2024A Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

This Official Statement is not to be construed as a contract with the purchasers or Owners of the Series 2024A Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact.

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

This Official Statement and the information contained herein are subject to completion or amendment without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City or the Authority or any other parties desc ribed herein since the date hereof. The Series 2024A Bonds may not be sold nor may an offer to buy be accepted prior to the time this Official Statement is delivered in final form. This Official Statement is being submitted in connection with the sale of the Series 2024A Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose, unless authorized in writing by the City. All summaries of documents and laws are made subject to the provisions thereof and do not purport to be complete statements of any or all such provisions.

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

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH

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

FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED T O BE

MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE CITY DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD -LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL S TATEMENT. IN

EVALUATING SUCH STATEMENTS, POTENTIAL INVESTORS SHOULD SPECIFICALLY CONSIDER THE VARIOUS

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

IN CONNECTION WITH THE OFFERING OF THE SERIES 2024A BONDS, THE UNDERWRITER MAY

OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2024A BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. S UCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE SERIES 2024A BONDS TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AND

OTHERS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATED ON TH E INSIDE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER.

THE SERIES 2024A BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS

AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH AC T AND HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.
[__________ (the “Insurer”) makes no representation regarding the Insured Series 2024A Bonds or the advisability of investing in the Insured Series 2024A Bonds. In addition, the Insurer has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding the Insurer, supplied by the Insurer and presented under the heading “BOND INSURANCE” and APPENDIX G—“SPECIMEN MUNICIPAL BOND INSURANCE POLICY.”] A wide variety of other information, includin g financial information, concerning the City is available from publications and website of City. Any such information that is inconsistent with the information set forth in this Official Statement should be disregarded.

No such information is a part of or incorporated into this Official Statement, except as expressly noted.

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CITY OF MORENO VALLEY

MAYOR AND MEMBERS OF THE CITY COUNCIL
Ulises Cabrera, Mayor
Cheylynda Barnard, Mayor Pro Tem, District 4
Elena Baca-Santa Cruz, Councilmember, District 1
Ed A. Delgado, Councilmember, District 2
[Vacant, Councilmember, District 31]

MORENO VALLEY PUBLIC FINANCING AUTHORITY
Ulises Cabrera, Chair
Cheylynda Barnard, Vice Chair
Ed A. Delgado, Boardmember
Elena Baca-Santa Cruz, Boardmember
STAFF
Mike Lee, City Manager/Authority Executive Director
Steve Quintanilla, City Attorney
Brian Mohan, Assistant City Manager (Administration)
Launa Jimenez, Chief Financial Officer/City Treasurer
Jane Halstead, City Clerk/Authority Secretary

SPECIAL SERVICES
Bond Counsel and Disclosure Counsel
Stradling Yocca Carlson & Rauth LLP
Newport Beach, California
Municipal Advisor
Fieldman Rolapp & Associates, Inc.

Irvine, California
Trustee
Wilmington Trust, National Association
Costa Mesa, California
Verification Agent
Causey Demgen & Moore P.C.

Denver, Colorado

1 This seat is currently vacant.

TABLE OF CONTENTS
Page
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INTRODUCTION ................................................................................................................................................ 1 General .............................................................................................................................................................. 1 Bondholders’ Risks ........................................................................................................................................... 3 Other Information in this Official Statement .................................................................................................... 3 THE SERIES 2024A BONDS .............................................................................................................................. 3 General .............................................................................................................................................................. 3 Registration, Transfers and Exchanges ............................................................................................................. 4 Redemption ....................................................................................................................................................... 4 Book-Entry Only System .................................................................................................................................. 6 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2024A BONDS .......................................... 6 Pledge of Revenues ........................................................................................................................................... 6 Base Rental Payments ....................................................................................................................................... 7 Additional Rental Payments ............................................................................................................................. 7 Abatement ......................................................................................................................................................... 8 Substitution, Addition and Removal of Property .............................................................................................. 8 Action on Default.............................................................................................................................................. 9 Reserve Fund .................................................................................................................................................... 9 Additional Bonds ............................................................................................................................................ 10 Insurance ......................................................................................................................................................... 10 BOND INSURANCE ......................................................................................................................................... 11 SOURCES AND USES OF FUNDS .................................................................................................................. 12 DEBT SERVICE SCHEDULE........................................................................................................................... 12 THE REFUNDING PLAN ................................................................................................................................. 12 General ............................................................................................................................................................ 12 Verification ..................................................................................................................................................... 13 THE PROPERTY ............................................................................................................................................... 13 THE AUTHORITY ............................................................................................................................................ 13 THE CITY .......................................................................................................................................................... 13 General ............................................................................................................................................................ 13 Largest Employers .......................................................................................................................................... 14 Government and Administration ..................................................................................................................... 15 Risk Management ........................................................................................................................................... 15 CITY FINANCIAL INFORMATION ................................................................................................................ 16 Accounting and Financial Reporting .............................................................................................................. 16 General Economic Condition and Outlook of the City ................................................................................... 17 Budget Procedure, Current Budget and Historical Budget Information ......................................................... 18 Change in Fund Balance of the City General Fund ........................................................................................ 24 General Fund Balance Sheets of the City ....................................................................................................... 26 Tax Revenues by Source ................................................................................................................................. 27 Property Taxes ................................................................................................................................................ 27 State of California Motor Vehicle In-Lieu Payments ..................................................................................... 30 Sales Taxes ..................................................................................................................................................... 31 Utility Taxes ................................................................................................................................................... 31 Other Taxes ..................................................................................................................................................... 31 Services ........................................................................................................................................................... 31 Other Indebtedness ......................................................................................................................................... 32 Retirement Contributions ................................................................................................................................ 36 Other Post-Employment Benefits ................................................................................................................... 41

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City Investment Policy .................................................................................................................................... 42 RISK FACTORS ................................................................................................................................................ 43 General Considerations – Security for the Series 2024A Bonds .................................................................... 43 Abatement ....................................................................................................................................................... 44 Natural Disasters ............................................................................................................................................. 44 Climate Change............................................................................................................................................... 45 Hazardous Substances ..................................................................................................................................... 45 Cybersecurity .................................................................................................................................................. 46 Substitution, Addition and Removal of Property; Additional Bonds .............................................................. 46 Limited Recourse on Default; No Acceleration of Base Rental ..................................................................... 47 Limitations on Remedies Available; Bankruptcy ........................................................................................... 47 Possible Insufficiency of Insurance Proceeds ................................................................................................. 48 Loss of Tax Exemption ................................................................................................................................... 49 No Liability of Authority to the Owners ......................................................................................................... 49 Dependence on State for Certain Revenues .................................................................................................... 49 Risks Associated with Bond Insurance ........................................................................................................... 50 CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS ............ 51 Article XIIIA of the State Constitution ........................................................................................................... 51 Legislation Implementing Article XIIIA ........................................................................................................ 51 Article XIIIB of the State Constitution ........................................................................................................... 52 Articles XIIIC and XIIID of the State Constitution ........................................................................................ 52 Proposition 62 ................................................................................................................................................. 53 Proposition 1A ................................................................................................................................................ 54 Proposition 22 ................................................................................................................................................. 54 Proposition 26 ................................................................................................................................................. 54 Possible Future Initiatives ............................................................................................................................... 55 TAX MATTERS................................................................................................................................................. 56 CERTAIN LEGAL MATTERS ......................................................................................................................... 58 ABSENCE OF LITIGATION ............................................................................................................................ 58 UNDERWRITING ............................................................................................................................................. 58 RATINGS ........................................................................................................................................................... 58 MUNICIPAL ADVISOR ................................................................................................................................... 59 CONTINUING DISCLOSURE .......................................................................................................................... 59 FINANCIAL STATEMENTS OF THE CITY ................................................................................................... 59 MISCELLANEOUS ........................................................................................................................................... 59

APPENDIX A ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING THE CITY OF MORENO VALLEY ................................................................................................... A-1 APPENDIX B SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS ........................................... B-1

APPENDIX C ANNUAL COMPREHENSIVE FINANCIAL REPORT OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2023 .......................................................................... C-1 APPENDIX D PROPOSED FORM OF BOND COUNSEL OPINION .................................................... D-1 APPENDIX E FORM OF CONTINUING DISCLOSURE CERTIFICATE ............................................ E-1 APPENDIX F BOOK-ENTRY ONLY SYSTEM .....................................................................................F-1 APPENDIX G SPECIMEN MUNICIPAL BOND INSURANCE POLICY ............................................. G-1

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OFFICIAL STATEMENT
$__________

MORENO VALLEY PUBLIC FINANCING AUTHORITY
LEASE REVENUE REFUNDING BONDS, SERIES 2024A

INTRODUCTION
General
This Official Statement (which includes the cover page , inside cover page and the appendices hereto) (the “Official Statement”), provides certain information concerning the sale and delivery of $__________* aggregate principal amount of Moreno Valley Public Financing Authority Lease Revenue Refunding Bonds , Series 2024A (the “Series 2024A Bonds”).

The net proceeds of the sale of the Series 2024A Bonds will be used to (i) refund the outstanding Moreno Valley Public Financing Authority Lease Revenue Refunding Bond s, Series 2014 (the “ 2014 Bonds”), (ii) purchase a municipal bond insurance policy to guarantee payment of the principal of and interest on the Series 2024A Bonds when due, as described under the caption “BOND INSURANCE,” (iii) purchase a debt service reserve insurance policy for deposit in the Reserve Fund for the Series 2024A Bonds, and (iv) pay the costs incurred in connection with the issuance of the Series 2024A Bonds. See “SOURCES AND USES OF FUNDS” herein.

The Series 2024A Bonds are equally and ratably payable from base rental payments (the “Base Rental Payments”) to be made by the City for the right to use certain real property consisting of the Moreno Valley City Hall (the “Property”) pursuant to a Lease Agreement, dated as of August 1, 2024 (the “Lease Agreement”), between the City, as lessee, and the Moreno Valley Public Financing Authority (the “Authority”), as lessor.

The Series 2024A Bonds will be issued pursuant to an Indenture, dated as of August 1, 2024 (the “Indenture”), by and among the Authority, the City and Wilmington Trust, National Association, as trustee (the “Trustee”). Pursuant to the Indenture, the Authority may issue additional bonds (the “ Additional Bonds”) payable from the Base Rental Payments on a parity with the Series 2024A Bonds (the Series 2024A Bonds and any such Additional Bonds being collectively referred to as the “Bonds”) subject to certain conditions.

Pursuant to a Ground Lease, dated as of August 1, 2024 (the “Ground Lease”), by and between the City and the Authority, the City has leased the Property to the Authority. The Authority has subleased the Property to the City under the Lease Agreement. The Lease Agreement obligates the City to make Base Rental Payments to the Authority.

The Trustee and the Authority have entered into an Assignment Agreement, dated as of August 1, 2024, pursuant to which the Authority has assigned to the Trustee for the benefit of the Bond Owners substantially all of the Authority’s right, title and interest in and to the Ground Lease and the Lease Agreement, including its rights to receive the Base Rental Payments due under the Lease Agreement and to enforce any remedies in the event of a default under the Lease Agreement by the City.

The City will covenant under the Lease Agreement to take such action as may be necessary to include all Rental Payments, which are comprised of Base Rental Payments and Additional Rental Payments (which, as defined under the caption “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2024A BONDS— Additional Rental Payments,” include taxes and assessments affecting the Property, administrative costs of the Authority relating to the Property, fees and expenses of the Trustee, and other amounts payable under the Lease

 Preliminary, subject to change.

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Agreement), due under the Lease Agreement as a separate line item in its annual budgets and to make the necessary annual appropriations therefor, subject to abatement as described herein.

Base Rental Payments are subject to complete or partial abatement in the event and to the extent that there is substantial interference with the City’s right to use and occupy the Property or any portion thereof. See “RISK FACTORS—Abatement.” Abatement of Base Rental Payments under the Lease Agreement, to the extent that payment is not made from alternative sources as set forth below, would result in all Bond Owners receiving less than the full amount of principal of and interest on the Bonds. To the extent that proceeds of insurance are available, Base Rental Payments (or a portion thereof) may be made from such proceeds of insurance during periods of abatement.
[Payment of the principal of and interest on the Series 2024A Bonds will be insured by a municipal bond insurance policy (the “Policy”) to be issued by __________ (the “Insurer”) concurrently with the issuance of the Insured Series 2024A Bonds. See the caption “BOND INSURANCE.” A specimen of the Policy is set forth in Appendix G.]
The Series 2024A Bonds are special obligations of the Authority, payable solely from Base Rental Payments and the other assets pledged therefor under the Indenture. Neither the faith and credit nor the taxing power of the Authority, the City or the State of California (the “State”), or any political subdivision thereof, is pledged to the payment of the Series 2024A Bonds. The Authority has no power to tax.

The obligation of the City to make the Base Rental Payments does not constitute a debt of the City, the State or of any political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which the City or the State is obligated to levy or pledge any form of taxation or for which the City or the State has levied or pledged any form of taxation.

The City has agreed to provide, or cause to be provided, to the Municipal Securities Rulemaking Board for purposes of Rule 15c2-12(b)(5) adopted by the Securities and Exchange C ommission (“SEC Rule 15c2-12(b)(5)”) certain annual financial information and operating data and, in a timely manner, notice of certain listed events. These covenants have been made in order to assist the Underwriter in complying with SEC Rule 15c2-12(b)(5). See “CONTINUING DISCLOSURE” herein for a description of the specific nature of the annual report and notices of listed events.

Wilmington Trust, National Association, Costa Mesa, California, will act as Trustee with respect to the Series 2024A Bonds. The Series 2024A Bonds will be issued subject to the approval as to their legality by Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, Bond Counsel. Certain legal matters will be passed upon for the City and the Authority by the City Attorney of the City and by Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, Disclosure Counsel. Certain legal matters will be passed upon for the Underwriter by Kutak Rock LLP, Irvine, California. The City’s financial statements for the fiscal year ended June 30, 2023 included as Appendix C hereto have been audited by Rogers, Anderson, Malody & Scott, LLP (the “Auditor”). See APPENDIX C—“ ANNUAL COMPREHENSIVE FINANCIAL REPORT OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2023” herein. The Au ditor has not undertaken to update the audited financial statements of the City or its report or to take any action intended or likely to elicit information concerning the accuracy, completeness or fairness of the statements made in this Official Statement.

Certain events could affect the ability of the City to make the Base Rental Payments when due. See “RISK FACTORS” for a discussion of certain factors that should be considered, in addition to other matters set forth herein, in evaluating an investment in the Series 2024A Bonds.

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Bondholders’ Risks
Certain events could affect the ability of the City to make the Base Rental Payments when due. See “RISK FACTORS” for a discussion of certain factors that should be considered, in addition to other matters set forth herein, in evaluating an investment in the Series 2024A Bonds.

The presentation of information, including tables of receipt of revenues, is intended to show recent historical information and, except for a budget discussion for Fiscal Years 2023-24 and 2024-25, is not intended to indicate future or continuing trends in the financial position or other affairs of the City. No representation is made that past experience, as it might be shown by such financial and other information, will necessarily continue or be repeated in the future. Se e the ca ptions “THE CITY” and “CITY FINANCIAL INFORMATION” and APPENDIX C—“ ANNUAL COMPREHENSIVE FINANCIAL REPORT OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2023” for financial and operating information related to the City.

Other Information in this Official Statement
The summaries or references to the Indenture, the Lease Agreement, the Ground Lease, the Assignment Agreement and other documents, agreements and statutes referred to herein, and the description of the Series 2024A Bonds included in this Official Statement, do not purport to be comprehensive or definitive, and such summaries, references and descriptions are qualified in their entireties by reference to each such document or statute. All capitalized terms used in this Official Statement (unless otherwise defined herein) which are defined in the Indenture or the Lease Agreement shall have the meanings set forth therein, some of which are summarized in APPENDIX B—“SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS.” THE SERIES 2024A BONDS
General
The Series 2024A Bonds will be issued in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof. The Series 2024A Bonds will be dated as of and bear interest (calculated on the basis of a 360-day year comprised of twelve 30-day months) from the dated date thereof at the rates set forth on the inside cover page hereof. Interest on the Series 2024A Bonds will be paid semiannually on May 1 and November 1 (each, an “Interest Payment Date”) of each year, commencing November 1, 2024.

Interest on the Series 2024A Bonds will be payable from the Interest Payment Date next preceding the date of authentication thereof unless (i) a Series 2024A Bond is authenticated on or before an Interest Payment Date and after the close of business on the fifteenth day of the month next preceding such Interest Payment Date, whether or not such day is a Business Day (the “Record Date”), in which event it will bear interest from such Interest Payment Date, (ii) a Series 2024A Bond is authenticated on or before the first Record Date, in which event interest thereon will be payable from the dated date thereof, or (iii) interest on any Series 2024A Bond is in default as of the date of authentication thereof, in which event interest thereon will be payable from the date to which interest has been paid in full, payable on each Interest Payment Date. Interest will be paid in lawful money of the United States on each Interest Payment Date to the Persons in whose names the ownership of the Series 2024A Bonds is registered on the Registration Books at the close of business on the immediately preceding Record Date, except as provided below. Interest will be paid by check of the Trustee mailed by first class mail, postage prepaid, on each Int erest Payment Date to the Owners at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date or by wire transfer to Owners of more than $1,000,000 in principal amount of Series 2024A Bonds who have provided account information and wiring instructions satisfactory to the Trustee.

The principal of the Series 2024A Bonds will be payable in lawful money of the United States of America upon presentation and surrender thereof upon maturity or earlier redemption at the Office of the Trustee.

The Series 2024A Bonds will be subject to redemption as set forth herein.

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Registration, Transfers and Exchanges
The Series 2024A Bonds will be issued as fully registered bonds, registered in the name of Cede & Co. as nominee of DTC, and will be available to actual purchasers of the Series 2024A Bonds (the “ Beneficial Owners”) in the denominations set forth above, under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC P articipants (as defined in Appendix F) as described herein.

Beneficial Owners will not be entitled to receive physical delivery of the Series 2024A Bonds. See “THE SERIES 2024A BONDS—Book-Entry Only System.”
Redemption
Extraordinary Redemption from Conde mnation Award or Insurance Proceeds . The Series 2024A Bonds shall be subject to redemption, in whole or in part, on any date, in denominations of $5,000 or any integral multiple thereof, from and to the extent of : (i) Net Insurance Proceeds received with respect to all or a portion of the Property, deposited by the Trustee in the Redemption Fund pursuant to the Indenture, and (ii) eminent domain proceeds received pursuant to the Lease Agreement, at a Redemption Price equal to the principal amount of the Series 2024A Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium.

No Optional Redemption. The Series 2024A Bonds are not subject to optional redemption prior to maturity.

Mandatory Sinking Fund Redemption. The Series 2024A Bonds with a stated maturity on November 1, 20__ are subject to mandatory sinking fund redemption in part (by lot) on each November 1 on and after November 1, 20__, in integral multiples of $5,000 at a Redemption Price equal to the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule:

Redemption Date
(November 1)
Principal
Amount

* Final Maturity.

In the event of an extraordinary mandatory redemption of any of the Term Bonds, each of the remaining mandatory sinking fund payments for such Term Bonds will be reduced, as nearly as practicable, on a pro rata basis in the amount of $5,000 or any integral multiple thereof as directed by an Authorized City Representative.

Selection of Bonds for Redemption. Whenever provision is made in the Indenture for the redemption of less than all of the Bonds, the Trustee shall select the Bonds to be redeemed from all Bonds not previously called for redemptio n (a) with respect to any optional redemption of Bonds of a Series, among maturities of Bonds of such Series as directed in a Written Request of the Authority provided to the Trustee at least 30 but no more than 60 days prior to the date of such redemption, (b) with respect to any redemption from and to the extent of any insurance proceeds or condemnation award received with respect to all or a portion of the Property and the corresponding provision of any Supplemental Indenture pursuant to which Additional Bonds are issued, among maturities of all Series of Bonds on a pro rata basis as nearly as practicable , as directed in a Written Request of the Authority provided to the Trustee at least 30 but no more than 60 days prior to the date of such redemption, and (c) with respect to any other redemption of Additional Bonds, among maturities as provided in the Supplemental Indenture pursuant to which such Additional Bonds are issued, and by lot among Bonds of the

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same Series with the same maturity in any manner which the Trustee in its sole discretion deems appropriate and fair. For purposes of such selection, all Bonds will be deemed to be comprised of separate $5,000 denominations and such separate denominations will be treated as separate Bonds which may be separately redeemed..

Notice of Redemption. Notice of redemption shall be given by the Trustee, not less than 20 nor more than 60 days prior to the redemption date (i) as to Series 2024A Bonds not registered in the name of a Securities Depository or its no minee, to the respective Owners of the Series 2024A Bonds designated for redemption at their addresses appearing on the Registration Books, (ii) as to Series 2024A Bonds registered in the name of a Securities Depository or its nominee, to such Securities D epository for such Series 2024A Bonds, and (iii) the Information Services. Notice of redemption to the Owners pursuant to (i) above shall be given by mail at their addresses appearing on the Registration Books, or any other method agreed upon by such Owner and the Trustee.

Notice of redemption to the Securities Depositories pursuant to (ii) above and the Information Services pursuant to (iii) above shall be given by electronically secure means, or any other method agreed upon by such entities and the Trustee.

Such notice will state the date of the notice, the redemption date, the redemption place and the Redemption Price and shall designate the CUSIP numbers, the Series 2024A Bond numbers and the maturity or maturities (except in the event of redemption of all of the Series 2024A Bonds of such maturity or maturities in whole) of the Series 2024A Bonds to be redeemed, and will require that such Series 2024A Bonds be then surrendered at the principal corporate trust office of the Trustee for redemption at the Redemption Price, giving notice also that further interest on such Series 2024A Bonds will not accrue from and after the date fixed for redemption. Neither the failure to receive any notice so given, nor any defect in such notice, will affect the validity of the proceedings for the redemption of the Series 2024A Bonds or the cessation of accrual of interest thereon from and after the date fixed for redemption.

With respect to any notice of optional redemption of the Bonds, such notice may state that such redemption is conditional upon the receipt by the Trustee, on or prior to the date fixed for such redemption, of moneys sufficient to pay the principal of, premium if any, and interest on the Bonds to be redeemed and upon other conditions set forth therein and that, if such money has not been so received or such other conditions have not been satisfied, said notice is of no force and effect and the Trustee is not required to redeem such Bonds. If any condition stated in the redemption notice for an optiona l redemption have not been satisfied on or prior to the redemption date: (i) the redemption notice will be of no force and effect, (ii) the Authority will not be required to redeem such Bonds, (iii) the redemption will not be made, and (iv) the Trustee will within a reasonable time thereafter give notice to the persons in the manner in which the conditional redemption notice was given that such condition or conditions were not met and that the redemption was canceled.

Partial Redemption of Bonds. Upon surrender of any Bonds redeemed in part only, the Authority will execute and the Trustee will authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or Bonds of the same Series in authorized denominations equal in aggrega te principal amount representing the unredeemed portion of the Bonds surrendered.

Effect of Notice of Redemption. Notice having been given as aforesaid, and moneys for the Redemption Price, and the interest to the applicable date fixed for redemption, having been set aside in the Redemption Fund, the Bonds will become due and payable on said date, and, upon presentation and surrender thereof at the principal corporate trust office of the Trustee, said Bonds will be paid at the Redemption Price thereof, tog ether with interest accrued and unpaid to said date.

If, on said date fixed for redemption, moneys for the Redemption Price of all the Bonds to be redeemed, together with interest to said date, will be held by the Trustee so as to be available therefor on such date, and, if notice of redemption thereof has been given as aforesaid and not canceled, then, from and after said date, interest on said Bonds will cease to accrue and become payable. All moneys held by or on behalf of the Trustee for the redemption of Bonds will be held in trust for the account of the Owners of the Bonds so to be redeemed without

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liability to such Owners for interest thereon. All Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions of the Indenture will be canceled upon surrender thereof and destroyed.

Book-Entry Only System
DTC will act as securities depository for the Series 2024A Bonds. The Series 2024A Bonds will be issued as fully-registered bonds registered in the name of Cede & Co. (DTC’s partnership nominee). One fully- registered Series 2024A Bond will be issued for each maturity of the Series 2024A Bonds, each in the initial aggregate principal amount of such maturity, and will be deposited with DTC. See APPENDIX F—“BOOK- ENTRY ONLY SYSTEM.”
SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2024A BONDS Pledge of Revenues
The Series 2024A Bonds are equally and ratably payable from and secured by Base Rental Payments and certain amounts on deposit in the Base Rental Payment Fund, t he Interest Fund, the Principal Fund , the Reserve Fund and the Redemption Fund established under the Indenture. Base Rental Payments will be payable by the City from any and all legally available funds, however, the City expects that its General Fund will be the primary source of funds to make Base Rental Payments. See the captions “THE CITY,” “CITY FINANCIAL INFORMATION” and “RISK FACTORS” for a description of such available funds and the potential risks associated with the availability of such funds to make Base Rental Payments. The City covenants in the Lease Agreement to take such action as may be necessary to include all Base Rental Payments and Additional Rental Payments due under the Lease Agreement in its annual budgets and to make the necessary annual appropriations therefor.

The Authority, pursuant to the Assignment Agreement, has assigned to the Trustee for the benefit of the Bond Owners all of the Authority’s right, title and interest in and to the Ground Lease and the Lease Agreement, including, without limitation, its right to receive Base Rental Payments to be paid by the City under and pursuant to the Lease Agreement; provided that, the Authority will retain the rights to indemnification, to give approvals and consents under the Lease Agreement and the Ground Lease and to payment or reimbursement of its reasonable costs and expenses under the Lease Agreement. The City will pay Base Rental Payments directly to the Trustee, as assignee of the Authority. See “—Base Rental Payments” below. Pursuant to the Indenture, the Authority may issue Additional Bonds payable from the Base Rental Payments on a parity with the Series 2024A Bonds subject to certain conditions . See APPENDIX B—“SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS—THE INDENTURE —ISSUANCE OF BONDS; APPLICATION OF PROCEEDS — Conditions for the Issuance of Additional Bonds” and “—Procedure for the Issuance of Additional Bonds.” Subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Indenture, all of the Base Rental Payments and any other amounts (including proceeds of the sale of the Bonds ) held in the Base Rental Payment Fund, the Interest Fund, the Capitalized Interest Fund, the Principal Fund, the Reserve Fund and the Redemption Fund are pledged by the Authority pursuant to the Indenture to secure the payment of the principal of and inte rest on the Bonds in accordance with their terms, the provisions of the Indenture and the Act. Said pledge constitutes a first lien on such assets.

The Bonds are special obligations of the Authority, payable solely from Base Rental Payments and the other assets pledged therefor under the Indenture. Neither the faith and credit nor the taxing power of the Authority, the City or the State, or any political subdivision thereof, is pledged to the payment of the Bonds. The Authority has no power to tax.

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Base Rental Payments
Rental Payments (defined in the Lease Agreement as collectively, the Base Rental Payments and the Additional Rental Payments) will be paid by the City to the Authority for and in consideration of the right to use and occupy the Property and in consideration of the continued right to the quiet use and enjoyment thereof during each Rental Period for which such Rental Payments are to be paid. Each Base Rental Payment will be deposited with the Trustee no later than the 25th day of the month next preceding each Interest Payment Date (the “Base Rental Deposit Date ”) on which such Base Rental Payment is due. All Base Rental Payments will be paid directly by the City to the Trustee, and if received by the Authority at any time will be transferred by the Authority to the Trustee within one Business Day after the receipt thereof. All Base Rental Payments received by the Trustee will be deposited by the Trustee in the Base Rental Payment Fund.

Pursuant to the Indenture, on the Business Day immediately preceding each Interest Payment Date and on the Business Day immediately preceding each Principal Payment Date, the Trustee will transfer amounts in the Base Rental Payment Fund as are necessary to the Interest Fund and the Principal Fund to provide fo r the payment of and the interest on and principal of the Series 2024A Bonds.

The Base Rental due under the Lease Agreement is calculated to be sufficient to pay the principal of and interest on the Series 2024A Bonds. The debt service schedules for the Series 2024A Bonds are set forth below under the heading “DEBT SERVICE SCHEDULE.”
The obligation of the City to make the Base Rental Payments does not constitute a debt of the City, the State or of any political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which the City or the State is obligated to levy or pledge any form of taxation or for which the City or the State has levied or pledged any form of taxation.

Additional Rental Payments
For the right to use and occupy the Property, the Lease Agreement requires the City to pay, as “Additional Rental Payments” thereunder, in addition to the Base Rental Payments, such amounts as shall be required for the payment of the following:
(i) All taxes and assessments of any type or nature charged to the Authority or the City or affecting the Property or the respective interests or estates of the Authority or the City therein. (ii) All reasonable administrative costs of the Authority relating to the Property including, but without limiting the generality of the foregoing, salaries, wages, fees and expenses, compensation and indemnification of the Trustee payable by the Authority under the Indenture, fees of auditors, acco untants, attorneys or engineers, and all other necessary and reasonable administrative costs of the Authority or charges required to be paid by it in order to maintain its existence or to comply with the terms of the Indenture or the Lease Agreement or to defend the Authority and its members, officers, agents and employees. (iii) Insurance premiums for all insurance required pursuant to the Lease Agreement. (iv) Any amounts with respect to the Lease Agreement or the Bonds required to be rebated to the federal government in accordance with section 148(f) of the Internal Revenue Code of 1986; and (v) All other payments required to be paid by the City under the provisions of the Lease Agreement or the Indenture.

Amounts constituting Additional Rental Payments payable under the Lease Agreement will be paid by the City directly to the person or persons to whom such amounts are payable. The City will pay all such amounts

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when due or at such later time as such amounts may be paid without penalty or, in any other case, within 60 days after notice in writing from the Trustee to the City stating the amount of Additional Rental Payments then due and payable and the purpose thereof.

Abatement
Base Rental Payments and Additional Rental Payments are paid by the City in ea ch Rental Period for and in consideration of the right to use and occupy the Property. Base Rental Payments and Additional Rental Payments may be abated in the event of damage, destruction, condemnation or title defect affecting the Property, each as desc ribed further below. The Trustee cannot terminate the Lease Agreement in the event of such substantial interference. Abatement of Base Rental Payments and Additional Rental Payments is not an event of default under the Lease Agreement and does not permit the Trustee to take any action or avail itself of any remedy against the City. See APPENDIX B—“SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS— THE LEASE AGREEMENT—RENTAL PAYMENTS—Rental Abatement.”
Except as otherwise specifically provided in the Lease Agreemen t, during any period in which, by reason of material damage to, or destruction or condemnation of, the Property, or any defect in title to the Property, there is substantial interference with the City’s right to use and occupy any portion of the Property, Rental Payments are subject to abatement proportionately, and the City waives the benefits of Civil Code Sections 1932(1), 1932(2) and 1933(4) and any and all other rights to terminate the Lease Agreement by virtue of any such interference, and the Lease A greement will continue in full force and effect. The amount of such abatement will be agreed upon by the City and the Authority; provided, however, that the Rental Payments due for any Rental Period may not exceed the annual fair rental value of that port ion of the Property available for use and occupancy by the City during such Rental Period. Any such abatement will continue for the period commencing with the date of interference resulting from such damage, destruction, condemnation or title defect and, with respect to damage to or destruction of the Property, ending when such use and occupancy is restored.

In the event of abatement, the term of the Lease Agreement will be extended until the date upon which (i) all Bonds shall be fully paid, or provision therefor made in accordance with the Indenture, or (ii) the Indenture shall be discharged by its terms and all Rental Payments shall have been paid in full. Notwithstanding the foregoing, the term of the Lease Agreement will in no event be extended beyond November 1, 2045.

Notwithstanding the foregoing, to the extent that moneys are available for the payment of Rental Payments due under the Lease Agreement in any of the funds and accounts established under the Indenture (including as a result of the availability of insurance proceeds), such Rental Payments will not be abated as provided above but, rather, will be payable by the City as a special obligation payable solely from said funds and accounts.

Substitution, Addition and Removal of Property
The Authority and the City may amend the Lease Agreement to substitute alternate property for any portion of the Property, to release a portion of the Property from the Lease Agreement or to add additional property to the encumbrance of the Lease Agreement upon compliance with all of the conditions set forth in the Lease Agreement and described below. After a substitution or release, the portion of the Property for which the substitution or release has been effected will be released from the leasehold encumbra nce of the Lease Agreement.

The Lease Agreement provides that there will be no reduction in or abatement of the Base Rental Payments due from the City thereunder as a result of such substitution, release or addition. Any such substitution, release or addi tion is subject to the following specific conditions precedent to such substitution, release or addition:
(a) a Written Certificate of the City to the effect that the Property, as constituted after such substitution, release or addition: (i) has an annual fair rental value at least equal to the maximum Base Rental

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Payments payable by the City in any Rental Period, and (ii) has a useful life in excess of the final maturity of any Outstanding Bonds.
(b) with respect to any substituted or added property, the City obtains or causes to be obtained a CLTA or ALTA title insurance policy or policies with respect to the Property (as such term will be defined after such substitution or addition) that when taken together with other title insurance policies covering the Property, will be in an amount at least equal to the aggregate principal amount of any Outstanding Bonds, of the type and with the endorsements described in the Lease Agreement; and (c) the City, the Authority and the Trustee execute, and the City cause s to be recorded with the County of Riverside Recorder, any document necessary to reconvey to the City the portion of the Property being released and to include any substituted or added real property in the description of the Property contained in the Lease Agreement and in the Ground Lease.

Action on Default
Should the City default under the Lease Agreement, the Trustee, as assignee of the Authority under the Lease Agreement, may terminate the Lease Agreement and recover certain damages from the City, or may retain the Lease Agreement and hold the City liable for all Base Rental Payments thereunder on an annual basis, and will have the right to re-enter and re-let the Property. In the event such re-letting occurs, the City would be liable for any resulting deficiency in Base Rental Payments. See “RISK FACTORS —Limited Recourse on Default; No Acceleration of Base Rental.”
For purposes of certain actions of Bond Owners under the Indenture and the Lease Agreement, such as certain consents and amendments and the direction of remedies following default, Bond Owners do not act alone and may not control such matters to the extent such matters are not supported by the requisite number of the Owners of all Bonds.

In the event of a default under the Lease Agreement there is no right under any circumstances to accelerate the Base Rental Payments or otherwise declare any Base Rental Payments not then in default to be immediately due and payable. There is no right under the Indenture to accelerate debt service payments on the Bonds in the event of a default under the Indenture or the Lease Agreement.

For a description of the events of default and permitted remedies of the Trustee (as assignee of the Authority) contained in the Lease Agreement and the Indenture, see APPEND IX B—“SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS —THE LEASE AGREEMENT —DEFAULTS AND REMEDIES ” and “—THE INDENTURE—DEFAULT AND LIMITATIONS OF LIABILITY.”
Reserve Fund
[The Indenture establishes a Reserve Fund and a Series 2024A Bonds Account therein, which is required to be maintained in an amount equal to $ __________ (the “Reserve Fund Requirement ”). Moneys in the Series 2024A Bonds Account of the Reserve Fund will be held in trust as a reserve for the payment when due of all debt service payments on the Series 2024A Bonds. The City will acquire the Reserve Surety Policy from the Insurer in the amount of the initial Reserve Fund Requirement for deposit into the Reserve Fund.] See APPENDIX B—“SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS —THE INDENTURE—SECURITY FOR THE BONDS; FLOW OF FUNDS—Flow of Funds.”

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Additional Bonds
Pursuant to the Indenture, the Authority may issue Additional Bonds payable from the Base Rental Payments on a parity with the outstanding Bonds upon satisfaction of certain conditions, including, but not limited to, the following:
(a) The Authority shall be in compliance with all agreements, conditions, covenants and terms contained in the Indenture , in the Lease Agreement and in the Ground Lease required to be observed or performed by it;
(b) The City shall be in compliance with all agreements, conditions, covenants and terms contained in the Indenture, in the Lease Agreement and in the Ground Lease required to be observed or performed by i t; and
(c) The Ground Lease and the Lease Agreement shall have been amended, to the extent necessary, (i) so as to increase the Base Rental Payments payable by the City thereunder by an aggregate amount equal to the principal of and interest on such Additi onal Bonds, payable at such times and in such manner as may be necessary to provide for the payment of the principal of and interest on such Additional Bonds; provided, however, that no such amendment shall be made such that the sum of Base Rental Payments , including any increase in the Base Rental Payments as a result of such amendment, plus Additional Rental Payments, in any Rental Period shall be in excess of the annual fair rental value of the Property after taking into account the use of the proceeds o f any Additional Bonds issued in connection therewith (evidence of the satisfaction of such condition shall be made by a Written Certificate of the City); and (ii) to include provisions for the prepayment of Base Rental Payments attributable to such Additional Bonds.

Notwithstanding satisfaction of the other conditions to the issuance of Additional Bonds set forth in the Indenture, no such issuance may occur if (1 ) an event of default (within the meaning of the Lease Agreement) (or any event which, once all notice or grace periods have passed, would constitute such event of default) exists unless such event of default shall be cured upon such execution or issuance or (2) the Reserve Fund is not fully funded at the Reserve Requirement.

See APPENDIX B—“SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS—THE INDENTURE—ISSUANCE OF BONDS; APPLICATION OF PROCEEDS —Conditions for the Issuance of Additional Bonds” and “—Procedure for the Issuance of Additional Bonds.” Insurance
General. The Lease Agreement requires that the Cit y maintain certain insurance coverages on the Property for loss due to property damage, title defect, loss of use and other liability as described below. Under the Lease Agreement, the City may self -insure for the coverages required under the captions “ Property Insurance,” “General Liability Insurance,” and “Workers’ Compensation Insurance.” The City self-insures up to certain amounts and purchases additional coverage from commercial carriers as described under the caption “THE CITY—Risk Management.”
Property Insurance. The Lease Agreement requires the City to maintain or cause to be maintained fire, lightning and special extended coverage insurance (which includes coverage for vandalism and malicious mischief, but need not include coverage for earthq uake damage) on all improvements constituting any part of the Property in an amount not less than 100% of the replacement cost of such improvements. Such property insurance required to be maintained pursuant to the Lease Agreement may be subject to a deductible in an amount not to exceed $500,000.

General Liability Insurance. The Lease Agreement requires the City to maintain or cause to be maintained a standard commercial general liability insurance policy or policies in protection of the City, the

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Authority and their respective members, officers, agents and employees. Said policy or policies shall provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the use or ownership of the Property. Said policy or policies shall provide coverage in the minimum liability limits of $1,000,000 for personal injury or death of each person and $3,000,000 for personal injury or deaths of two or more persons in a single accident or event, and in a minimum amount of $500,000 for damage to property (subject to a deductible clause of not to exceed $100,000) resulting from a single accident or event. Such commercial general liability and property damage insurance may, however, be in the form of a single limit policy in the amount of $3,000,000 covering all such risks.

Rental Interruption Insurance. The Lease Agreement requires the City to maintain rental interruption insurance to cover the Authority’s loss, total or partial, of Base Rental Payments resulting from the loss, total or partial, of the use of any part of the Property as a result of any of the hazards covered by the casualty insurance described above under “— Property Insurance,” in an amount sufficient at all times to pay an amount not less than the product of two times the maximum amount of Base Rental Payments scheduled to be paid during any Rental Period. The City is not permitted to self-insure its obligation to maintain rental interruption insurance.

Workers’ Compensation Insurance. The City is also required to maintain or cause to be maintained workers’ compensation insurance issued by a responsible carrier authorized under the laws of the State to insure employers against liability f or compensation under the California Labor Code, or any act enacted as an amendment or supplement thereto or in lieu thereof, such workers’ compensation insurance to cover all persons employed by the City in connection with the Property and to cover full liability for compensation under any such act.

Title Insurance. The City shall provide, at its own expense, one or more CLTA or ALTA title insurance policies for the Property, in the aggregate amount of not less than the initial aggregate principal amount of the Bonds. Said policy or policies shall insure (a) the fee interest of the City in the Property, (b) the Authority’s ground leasehold estate in the Property under the Ground Lease, and (c) the City’s leasehold estate under the Lease in the Property, subject only to Permitted Encumbrances. All Net Insurance Proceeds received under said policy or policies shall be deposited with the Trustee and applied as provided in the Indenture. So long as any of the Bonds remain Outstanding, each policy of title insurance obtained pursuant to the Indenture or the Lease Agreement or required thereby shall provide that all proceeds thereunder shall be payable to the Trustee for the benefit of the Bond Owners.

See APPENDIX B—“SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS —THE LEASE AGREEMENT—INSURANCE.”

BOND INSURANCE
[TO COME]

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SOURCES AND USES OF FUNDS
The sources and uses of funds with respect to proceeds of the Series 2024A Bonds and other available amounts are shown below.

Sources
Principal Amount of Series 2024A Bonds
[Plus/Less] [Net] Original Issue [Premium/Discount]
Plus Prior Funds on Hand
Total Sources

Uses
Escrow Fund for 2014 Bonds
Underwriter’s Discount
Costs of Issuance(1)
Total Uses

(1) Includes legal, municipal advisory, rating agency, printing fees, the premiums for the Insurance Policy and the Reserve Surety Policy and other miscellaneous costs of issuance.

DEBT SERVICE SCHEDULE
Following is the annual schedule of debt service due with respect to the Series 2024A Bonds:

Fiscal Year
Ending June 30 Principal Interest Total
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Total

Source: The Underwriter.

THE REFUNDING PLAN
General
Pursuant to the Indenture, the Authority will deliver a portion of the proceeds of the Series 2024A Bonds to the Trustee to transfer to Computershare Trust Company, N.A., acting as escrow agent (the “Escrow Agent”), for deposit in an escrow fund (the “Escrow Fund”) established under the Escrow Agreement, dated as of August 1, 2024, by and among the Authority, the City and the Escrow Agent (the “Escrow Agreement”). Proceeds of the Series 2024A Bonds and other moneys held in the Escrow Fund to refund the 2014 Bonds will be held in cash and used to pay the regularly scheduled debt service on the 2014 Bonds on November 1, 2024 (the “Redemption Date”) and to refund the outstanding 2014 Bonds maturing after the Redemption Date on the Redemption Date. Amounts in the Escrow Fund will be irrevocably pledged to secure, when due, the payment

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of the principal of, interest and premium due with respect to the 2014 Bonds and will not be available to pay debt service on the Series 2024A Bonds.

Verification
Upon issuance of the Series 2024A Bonds, Causey Demgen & Moore P.C, Denver, Colorado, as verification agent, will deliver a report on the mathematical accuracy of certain computations based upon certain information and assertions provided to it by the Underwriter relating to: (a) the adequacy of amounts in the Escrow Fund to pay when due the regularly scheduled debt service on the 2014 Bonds on the Redemption Date and to refund the outstanding 2014 Bonds maturing after the Redemption Date on the Redemption Date; and (b) the computations of yield of the Series 2024A Bonds which support Bond Counsel’s opinion that the interest on the Series 2024A Bonds is excluded from gross income for federal income tax purposes.

THE PROPERTY
The Property leased under the Ground Lease and the Lease Agreement consists of the Moreno Valley City Hall. City Hall is comprised of an approximately 57,600 square feet foot building constructed in 1991, located on approximately 3.33 acres at 14177 Frederick Street in the City. City Hall includes all of the managerial departments of the City, the City Council chambers and the City Council Members’ offices. For purposes of the Lease Agreement, the City has ascribed a value to City Hall of $40,187,091 based on the insured value of the City Hall building. The City Hall building is a two-story tilt-up construction office building for public access including offices for City Council and City staff, plus general administration for the following departments: City Manager, City Clerk, Community Development, Planning, Economic Development, Finance, City Attorney, Parks and Recreation, Public Works, and Technical Services. The City Hall building underwent a seismic retrofit in 2012.

The Authority and the City may amend the Lease Agreement to substitute alternate property for any portion of the Property, to release a portion of the Property from the Lease Agreement or to add additional property to the encumbrance of the Lease Agreement upon compliance with all of the conditions set forth in the Lease Agreement and described below. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2024A BONDS—Substitution, Addition and Removal of Property.”

THE AUTHORITY
The Authority is a public body that is duly o rganized and existing under the Joint Exercise of Powers Agreement, dated as of October 28, 1997 (the “JPA Agreement”), by and between the City and the Community Redevelopment Agency of the City of Moreno Valley (the “ Agency”), and under the Constitution and laws of the State. The Authority was formed for the purpose of assisting the City in the financing and refinancing of public capital improvements by exercising the powers referred to in the JPA Agreement, including the power to issue bonds to pay the c osts of public improvements. Neither the City nor the Agency is responsible for repayment of the obligations of the other. The members of the Board of Directors of the Authority are the members of the City Council of the City. The Authority has no emplo yees and all staff work is done by City staff or by consultants to the Authority. The Authority has acted as a conduit issuer for the City for a variety of financings.

THE CITY
General
The City is located in western Riverside County (the “ County”), approximately 66 miles east of Los Angeles and 100 miles north of San Diego, California. The City had a population of approximately 208,289 as of January 1, 2023 and covers approximately 51.3 square miles. The City was incorporated on December 3, 1984 and is a general law city operating under a council/manager form of government. Further information

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concerning the City is set forth below and in APPENDIX A—“ ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING THE CITY OF MORENO VALLEY”.

The City had approximately 402 full and part -time employees as of June 30, 2023. City employees (full-time) are represented by three labor associations: the Moreno Valley City Employees Association (the “MVCEA”), which represent ed approximately 189 employees as of June 30, 2023, the Moreno Valley Management Association (the “MVMA”), which represented approximately 85 employees as of June 30, 2023, and the Moreno Valley Confidential Management Employee Association (the “MVCMEA”) which represented approximately 14 employees as of June 3 0, 2023. Relations between the City and the MVCEA, MVMA and MVCMEA are governed by memoranda of understanding that expire on June 30, 2025. A total of approximately 37 management and confidential employees are exempt from collective bargaining. Salaries for exempt employees are set by the City Council. The City has never experienced a strike, slowdown or work stoppage.

The City provides or contracts for many municipal services for its residents, including libraries, parks, recreation, street and storm drain maintenance and electric utility services. The City contracts with the Riverside County Sheriff’s Department for law enforcement services and with the County for fire protection services, which services are provided by the California Department of Fo restry and Fire Protection. Water and sewer service is provided by EMWD and Box Springs Mutual Water Company.

Largest Employers
The largest employer located in the City is the March Air Reserve Base, which currently employs approximately 6,500, representing approximately 6.57% of the total City employment. March Air Reserve Base is the home to the Air Force Reserve Command’s 4th Air Force Headquarters and the 452nd Air Mobility Wing, the largest air mobility wing of the 4th Air Force. In addition to mu ltiple units of the Air Force Reserve Command, the base supports the Air Mobility Command, Air Combat Command and Pacific Air Forces, and is home to units from the Army Reserve, Navy Reserve, Marine Corps Reserve and California Air National Guard.

Other large employers in the City include Amazon.com, which currently employs approximately 4,854 employees, the Riverside County Regional Medical Center, which currently employs approximately 4,325 employees, and the Moreno Valley Unified School District, which c urrently employs approximately 3,673 employees. Based on its close proximity to the counties of Los Angeles, Orange and San Diego, the City serves as a regional logistics and major distribution hub for many large manufacturers and retail companies, including Skechers USA, Inc., Deckers, Walgreen Company, Ross Dress for Less, Inc. and Harbor Freight Tools. Several large companies await completion of or have recently completed construction of distribution sites and fulfillment centers within the City limits , including e -retailer Amazon (NASDAQ symbol: AMZN), Deckers Outdoor Corporation (NASDAQ symbol: DECK), which designs, manufactures and markets Teva, UGG Australia, and other footwear brands, and Aldi, Inc., a European discount grocery retailer chain that has over 8,000 stores worldwide (including over 1,000 stores in the United States).

The table below sets forth the largest employers within the City as of June 30, 2023, the latest date for which such information is available.

CITY OF MORENO VALLEY
LARGEST EMPLOYERS – FISCAL YEAR 2023
Employer Number of Employees Type of Business
March Air Reserve Base 6,500 Military Reserve Base
Amazon.com, Inc. 4,854 Retail Distribution
Riverside County Regional Medical Center 4,325 County Hospital Moreno Valley Unified School District 3,673 Public Schools Kaiser Permanente 1,467 Hospital/Medical Services
Ross Distribution Center 1,366 Retail Distribution

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Harbor Freight Tools 1,150 Retail Distribution
Procter & Gamble 632 Retail Distribution
Val Verde Unified School District 620 Public Schools
United Natural Foods 559 Distribution - Grocery

Source: City of Moreno Valley Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2023.

Government and Administration
The City operates under a council-manager form of government. Councilmembers are elected by district for four-year alternating terms and the Mayor is elected at large. The City Manager, appointed by the City Council, serves as the City’s chief administrative officer and is responsible for overseeing the daily operations of City departments and efficient management of all City business. Functions of the City Manager’s Office include coordination of the implementation of City Council policies and programs; providing overall direction to the departments that administer City programs and services; coordinating intergovernmental relations and legislative advocacy; and administration of the City’s communications, media relations and public information programs.

Mike Lee has served as the City Manager since June 2020. In this capacity he leads the daily operation of City government. Mr. Lee began working for the City in 2015, initially serving as the Community and Economic Development Director before being appointed Interim City Manager in December 2019. Mr. Lee’s 25-year career in local government has included senior management positions at the cities of West Covina and Pomona. Mr. Lee has a Bachelor of Science degree in Urban and Regional Planning from Cali fornia State Polytechnic University, Pomona, and a Masters in Public Administration degree from the University of LaVerne.

Other key personnel responsible for management of the City include the Assistant City Manager and the Chief Financial Officer/City Treasurer. In addition, the City Attorney provides legal services to the City and the Authority.

Brian Mohan serves as the Assistant City Manager (Administration). Mr. Mohan began working for the City in 2017, initially serving as the Financial Resources D ivision Manager and later the Assistant City Manager/Chief Financial Officer/City Treasurer. Mr. Mohan’s 24-year career in local government has included senior management positions with the San Bernardino County Employees Retirement Association and the City of Rialto. Mr. Mohan has a Bachelor of Science degree in Business and Administration from California State University, San Bernardino.

Launa Jimenez serves as the Chief Financial Officer/City Treasurer. Ms. Jimenez began working for the City in 2005, working her way up the ranks to her most recent position. Prior to becoming the Chief Financial Officer, Ms. Jimenez served as the Financial Resources Division Manager and in various other roles related to capital improvement and transportation projects. Prior to joining the City, Ms. Jimenez worked for the City of Fontana. Ms. Jimenez has a Bachelor of Arts degree in Public Administration from California State University, San Bernardino.

Steve Quintanilla, President and owner of the Law Offices of Quintanilla & Associates, has served as contract Interim City Attorney and contract Interim General Legal Counsel for the City’s affiliated agencies in 2014-2015, and recently from March 2020 until being appointed City Attorney on a permanent basis in August 2023. Mr. Quintanilla has been an attorney for more than 25 years in private practice specializing in municipal law. He graduated with a juris doctorate from the University of California, Los Angeles School of Law.

Risk Management
The City is exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets, errors and omissions, injuries to employees and natural disasters. The City has established two self insurance funds to finance uninsured risks of loss up to a maxi mum of $300,000 for each workers’ compensation claim

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and $250,000 for each general liability claim. For workers’ compensation, the City participates in the CSAC Excess Insurance Authority, a joint powers authority, for claims in excess of coverage provide d by its internal funds up to the statutory requirements. For general liability, the City participates in the Public Entity Risk Management Authority (“PERMA”), a joint powers authority, for claims in excess of coverage provided by its internal funds up t o $50,000,000. Claims have not exceeded the City's insurance coverage in any of the last three years.

The City purchases all-risk, replacement cost value property insurance coverage through PERMA up to a maximum amount of $100,000,000. All property and improvements at the Property are insured under the City’s property insurance coverage. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2024A BONDS—Insurance.”
No assurance can be given as to the adequacy of the insurance maintained now or in the future by the City to fund necessary repairs or replacement of any portion of the Property , and the City does not have any obligation under the Facilities Sublease to maintain earthquake coverage or other coverage in the current coverage amounts. Significant damage to any of the Property could cause Base Rental Payments to be abated.

See the captions “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2024A BOND S— Abatement” and “RISK FACTORS—Natural Disasters.”

CITY FINANCIAL INFORMATION
Accounting and Financial Reporting
The City maintains its accounting records in accordance with Generally Accepted Accounting Principles and the standards established by the Governmental Accounting Standards Board (“ GASB”). On a quarterly basis, a report is prepared for the City Council and City staff which reviews fiscal performance to date against the budget. Combined financial statements of the City and its component units are produced following the close of each Fiscal Year.

The City Council employs an independe nt certified public accountant who examines at least annually the financial statements of the City in accordance with generally accepted auditing standards, including tests of the accounting records and other auditing procedures as such accountant consider s necessary. As soon as practicable, after the end of the Fiscal Year, a final audit and report is submitted by the independent accountant to the City Council.

The accounts of the City are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures, or expenses, as appropriate. Governmen t resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.

The City’s government -wide financial statements are reported using the econ omic resource measurement focus and the accrual basis of accounting, under which revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows.

The City’s governmental fund (including the General Fund) financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting, under which revenues are recognized as soon as they are both measurable and available (i.e. col lectible within the current period or soon enough thereafter to pay liabilities of the current period), and expenditures are recorded when a liability is incurred.

The General Fund is the general operating fund of the City. It is used to account for all f inancial resources except those that are required to be accounted for in another fund. Base Rental Payments will be paid

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from any legally available funds of the City. Tables 1 through 4 below set forth certain historical and current Fiscal Year budget information for the General Fund. Information on the remaining governmental funds of the City as of June 30, 2023 is set forth in Appendix C.

General Economic Condition and Outlook of the City
Fiscal Policies. In 2017, the City adopted a comprehensive fina ncial reserve policy (the “ Reserve Policy”) to direct the City’s reserves for specific purposes. The Reserve Policy was further updated in 2023, and is anticipated to help maintain the City’s financial stability, protect against future economic downturns which bring unpredictable shortfalls in tax revenue and better prepare the City, its residents and its businesses for a catastrophic natural disaster.

The Reserve Policy categorizes the City’s reserves into a Cash Flow fund, a Rainy Day fund (also called the Economic Uncertainty Reserve) and an Emergency fund (also called the Operating Reserve). The Cash Flow fund’s minimum level is 17% of General Fund expenses, which allows the City to provide services before the receipt of the City’s first tranche of property tax payments (seven months after the start of the Fiscal Year).

The Rainy Day fund’s minimum level is 15% of the City’s General Fund, which is intended to ensure that the City has the flexibility to continue to deliver quality services during econo mic downturns, which can reduce sales and property tax revenues which support the full range of services provided to residents.

The Emergency fund’s minimum level is 15% of the City’s General Fund, which is intended to ensure that the City can respond to a catastrophic earthquake, flood, fire or other disaster. The fund also provides a financial buffer in the event that the City is forced to wait for receipt of federal disaster relief funds.

The amounts that are currently held in the Cash Flow, Rainy Day and Emergency funds meet the target levels described above. The City did not apply any of its reserves to cover funding shortfalls during the COVID- 19 pandemic.

Strategic Plan. In 2016, after soliciting significant public input via public meetings, online surveys and other community outreach efforts, the City adopted a strategic plan, known as “Momentum MoVal.” Momentum MoVal aligns the City’s resources and creative energy toward meeting six objectives identified by community stakeholders and approved by elected leaders. Momentum MoVal was intended to govern the first five years after adoption while allowing the City Council to adjust priorities as needed to address emerging issues. The strategic plan was reapproved in 2023.

Momentum MoVal identified the following City priorities:
• Economic Development, including attracting new businesses to the City, creating jobs, entering into strategic partnerships and developing the City’s workforce. • Public Safety, including reducing crime, preparing for emergencies and exploring cost-effective solutions.
• Library, including both traditional and virtual methods of delivering services to residents. • Infrastructure, including managing infrastructure and exploring cost -effective solutions to maintaining existing assets.
• Beautification, Community Engagement and Quality of Life , including caring for the environment and providing cultural and recreational opportunities. • Youth Programs, including expanding healthy lifestyle choices and learning opportunities.

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Momentum MoVal also sets forth detailed means of achieving the above objectives, as well the timeline to undertake each task.

Based on the reapproval in 2023, t he City continues to focus on the priorities established through Momentum MoVal and, during the most recent and future budgeting cycles, projects will be identified with these priorities in mind.

See the caption “—Budget Procedure, Current Budget and Historical Budget Information” for additional information relating to the City’s budget for Fiscal Years 2023-24 and 2024-25.

Impact on General Fund of American Rescue Plan Act. On January 4, 2022, the City Council accepted funds under the American Rescue Plan Act (“ARPA”) in the amount of $48,870,845, which funds were paid to the City in two tranches (one in Fiscal Year 2021-22 and one in Fiscal Years 2022 -23) approbatively one year apart. Pursuant to the United States Department of Treasury (“Treasury”) rules regarding ARPA funds, the City established the tracking of these funds in a Special Revenue Fund. The City Council also approved using ARPA funding toward public safety pursuant to Treasury rules. As such, General Fund expenditures in the categories of Police and Fire were reclassified to the City’s ARPA Fund ($24,395,437 in Fiscal Year 2021 -22 and $24,475,408 in Fiscal Year 2022-23). In each year of the stated fiscal years, the General Fund had a reduction of expenditures in the same amounts, and the City Council approved an historic approximately $50 million investment in a pavement rehabilitation/re-pavement project, which funded approximately ten years’ worth of pavement rehabilitation in 18 months. The General Fund transferred $27,233,814 in Fiscal Year 2021-22 and $26,745,287 in Fiscal Year 2022-23 to the City’s Capital Projects Fund. Also, due to significant increases in sales tax revenues received by the City related to changes in the corporate structure of Amazon, which operates a fulfillment center within the City , the General Fund transferred $14,871,749 in Fiscal Year 2021 -22 and $24,270,000 in Fiscal Year 2022 -23 to Internal Services Funds to increase the reserves, specifically in technology, facilities, fleet and unfunded liabilities. The General Fund also transferred approximately $6 million to the Community Services District Fund related to a community benefit contribution the City received from the City’s waste hauler in Fiscal Year 2022-23, which is being used to fund a park rehabilitation and refurbishment project. See the captions “—Change in Fund Balance of the City General Fund” and “—General Fund Balance Sheets of the City,” as well as APPENDIX C—“ ANNUAL COMPREHENSIVE FINANCIAL REPORT OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2023.”
Budget Procedure, Current Budget and Historical Budget Information Budget Timeline. The City currently operates on a two-year operating budget cycle. The current budget was approved on May 2, 2023 and governs the period beginning on July 1, 2023 for Fiscal Years 2023-24 and 2024-25. The budget includes all funding sources of the City, including the General Fund, Community Services District and the Successor Agency of the former Redevelopment Agency. The City’s budget process is described below.

At such time as the City Manager determines, each department head must furnish to the City Manager an estimate of revenues and expenditures for the applicable department for the ensuing two Fiscal Years, detailed in such manner as may be prescribed by the City Manager. In preparing the proposed budget, the City Manager reviews the estimates, h olds conferences regarding the estimates with the respective department heads and revises the estimates as the City Manager deems advisable. The City Council has directed staff to develop a balanced budget.

Prior to June 30 of every second Fiscal Year, the City Manager submits to the City Council a proposed budget for the next two -year period commencing the following July 1. The budget includes proposed expenditures and the means of financing them. Prior to June 30 of the applicable Fiscal Year, public h earings are conducted to obtain public comments and the budget is legally enacted through the passage of a resolution.

The budget is subject to amendment throughout the two-year period to reflect actual financial performance.

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From the effective date of the budget, the amounts stated as proposed expenditures become appropriated to the several departments, offices and agencies for the objects and purposes named. The City Manager is authorized to transfer budgeted amounts between line items within a departme nt or activity, and between departments and programs within the same fund, provided that the total appropriation does not exceed the budgeted amount. All other transfers or amendments require City Council approval. The City Manager and affected department heads are mutually responsible for controlling expenditures within budgeted appropriations.

All appropriations lapse at the end of the Fiscal Year to the extent that they have not been expended or lawfully encumbered. At a public meeting after the adoption of the budget the City Council may amend or supplement the budget by motion adopted by three affirmative votes of members of the City Council. The City Manager proposes interim changes, if any, to the City Council quarterly throughout the two-year budget cycle.

A summary of the actions taken during the budgetary process is set forth below:

CITY OF MORENO VALLEY

BUDGET PROCESS

Source: City.

The City conducts its annual financial audit between August and November each year, and such audit is typically accepted by the City Council by December of such year. In recognition of its financial reporting excellence, the Government Finance Officers Association of the United States and Canada has awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for over 25 consecutive years.

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Current Budget . For Fiscal Year 2023 -24, the adjusted General Fund operating budget projects revenues of approximately $150.4 million (excluding transfers in), which is approximately $10.7 million (or approximately 6.6%) above Fiscal Year 2022 -23 revenues. The adjusted Fiscal Year 2023 -24 General Fund operating budget projects expenditures of approximately $151.4 million (excluding transfers out), which is approximately $50.4 million (or approximately 51.7%) above Fiscal Year 2022-23 expenditures. The increase in budgeted expenditures for Fiscal Year 2023 -24 is attributable to the fact that in Fiscal Years 2021 -22 and 2022-23, the City utilized funds received under ARPA to fund public safety expenditures, thereby reducing the amount of General Fund public safety expenditures. See the caption “ —General Economic Condition and Outlook of the City—Impact on General Fund of American Rescue Plan Act.” For Fiscal Year 2024 -25, the adjusted General Fund operating budget projects revenues of approximately $155.2 million (excluding transfers in), which is approximately $1.9 million (or approximately

1.2%) above the budgeted Fiscal Year 2023 -24 revenues. Th e adjusted Fiscal Year 2024 -25 General Fund operating budget projects expenditures of approximately $149.6 million (excluding transfers out), which is approximately $1.8 million (or approximately 1.2%) below budgeted Fiscal Year 2023-24 expenditures.

The a djusted General Fund operating budget for Fiscal Years 2023 -24 and 2024 -25 reflects the following significant assumptions: (a) the City will not hire any additional employees; (b) assessed valuations of property will increase by 8.9% and 2.9% in Fiscal Yea rs 2023-24 and 2024 -25, respectively; (c) sales tax revenues will increase by 2.1% in Fiscal Year 2023 -24 and remain relatively flat in Fiscal Year 2024 -25; (d) utility taxes will increase by 11.3% in Fiscal Year 2023 -24 and remain relatively flat in Fis cal Year 2024-25; (e) transient occupancy tax revenues will increase by 56.7% in Fiscal Year 2023 -24 and remain flat in Fiscal Year 2024-25, given the construction of new hotels within the City; and (f) miscellaneous revenues, including fees for services, licenses and permits and fines and forfeitures, are conservatively estimated to decrease by 33% in Fiscal Year 2023-24 compared to audited Fiscal Year 2022-23 amounts.

Set forth in Table 1A are recent General Fund budgets and results of the City, excluding transfers in and out, for Fiscal Years 2021-22 and 2022-23. During the course of each Fiscal Year, the budget is amended and revised as necessary by the City Council. Set forth in Table 1B are the adopted General Fund budgets for Fiscal Years 2023-24 and 2024-25, as well as the adjusted budgets for such years.

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TABLE 1A

CITY OF MORENO VALLEY

GENERAL FUND BUDGETS AND RESULTS

Fiscal Year
2021-22
Final Budget
Fiscal Year
2021-22
Audited Results
Fiscal Year
2022-23
Final Budget
Fiscal Year
2022-23
Audited Results
Revenues
Property Taxes $ 41,881,000 $ 43,126,471 $ 45,361,593 $ 47,207,562 Utility Taxes 28,499,303 40,570,137 36,725,489 36,161,809 Sales Taxes 15,717,540 17,708,256 15,717,540 19,501,114 Other Taxes(1) 15,233,787 19,818,127 17,044,481 20,930,742 Licenses & Permits 5,485,448 4,182,232 5,630,325 4,254,783 Intergovernmental 684,042 663,988 639,963 607,686
Charges for Services 14,611,159 15,788,929 14,393,395 15,931,642 Use of Money & Property 4,466,853 (6,674,183) 4,684,136 4,910,748 Fines & Forfeitures 499,500 660,409 596,952 678,067
Miscellaneous 486,510 784,081 8,056,421 10,383,637 Total Revenues $ 127,565,142 $ 136,628,447 $ 148,850,295 $ 160,567,790

Expenditures
Current
General Government $ 18,004,540 $ 18,744,301 $ 20,799,740 $ 20,026,089 Public Safety(2) 50,968,668 42,125,860 60,264,166 49,946,422 Public Works 10,789,890 8,452,014 11,023,438 10,116,764 Community and Economic
Development 14,113,703 11,960,478 15,548,040 13,435,228 Principal Retirement - 222,149 - 882,176
Interest and Fiscal Charges - 7,527 - 60,997
Capital Outlay 719,364 1,769,346 3,016,760 3,030,793 Total Expenditures $ 94,596,165 $ 83,281,675 $ 110,652,144 $ 97,498,469

Excess (Deficiency) of
Revenues Over (Under)
Expenditures $ 32,968,977 $ 53,346,772 $38,198,151 $ 63,069,321

Other Financing Sources
SBITA Acquisition -- -- -- $ 1,775,199
Transfers In $ 152,862 $ 65,129 $ 1,089,216 758,451
Transfers Out(3) (33,030,759) (44,104,079) (41,323,751) (64,222,671) Lease Acquisition -- 1,370,973 -- --
Total Other Financing
Sources $ (32,877,897) $ (42,667,977) $ (40,234,535) $ (61,689,021)

Net Change in Fund Balance $ 91,080 $ 10,678,795 $ (2,036,384) $ 1,380,300

Beginning Fund Balance $ 86,585,354 $ 86,585,354 $ 97,264,149 $ 97,264,149 Ending Fund Balance $ 86,676,434 $ 10,678,795 $ 95,227,765 $ 98,644,449

(1) Includes franchise fees, business license fees , transient occupancy tax revenues and the Measure M cannabis business tax .

See the caption “—Other Taxes.”
(Footnotes continue on following page.)

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(Footnotes continued from previous page.)
(2) In each of Fiscal Year 2021 -22 and 2022-23, public safety results were less than budgeted amounts due to the City using approximately $24.2 million and $24.3 million, respectively, of funds from the City’s American Rescue Plan Act Fund to fund public safety services related to the pandemic response. See the caption “—General Economic Condition and Outlook of the City—Impact on General Fund of American Rescue Plan Act.” (3) Transfers out in Fiscal Years 2021-22 and 2022-23 include transfers out of approximately $24.4 million in each year to fund capital projects using funds made available due to the City’s receipt of approximately $48.8 million in funding received under ARPA across such years. Transfers out in Fiscal Years 2021 -22 and 2022-23 also include transfers out to Internal Servic e Funds to increase reserves for technology, facilities, fleet and unfunded liabilities. See the caption “ —General Economic Condition and Outlook of the City—Impact on General Fund of American Rescue Plan Act.” Sources: Audited financial statements of the City for Fiscal Years 2021-22 and 2022-23

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TABLE 1B

CITY OF MORENO VALLEY
FISCAL YEARS 2023-24 AND 2024-25 BIENNIAL BUDGET

Fiscal Year
2023-24
Adopted Budget
Fiscal Year
2023-24
Adjusted
Budget(1)
Fiscal Year
2024-25
Adopted Budget
Fiscal Year
2024-25
Adjusted
Budget(1)
Revenues
Property Taxes $ 21,500,000 $ 21,500,000 $ 22,136,000 Property Taxes in lieu(2) 27,500,000 27,500,000 28,100,000 Utility Taxes 17,500,000 17,500,000 18,000,000
Sales Taxes 37,500,000 37,500,000 37,750,000
Other Taxes(3) 19,700,000 19,700,000 20,000,000
Licenses & Permits 5,638,254 5,638,254 5,639,454
Intergovernmental 615,803 872,842 615,803
Charges for Services 14,476,273 14,666,273 14,529,973
Use of Money &
Property
4,723,000 4,723,000 4,725,100
Fines & Forfeitures 532,500 557,500 532,000
Miscellaneous 221,500 221,500 221,500
Total Revenues $ 149,907,330 $ 150,379,369 $ 152,250,330

Expenditures
Personnel Services $ 29,238,558 $ 29,352,565 $ 30,985,300 Contractual Services 107,114,087 108,245,555 108,073,742 Materials & Supplies 5,369,852 7,165,635 4,414,612
Fixed Charges 6,151,248 6,151,248 6,151,248
Fixed Assets -- 523,220 --
Total Expenditures $ 147,873,745 $ 151,438,223 $ 149,624,902

Excess (Deficiency) of
Revenues Over (Under)
Expenditures $ 2,033,585 $ (1,058,854) $ 2,625,428

Transfers:

Transfers In $ 2,926,713 $ 6,019,152 $ 2,940,159
Transfers Out (4,957,082) (4,769,495) (5,560,911) Net Transfers $ (2,030,369) $ 1,249,657 $ (2,620,752)

Net Change in Fund
Balance $ 3,216 $ 190,803 $ 4,676

(1) Represents mid-year budget updates.
(2) See the caption “—State of California Motor Vehicle In-Lieu Payments.” (3) Includes franchise fees, business license fees , transient occupancy tax revenues and the Measure M cannabis business tax .

See the caption “—Other Taxes.”
Sources: Adopted budgets of the City for Fiscal Years 2023 -24 and 2024 -25; City for mid -year budget updates to the biennial budget for Fiscal Years 2023-24 and 2024-25.

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Change in Fund Balance of the City General Fund
Set forth in Table 2 are the City’s General Fund stateme nts of revenues, expenditures and changes in fund balance for the last five Fiscal Years.

TABLE 2

CITY OF MORENO VALLEY

GENERAL FUND STATEMENT OF

REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
Fiscal Year Ended June 30,
2019 2020 2021 2022 2023
Revenues
Taxes
Property Taxes $ 15,623,696 $ 17,217,684 $ 18,473,330 $ 19,290,854 $ 21,268,854 Property Taxes in lieu(1) 19,577,636 21,232,068 22,738,372 23,835,902 25,938,708 Utility Taxes 15,483,806 15,499,534 16,361,233 17,708,256 19,501,114 Sales Taxes(2) 21,208,442 20,498,386 25,723,709 40,570,137 36,161,809 Other Taxes(3) 12,303,492 12,970,014 15,448,743 19,818,127 20,930,742 Licenses & Permits 3,468,511 3,843,038 4,193,378 4,182,232 4,254,783 Intergovernmental 722,703 536,799 3,145,436 663,988 607,686 Charges for Services 13,650,496 11,947,306 12,676,206 15,788,929 15,931,642 Use of Money & Property 7,195,588 9,048,856 1,540,805 (6,674,183) 4,910,748 Fines & Forfeitures 729,939 573,901 764,279 660,409 678,067 Miscellaneous(4) 223,303 416,775 859,050 784,081 10,383,637 Total Revenues $110,187,612 $113,784,361 $ 121,924,541 $ 136,628,447 $ 160,567,790 Expenditures
Current
General Government $ 15,109,570 $ 18,262,308 $ 16,044,563 $ 18,744,301 $ 20,026,089 Public Safety(5) 60,540,145 63,893,676 63,601,268 42,125,860 49,946,422 Community Development 11,402,636 11,931,934 10,123,013 11,960,478 13,435,228 Public Works 6,666,003 7,817,557 6,706,293 8,452,014 10,116,764 Principal Retirement -- -- -- 222,149 882,176
Interest and Fiscal Charges -- -- -- 7,527 60,997
Capital Outlay 1,611,478 1,948,131 2,152,410 1,769,346 3,030,793 Total Expenditures $ 95,329,832 $103,853,606 $ 98,627,547 $ 83,281,675 $ 97,498,469 Excess (Deficiency) of Revenues
Over (Under) Expenditures $ 14,857,780 $ 9,930,755 $ 23,296,994 $ 53,346,772 $ 63,069,321 Other Financing Sources (Uses)
Transfers In $ 2,103,241 $ 217,760 $ 79,958 $ 65,129 $ 758,451 Transfers Out(7) (6,949,286) (5,411,389) (7,485,485) (44,104,079) (64,222,671) Lease Acquisition -- -- -- 1,370,973 --
SBITA Acquisition -- -- -- -- 1,775,199
Total Other Financing Sources
(Uses) $ (4,846,045) $ (5,193,629) $ (7,405,527) $ (42,667,977) $ (61,689,021) Net Change in Fund Balances $ 10,011,735 $ 4,737,126 $ 15,891,467 $ 10,678,795 $ 1,380,300 Fund Balances, Beginning of Year(6) $ 55,721,954 $ 65,733,689 $ 70,693,887 $ 86,585,354 $ 97,264,149 Fund Balances, End of Year $ 65,733,689 $ 70,470,815 $ 86,585,354 $ 97,264,149 $ 98,644,449

(1) See the caption “—State of California Motor Vehicle In-Lieu Payments.” (2) Increase beginning in Fiscal Year 2021-22 due to changes in the corporate structure of Amazon, which operates a fulfillment center within the City, which led to increased collections of sales taxes received by the City. See the caption “—Sales Taxes.” (3) Includes franchise fees, business license fees, cannabis business taxes and transient occupancy tax revenues. See the caption “ —Other Taxes.” The cannabis business tax was approved by the voters in November 2018 and the first full year of collections was Fiscal Year 2020-21. See the captions “—Tax Revenues by Source” and “—Other Taxes.”
(4) Increase in Fiscal Year 2022-23 due to a one time donation. (5) In each of Fiscal Year 2021-22 and 2022-23, public safety expenditures were less than prior years due to the City using approximately $24.2 million and $24.3 million, respectively, of funds from the City’s American Rescue Plan Act Fund to fund public safety services relate d to the pandemic response. See the caption “—General Economic Condition and Outlook of the City—Impact on General Fund of American Rescue Plan Act.” (Footnotes continue on following page.)

25 4872-9371-4101v4/022432-0049
(Footnotes continued from previous page.)
(6) The Fiscal Year 2020 -21 beginning fund balance was restated in the City’s audited financial statem ents for Fiscal Year 2020 -21 due to the implementation of GASB Statement No. 84—Fiduciary Activities. (7) Transfers out in Fiscal Year s 2021-22 and 2022-23 include transfers out of approximately $24.4 million in each year to fund capital projects using funds made available due to the City’s receipt of approximately $48.8 million in funding received under ARPA across such years. Transfers out in Fiscal Years 2021-22 and 2022-23 also include transfers out to Internal Service Funds to increase reserves for technology, facilities, fleet and unfunded liabilities. See the caption “—General Economic Condition and Outlook of the City—Impact on General Fund of American Rescue Plan Act.” Sources: Audited financial statements of the City for Fiscal Years 2018-19 through 2022-23.

26 4872-9371-4101v4/022432-0049
General Fund Balance Sheets of the City
Set forth in Table 3 are the City’s General Fund balance sheets for the last five Fiscal Years.

TABLE 3

CITY OF MORENO VALLEY

GENERAL FUND BALANCE SHEETS
Fiscal Year Ended June 30,
2019 2020 2021 2022 2023
Assets
Pooled Cash and Investments $ 64,534,397 $ 68,767,430 $ 65,263,553 $ 58,024,866 $ 51,139,078 Receivables
Accounts 2,081,202 2,207,456 2,837,967 4,251,200 7,072,296 Notes to Successor Agency 12,516,341 11,753,341 10,990,341 10,227,341 9,464,341 Leases(1) -- -- -- 1,694,567 1,629,255
Interest 1,160,418 991,399 661,485 820,927 1,827,367
Other -- 7,336 7,336 -- --
Prepaid Costs 339,973 409,162 482,250 451,612 743,112
Due from Other Governments 5,608,118 4,873,657 7,572,657 7,276,902 6,793,509 Due from Other Funds(2) 1,867,562 2,966,880 29,281,493 51,782,657 63,304,067 Advances to Other Funds 4,400,000 4,700,000 5,050,000 5,400,000 5,500,000 Land Held for Resale/Redevelopment 2,860,044 2,860,044 2,856,471 2,856,471 2,856,471 Total Assets $ 95,368,055 $ 99,536,705 $ 125,703,553 $ 142,786,543 $ 150,329,496 Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities
Accounts Payable $ 16,492,002 $ 10,751,549 $ 11,684,989 $ 23,568,023 $ 22,798,736 Accrued Liabilities 1,438,182 3,235,422 1,409,049 915,232 1,313,703 Deposits Payable(3) -- -- 7,212,329 8,746,423 9,385,188 Unearned Revenues 643,741 432,970 623,312 744,901 1,025,176 Due to Other Governments(4) 1,557 4,742,713 3,888,597 8,205 6,010,337 Total Liabilities $ 18,575,482 $ 19,162,654 $ 24,818,276 $ 33,982,784 $ 40,533,140 Deferred Inflows of Resources
Unavailable Revenues $ 11,058,884 $ 9,903,236 $ 14,299,923 $ 9,884,828 $ 9,601,917 Leases(1) -- -- -- 1,654,782 1,549,990
Total Deferred Inflows of Resources $ 11,058,884 $ 9,903,236 $ 14,299,923 $ 11,539,610 $ 11,151,907 Fund Balances
Nonspendable
Prepaid Costs $ 339,973 $ 416,498 $ 489,586 $ 451,612 $ 743,112 Land Held for Resale 2,860,044 2,860,044 2,856,471 2,856,471 2,856,471 Notes to Successor Agency 3,373,731 3,169,095 2,964,459 2,759,823 2,555,187 Advances to Other Funds 4,400,000 4,700,000 5,050,000 5,400,000 5,500,000 Committed to
Revolving Line of Credit(5) 2,600,000 2,600,000 2,600,000 2,600,000 2,600,000 Maintenance of Pedestrian Bridge 195,276 195,276 225,234 240,363 255,936 Operating Reserve(6) 13,392,552 13,392,552 14,285,848 16,129,747 22,446,030 Assigned to
Economic Uncertainty Reserve(7) 11,160,460 11,160,460 11,904,874 13,441,456 22,446,030 Continuing Appropriations 4,454,344 1,480,786 2,000,000 2,256,992 2,454,543 Grants and Federal/State Awards(8) -- -- 3,743,928 -- 13,115,981 GASB 31(9) 818,768 4,854,105 -- -- --
Other(10) -- -- 2,263,612 -- --
Unassigned 22,138,541 25,641,999 38,201,342 51,127,685 23,671,159 Total Fund Balances $ 65,733,689 $ 70,470,815 $ 86,585,354 $ 97,264,149 $ 98,644,449 Total Liabilities, Deferred Inflows of
Resources and Fund Balances $ 95,368,055 $ 99,536,705 $ 125,703,553 $ 142,786,543 $ 150,329,496

(1) Beginning in Fiscal Year 2021-22, the City implemented GASB Statement No. 87—Leases, which generally requires recognition of certain leases assets and liabilities fore leases that were previously classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. (2) Increases beginning in Fiscal Year 2020-21 due to restructuring the financial reporting. (3) Represents deposits held by the City for various development projects and shown beginning in Fiscal Year 2020 -21 due to a change in reporting.
(4) Represents Public Safety expenditures accrued and sales tax payable. Increases in Fiscal Years 2021 and 2023 due to public safety services related to the pandemic response, which was funded by the American Rescue Plan Act. (Footnotes continue on following page.)

27 4872-9371-4101v4/022432-0049
(Footnotes continued from previous page.)
(5) Reflects moneys made available from the General Fund to the Moreno Valley Electric Utility (“MVU”) for liquidity purposes. No portion of the available amount has been drawn upon for over a decade. MVU has robust reserves and the City does not currently expect MVU to draw upon these moneys for the foreseeable future.
(6) Also referred to in the Reserve Policy as the Emergency fund. See the caption “ —General Economic Condition and Outlook of the City— Fiscal Policies.”
(7) Also referred to in the Reserve Policy as the Rainy Day fund. See the caption “ —General Economic Condition and Outlook of the City — Fiscal Policies.”
(8) Amounts shown for Fiscal Year 2022-23 represent grants awarded but not yet completed. (9) Represents temporary fluctuations in the fair value of investments pursuant to GASB Statement No. 31. Not shown in Fiscal Years 2020-21 through 2022-23 due to changes in reporting structure.
(10) Represents a GASB Statement No. 31 gain in Fiscal Year 2020-21.

Sources: Audited financial statements of the City for Fiscal Years 2018-19 through 2022-23.

Tax Revenues by Source
The City derives its General Fund tax revenues from a variety of sources including ad valorem property taxes, sales and use taxes, franchise taxes, a real property transfer tax and transient occupancy taxes. The City’s total General Fund tax revenues by source for the five most recent fiscal years are set forth below.

TABLE 4

CITY OF MORENO VALLEY

GENERAL FUND TAX REVENUES BY SOURCE
Revenue Category 2018-19 2019-20 2020-21 2021-22 2022-23 Property Tax $15,623,696 $ 17,217,684 $ 18,473,330 $ 19,290,569 $ 21,268,854 Property Tax In-Lieu of VLF 19,577,636 21,232,068 22,738,372 23,835,902 25,938,708 Utility Users Tax 15,483,806 15,499,534 16,361,233 17,708,256 19,501,114 Sales and Use Tax(1) 21,208,442 20,498,386 25,723,709 40,570,137 36,161,809 Transient Occupancy Tax 2,433,358 2,731,202 3,638,959 4,731,985 4,787,129 Franchise Tax 6,585,791 6,794,798 7,176,916 7,706,517 9,045,784 Business License Gross Receipts Tax 2,451,261 2,461,291 2,664,404 2,668,645 2,959,202 Documentary Transfer Tax 833,082 935,134 739,434 1,314,039 954,975 Cannabis Business Tax(2) -- 47,589 1,229,029 3,396,941 3,183,652 Total Tax Revenues $84,197,072 $ 87,417,686 $ 98,745,386 $121,222,991 $123,801,227

(1) Increase beginning in Fiscal Year 2021-22 due to changes in the corporate structure of Amazon, which operates a fulfillment center within the City, which led to increased collections of sales taxes received by the City. See the caption “—Sales Taxes.” (2) The cannabis business tax was approved by the voters in November 2018. See the caption “—Other Taxes.” Source: City.

Property Taxes
Property tax receipts of $21,268,854 (excluding motor vehicle license fee in-lieu payments, which are discussed under the caption “—State of California Motor Vehicle In-Lieu Payments”), provided the third largest tax revenue source of the City in Fiscal Year 2022 -23, contributing approximately 17.2% of General Fund tax revenues and approximately 13.2% of total General Fund revenues during Fiscal Year 2022-23.

Property in the State which is subject to ad valorem taxes is classified as “secured” or “unsecured.” The secured classification includes property on which any property tax levied by a county becomes a lien on that property. A tax that is levied on unsecured property may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all other liens arising pursuant to State law on the secured property, regardless of the time of the creation of other liens.

The exclusive means of compelling the payment of delinquent taxes with respect to secured property is the sale of the property securing the taxes for the amount of taxes that are delinquent. The taxing authority has three methods of collecting unsecured personal property taxes: (1) filing a civil action against the taxpayer; (2) obtaining a judgment lien on certain property of the taxpayer from the county clerk or county recorder; and

28 4872-9371-4101v4/022432-0049
(3) seizing and selling personal property, improvements or possessory interests belonging or taxable to the assessee.

A 10% penalty is added to delinquent taxes which have been levied with respect to property on the secured roll. In addition, beginning on the July 1 following a delinquency, interest begins accruing at the rate of

1.5% per month on the amount delinquent. If taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the county tax collector. A 10% penalty also a pplies to the delinquent taxes or property on the unsecured roll, and further, an additional penalty of 1.5% per month accrues with respect to such taxes beginning on the varying dates related to the tax billing date.

State law also provides for the supple mental assignment and taxation of property as of the occurrence of a change in ownership or completion of new construction. Collection of taxes based on supplemental assessments occurs throughout the year. Taxes due are prorated according to the amount o f time remaining in the tax year.

For a number of years, the State Legislature shifted property taxes from cities, counties and special districts to the Educational Revenue Augmentation Fund (“ERAF”). In Fiscal Years 1993 and 1994, in response to serious budgetary shortfalls, the State Legislature and administration permanently redirected over $3 billion of property taxes from cities, counties, and special districts to schools and community college districts pursuant to ERAF shifts. The Fiscal Year 2004-05 State Budget included an additional $1.3 billion shift of property taxes from certain local agencies, including the City, in Fiscal Years 2004-05 and 2005-06.

On July 27, 2009, the Governor signed a revised Fiscal Year 2010 State budget that included an ERAF shift of approximately 8% of 1% ad valorem property tax revenues from certain local agencies, including the City.

On November 2, 2010, State voters approved Proposition 22, which: (i) prohibits the State of California from shifting or delaying the distribution of funds from special districts to schools and community colleges; (ii) eliminates the authority to shift property taxes temporarily during a severe financial hardship of the State; and (iii) restricts the State’s authority to use fuel tax revenues to pay debt service on transportation bonds, to borrow or change the distribution of fuel tax revenues or to use vehicle license fee revenues to reimburse local governments for state-mandated costs.

Despite the passage of Proposition 22, there can be no assurance that 1% ad valorem property tax revenues which the City currently expects to receive will not be temporarily shifted from the City or reduced pursuant to State legislation enacted in the future. See the caption “STATE OF CALIFORNIA BUDGET INFORMATION.” If the property tax formula is permanently changed in the future, it could have a material adverse effect on the receipt of its share of 1% property tax revenues by the City.

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Set forth in Table 5 are the secured and unsecured assessed valuations for property in the City for the current and last five Fiscal Years.

TABLE 5

CITY OF MORENO VALLEY

ASSESSED VALUATION HISTORY
Fisca
l
Year Secured Value Utility
Unsecured
Value
Total Assessed
Value
Less
Exemptions
Taxable
Assessed Value
Direct Tax
Rate(1)
2019 $ 15,10,582,007
$18,45
0 $ 636,281,038
$16,127,635,97
5 $360,754,480
$15,766,881,49
5 0.36435%
2020 16,777,704,373 18,450 718,740,733 17,496,463,556 385,359,433 17,111,104,123 0.35948 2021 17,993,472,260 18,450 744,144,717 18,737,635,427 396,783,606 18,340,851,821 0.40500 2022 18,891,344,445 18,450 732,701,389 19,624,064,284 416,160,436 19,207,903,848 0.40600 2023 20,519,931,698 18,450 795,193,318 21,315,143,466 433,258,320 20,881,885,146 0.39898 2024 22,081,305,394 18,450 1,037,323,828 23,118,647,672 446,202,881 22,672,444,791 N/A

(1) The Direct Tax Rate is the ratio of the assessed valuations within the City to the amount of all property taxes collected in the County.

Sources: County Assessor’s Office; County Auditor-Controller’s Office.

Set forth in Table 6 are property tax collections (including amounts that do not constitute General Fund moneys) and delinquencies in the City as of June 30 for the last five Fiscal Years. The County has adopted the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (known as the Teeter Plan), as provided for in Section 4701 et seq. of the Revenue and Taxation Code of the State, and therefore the County Auditor-Controller distributes 100% of property tax revenues allocated to each city in the County without regard to delinquencies in the payment of property taxes. As a result of City’s participation in the Teeter Plan, the City receives no adjustments for redemption payments on delinquent collections. The City does receive supplemental taxes. There can be no assurance that the County Auditor -Controller will not change its policies with respect to delinquencies in property tax payments in the future.

TABLE 6

CITY OF MORENO VALLEY

PROPERTY TAX LEVIES AND COLLECTIONS
Fiscal
Year
Total
Tax Levy
Collections
within the
Fiscal Year
of Levy(1)
Percent of Levy
Collected
within the
Fiscal Year of
Levy
Collections in
Subsequent
Years
Total
Collections to
Date Percent of
Levy Collected
to Date
2019 $30,459,787 $30,334,346 99.59% $125,440 $30,459,787 100.00% 2020 31,609,650 31,609,650 100.00 -- 31,609,650 100.00
2021 33,423,930 32,965,479 98.63 458,450 33,423,930 100.00 2022 35,239,398 34,720,200 98.53 519,198 35,239,398 100.00 2023 37,433,664 37,433,664 100.00 -- 37,433,664 100.00

(1) The amounts shown in this column reflect all property tax collections of the City, including non -General Fund moneys. See Table 2 under the caption “ —Change in Fund Balance of the City General Fund” for historic General Fund property tax revenues alone.

Source: Comprehensive Annual Financial Report of the City for Fiscal Year Ended June 30, 2023.

Information with respect to the ten largest property taxpayers in the City as shown on the Fiscal Year 2023-24 tax roll is set forth in Table 7.

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TABLE 7

CITY OF MORENO VALLEY

TEN LARGEST PROPERTY TAXPAYERS
Taxpayer
2024 Taxable
Assessed Valuation
% of Total
Assessed
Valuation(1)
Skechers USA Inc.(2) $ 400,294,478 1.77%
Duke Realty LP 274,972,000 1.21
First Industrial LP 273,632,246 1.21
TGA Centerpointe LLC 272,446,544 1.20
Prologis Targeted US Logistics Fund 202,316,286 0.89
Prologis 163,790,708 0.72
Ross Dress For Less Inc. 158,126,686 0.70
Amazon.com Services LLC 154,839,457 0.68
FR Cal Moreno Valley LLC 134,491,023 0.59
FR Cal Indian Avenue LLC(2) 127,900,757 0.56
TOTAL $ 2,162,810,185 9.54%

(1) Fiscal Year 2023-24 total taxable assessed value: approximately $22,672,444,791. (2) Each of these taxpayers have filed property tax assessment appeals with the County. The City is unable to determine the likelihood of success of such appeals or the magnitude of reductions in property tax assessments as a result of successful appeals, if any.

Source: County Assessor’s Office.

State of California Motor Vehicle In-Lieu Payments
The State imposes a Vehicle License Fee (the “ VLF”), which is the portion of the fees paid in lieu of personal property taxes on a vehicle. The VLF is based on vehicle value and declines as the vehicle ages. Prior to the adoption of the Fiscal Year 2004 -05 State Budget, the VLF was 2% of the value of a vehicle. Through legislation in prior Fiscal Years, the State enacted VLF reduc tions under which the State was required to “backfill” local governments for their revenue losses resulting from the lowered fee. The Fiscal Year 2004 -05 State Budget permanently reduced the VLF from 2% to 0.65% of the value of a vehicle and deleted the requirement for backfill payments, providing instead that the amount of the backfill requirement will be met by an increase in the property tax allocation to cities and counties. See the caption “STATE OF CALIFORNIA BUDGET INFORMATION.”
VLF receipts totale d $ 25,938,708 in Fiscal Year 2022-23. Such revenues provided the largest tax revenue source for the City in Fiscal Year 2022-23, contributing approximately 20.9% of General Fund tax revenues and approximately 16.2% of total General Fund revenues.

TABLE 8

CITY OF MORENO VALLEY

STATE OF CALIFORNIA MOTOR VEHICLE IN-LIEU PAYMENTS
Fiscal Year Ended June 30,
Source 2019 2020 2021 2022 2023
Motor Vehicle In-Lieu Payments $19,577,636 $21,232,068 $22,738,372 $23,835,902 $25,938,708

Source: City.

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Sales Taxes
Sales tax receipts of $36,161,809 provided the second largest tax revenue source for the City in Fiscal Year 2022-23, contributing approximately 29.2% of General Fund tax revenues and approximately 22.5% of total General Fund revenues during Fiscal Year 2022-23. Automobile sales at the Moreno Valley Auto Mall and business activity at fulfillment centers and logistics warehouses throughout the City contribute significantly to such receipts.

A sales tax is imposed on retail sales or consumption of personal property and collected and distributed by the California Department of Tax and Fee Administration (the “ CDTFA”). The basic sales tax rate is established by the State Legislature, and local overrides may be approved by voters.

The City Council placed a measure (“Measure G”) on the November 2, 2021 ballot to increase the sales tax rate in the City from 7.75% to 8.75%, with no sunset provision. Measure G was approved by the voters of the City; however, the CDTFA did not allow for the collection of the Measure G sales tax and, therefore, the City has not been collecting the extra one percent sales tax.

Additional information relating to sales tax receipts by the City is set forth in APPENDIX A—“ ECONOMIC AND DEMOGRAPHIC INFORMATION REGARDING THE CITY OF MORENO VALLEY”.

Utility Taxes
Utility tax receipts of $19,501,114 provided the fourth largest tax revenue source for the City in Fiscal Year 2022-23, contributing approximately 15.7% of General Fund tax revenues and approximately 12.1% of total General Fund revenues during Fiscal Year 2022-23. The utility tax is imposed upon utility users in the City, including users of electricity, gas, telephone, mobile telephone and water services, at the rate of 5.75%.

Exemptions are available for low -income residents. Proceeds of the utility tax are used to fund police, fire, library, school crossing guard, animal control, code enforcement and street maintenance programs and other activities funded by the General Fund.

The City notes that the utility tax does not have a sunset provision and has been a stable revenue source which has enabled the City to manage its finances during economic downturns that negatively affected other tax revenue sources, including the 2008-09 financial crisis and the pandemic-induced recession in 2020.

Other Taxes
Other tax receipts of $21,145,389 collected by the City in Fiscal Year 2022-23, including but not limited to transient occupancy taxes, business license taxes, franchise fees , property transfer taxes and Measure M tax revenues (described below), provided approximately 17.1% of General Fund tax revenues and 13.2% of total General Fund revenues during Fiscal Year 2022-23.

On November 6, 2018, City voters approved Measure M, a tax on commercial cannabis activity at the rate of 8% of the sales price (excluding e xcise taxes) of cannabis products. The City has made 39 cannabis business permits available, of which 17 are currently in use. Fiscal Year 2020-21 was the first full year in which the Measure M tax was collected. See the caption “—Tax Revenues by Source” for the City’s historical Measure M tax revenues.

Services
Fees of $36,766,563 collected for services provided by the City in Fiscal Year 2022 -23, including but not limited to fees for plan checks and other planning services, issuance of building permits, police services, and public works projects, provided approximately 22.9% of General Fund revenues during Fiscal Year 2022 -23.

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Such amounts reflect the sum of the “Licenses & Permits,” “Intergovernmental,” “Charges for Services,” “Use of Money and Property,” “Fines & Forfeitures” and “Miscellaneous” line items shown in Tables 1 and 2 above.

Other Indebtedness
General Fund-Supported Debt.
2014 Bonds . In November 2014, the Authority issued the 2014 Bonds to refinance certain capital improvements of the City and MVU. The Series 2024 Bonds are being issued to refund the 2014 Bonds. See the captions “SOURCES AND USED OF FUNDS” AND “THE REFUNDING PLAN.” Series 2019 Bonds. In April 2019, the Authority issued its Lease Revenue Bonds, Series 2019 (Taxable) (the “Series 2019 Bonds”) to finance certain capital improvements of MVU. The Series 2019 Bonds mature on May 1, 2049 and bear interest at the rate of 4% per annum. The Series 2019 Bonds are payable from rental payments by the City to the Authority under a Facilities Sublease. As of June 30, 2023, the Series 2019 Bonds were outstanding in the aggregate principal amount of $15,830,000.

The City has covenanted in the Facilities Sublease with respect to the Series 2019 Bonds to budget and appropriate moneys annually for the lease payments payable thereunder from legally available funds, including MVU, in the same manner as for the Series 2024 Bonds.

Series 2021 Bonds. In October 2021, the Authority issued its Lease Revenue Refunding Bonds, series 2021 (Taxable) (the “Series 2021 Bonds”) to refinance certain capital improvements of MVU. The Series 2021 Bonds mature on May 1, 2045 and bear interest at rates ranging from 0.651% to 3.100% per annum. The Series 2021 Bonds are payable form rental payments by the City to the Authority under the same Facilities Sublease as the Series 2019 Bonds. As of June 30, 2023, the Series 2021 Bonds were outstanding in the aggregate principal amount of $27,810,000.

The City has covenanted in the Facilities Sublease with respect to the Series 2021 Bonds to budget and appropriate moneys annually for the lease payments payable thereunder from legally available funds, including MVU, in the same manner as for the Series 2024 Bonds.
2021 Streetlight Financing. In August 2021, the Cit y entered into a lease agreement with Banc of America Leasing & Capital (“ BALCAP”) that is payable from available moneys of the City, including the General Fund, although payments are to be made from revenues of MVU. Pursuant to this agreement, BALCAP provided $7,402,587 to the City to refinance the purchase of approximately 9,411 streetlights from Southern California Edison and the retrofitting of approximately 2,000 streetlights owned by the City to LED standards.

The agreement matures in June 2034 and carries an annual interest rate of 3.47%. As of June 30, 2023, the agreement was outstanding in the aggregate principal amount of $6,425,772.

Other Long-Term Debt. As of June 30, 2023, the City had $17,905,000 aggregate principal amount of obligations under an Installment Sale Agreement, dated as of October 1, 2020 (the “2020 ISA”), by and between the City and the California Statewide Communities Development Authority. The 2020 ISA is payable from proceeds of a retail transactions and use tax (Measure A) imposed by the Riverside County Transportation Commission.

Short-Term Debt. The City currently has no short-term debt outstanding. As discussed in the footnotes to the table under the caption “ —General Fund Balance Sheets,” the City has made available (as a potential interfund transfer) up to $2.6 million from the General Fund to MVU for liquidity purposes. No portion of the available amount has been drawn upon for over a decade . MVU has robust reserves and the City does not currently expect MVU to draw upon these moneys for the foreseeable future.

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Estimated Direct and Overlapping Bonded Debt . The estimated direct and overlapping bonded debt of the City as of May 1, 2024 is set forth in Table 8. The information in Table 8 has been derived from data assembled and reported to the City by California Municipal Statistics, Inc. None of the City, the Authority or the Underwriter has independently verified the information in Table 8 and the City, the Authority and the Underwriter do not guarantee its accuracy.

34 4872-9371-4101v4/022432-0049
TABLE 9

CITY OF MORENO VALLEY

ESTIMATED DIRECT AND OVERLAPPING BONDED DEBT
2023-24 Assessed Valuation: $22,671,135,496

OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 5/1/24 Metropolitan Water District 0.586% $
106,711
Riverside County Flood Control and Water Conservation District Zone 4 28.299
779,637
Eastern Municipal Water District, I.D. No. U-
22 99.099 1,
139,639
Riverside City Community College
District 14.790 41,
833,730
Mount San Jacinto Community College
District 0.019
46,020
Moreno Valley Unified School
District 80.273 229,
037,899
San Jacinto Unified School
District 0.541
393,037
Val Verde Unified School
District 28.831 90,
330,968
Moreno Valley Unified School District Community Facilities District No. 2002- 1 100. 8,
279,754
Moreno Valley Unified School District Community Facilities District No. 2003-1 & 2 100. 12,
890,849
Moreno Valley Unified School District Community Facilities District No. 2004- 1 100. 1,
905,000
Moreno Valley Unified School District Community Facilities District No. 2004- 2 100. 5,
485,969
Moreno Valley Unified School District Community Facilities District No. 2004- 3 100. 2,
685,000
Moreno Valley Unified School District Community Facilities District No. 2004- 4 100. 3,
475,000
Moreno Valley Unified School District Community Facilities District No. 2004- 5 100. 3,
205,000
Moreno Valley Unified School District Community Facilities District No. 2004- 6 100. 30,
925,192
Moreno Valley Unified School District Community Facilities District No. 2005- 1 100. 6,
115,000
Moreno Valley Unified School District Community Facilities District No. 2005-2, 3, 4, & 5 100. 20,
775,000
Moreno Valley Unified School District Community Facilities District No. 2007- 1 100. 4,
590,000
Moreno Valley Unified School District Community Facilities District No. 2015- 2 100. 6,
145,000
Moreno Valley Unified School District Community Facilities District No. 2015- 3 100. 3,
950,000

35 4872-9371-4101v4/022432-0049
Moreno Valley Unified School District Community Facilities District No. 2016- 1 100. 5,
080,000
Moreno Valley Unified School District Community Facilities District No. 2017- 1 100. 3,
540,000
Moreno Valley Unified School District Community Facilities District No. 2018- 1 100. 9,
890,000
Moreno Valley Unified School District Community Facilities District No. 2019- 1 100. 5,
310,000
Moreno Valley Unified School District Community Facilities District No. 2019- 2 100. 4,
940,000
Moreno Valley Unified School District Community Facilities District No. 2020- 1 100. 3,
940,000
Val Verde Unified School District Community Facilities District No. 98- 1 100. 8,
950,000
Val Verde Unified School District Community Facilities District No. 2003- 2 100. 2,
070,000
Val Verde Unified School District Community Facilities District No. 2014- 1 100. 6,
620,000
Val Verde Unified School District Community Facilities District No. 2018- 1 100. 12,
375,000
Eastern Municipal Water District Community Facilities
Districts 100. 13,
941,000
City of Moreno Valley Community Facilities District No. 5 100. 4,
365,000
City of Moreno Valley Community Facilities District No. 7, I.A. No. 1 100. 2,800,000

TOTAL OVERLAPPING TAX AND ASSESSMENT
DEBT $557,
915,405

DIRECT AND OVERLAPPING GENERAL FUND DEBT:

Riverside County General Fund Obligations 5.714% $
37,487,533
Riverside County Pension Obligation
Bonds 5.714 38,
328,655
Riverside City Community College District Certificates of Participation 14.790 3,
630,945
Moreno Valley Unified School District Certificates of
Participation 80.273 3,
014,251
San Jacinto Unified School District Certificates of
Participation 0.541
203,768
Val Verde Unified School District Certificates of
Participation 28.831 13,
007,106
Western Municipal Water District Certificates of
Participation 0.142
3,869
City of Moreno Valley General Fund Obligations 100.
72,186,303

36 4872-9371-4101v4/022432-0049

TOTAL DIRECT AND OVERLAPPING GENERAL FUND
DEBT $167,
862,430

OVERLAPPING TAX INCREMENT DEBT (Successor Agencies): 22.423 - 100.% $44,016,245

COMBINED TOTAL DEBT $769,794,080(1)
Ratios to 2023-24 Assessed Valuation:

Total Overlapping Tax and Assessment Debt ................................................ 2.46% Total Direct Debt ($72,186,303) ................................................................. 0.32% Combined Total Debt .................................................................................... 3.40%

Ratios to Redevelopment Successor Agencies Incremental Valuation ($5,342,464,265):

Total Overlapping Tax Increment Debt ......................................................... 0.82%

(1) Excludes the Series 2024A Bonds.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.

Source: California Municipal Statistics, Inc.

Retirement Contributions
Accounting and financial reporting by state and local government employers for defined benefit pension plans is governed by GASB Statement No. 68 (“ GASB 68”). GASB 68 includes the following components:
(i) unfunded pension liabilities are included on the employer’s balance sheet; (ii) pension expense incorporates rapid recognition of actuarial experience and investment returns and is not based on the employer’s actual contribution amounts; (iii) lower actuarial discount rates are required to be used for underfunded plans in certain cases for purposes of the financial statements; (iv) closed amortization periods for unfunded liabilities are required to be used for certain purposes of the financial statements; and (v) the difference between expected and actual investment returns will be recognized over a closed five -year smoothing period. GASB 68 affects the City’s accounting and reporting requirements, but it does not change the City’s pension plan funding obligations.

The City participates in a Miscellaneou s plan to fund pension benefits for employees. The City’s pension plan is administered by CalPERS. CalPERS administers an agent multiple-employer public employee defined benefit pension plan for all of the City’s full-time and certain part-time employees. CalPERS provides retirement, disability and death benefits to plan members and beneficiaries and acts as a common investment and administrative agent for participating public entities within the State, including the City. CalPERS plan benefit provisions and all other requirements are established by State statute and the City Council.

City employees are subject to different benefit levels based on their hire date. Current benefit provisions for City employees are set forth below as of June 30, 2023.

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CITY OF MORENO VALLEY
CALPERS PENSION PLANS – SUMMARY OF BENEFIT PROVISIONS

Employees Hired
Before December 23,
2011
Employees Hired
between December 23,
2011 and December 31,
2012
Employees Hired after
December 31, 2012 (Not
Previously CalPERS
members)
Benefit Formula 2.7% @ age 55 2.0% @ age 55 2.0% @ age 62 Benefit Vesting 5 years of service 5 years of service 5 years of service Benefit Payments Monthly for life Monthly for life Monthly for life Minimum Retirement
Age
50-55 50-55 52-62
Monthly Benefits as % of
Eligible Compensation

2.0% - 2.7% 1.426% - 2.418% 1.0% - 2.5%
Employee Normal Cost 8.00%(1) 7.00%(1) 6.75%(1)
Employer Normal Cost
Rate

19.69% 19.69% 19.69%

(1) These employees are required to make the full employee contribution.

Source: City.

Contributions to the City’s pension plan consist of contributions from plan participants (i.e., employees) and contributions by the City.

City employees who were hired on and after January 1, 2013 and who were not previously CalPERS members receive benefits based on a 2.0% at age 62 formula. Such employees are required to make the full amount of required employee contributions themselves under the California Public Employees’ Pension Reform Act of 2013 (“AB 340”), which was signed by the State Governor on September 12, 2012. AB 340 established a new pension tier for such employees. Benefits for such participants are calculated on the highest average annual compensation over a consecutive 36 -month period. Employees are required to pay at le ast 50% of the total normal cost rate. AB 340 also capped pensionable income as noted below. Amounts are set annually, subject to Consumer Price Index increases, and retroactive benefits increases are prohibited, as are contribution holidays and purchases of additional non-qualified service credit.

CITY OF MORENO VALLEY
PENSIONABLE INCOME CAPS FOR CALENDAR YEAR 2024
(AB 340 AND NON-AB 340 EMPLOYEES)

Employees Hired Before
January 1, 2013
(Non-AB 340 Employees)
Employees Hired On or After
January 1, 2013
(AB 340 Employees)
Maximum Pensionable Income $345,000 $181,734
Maximum Pensionable Income if
also Participating in Social Security N/A $151,446

Source: City.

Additional employee contributions, limits on pensionable compensation and higher retirement ages for new members as a result of the passage of AB 340 are expected to reduce the City’s unfunded pension lability and potentially reduce City contribution levels in the long term.

The City is also required to contribute the actuarially determined remaining amounts necessary to fund benefits for its members. Employer contribution rates for all public employers are determined on an annual basis

38 4872-9371-4101v4/022432-0049
by the CalPERS actuary and are effective on the July 1 following notice of a change in the rate. Total plan contributions are determined through the CalPERS annual a ctuarial valuation process. The total minimum required employer contribution is the sum of: (i) the plan’s employer normal cost rate, which funds pension benefits for current employees for the upcoming Fiscal Year (expressed as a percentage of payroll); plus (ii) the employer unfunded accrued liability contribution amount, which funds pension benefits that were previously earned by current and former employees (billed monthly).

For Fiscal Year 2022-23, required employer normal cost rates as a percentage of payroll were 12.21%,

12.21% and 12.21% for employees hired before December 23, 2011, employees hired between December 23, 2011 and December 31, 2012 and employees hired after December 31, 2012, respectively. For Fiscal Year 2023- 24, required employer n ormal cost rates as a percentage of payroll are 13.01%, 13.01% and 13.01% for employees hired before December 23, 2011, employees hired between December 23, 2011 and December 31, 2012 and employees hired after December 31, 2012, respectively.

For Fiscal Year 2022-23, the total required employer payment of the unfunded accrued liability for the City’s Miscellaneous plan was $7,289,937. For Fiscal Year 2023 -24, the total required employer payment of the unfunded accrued liability for the City’s Miscellaneous plan is $6,961,358; the City paid this amount in a lump sum on July 20, 2023.

Beginning in Fiscal Year 2017-18, CalPERS began collecting employer contributions toward a pension plan’s unfunded liability as dollar amounts instead of the prior method of a percentage of payroll. According to CalPERS, this change was intended to address potential funding issues that could arise from a declining payroll or a reduction in the number of active members in the plan. Funding the unfunded liability as a percentage of payroll could lead to underfunding of pension plans. Due to stakeholder feedback regarding internal needs for total contributions expressed as an estimated percentage of payroll, the CalPERS reports include such results in the contribution projection f or informational purposes only. Contributions toward a pension plan’s unfunded liability will continue to be collected as set dollar amounts.

The City’s required contributions to CalPERS fluctuate each year and, as noted, include a normal cost component and a component equal to an amortized amount of the unfunded liability. Many assumptions are used to estimate the ultimate liability of pensions and the contributions that will be required to meet those obligations. The CalPERS Board of Administration ha s adjusted and may in the future further adjust certain assumptions used in the CalPERS actuarial valuations, which adjustments may increase the City’s required contributions to CalPERS in future years. Accordingly, the City cannot provide any assurances that the City’s required contributions to CalPERS in future years will not significantly increase (or otherwise vary) from any past or current projected levels of contributions. CalPERS earnings reports for Fiscal Years 20 12-13 through 2022-23 report investment gains (and losses) of approximately 13.2%, 18.4%, 2.4%, 0.6%, 11.2%, 8.6%, 6.7%,

4.7%, 21.3%, (6.1%), and 6.1%, respectively. Future earnings performance may increase or decrease future contribution rates for plan participants, including the City CalPERS’ discount rate was lowered from 7.00% to 6.80% in fall 2021. Lowering the discount rate means that employers that contract with CalPERS to administer their pension plans will see increases in their normal costs and unfunded actuarial liabilities. Active members hired after January 1, 2013 who were not previously CalPERS members will also see their contribution rates rise under AB 340.

The tables below are derived from the Actuarial Valuation as of June 30, 2022 for the Miscellaneous Plan of the Cit y of Moreno Valley (the “ 2023 Report ”) and show the required and projected employer contributions (before cost sharing) for the next six fiscal years, as well as the historical funded status of the City’s Miscellaneous pension plan. Projected results reflect the adopted changes to the discount rate described in the 2023 Report. Such projections also assume that all actuarial assumptions will be realized and that no further changes to assumptions, contributions, benefits, or funding will occur during the p rojection period. The projected normal cost percentages in the projections below does not reflect that the normal cost will decline over the time as new employees are hired into AB 340 or other lower cost benefit tiers.

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The foregoing projections assumed the investment return for fiscal year 2022 -23 would be 6.8 %. As described above, CalPERS announced a investment returns of 6.1% for fiscal year 2022 -23. As a result, the actual contribution requirements for the fiscal years 2024 -25 and the following years shown below can be expected to differ from such projections. No assurance can be provided that the City’s CalPERS plan expenses will not increase significantly in the future.

Required
Contribution
Projected Future Employer Contributions
(Assumes 6.80% Return for Fiscal Year 2022-23 and Beyond) Fiscal Year 2024-25 2025-26 2026-27 2027-28 2028-29 2029-30 Normal Cost % 12.11% 11.8% 11.4% 11.1% 10.8% 10.5%
UAL Payment $7,988,536 $8,522,000 $8,104,000 $8,521,000 $9,398,000 $9,605,000 Total as a % of Payroll* 43.90% 44.8% 41.9% 42.3% 44.3% 43.8% Projected Payroll $25,126,798 $25,830,348 $26,553,599 $27,297,099 $28,061,418 $28,847,138

* Illustrative only and based on the projected payroll shown.

Source: CalPERS’ 2023 Report.

The tables below are derived from the 2023 Report and show the funded status of the City’s Miscellaneous pension plan as of the valuation dates shown.

Valuation
Date
Accrued
Liability
Market Value of
Assets
Unfunded
Liability Funded Ratio
Annual
Covered
Payroll
6/30/2018 $215,472,491 $139,902,350 $75,570,141 64.9% $21,200,824 6/30/2019 226,950,772 148,460,981 78,489,791 65.4 22,554,727 6/30/2020 238,198,412 155,038,558 83,159,854 65.1 24,020,218 6/30/2021 251,638,371 189,639,861 61,998,510 75.4 21,136,753 6/30/2022 264,504,100 174,120,660 90,383,440 65.8 23,129,051

Source: CalPERS’ 2023 Report.

Portions of the above disclosures are primarily derived from information that has been produced by CalPERS, its independent accountants and its actuaries. The City has not independently verified such information and neither makes any representations nor expresses any opinion as to the ac curacy of the information that has been provided by CalPERS.

The comprehensive annual financial reports of CalPERS are available on CalPERS’ Internet website at www.calpers.ca.gov. The CalPERS website also contains CalPERS’ most recent actuarial valuation reports and other information that concerns benefits and other matters. The textual reference to such Internet website is provided for convenience only. None of the information on such Internet website is incorporated by reference herein. The City cann ot guarantee the accuracy of such information. Actuarial assessments are “forward-looking” statements that reflect the judgment of the fiduciaries of the pension plans, and are based upon a variety of assumptions, one or more of which may not materialize or be changed in the future.

The City’s Miscellaneous plan had a total net pension liability of approximately $84,102,896 for Fiscal Year 2021-22 (as of the measurement date of June 30, 2022). The net pension liability is the difference between the total pension liability and the fair market value of pension assets. The City’s total pension assets include funds that are held by CalPERS, and its net pension asset or liability is based on such amounts.

For Fiscal Year 2022-23, the City incurred Miscellaneous plan pension expenses of $10,099,679.

A summary of principal assumptions and methods used to determine the total pension liability for Fiscal Year 2021-22 is shown below.

40 4872-9371-4101v4/022432-0049

CITY OF MORENO VALLEY

ACTUARIAL ASSUMPTIONS FOR CALPERS PENSION PLAN
Actuarial Cost Method Entry Age Normal in accordance with the requirements of GASB 68 Asset Valuation Method Market Value of Assets
Actuarial Assumptions:

Discount Rate 6.90%
Inflation 2.50%
Payroll Growth 2.75%
Salary Increases Varies by entry age and service, depending on age, service and type of employment
Investment Rate of Return 7.00% net of pension plan investment and administrative expenses; includes projected inflation
Mortality Rate Table(1) Derived using CalPERS’ membership data for all funds

(1) The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2021 valuation were based on the results of a 2017 CalPERS actuarial experience study for the period 1997 to 2015.

Source: City.

Changes in the net pension liability for the City’s pension plans in the most recent Fiscal Year for which information is available were as follows:

CITY OF MORENO VALLEY

CHANGES IN CALPERS PENSION PLANS NET PENSION LIABILITY
Increase / (Decrease)

Total
Pension Liability
Plan Fiduciary
Net Position
Net Pension
Liability / (Asset)
Balance at June 30, 2021 (Measurement
Date) $ 244,548,531 $ 189,651,335 $ 54,897,196
Balance at June 30, 2022 (Measurement
Date) 258,227,772 174,124,876 84,102,896
Net Changes for period from July 1, 2021
through June 30, 2022 $ 13,679,241 $ (15,526,459) $ 29,205,700

Source: City.

The table below presents the net pension liability of the City’s pension plans, calculated using the discount rate applicable to Fiscal Year 2022-23 (6.90%), as well as what the net pension liability would be if it were calculated using a discount rate tha t is 1 percentage point lower ( 5.90%) or 1 percentage point higher (7.90%) than the Fiscal Year 2022-23 rate:

CITY OF MORENO VALLEY

SENSITIVITY OF THE CALPERS PENSION PLANS NET PENSION LIABILITY

TO CHANGES IN THE DISCOUNT RATE

Discount Rate – 1%
(5.90%)
Applicable Discount
Rate (6.90%)
Discount Rate + 1%
(7.90%)
Plan’s Net Pension
Liability/(Asset)
$118,695,641 $84,102,896 $55,515,876

Source: City.

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For additional information relating to the City’s plan, see Note 8 to the City’s audited financial statements set forth in Appendix C.

Other Post-Employment Benefits
The City provides post-employment health care benefits to qualified retired employees. Employees are eligible for such benefits if they were hired prior to September 30, 2011 and retire directly from the City at or after age 50 with at least five years of CalPERS membership. Employees hired after September 30, 2011 are not eligible for such benefits; the City no longer offers such benefits to employees hired after September 30, 2011. The City administers a single -employer defined benefit post -employment healthcare plan (the “ OPEB Plan”). Benefits vary by hire date and employment status (Management or Non-Management), and continue to surviving spouses. A menu of benefit provisions, as well as other requirements, are established by state statutes within the Public Employees’ Retirement Law. The City selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through local ordinance.

At June 30, 2022 (the census date), the following employees were covered by the benefit terms:

Category Count
Active employees 316
Inactive employees or beneficiaries currently receiving benefit payments 177 Inactive employees entitled to but not yet receiving benefit payment 80

Source: City.

The City funds benefits under the OPEB Plan based on an Actuarially Determined Contribution (the “ADC”). For the year ended June 30, 2023, the City’s ADC contribution rate was 5.89% of covered employee payroll. Employees do not contribute to the plan, but instead pay the difference between the benefit that they receive and the monthly premium for that benefit.

GASB has issued two pronouncements, known as GASB 74 and GASB 75, related to funding and accounting for the OPEB Plan. Under these pronouncements, OPEB Plan benefits are intended to be accounted for in a manner that is similar to the accounting treatment of pensions under GASB 68 . See the caption “ — Retirement Contributions.” Under GASB 74 and 75, unfunded OPEB Plan benefits will be recognized on the City’s financial statements and the City is required to use the Entry Age actuarial cost method when calculating OPEB Plan liabilities. In addition, a 20 -year municipal bond rate is used to discount unfunded OPEB Plan payments and the long-term rate of return on plan investments is used to discount benefits that are projected to be paid by plan assets.

The City retained GovInvest (the “ Actuarial Consultant”) to calculate the City’s post -employment benefits funding status. In a report for the Fiscal Year ended June 30, 2020 (the “ Report”), the Actuarial Consultant concluded that, as of June 30, 2022, the City’s unfunded actuarial accrued liability for postemployment benefits was $5,733,797. The Actuarial Consultant also concluded that the City’s ADC is $1,090,184.

The City is not required to fund the amortization of the unfunded actuarial liability. Prior to June 2009, the City’s policy was to pay for OPEB Plan costs as they are incurred. In June 2009, the City Council approved the establishment of an irrevocable trust to fund OPEB Plan benefits (the “ OPEB Trust”) with the California Employers’ Retiree Benefit Trust, an agent multiple -employer plan that is administered by CalPERS, and approved and authorized an agreement with CalPERS to administer the OPEB Trust on its behalf. As of June 30, 2023, the City held $13,897,244 in the OPEB Trust. Based on the most recent actuarial valuation, the actuarial unfunded liability o f the OPEB Plan was estimated to be approximately $5,733,797 using a methodology that is compliant with GASB 75.

42 4872-9371-4101v4/022432-0049
Changes in the total liability for the City’s OPEB Plan for Fiscal Year 2022-23 were as follows.

CITY OF MORENO VALLEY

CHANGES IN OPEB PLAN LIABILITY
Increase / (Decrease)

Total
OPEB Plan Liability
Plan Fiduciary
Net Position
Net OPEB Plan
Liability / (Asset)
Balance at June 30, 2022 $ 20,689,327 $ 15,414,512 $ 5,274,815 Net Changes for period from July
1, 2022 through June 30, 2023 (1,058,286) (1,517,268) 458,982 Balance at June 30, 2023 $ 19,631,041 $ 13,897,244 $ 5,733,797

Source: City.

The following table presents the net liability of the OPEB Plan, calculated using the discount rate applicable to Fiscal Year 2022-23 (6.00%), as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower ( 5.00%) or 1 percentage point higher ( 7.00%) than the current rate:

CITY OF MORENO VALLEY

SENSITIVITY OF THE OPEB PLAN TOTAL LIABILITY

TO CHANGES IN THE DISCOUNT RATE

Discount Rate – 1%
(5.00%)
Current Discount
Rate (6.00%)
Discount Rate + 1%
(7.00%)
Plan’s Total Liability/(Asset) $7,940,288 $5,733,797 $3,868,565

Source: City.

Future changes in funding policies and assumptions, including those related to assumed rates of investment return and healthcare cost inflation, could trigger increases in the City’s annual required OPEB Plan contributions, and such increases could be mate rial to the finances of the City. No assurance can be provided that such expenses will not increase significantly in the future. The City does not expect that any increased funding of OPEB Plan benefits will have a material adverse effect on the ability of the City to pay the Series 2024 Bonds.

For additional information relating to the City’s OPEB Plan, see Note 9 to the City’s audited financial statements set forth in Appendix C.

City Investment Policy
The City invests its funds in accordance with the C ity’s investment policy (the “Investment Policy”), which was most recently reviewed and revised by the City Council on May 21, 2024. In accordance with Section 53600 et seq. of the California Government Code, idle cash management and investment transactions are the responsibility of the City Treasurer. The City’s Investment Policy sets forth the policies and procedures applicable to the investment of City funds and designates eligible investments. The Investment Policy sets forth a stated objec tive, among others, of insuring the safety of invested funds by limiting credit and market risks.

Eligible investments are generally limited to the Local Agency Investment Fund which is operated by the California State Treasurer, the County i nvestment pool for local agencies, local agency bonds, U.S. Treasury Bills, Notes and Bonds, obligations issued by United States Government agencies, FDIC-insured or negotiable certificates of deposit, repurchase agreements, banker’s acceptances and commercial paper ra ted A1/P1, as

43 4872-9371-4101v4/022432-0049
applicable, or better, and money market funds rated in the highest category by Moody’s or S&P or administered by a domestic bank with long-term debt rated in one of the top two categories of Moody’s and S&P. Funds are invested in the following order of priority:
 Safety of Principal;
 Liquidity; and
 Return on Investment.

The City Treasurer is required to provide a quarterly report to the City Manager and the City Council showing the type of investment, date of maturity, amount invested, current market value, rate of interest, and other such information as may be required by the City Council.

A summary of the City’s investments as of December 31, 2023 is set forth in the below table.

CITY OF MORENO VALLEY

SUMMARY OF INVESTMENTS
Investment Type Total
Bank Accounts $ 6,393,711
Local Agency Investment Fund 96,836,921
Funds with Fiscal Agents 2,738,026
Asset Backed Securities 16,397,205
United States Agency Issues 31,952,259
Collateralized Mortgage Obligations 21,171,276
Medium Term Corporate Notes 55,495,560
Money Market Fund 258,647
Supranationals 17,532,261
United States Treasury Obligations 125,100,285
Totals $373,876,152

(1) Totals may not add due to rounding.

Source: City.

For additional information relating to the City’s investments, see Note 3 to the City’s audited financial statements set forth in Appendix C.

RISK FACTORS
The following factors, along with the other information in this Official Statement, should be considered by potential investors in evaluating the purchase of the Series 2024A Bonds. However, they do not purport to be an exhaustive listing of risks and other considerations which may be relevant to an investment in the Series 2024A Bonds. In addition, the order in which the following factors are presented is not intended to reflect the relative importance of any such risks.

General Considerations – Security for the Series 2024A Bonds The Series 2024A Bonds are special obligations of the Authority, payable solely from Base Rental Payments and the other assets pledged under the Indenture. Neither the faith and credit nor the taxing power of the Authority, the City or the State, or any political subdivision thereof, is pledged to the payment of the Series 2024A Bonds. The Authority has no taxing power.

The obligation of the City to make the Base Rental Payments does not constitute a debt of the City or the State or of any political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which the City or the State is obligated to levy or pledge any form of taxation or for which the City or the State has levied or pledged any form of taxation.

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Although the Lease Agreement doe s not create a pledge, lien or encumbrance upon the funds of the City, the City is obligated under the Lease Agreement to pay the Base Rental Payments and Additional Rental Payments from any source of legally available funds and the City has covenanted in the Lease Agreement that it will take such action as may be necessary to include all Base Rental Payments and Additional Rental Payments due under the Lease Agreement in its annual budgets and to make necessary annual appropriations for all such Rental Payments, subject to abatement. The City is currently liable and may become liable on other obligations payable from general revenues. See the caption “CITY FINANCIAL INFORMATION—Other Indebtedness.” The City has the capacity to enter into other obligations which may constitute additional charges against its revenues. To the extent that additional obligations are incurred by the City, the funds available to make Base Rental Payments may be decreased. In the event the City’s revenue sources are less than it s total obligations, the City could choose to fund other activities before making Base Rental Payments and other payments due under the Lease Agreement. The same result could occur if, because of California Constitutional limits on expenditures, the City is not permitted to appropriate and spend all of its available revenues. However, the City’s appropriations have never exceeded the limitation on appropriations under Article XIIIB of the State Constitution. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS—Article XIIIB of the State Constitution.” Abatement
In the event of substantial interference with the City’s right to use and occupy any portion of the Property by reason of damage to, or destruction or condemnation of the Property, or any defects in title to the Property, Base Rental Payments will be subject to abatement. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2024A BONDS—Abatement.” In the event that all or a portion of the Property, if damaged or destroyed by an insured casualty, could not be replaced during the period of time in which proceeds of the City’s rental interruption insurance will be available in lieu of Base Rental Payments, plus the period for which funds are available from the funds and accounts established under the Indenture, or in the event that casualty insurance proceeds are insufficient to provide for complete repair or replacement of such portion of the Property or redemption of the Series 2024A Bonds, there could be insufficient funds to make payments to Owners in full.

It is not always possible to predict the circumstances under which abatement of rental may occur. In addition, there is no statute, case or other law specifying how such an abatement of rental should be measured.

For example, it is not clear whether fair rental value is established as of commencement of the lease or at the time of the abatement. If the latter, it may be that the value of the Property is substantially higher or lower than its value at the time of issuance of the Series 2024A Bonds. Abatement, therefore, could have an uncertain and material adverse effect on the security for and payment of the Series 2024A Bonds.

If damage, destruction, title defect or eminent domain proceedings with respect to the Property results in abatement of the Base Rental Payments related to such Property and if such abated Base Rental Payments, if any, together with moneys from rental interruption or use and occupancy insurance (in the event of any insured loss due to damage or destruction), and eminent domain proceeds, if any, are insufficient to make all payments of principal and interest with respect to the Series 2024A Bonds during the period that the Property is being replaced, repaired or reconstructed, then all or a portion of such payments of principal and interest may not be made. Under the Lease Agreement and the Indenture, no remedy is available to the Series 2024A Bond Owners for nonpayment under such circumstances.

Natural Disasters
The occurrence of any natural disaster in the City, including, without limitation, fire, wildfire, windstorm, drought, earthquake, landslide, mudslide, subsidence or flood, could have an adverse material impact on the economy within the City, its General Fund and the revenues available for the payment of the Base Rental Payments. The City does not maintain earthquake insurance for the Property.

45 4872-9371-4101v4/022432-0049
Earthquakes are considered a threat to the City due to the highly active seismic region and the proximity of fault zones, which could influence the entire southern coastal portion of the State. There are also likely to be unmapped faults in or near the Ci ty. Seismically induced ground shaking has affected the City in the past and is expected to affect the City in the future. However, no major earthquake has caused substantial damage to the City to date.

An earthquake along one of the faults in the vicinity of the City, either known or unknown, could cause a number of casualties and extensive property damage. The effects of such a quake could be aggravated by aftershocks and secondary effects such as fires, landslides, dam failure, liquefaction, floods and other threats to public health, safety and welfare. The potential direct and indirect consequences of a major earthquake could easily exceed the resources of the City and would require a high level of self-help, coordination and cooperation.

In recent years, wildfires have caused extensive damage throughout the State. In some instances, entire neighborhoods have been destroyed. Several of the fires that occurred in recent years damaged or destroyed property in areas that were not previously considered to be at risk from such events. Some commentators believe that climate change will lead to even more frequent and more damaging wildfires in the future. Additionally, wildfires increase the risk of mudslides in areas like those in the City that are sur rounded by hillsides because, when wildfires scorch land, they destroy all vegetation on mountains and hillsides. As a result, when heavy rain falls in the winter, there is nothing to stop the rain from penetrating directly into the soil. In addition, wa xy compounds in plants and soil that are released during fires create a natural barrier in the soil that prevents rain water from seeping deep into the ground. The result is erosion, mudslides and excess water running off the hillsides often causing flash flooding. In general, property damage due to wildfire or mudslides could result in a significant decrease property tax and other revenues received by the City.

The occurrence of natural disasters in the City could result in substantial damage to the City which, in turn, could substantially reduce General Fund revenues and affect the ability of the City to make the Base Rental Payments. Reduced ability to make the Base Rental Payments could affect the payment of the principal of and interest on the Series 2024A Bonds. The City maintains liability insurance and property casualty insurance (for losses other than from seismic events) for the Property. See the caption “THE CITY —Risk Management.” However, there can be no assurance that specific losses will be covered by insurance or, if covered, that claims will be paid in full by the applicable insurers.

Climate Change
The State has historically been susceptible to wildfires and hydrologic variability. As greenhouse gas emissions continue to accumulate in the atmosphere as a result of economic activity, climate change is expected to intensify, increasing the frequency, severity and timing of extreme weather events such as coastal storm surges, drought, wildfires, floods and heat waves, and raising sea level s. The future fiscal impact of climate change on the City is difficult to predict, but it could be significant and it could have a material adverse effect on the General Fund by requiring greater expenditures to counteract the effects of climate change or by changing the operations and activities of City residents and business establishments. On June 15, 2021, the City adopted a Climate Action Plan (the “CAP”) as part of the City’s comprehensive General Plan update, which is intended to guide the City’s planning and development through 2040.

Hazardous Substances
An additional environmental condition that may result in the reduction in the assessed value of property, and therefore property tax revenue available to make Base Rental Payments, would be the dis covery of a hazardous substance that would limit the beneficial use of taxable property within the City. In general, the owners and operators of a property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is the most well-known and widely applicable of these laws, but State laws wi th regard to hazardous substances are

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also stringent and similar in effect. Under many of these laws, the owner or operator may be required to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the property within the City be affected by a hazardous substance, could be to reduce the marketability and value of such property by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller.

The City has not independently verified, but is not aware of, the presence of any hazardous substances on the Property. Hazardous substance liabilities may arise in the future with respect to any of the property in the City resulting from the existence, currently, of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatene d, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Additionally, such liabilities may arise from the method of handling su ch substance.

These possibilities could significantly affect the value of a parcel and could result in substantial delays in completing planned development on parcels that are currently undeveloped.

Cybersecurity
Municipal agencies, like other business entities, face significant risks relating to the use and application of computer software and hardware. Recently, there have been significant cybersecurity incidents affecting municipal agencies, including a freeze affecting computer systems of the City of Atlanta, an attack on the City of Baltimore’s 911 system, an attack on the Colorado Department of Transportation’s computers and an attack that resulted in the temporary closure of the Port of Los Angeles’ largest terminal.

The City employs a multi-layer cyber protection scheme that includes weekly vulnerability scans by the Cybersecurity Infrastructure and Security Agency (part of the United States Department of Homeland Security), next-generation firewalls, anti -virus software, anti -spam/malware softwar e, intrusion detection/prevention, domain name system filtering services by the Multi -State Information Sharing and Analysis Center, duplicate systems in a disaster recovery site and multiple copies of all information that is backed up. The City implements recommended strategies suggested by security vendors and makes internal system changes as needed. To date, the City has not experienced a significant attack on its computer operating systems. However, there is no assurance that a future attack or attem pted attack would not result in disruption of City operations. The City expects that any such disruptions would be temporary in nature. The City also carries cyber insurance. See the caption “THE CITY—Risk Management.”
Substitution, Addition and Removal of Property; Additional Bonds The Authority and the City may amend the Lease Agreement to substitute alternate real property for any portion of or add additional real property to the Property or to release a portion of the Property from the Lease Agreemen t, upon compliance with all of the conditions set forth in the Lease Agreement. After a substitution or release, the portion of the Property for which the substitution or release has been effected will be released from the leasehold encumbrance of the Lea se Agreement. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2024A BONDS―Substitution, Addition and Removal of Property.” Moreover, the Authority may issue Additional Bonds secured by Base Rental Payments which are increased from current levels.

Although the Lease Agreement requires, among other things, that the Property, as constituted after such substitution or release, have an annual fair rental value at least equal to the maximum Base Rental Payments payable by the City in any Rental Period, it does not require that such Property have an annual fair rental value equal to the annual fair rental value of the Property at the time of substitution or release. Thus, a portion of the Property could be replaced with less valuable real property, or could be released altogether. Such a replacement or release could have an adverse impact on the security for the Series 2024A Bonds, particularly if an event requiring abatement of Base Rental Payments were to occur subsequent to such substitution or release. See

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APPENDIX B—“SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS —THE LEASE AGREEMENT—NO CONSEQUENTIAL DAMAGES; USE OF THE PROPERTY; SUBSTITUTION OR RELEASE—Substitution or Release of, or Addition to, the Property.” The Indenture requires, among other things, that upon the issuance of Additional Bonds, the Ground Lease and the Lease Agreement will be amended, to the extent necessary, so as to increase the Base Rental Payments payable by the City thereunder by an aggregate amount equal to the principal of and interest on such Additional Bonds; provided, however, that no such amendment will be made such that the sum of Base Rental Payments, including any increase in the Base Rental Payments as a result of such amendment, plus Additional Rental Payments, in any Rental Period is in excess of the annual fair rental value of the Property after taking into account the use of the proceeds of any Additional Bonds issued in connection therewith.

Limited Recourse on Default; No Acceleration of Base Rental Failure by the City to make Base Rental Payments or other payments required to be made under the Lease Agreement, or failure to observe and perform any other terms, covenants or conditions contained in the Lease Agreement or in the Indenture for a period of 30 days or such additional time as is reasonable required to correct any such default after notice by the Authority to the City, constitute events of default under the Lease Agreement and permit the Trustee or the Authority to pursue any and all remedies available. In the eve nt of a default, notwithstanding anything in the Lease Agreement or in the Indenture to the contrary, there is no right under any circumstances to accelerate the Base Rental Payments or otherwise declare any Base Rental Payments not then in default to be immediately due and payable, nor do the Authority or the Trustee have any right to re- enter or re-let the Property except as described in the Lease Agreement.

The enforcement of any remedies provided in the Lease Agreement and the Indenture could prove both expensive and time consuming. If the City defaults on its obligation to make Base Rental Payments with respect to the Property, the Trustee, as assignee of the Authority, may retain the Lease Agreement and hold the City liable for all Base Rental Payments thereunder on an annual basis and enforce any other terms or provisions of the Lease Agreement to be kept or performed by the City.

Alternatively, the Authority or the Trustee may terminate the Lease Agreement, retake possession of the Property and proce ed against the City to recover damages pursuant to the Lease Agreement. Due to the specialized nature of the Property or any property substituted therefor pursuant to the Lease Agreement and the restrictions on its use, no assurance can be given that the Trustee will be able to re -let the Property so as to provide rental income sufficient to make all payments of principal of, interest and premium, if any, on the Series 2024A Bonds when due, and the Trustee is not empowered to sell the Property for the benefit of the Owners of the Series 2024A Bonds. Any suit for money damages would be subject to limitations on legal remedies against cities in California, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2024A BONDS” and APPENDIX B—“SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS —THE LEASE AGREEMENT—DEFAULTS AND REMEDIES.”
Limitations on Remedies Available; Bankruptcy
The enforceability of the rights and remedies of the Owners and the obligations of the City may become subject to the following: the federal bankruptcy code and applicable bankruptcy, insolvency, reorganizatio n, moratorium, or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or hereafter in effect; usual equitable principles which may limit the specific enforcement under state law of certain remedies; the exercise by the United States of America of the powers delegated to it by the Federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State of California and its government al bodies in the interest of servicing a significant and legitimate public purpose.

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Under Chapter 9 of the United States Bankruptcy Code (Title 11, United States Code) (the “Bankruptcy Code”), which governs bankruptcy proceedings of public entities such as the City, no involuntary bankruptcy petition may be filed against a public entity. However, upon satisfaction of certain prerequisite conditions, a voluntary bankruptcy petition may be filed by the City. The filing of a bankruptcy petition results in a stay against enforcement of remedies under agreements to which the bankrupt entity is a party. A bankruptcy filing by the City could thus limit remedies under the Lease Agreement. A bankruptcy debtor may choose to assume or reject executory contracts and leases, such as the Lease Agreement. In the event of rejection of a lease by debtor lessee, the leased property is returned to the lessor and the lessor has a claim for a limited amount of the resulting damages.

Under the Indenture, the Trustee holds a security interest in the Base Rental Payments for the benefit of the Owners of the Bonds, but such security interest arises only when the Base Rental Payments are actually received by the Trustee following payment by the City. The Property is not subject t o a security interest, mortgage or any other lien in favor of the Trustee for the benefit of Owners. In the event of a bankruptcy filed by the City and the subsequent rejection of the Lease Agreement by the City, the Authority would recover possession of the Property and the Trustee, as assignee of the Authority, would have a claim for damages against the City. The Trustee’s claim would constitute a secured claim only to the extent of Revenues in the possession of the Trustee; the balance of such claim would be unsecured.

Bankruptcy proceedings would subject the Owners of the Series 2024A Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently entail risks of delay, limitation, or modification of their rights with respect to the Series 2024A Bonds. In a bankruptcy case, the amount recovered by Owners of the Series 2024A Bonds could be affected by whether the Lease Agreement is determined to be a “true lease” or a loan or other financing arrangement (a “financing lease”), and the Owners’ recovery could be reduced in either case. If the Lease Agreement is determined by the bankruptcy court to constitute a “true lease” (rather than a financing lease), the City could choose not to perform under the Lease Agreement by rejecting it and the claim of the Owners could be substantially limited pursuant to Section 365 of the Bankruptcy Code to a fraction of the scheduled amount of Base Rental Payments, and that reduced claim amount could be impaired as an unsecured claim under a plan of adjustment. If a bankruptcy court were to treat the Lease Agreement as a financing lease then, under a plan of adjustment, the priority, payment terms, collateral, payment dates, payment sources, covenants and other terms or provisions of the Lease Agreement and the Series 2024A Bonds may be altered. Such a plan could be confirmed even over the objections of the Trustee and the Owners, and without their consent. For example, the amount of the Base Rental Payments from the City might be substantially reduced because of the power of the bankruptcy court under the Bankruptcy Code to adjust secured claims to the value of their collateral, which, as described above, could be limited to the Base Rental Payments held by the Trustee.

In addition there can be a substantial disparity in treatment based on the nature of the Property. Whether the Lease Agreement is characterized by the bankruptcy court as a true lease or a financing lease, either scenario could result in the Owners not receiving the full amount of the principal and interest due on the Series 2024A Bonds.

The opinions of counsel, including Bond Counsel, delivered in connection with the issuance of the Series 2024A Bonds will be so qualified. Bankruptcy proceedings, or the exercising of powers by the federal or state government, if initiated, could subject the Owners to judicial discretion and interpretation of their rights in bankruptcy or otherwise and consequently may entail risks of delay, limitation, or modification of their rights.

Possible Insufficiency of Insurance Proceeds
The Lease Agreement obligates the City to keep in force various forms of insurance, subject to deductibles, for repair or replacement of the Property in the event of damage, destruction or title defects, subject to certain exceptions. The Authority and the City make no representation as to the ability of any insurer to fulfill its obligations under any insurance policy obtained pursuant to the Lease Agreement, and no assurance can be given as to the adequacy of any such insurance to fund necessary repair or replacement or to pay principal of and interest on the Series 2024A Bonds when due. In addition, certain risks, such as earthquakes and floods, are

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not required to be insu red under the Lease Agreement, and therefore, are not carried by t he City. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2024A BONDS—Insurance.” Loss of Tax Exemption
As discussed under the heading “TAX MATTERS,” the interest on the Series 2024A Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date of delivery of the Series 2024A Bonds, as a result of acts or omissions of the Authority or the City in violation of their covenants in the Indenture and the Lease Agreement. Should such an event of taxability occur, the Series 2024A Bonds would not be subject to a special redemption and would remain Outstanding until maturity or until redeemed under the redemption provisions contained in the Indenture.

No Liability of Authority to the Owners
Except as expressly provided in the Indenture, the Authority will not have any obligation or liability to the Owners of the Series 2024A Bonds with respect to the payment when due of the Base Rental Payments by the City, or with respect to the performance by the City of other agreements and covenants required to be performed by it contained in the Lease Agreement or the Indenture, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained in the Indenture.

Dependence on State for Certain Revenues
On January 10, 2024, the Governor released his proposed State budget for Fiscal Year 2024-25 (the “Proposed State Budget”). The following information is taken from the Legislative Analyst Office’s (“LAO”) overview of the Proposed State Budget as of January 12, 2024.

The Proposed State Budget estimates a budget deficit for Fiscal Year 2024-25 of approximately $38 billion. The Proposed State Budget includes spending-related, revenue-related, cost shifting measures, reversions to the general fund and a draw from the Budget Stabilization Account/Rainy Day Fund (the “BSA”) to solve for the Governor’s estimated $38 billion budget deficit for Fiscal Year 2024-25.

Spending-related measures include spending reductions of approximately $8 billion, delays of expenditures to future fiscal years of approximately $8 billion, shifting of costs from the general fund to oth er funds totaling approximately $6 billion and reversions from unspent programmatic funds to the general fund of approximately $3 billion. The Proposed State Budget includes a draw from the BSA and the State’s Safety Net Reserve Fund of approximately $13 billion.

For Fiscal Year 2024-25, the Proposed State Budget projects total general fund revenues and transfers of $214.7 billion (excluding prior year balances) and authorizes expenditures of $ 208.7 billion. The LAO’s overview of the Proposed State Budge t estimates that at the end of Fiscal Year 2024-25, the BSA will have a balance of $11.1 billion, the Special Fund for Economic Uncertainties will have a balance of $ 3.4 billion, the Safety Net Reserve Fund will have a zero balance, and the Public School System Stabilization Account will have a balance of $3.9 billion.

The Proposed State Budget updated projections for Fiscal Year 2023-24 State general fund revenues and expenses. For Fiscal Year 2023-24, total State general fund revenues and transfers are estimated in the Proposed State Budget to be $196.9 billion and total general fund expenditures are estimated to be $230.9 billion.

The LAO notes that its estimate of the budget deficit for Fiscal Year 20 24-25 is approximately $58 billion (which differs from the Governor’s estimate in the Proposed State Budget of $38 billion). This difference is primarily due to the Proposed State Budget excluding expenditure changes which occur automatically under current law and policy (i.e. without additional action thr ough the budgetary process). According to the LAO,

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the largest of these automatic changes is approximately $15 billion in reduced general fund expenditures for K- 12 and community college districts, which are reduced due to the projected decrease in general fund revenues.

The Proposed State Budget shows projected deficits of $37 billion in Fiscal Year 2025-26, $30 billion in fiscal year 2026-27 and $28 billion in fiscal year 2027-28. The LAO notes that such deficits (which are based on current projectio ns and subject to change) will likely require ongoing spending reductions and revenue increases.

The City cannot predict the extent of any budgetary problems the State will encounter in future fiscal years, and it is not clear what measures would be taken by the State to balance its budget, as required by law. In addition, the City cannot predict the impact that State budgets will have on the City’s finances and operations, or what actions will be taken in the future by the State Legislature and the Governor to deal with changing State revenues and expenditures. Current and future State budgets will be affected by international, national and State economic conditions and other factors over which the City has no control.

While the City is not substant ially reliant on the State’s finances, a number of the City’s revenues are collected and dispersed by the State (such as sales tax and motor-vehicle license fees) or allocated in accordance with State law (most importantly, property taxes). Therefore, State budget decisions can have an impact on City finances. In the event of a material economic downturn in the State, there can be no assurance that any resulting revenue shortfalls to the State will not reduce revenues to local governments (including the City) or shift financial responsibility for programs to local governments as part of the State’s efforts to address any such related State financial difficulties.

See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS—Proposition 1A” and “—Proposition 22” below.

Risks Associated with Bond Insurance
[In the event that the Authority defaults in the payment of principal of or interest on the Series 2024A Bonds as a result of the failure of the City to pay the Base Rental Payments when due, the Owners of the Series 2024A Bonds will have a claim under the Policy for such payments. See the caption “BOND INSURANCE.” In the event that the Insurer becomes obligated to make payments with respect to the Series 2024A Bonds, no assurance can be given that such event will not adversely affect the market for the Series 2024A Bonds. In the event that the Insurer is unable to make payment of principal of and interest on the Series 2024A Bonds when due under the Policy, the Series 2024A Bonds will be payable solely from Base Rental Payments and amounts held in certain funds and accounts established under the Indenture, as described under the caption “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2024A BONDS.”
The Insurer is expected to insure a majority of the Series 2024A Bonds and will therefore have the ability to direct the actions of the Trustee give consents and waivers and take other actions without regard to the views of the owners of the Series 2024A Bonds. As a result, Owners of the Series 2024A Bonds may be limited in the rights and remedies they are able to exercise in the event of a default by the Authority under the Indenture.

The Insurer may have different business and other interests than the Owners of the Series 2024A Bonds.

The long-term rating on the Series 2024A Bonds is dependent in part on the financial strength of the Insurer and its claims-paying ability. The Insurer’s financial strength and claims -paying ability are predicated upon a number of factors which could change over time. If the long-term ratings of the Insurer are lowered, such event could adversely affect the market for the Series 2024A Bonds. See the caption “RATINGS.” None of the City, the Authority or the Underwriter have made an independent investigation of the claims-paying ability of the Insurer and no assurance or representation regarding the financial strength or projected financial strength of the Insurer is being made by the City, the Authority or the Underwriter in this Official Statement. Therefore, when maki ng an investment decision with respect to the Series 2024A Bonds,

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potential investors should carefully consider the ability of the City to pay Base Rental Payments, which secure the Series 2024A Bonds, assuming that the Policy is not available for that purpose, and the claims-paying ability of the Insurer through final maturity of the Series 2024A Bonds.

So long as the Policy remains in effect and the Insurer is not in default of its obligations thereunder, the Insurer has certain notice, consent and other rights under the Indenture and will have the right to control all remedies for default under the Indenture. The Insurer is not required to obtain the consent of the Owners with respect to the exercise of remedies.]

CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS Principal of and interest on the Series 2024A Bonds are payable from Base Rental Payments made from the City’s General Fund. See the caption “ SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2024A BONDS.” Articles XIIIA, XIIIB, XIIIC and XIIID of the State Constitution, Propositions 62, 111, 218, 1A and 22, and certain other provisions of law discussed below are included in this Official Statement to describe the potential effect of these Constitutional and statutory measures on the ability of the City to levy taxes and spend tax proceeds for operating and other purposes.

Article XIIIA of the State Constitution
On June 6, 1978, State voters approved Proposition 13, which added Article XIIIA to the State Constitution. Article XIIIA, as amended, limits the amount of any ad valorem tax on real property to 1% of the full cash value thereof, except that additional ad valorem taxes may be levied to pay debt service: (i) on indebtedness approved by the voters prior to December 1, 1978; (ii) on bonded indebtedness approved by a two-thirds vote on or after December 1, 1978, for the acquisition or improvement of real property; or (iii) bonded indebtedness incurred by a school district, community college district or county office of education for the construction, reconstruction, rehabilitation or replacement of school facilities, including the furnishing and equipping of school facilities or the acquisition or lease of real property for school facilities, approved by 55% of the voters voting on the proposition. Article XIIIA defines full cash value to mean “the county assessor’s valuation of real property as shown on the 1975-76 tax bill under “full cash value,” or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” This full cash value may be increased at a rate not to exceed 2% per year to account for inflation.

Article XIIIA has subsequently been amended to permit reduction of the “full cash value” base in the event of declining property values caused by damage, destruction or other factors, including a general economic downturn, to provide that there would be no increase in the “full cash value” base in the event of reconstruction of property damaged or destroyed in a disaster, and in other minor or technical ways.

Legislation Implementing Article XIIIA
Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA.

Under current law, local agencies are no longer permitted to levy directly any property tax (except to pay voter- approved indebtedness). The 1% property tax is automatically levied by counties and distributed according to a formula among taxing agencies.

Increases in assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the 2% annual adjustment are allocated among the various jurisdictions in the “taxing area” based upon their respective “situs.” Any such allocation made to a local agency continues as part of its allocation in future years.

All taxable property is shown at full cash value on the tax rolls. Consequently, the tax rate is expressed as $1 per $100 of taxable value. All taxable property value included in this Official Statement is shown at 100 percent of taxable value (unless noted differently) and all tax rates reflect the $1 per $100 of taxable value.

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Article XIIIB of the State Constitution
In addition to the limits that Article XIIIA imposes on property taxes that may be collected by local governments, certain other revenues of the State and most local governments are subject to an annual “appropriations limit” imposed by Article XIIIB which effectively limits the amount of such revenues that such entities are permitted to spend. Article XIIIB, approved by the voters in June 1979, was modified substantially by Proposition 111 in 1990. The appropriations limit of each government entity applies to “proceeds of taxes,” which consist of tax revenues and the investment proceeds thereof, State subventions and certain other funds, including proceeds from regulatory licenses, user charges or other fees to the exten t that such proceeds exceed “the cost reasonably borne by such entity in providing the regulation, product or service.” “Proceeds of taxes” excludes tax refunds and some benefit payments such as unemployment insurance. No limit is imposed on the appropriation of funds which are not “proceeds of taxes,” such as reasonable user charges or fees, and certain other non-tax funds. Article XIIIB also does not limit appropriation of local revenues to pay debt service on bonds existing or authorized as of October 1, 1979, or subsequently authorized by the voters, appropriations required to comply with mandates of courts or the federal government, appropriations for qualified capital outlay projects, and appropriation by the State of revenues derived from any incre ase in gasoline taxes and motor vehicle weight fees above January 1, 1990 levels. The appropriations limit may also be exceeded in case of emergency; however, the appropriations limit for the next three years following such emergency appropriation must be reduced to the extent by which it was exceeded, unless the emergency arises from civil disturbance or natural disaster declared by the Governor, and the expenditure is approved by two-thirds of the legislative body of the local government.

The State and e ach local government entity has its own appropriations limit. Each year, the limit is adjusted to allow for changes, if any, in the cost of living, the population of the jurisdiction, and any transfer to or from another government entity of financial resp onsibility for providing services. Proposition 111 requires that each local government’s actual appropriations be tested against its limit every two years.

If the aggregate “proceeds of taxes” for the preceding two-year period exceeds the aggregate limit, the excess must be returned to the agency’s taxpayers through tax rate or fee reductions over the following two years.

The City’s appropriations have never exceeded the limitation on appropriations under Article XIIIB.

Articles XIIIC and XIIID of the State Constitution
On November 5, 1996, State voters approved Proposition 218, known as the “Right to Vote on Taxes Act.” Proposition 218 adds Articles XIIIC and XIIID to the State Constitution and contains a number of interrelated provisions affecting the ab ility of the City to levy and collect both existing and future taxes, assessments and property-related fees and charges. The interpretation and application of Proposition 218 will ultimately be determined by the courts with respect to a number of the matt ers discussed below, and it is not possible at this time to predict with certainty the outcome of such determination.

Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general government al purposes of the City (such as Measure W) require a majority vote, and taxes for specific purposes, even if deposited in the City’s General Fund, require a two -thirds vote. The voter approval requirements of Proposition 218 reduce the flexibility of the City to raise revenues for the General Fund, and no assurance can be given that the City will be able to impose, extend or increase such taxes in the future to meet increased expenditure needs.

Article XIIID also adds several provisions making it generally more difficult for local agencies to levy and maintain property -related fees, charges, and assessments for municipal services and programs, such as hearings and stricter and more individualized benefit requirements and findings. These provisions include , among other things: (i) a prohibition against assessments which exceed the reasonable cost of the proportional

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special benefit conferred on a parcel; (ii) a requirement that assessments must confer a “special benefit,” as defined in Article XIIID, over a nd above any general benefits conferred; (iii) a majority protest procedure for assessments which involves the mailing of notice and a ballot to the record owner of each affected parcel, a public hearing and the tabulation of ballots weighted according to the proportional financial obligation of the affected party; and (iv) a prohibition against fees and charges which are used for general governmental services, including police, fire or library services, where the service is available to the public at large in substantially the same manner as it is to property owners. If the City is unable to continue to collect revenues of this nature, the services and programs funded with these revenues would have to be curtailed and/or the City’s General Fund might have to be used to support them. The City is unable to predict whether or not in the future it will be able to continue all existing services and programs funded by fees, charges and assessments in light of Proposition 218 or, if these services and programs ar e continued, which amounts (if any) would be used from the City’s General Fund to continue to support such activities.

Article XIIIC also removes limitations on the initiative power in matters of reducing or repealing local taxes, assessments, fees or charges. This extension of the initiative power is not limited to taxes imposed on or after November 6, 1996, the effective date of Proposition 218, and could result in retroactive repeal or reduction in any existing taxes, assessments, fees and charges, subj ect to overriding federal constitutional principles relating to the impairments of contracts. Legislation implementing Proposition 218 provides that the initiative power provided for in Proposition 218 “shall not be construed to mean that any owner or beneficial owner of a municipal security, purchased before or after (the effective date of Proposition 218) assumes the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of contractual rights” protected by the United States Constitution. However, no assurance can be given that the voters of the City will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges currently comprising a substantial part of the City’s General Fund.

Although a portion of the City’s General Fund revenues are derived from taxes purported to be governed by Proposition 218, all of such taxes were imposed in accordance with the requirements of Proposition 218. No assurance can be given that the voters of the City will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges which support the City’s General Fund.

Proposition 62
Proposition 62 was adopted by the voters at the November 4, 1986, general election and: (a) requires that any new or higher taxes for general governmental purposes imposed by local governmental entities such as the City be approved by a two-thirds vote of the governmental entity’s legislative body and by a majority vote of the voters of the governmental entity voting in an election on the tax; (b) requires that any special tax (defined as taxes levied for other than general governmental purposes) imposed by a local governmental entity be approved by a two-thirds vote of the voters of the governmental entity voting in an election on the tax; (c) restricts the use of revenues from a special tax to the purposes or for the service for which the special tax was imposed; (d) prohibits the imposition of ad valorem taxes on real property by local governmental entities except as permitted by Article XIIIA; (e) prohibits the imposition of transaction taxes and sales taxes on the sale of real property by local governmental entities; and (f) requires that any tax imposed by a local governmental entity on or after July 1, 1985, be ratified by a majority vote of the voters voting in an election on the tax within two years of the adoption of the initiative or be terminated by November 15, 1988.

On September 28, 1995, the California Supreme Court, in the case of Santa Clara County Local Transportation Authority v. Guardino, upheld the constitutionality of Proposition 62. In this case, the court held that a countywide sales ta x of one -half of one percent was a special tax that, under Section 53722 of the Government Code, required a two-thirds voter approval. Because the tax received an affirmative vote of only

54.1%, this special tax was found to be invalid. The decision did not address the question of whether or not it should be applied retroactively.

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Following the California Supreme Court’s decision upholding Proposition 62, several actions were filed challenging taxes imposed by public agencies since the adoption of Proposi tion 62, which was passed in November 1986. On June 4, 2001, the California Supreme Court released its decision in one of these cases, Howard Jarvis Taxpayers Association v. City of La Habra, et al. In this case, the court held that a public agency’s continued imposition and collection of a tax is an ongoing violation, upon which the statute of limitations period begins anew with each collection. The court also held that, unless another statute or constitutional rule provided differently, the statute of limitations for challenges to taxes subject to Proposition 62 is three years. Accordingly, a challenge to a tax subject to Proposition 62 may only be made for those taxes received within three years of the date the action is brought.

The City has not expe rienced any substantive adverse financial impact as a result of the passage of Proposition 62.

Proposition 1A
Proposition 1A was approved by the voters at the November 2, 2004 election. Proposition 1A amended the State Constitution to, among other things, reduce the Legislature’s authority over local government revenue sources by placing restrictions on the State’s access to local governments’ property, sales, and vehicle license fee revenues as of November 3, 2004. Beginning with Fiscal Year 2008 -09, the State may borrow up to eight percent of local property tax revenues, but only if the Governor proclaims such action is necessary due to a severe State fiscal hardship , and two–thirds of both houses of the Legislature approves the borrowing. The amount borrowed is required to be paid back within three years. The State also will not be able to borrow from local property tax revenues for more than two fiscal years within a period of 10 fiscal years. In addition, the State cannot reduce the local sales tax rate or restrict the authority of local governments to impose or change the distribution of the statewide local sales tax.

Many of the provisions of Proposition 1A have been superseded by Proposition 22 enacted in November 2010 and described below.

Proposition 22
On November 2, 2010, the voters of the State approved Proposition 22, known as “The Local Taxpayer, Public Safety, and Transportation Protection Act” (“ Proposition 22”). Proposition 22, among other things, broadens the restrictions established by Proposition 1A. While Proposition 1A permits the State to appropriate or borrow local property tax revenues on a temporary basis during times of severe financial hardship, Proposition 22 amends Article XIII of the State Constitution to prohibit the State from appropriating or borrowing local property tax revenues under any circumstances. The State can no longer borrow local property tax revenues on a temporary basis even during times of severe financial hardship. Proposition 22 also prohibits the State f rom appropriating or borrowing proceeds derived from any tax levied by a local government solely for the local government’s purposes. Furthermore, Proposition 22 restricts the State’s ability to redirect redevelopment agency property tax revenues to schoo l districts and other local governments and limits uses of certain other funds although this provision no longer has any meaningful impact given the statewide dissolution of redevelopment agencies. Proposition 22 is intended to stabilize local government revenue sources by restricting the State government’s control over local revenues. The City cannot predict whether Proposition 22 will have a beneficial effect on the City’s financial condition.

Proposition 26
On November 2, 2010, State voters also approved Proposition 26. Proposition 26 amends Article XIIIC of the State Constitution to expand the definition of “tax” to include “any levy, charge, or exaction of any kind imposed by a local government” except the following: (a) a charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege; (b) a charge imposed

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for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product; (c) a charge imposed for the reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof; (d) a charge imp osed for entrance to or use of local government property, or the purchase, rental or lease of local government property; (e) a fine, penalty or other monetary charge imposed by the judicial branch of government or a local government as a result of a violat ion of law; (f) a charge imposed as a condition of property development; and (g) assessments and property -related fees imposed in accordance with the provisions of Article XIIID. Proposition 26 provides that the local government bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payo r bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity. The City does not believe that Proposition 26 will adversely affect its General Fund revenues.

Possible Future Initiatives
General. Articles XIIIA, XIIIB, XIIIC and XIIID and Propositions 218, 111, 62, 1A, 22 and 26 were each adopted as measures that qualified for the ballot pursuant to the State’s initiative process. From time to time other initiative measures could be adopted, furth er affecting revenues of the City or the City’s ability to expend revenues. The nature and impact of these measures cannot be anticipated by the City.

Initiative Measure Qualified for November 2024 Ballot – Taxpayer Protection and Government Accountability Act. A ballot initiative known as the “Taxpayer Protection and Government Accountability Act” (“Initiative 1935”) received the required number of signatures to appear on the November 5, 2024 Statewide ballot. If approved by a majority of voters casting a ballot at the November 5, 2024 Statewide election, Initiative 1935 would make numerous significant changes to Articles XIII, XIIIA, XIIIC and XIIID of the California Constitution to further limit the authority of local governments, and electors via the initiative process, to adopt and impose taxes and fees. The full text of Initiative 1935 may be viewed at the website of the California Attorney General.

Among other things, Initiative 1935 would amend the definition “tax” in Article XIIIC to include “every levy, charge, or exaction of any kind imposed by a local law that is not an exempt charge.” Initiative 1935 defines “exempt charge” to mean a “reasonable charge for a specific government service or product provided directly to the payor that is not pro vided to those not charged, and which does not exceed the actual costs [as opposed to the reasonable costs] of providing the service or product to the payor.” “Exempt charges” also encompass existing exceptions from the definition of “tax” added to Article XIIIC by Proposition 26, including property-related fees imposed in accordance with Article XIIID (see “ —Articles XIIIC and XIIID of the California Constitution – Proposition 218,” above). “Actual costs” is defined as “the minimum amount necessary to reimburse the government for the cost of providing the service or product … less all other sources of revenue including, but not limited to taxes, other exempt charges, grants, and state or federal funds received to provide such service or product.” Initiat ive 1935 further provides that the local government adopting an exempt charge would bear the burden of proving by clear and convincing evidence (as opposed to a preponderance of the evidence) that: (a) a levy, charge or exaction is an exempt charge and not a tax; and (b) the amount of the exempt charge is reasonable and that the amount charged does not exceed the actual cost of providing the service or product to the payor. Initiative 1935 would also amend Article XIIIC to provide that no local law, whether proposed by the governing body or by an elector, may impose any special tax unless and until that tax is submitted to the electorate and approved by a two -thirds vote. The full definitions of the terms referenced above, along with the full text of Initi ative 1935, may be viewed at the website of the California Attorney General.

Initiative 1935 is retroactive, and provides that any tax or exempt charge adopted after January 1, 2022 but prior to the effective date of Initiative 1935, which was not adopted in compliance with the requirements

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thereof, would be void 12 months after the effective date of Initiative 1935, unless the tax or exempt charge is reenacted in compliance with the provisions of Initiative 1935.

The City cannot predict whether Initiative 1935 will be approved at the November 5, 2024 Statewide election. If Initiative 1935 is approved, the City cannot provide any assurances that it will not have a material adverse effect on the City’s ability to adopt or increase rates, fees, and charges for the various services provided by the City.

TAX MATTERS
In the opinion of Stradling Yocca Carlson & Rauth LLP , Newport Beach, California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of cert ain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the Series 2024A Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. However, it should be noted that, with respect to applicable corporations as defined in Section 59(k) of the Internal Revenue Code of 1986, as amended (the “Code”), generally certain corporations with more than $1,000,000,000 of average annual adjusted financial statement income, interest (and original issue discount) with respect to the Series 2024A Bonds might be taken into account in determining adjusted financial statement income for purposes of computing the alternative minimum tax imposed by Section 55 of the Code on such corporations. In the further opinion of Bond Counsel, interest (and original issue discount) on the Series 2024A Bonds is exempt from State of California personal income tax.

Bond Counsel’s opinion as to the exclusion from gross income for federal income tax purposes of interest (and original issue discount) on the Series 2024A Bonds is based upon certain representations of fact and certifications made by the Authority and others and is subject to the condition that the Authority comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Series 2024A Bonds to assure that interest (and original issue discount) on the Series 2024A Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest (and original issue discount) on the Series 2024A Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Series 2024A Bond s. The Authority has covenanted to comply with all such requirements.

In the opinion of Bond Counsel, the difference between the issue price of a Series 2024A Bond (the first price at which a substantial amount of the Series 2024A Bonds of a maturity is to be sold to the public) and the stated redemption price at maturity of such Series 2024A Bond constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Beneficial Owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by a Beneficial Owner will increase the Beneficial Owner’s basis in the applicable Series 2024A Bond.

The amount of original issue discount that accrues to the Beneficial Owner of a Series 2024A Bond is excluded from the gross income of such Beneficial Owner for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals, and is exempt from State of California personal income tax.

The amount by which a Series 2024A Bond Owner’s original basis for determining loss o n sale or exchange in the applicable Series 2024A Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable bond premium, which must be amortized under Section 171 of the Code; such amortizable bond premium reduces the Series 2024A Bond Owner’s basis in the applicable Series 2024A Bond (and the amount of tax-exempt interest received with respect to the Series 2024A Bonds), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of bond premium may result in a Series 2024A Bond Owner realizing a taxable gain when a Series 2024A Bond is sold by the Owner for an amount equal to or less (under certain circumstances) than the original cost of the

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Series 2024A Bond to the Owner. Purchasers of the Series 2024A Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable bond premium.

The IRS has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the Series 2024A Bonds will be selected for audit by the IRS. It is also possible that the market value of the Series 2024A Bonds might be affected as a result of such an audit of the Series 2024A Bonds (or by an audit of similar municipal obligations). No assurance can be given that in the course of an audit, as a result of an audit, or otherwise, Congress or the IRS might not change the Code (or interpretation thereof) subsequent to the issuance of the Series 2024A Bonds to the extent that it adversely affects the exclusion from gross income of interest (and original issue discount) on the Series 2024A Bonds or their market value.

SUBSEQUENT TO THE ISSUANCE O F THE SERIES 2024A BONDS THERE MIGHT BE

FEDERAL, STATE OR LOCAL STATUTORY CHANGES (OR JUDICIAL OR REGULATORY CHANGES

TO OR INTERPRETATIONS OF FEDERAL, STATE OR LOCAL LAW) THAT AFFECT THE FEDERAL, STATE OR LOCAL TAX TREATMENT OF THE SERIES 2024A BONDS, INCLUDING THE IMPOSITION

OF ADDITIONAL FEDERAL INCOME OR STATE TAXES ON OWNERS OF TAX-EXEMPT STATE OR LOCAL OBLIGATIONS, SUCH AS THE SERIES 2024A BONDS . THESE CHANGES COULD ADVERSELY AFFECT THE MARKET VALUE OR LIQUIDITY OF THE SERIES 2024A BONDS. NO ASSURANCE CAN BE GIVEN THAT SUBSEQUENT TO THE ISSUANCE OF THE SERIES 2024A

BONDS STATUTORY CHANGES WILL NOT BE INTRODUCED OR ENACTED OR JUDICIAL OR

REGULATORY INTERPRETATIONS WILL NOT OCCUR HAVING THE EFFECTS DESCRIBED ABOVE. BEFORE PURCHASING ANY OF THE SERIES 2024A BONDS , ALL POTENTIAL

PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING POSSIBLE STATUTORY

CHANGES OR JUDICIAL OR REGULATORY CHANGES OR INTERPRETATIONS, AND THEIR COLLATERAL TAX CONSEQUENCES RELATING TO THE SERIES 2024A BONDS.

Bond Counsel’s opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. Bond Counsel has not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. The I ndenture and the Tax Certificate relating to the Series 2024A Bonds permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the effect on the exclusion from gross income of interest (and original issue discount) for federal income tax purposes with respect to any Series 2024A Bond if any such action is taken or omitted based upon the advice of counsel other than Stradling Yocca Carlson & Rauth LLP.

Although Bond Counsel has rendered an opinion that interest (and original issue discount) on the Series 2024A Bond s is excluded from gross income for federal income tax purposes provided that the Authority continues to comply with certain requirements of t he Code, the ownership of the Series 2024A Bonds and the accrual or receipt of interest (and original issue discount) on the Series 2024A Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any such tax consequences.

Accordingly, before purchasing any of Series 2024A Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences relating to the Series 2024A Bonds.

Should interest (and original issue dis count) on the Series 2024A Bonds become includable in gross income for federal income tax purposes, the Series 2024A Bonds are not subject to early redemption and will remain outstanding until maturity or until redeemed in accordance with the Indenture.

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

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CERTAIN LEGAL MATTERS
The validity of the Series 2024A Bonds and certain other legal matters are subject to the approving opinion of Stradling Yocca Carlson & Rauth LLP, Bond Counsel. Stradling Yocca Carlson & Rauth LLP, is also acting as Disclosure Counsel for the City. A complete copy of the proposed form of Bond Counsel opinion is contained in Appendix D hereto. Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Bond Counsel and Disclosure Counsel will receive compensation from the City contingent upon the sale and delivery of the Series 2024A Bonds. From time to time, Bond Counsel represents the Underwriter on matters unrelated to the Series 2024A Bonds. Certain legal matters will be passed upon for the Underwriter by Kutak Rock, LLP, for the Trustee by its counsel and for the Insurer by its counsel.

Counsel to the Underwriter will receive compensation contingent upon the issuance of the Series 2024A Bonds.

ABSENCE OF LITIGATION
To the best knowledge of the City and the Authority, there is no action, suit or proceeding pending or threatened either restraining or enjoining the execution or deli very of the Series 2024A Bonds, the Lease Agreement, the Ground Lease or the Indenture, or in any way contesting or affecting the validity of the foregoing or any proceedings of the Authority or the City taken with respect to any of the foregoing.

UNDERWRITING
The Series 2024A Bonds are being purchased by Stifel, Nicolaus & Company, Incorporated (the “Underwriter”). The Underwriter will purchase the Series 2024A Bonds from the Authority at a n aggregate purchase price of $__________ (representing the principal amount of the Series 2024A Bonds, [plus/less] [net] original issue [premium/discount] of $__________ and less an Underwriter’s discount of $___________). The purchase agreement relating to the Series 2024A Bonds provides that the Underwriter will purchase all of the Series 2024A Bonds if any are purchased. The obligation to make such purchase is subject to certain terms and conditions set forth in such purchase agreement, the approval of certain legal matters by counsel and certain other conditions.

The initial offering prices that are stated on the inside front cover page of this Official Statement may be changed from time to time by the Underwriter. The Underwriter may offer and sell the Series 2024A Bonds to certain dealers (including dealers depositing Series 2024A Bonds into investment trusts), dealer banks, banks acting as agent and others at prices lower than said public offering prices.

RATINGS
S&P Global Ratings, a Standard & Poor’s Financial Service s LLC business (“S&P”) has assigned a rating of “_____” to the Series 2024A Bonds based upon the delivery of the municipal bond insurance policy by the Insurer at the time of issuance of the Series 2024A Bonds. S&P has assigned the Series 2024A Bonds the rating of “_____” without regard to the delivery of the Policy. Such ratings reflect only the views of S&P and any desired explanation of the significance of such rat ings should be obtained from S&P . Generally, a rating agency bases its rating s on the in formation and materials furnished to it and on investigations, studies and assumptions of its own. Th ere is no assurance such rating s will continue for any given period of time or th at such rating will not be revised downward or withdrawn entirely by the rating agency, if in the judgment of such rating agency, circumstances so warrant. Any such downward revision or withdrawal of the rating may have an adverse effect on the market price of the Series 2024A Bonds. None of the Authority, the City or the Underwriter has undertaken any responsibility either to bring to the attention of the owners of the Series 2024A Bonds a proposed change in or withdrawal of the ratings or to oppose any such proposed revision or withdrawal.

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MUNICIPAL ADVISOR
Fieldman, Rolapp & Associates, Inc. , Irvine, California (the “ Municipal Advisor ”), served as municipal advisor to the Authority and the City with respect to the sale of the Series 2024A Bonds. The Municipal Advisor will receive compensation contingent upon the sale and delivery of the Series 2024A Bonds.

The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement.

The Municipal Advisor is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities.

CONTINUING DISCLOSURE
The City has covenanted for the benefit of the Owners of the Series 2024A Bonds to provide annually certain financial information and operating data relating to the Series 2024A Bonds and the City (the “Annual Report”), and to provide notices of the occurrence of certain enumerated events. For a complete listing of items of information which will be provided in each Annual Report and further description of the City’s undertaking with respect to the Annual Report and certain enumerated events, see APPENDIX E—“FORM OF CONTINUING DISCLOSURE CERTIFICATE.” The Annual Report is to be provided by the City not later than nine months following the end of the City’s fiscal year (which present ly ends on June 30), commencing with the report for the fiscal year ending June 30, 2024 and due March 31, 2025. The Annual Report will be filed by the City with the Municipal Securities Rulemaking Board. These covenants have been made in order to assist the Underwriter in complying with SEC Rule 15c2-12(b)(5). [Within the last five years, the City has not failed to comply with continuing disclosure obligations related to any of the Authority’s or the City’s outstanding obligations pursuant to SEC Rule 15c2-12(b)(5).] In order to promote c ompliance by the City and its related entities, including the Authority and the Former Agency, with their respective continuing disclosure undertakings, the City has retained Willdan Financial Services (“Willdan”) to serve as dissemination agent and assist such entities in complying with their continuing disclosure obligations. Willdan will also perform these duties for the land -secured financings involving the City’s community facilities districts. Additionally the City has taken the steps to amend its existing debt policy, which has been approved by the City Council, to ensure compliance with Rule 15c2-12.

FINANCIAL STATEMENTS OF THE CITY
Included herein as Appendix C is the Annual Comprehensive Financial Report of the City for the Fiscal Year ended June 30, 2023, together with the report thereon dated January 17, 2024 of Rogers, Anderson, Malody & Scott, LLP (the “Auditor”). The Auditor has not undertaken to update the audited financial statements of the City or its report or to take any action intended or likely to elicit information concerning the accuracy, completeness or fairness of the statements made in this Official Statement, and no opinion is expressed by the Auditor with respect to any event subsequent to its report dated January 17, 2024.

MISCELLANEOUS
References are made herein to certain documents and reports which are brief summaries thereof which do not purport to be complete or definitive and reference is made to such documents and reports for full and complete statements of the contents thereof. Copies of the Indenture, the Lease Agreement, the Ground Lease and other documents are available, upon request, and upon payment to the City of a charge for copying, mailing and handling, from the Chief Financial Officer of the City at 14177 Frederick Street, P.O. Box 88005, Moreno Valley, California 92552.

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Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Authority or the City and the purchasers or Owners of any of the Series 2024A Bonds.

The execution and delivery of this Official Statement have been duly authorized by the Authority and the City.

MORENO VALLEY PUBLIC FINANCING

AUTHORITY
By:

Executive Director

CITY OF MORENO VALLEY
By:

City Manager

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APPENDIX A

GENERAL INFORMATION REGARDING THE CITY OF MORENO VALLEY AND THE REGION The following information is presented as general background data. The Series 2024A Bond s are payable solely from the Base Rental Payments under the Facilities Sublease as described in the Official Statement. The taxing power of the City, the State or any political subdivision thereof is not pledged to the payment of the Base Rental Payments or the Series 2024A Bonds.

Location
The City of Moreno Valley (the “City”) is centrally located in Southern California, 66 miles east of Los Angeles and 100 miles north of San Diego. The City encompasses approximately 51 square miles of land area in western Riverside County. Geographically, the City is bordered by three low-lying mountain ranges, March Air Reserve Force Base and Lake Perris State Park. The City is situated at the junction of two major highways, California State Highway 60 (the Moreno Valley Freeway) and Interstate 215.

Population
The City is the second lar gest city in Riverside County with an estimated population of 208,289 as of January 1, 2023. The table below sets forth the total population of the City, the County of Riverside (the “County”) and the State of California (the “State”).

CITY OF MORENO VALLEY, COUNTY OF RIVERSIDE AND STATE OF CALIFORNIA Population
Calendar Year
2019 2020 2021 2022 2023
Moreno Valley 207,190 208,791 209,426 208,302 208,289
Riverside County 2,419,057 2,440,719 2,454,453 2,430,976 2,439,234 California 39,605,361 39,648,938 39,466,855 39,078,674 38,940,231

Source: State of California Department of Finance.

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Employment
The following table summarizes the labor force, employment and unemployment figures for the years 2019 through 2023 for the City, the County, the State and the nation as a whole.

CITY OF MORENO VALLEY, COUNTY OF RIVERSIDE,

STATE OF CALIFORNIA AND UNITED STATES
Average Annual Civilian Labor Force, Employment and Unemployment Year and Area Labor Force Employment(1) Unemployment(2) Unemployment
Rate (%)(3)
2019
City of Moreno Valley 95,400 91,200 4,100 4.3%
Riverside County 1,105,700 1,058,700 47,000 4.2
California 19,353,700 18,550,500 803,200 4.2
United States(4) 163,539,000 157,538,000 6,001,000 3.8

2020
City of Moreno Valley 97,100 87,000 10,100 10.4%
Riverside County 1,107,700 997,700 110,000 9.9
California 18,821,200 16,913,100 1,908,100 10.1
United States(4) 160,742,000 147,795,000 12,947,000 8.1

2021
City of Moreno Valley 98,600 90,400 8,200 8.3%
Riverside County 1,130,500 1,047,700 82,800 7.3
California 18,923,200 17,541,900 1,381,200 7.3
United States(4) 161,204,000 152,581,000 8,623,000 5.3

2022
City of Moreno Valley 99,000 94,600 4,400 4.4%
Riverside County 1,145,700 1,097,200 48,500 4.2
California 19,169,300 18,348,900 820,400 4.3
United States(4) 164,287,000 158,291,000 5,996,000 3.6

2023
City of Moreno Valley 100,100 95,100 5,100 5.0%
Riverside County 1,157,900 1,102,300 55,600 4.8
California 19,308,300 18,388,300 920,000 4.8
United States(4)

(1) Includes persons involved in labor-management trade disputes. (2) Includes all persons without jobs who are actively seeking work. (3) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures in this table.
(4) Not strictly comparable with data for prior years.

Source: California Employment Development Department, March 2023 Benchmark and U.S. Department of Labor, Bureau of Labor Statistics.

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The following tables show the largest employers located in the City and the County as of Fiscal Year 2023.

CITY OF MORENO VALLEY
Largest Employers – Fiscal Year 2023
Employer Number of Employees Type of Business
March Air Reserve Base 6,500 Military
Amazon.com, Inc. 4,854 Fulfillment
Riverside County Regional Medical Center 4,325 Medical
Moreno Valley Unified School District 3,673 Public Agency Kaiser Permanente Community Hospital 1,467 Medical
Ross Dress for Less / D D’s Discounts 1,366 Distribution Harbor Freight Tools 1,150 Distribution
Procter & Gamble 632 Distribution
Val Verde Unified School District 620 Public Schools
United Natural Foods (UNFI) 559 Distribution

Source: City of Moreno Valley Annual Comprehensive Financial Report Fiscal Year Ended June 30, 2023.

COUNTY OF RIVERSIDE
Largest Employers – Fiscal Year 2023
Employer Number of Employees
County of Riverside 25,366
Amazon.com, Inc. 14,317
March Air Reserve Base 9,600
Nestle UA 8,874
University of California, Riverside 8,623
State of California 8,383
Wal-Mart 7,494
Moreno Valley Unified School District 6,020
Kaiser Permanente Riverside Medical Center 5,817
Corona-Norco Unified School District 5,478

Source: County of Riverside Annual Comprehensive Financial Report Fiscal Year Ended June 30, 2023.

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Industry
Residents of the City find employment throughout the Riverside-San Bernardino-Ontario Labor Market Area. This labor market area, as defined for reporting purposes by the California Employment Development Department, has boundaries coterminous with those of Riverside and San Bernardino Counties. The following table represents the Annual Average Labor Force and Industry Employment for the County for the period from 2019 through 2023.

RIVERSIDE-SAN BERNARDINO-ONTARIO MSA
Industry Employment and Labor Force (Annual Average)
2019 2020 2021 2022 2023
Civilian Labor Force 2,070,700 2,073,900 2,120,600 2,148,700 2,171,500 Civilian Employment 1,986,100 1,872,600 1,964,300 2,058,400 2,068,800 Civilian Unemployment 84,600 201,300 156,300 90,200 102,700 Civilian Unemployment Rate 4.1% 9.7% 7.4% 4.2% 4.7%

Total Farm 15,400 13,900 13,700 13,800 13,100
Total Nonfarm 1,552,100 1,487,800 1,575,100 1,659,800 1,679,800 Total Private 1,290,900 1,238,700 1,333,100 1,409,800 1,418,900 Goods Producing 208,900 200,500 207,700 216,300 216,100 Mining and Logging 1,200 1,300 1,400 1,500 1,500
Construction 107,200 105,000 110,100 114,700 115,700
Manufacturing 100,600 94,300 96,100 100,000 98,900
Service Providing 1,343,200 1,287,400 1,367,400 1,443,500 1,463,700 Trade, Transportation and Utilities 394,400 403,800 443,200 464,900 456,500 Wholesale Trade 67,100 64,600 67,400 69,500 68,700
Retail Trade 180,700 168,800 177,000 181,000 182,700
Transportation, Warehousing and Utilities 146,600 170,500 198,800 214,400 205,100 Information 11,500 9,400 12,500 13,000 13,300
Financial Activities 45,000 43,700 45,200 46,000 44,900 Professional and Business Services 158,700 154,000 166,600 173,900 164,800 Educational and Health Services 250,300 248,700 254,300 267,500 287,500 Leisure and Hospitality 175,900 139,200 160,200 180,900 186,500 Other Services 46,200 39,600 43,600 47,400 49,300
Government 261,200 249,100 242,000 250,000 260,900 Total, All Industries 1,567,500 1,501,800 1,588,800 1,673,500 1,692,900

Note: Does not include proprietors, self-employed, unpaid volunteers or family workers, domestic workers in households and persons involved in labor-management trade disputes. Employment reported by place of work. Items may not add to total due to independent rounding.

The “Total, All Industries” data is not directly comparable to the employment data found in this Appendix G.

Source: State of California, Employment Development Department, March 2023 Benchmark.

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Assessed Valuation
The table below sets forth the City’s assessed valuation of property for the last five Fiscal Years for which information is available.

CITY OF MORENO VALLEY
Assessed Valuation of Taxable Property (Dollars in Thousands) Fiscal Year
Ended June 30
Secured
Value
Unsecured
Value
Total Assessed
and Estimated
Full Value
2019 $15,490,166 $637,631 $16,127,798
2020 16,780,625 718,741 17,499,366
2021 17,993,472 744,145 18,737,617
2022 18,891,344 732,720 19,624,064
2023 20,519,932 795,211 21,315,143

Source: City of Moreno Valley Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2023.

Tax Levy and Tax Collection
Below is a summary of the property tax levies and total collections for the last five Fiscal Years for which information is available.

CITY OF MORENO VALLEY
Property Tax Levies and Collections

Collected within the Fiscal
Year of Levy
Total
Collections to Date
Fiscal Year
Ended
June 30 Taxes Levied Amount
Percent of
Levy(1)
Collections
in
Subsequent
Years Amount
Percent of
Levy
2019 $30,459,787 $30,334,346 99.59% $125,440 $30,459,787 100.00 2020 31,609,650 31,609,650 100.00 - 31,609,650 100.00
2021(2) 33,423,930 32,965,479 98.63 458,450 33,423,930 100.00 2022 35,239,398 34,720,200 98.53 519,198 35,239,398 100.00 2023 37,433,664 37,433,664 100.00 - 37,433,664 100.00

(1) The City began participating in the “Teeter Plan” in FY 1993 -94. The Teeter Plan adopted by the County of Riverside guarantees each participating city payment equal to 100% of the total tax value. Any delinquencies and the associated penalties and interest are collected and maintained by the County (2) Starting in fiscal year 2021, with the implementation of GASB 84, Custodial Funds receiving tax le vies (Special Tax) are accounted for as liabilities, therefore, excluded from the Property Tax Levies and Collections calculation.

Source: City of Moreno Valley Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2023.

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Largest Taxpayers
The principal property taxpayers in the City for 2023 were as follows:

CITY OF MORENO VALLEY
Largest Property Taxpayers
Taxpayer
2023 Taxable
Assessed Valuation
% of Total
Assessed
Valuation
Skechers USA, Inc. $ 327,192,762 1.57%
Duke Realty LP 269,650,486 1.29
First Industrial LP 268,267,502 1.28
TGA Centerpointe LLC 267,104,459 1.28
Prologis Targeted US Logistics Fund LP 198,349,302 0.95 Prologis 160,579,127 0.77
Ross Dress for Less, Inc. 150,736,696 0.72
Amazon Com Services LLC 147,298,314 0.71
FR Cal Moreno Valley LLC 131,853,947 0.63
Walgreen Company 125,968,859 0.60
TOTAL $ 2,047,001,454 9.80%

Source: City of Moreno Valley Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2023.

Building Activity
In addition to annual building permit valuations, the numbers of permits for new dwelling units issued each year from 2018 through 2022 are shown in the following tables for both the County and the City.

COUNTY OF RIVERSIDE
Building Permit Valuations (Dollars in Thousands)
2018 2019 2020 2021 2022
Valuation ($000):

Residential $ 2,558,081 $ 2,275,405 $ 2,519,303 $ 2,162,239 $ 2,768,803 Non-residential 1,959,680 1,285,856 1,153,778 1,253,029 1,176,853 Total* $4,517,761 $ 3,561,261 $ 3,673,081 $ 3,415,268 $ 3,945,656 Residential Units:

Single family 7,540 6,563 8,443 7,360 8,863
Multiple family 1,628 1,798 723 1,126 2,861
Total 9,168 8,361 9,166 8,486 11,724

* Totals may not add to sums because of rounding.

Source: Construction Industry Research Board.

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CITY OF MORENO VALLEY
Building Permit Valuations (Dollars in Thousands)
2018 2019 2020 2021 2022
Valuation ($000):

Residential $ 322,159 $ 83,548 $ 89,140 $ 100,963 $ 74,472 Non-residential 433,939 427,693 158,503 54,465 37,407 Total $ 756,098 $ 511,241 $ 247,643 $ 155,428 $ 111,879 Residential Units:

Single family 854 315 186 377 198
Multiple family 372 14 237 10 97
Total 1,226 329 423 387 295

Note: Totals may not add to sums because of rounding.

Source: Construction Industry Research Board.

Commercial Activity
Trade outlet and retail sales activity for the last five Fiscal Years for which information is available are summarized below.

CITY OF MORENO VALLEY
Taxable Transactions and Sales Permits (Dollars in Thousands) Calendar Year
Total Retail
Stores
Total Retail
Stores Permits
Total Taxable
Transactions
Total Issued
Permits
2017 $1,506,226 2,152 $1,691,312 2,950
2018 1,609,248 2,228 1,789,391 3,103
2019 1,666,684 2,347 1,856,100 3,351
2020 1,659,839 2,629 1,882,893 3,833
2021 2,767,779 2,584 3,040,765 3,863
2022 2,865,012 2,643 3,207,162 3,931
2023 2,666,433 2,676 3,040,765 1,326

Source: California Department Tax and Fee Administration.

CITY OF MORENO VALLEY
Retail Sales (Dollars in Thousands)
Type of Business 2019 2020 2021 2022 2023
Auto Dealers $ 341,773 $ 374,779 $ 498,784 $ 524,464 $ 472,020 Home Furnishing 50,213 56,631 71,011 63,887 52,733 Building Materials 144,205 202,136 198,362 189,717 187,257 Food Stores 144,879 145,295 160,495 174,518 161,753 Service Stations 197,059 155,769 241,649 278,061 245,088 Apparel Stores 127,678 93,146 151,392 138,558 132,708 General Merchandise Stores 304,554 294,182 357,361 376,288 349,159 Eating/Drinking Places 287,618 268,659 336,447 364,886 399,652 Other Retail Stores 68,705 69,242 752,274 754,628 666,057 Retail Stores Totals $ 1,666,684 $ 1,659,839 $ 2,767,779 $ 2,865,012 $ 2,666,433 All Other Outlets 189,416, 223,054 279,971 342,150 374,332 Total All Outlets $ 1,856,100 $ 1,882,893 $ 3,047,751 $ 3,207,162 $ 3,040,765

Source: California Department Tax and Fee Administration.

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The table below presents taxable sales for the County for the last five Fiscal Years for which information is available.

COUNTY OF RIVERSIDE TAXABLE SALES
Taxable Sales
(Dollars in Thousands)
Year Permits Taxable Transactions
2019 64,063 $40,626,998
2020 69,284 42,313,474
2021 64,335 55,535,195
2022 66,738 62,117,152
2023 68,670 61,094,593

Source: California Department Tax and Fee Administration.

Personal Income
The following tables show the personal income and per capita personal income for the City, County, State of California and United States for the last five Fiscal Years for which information is available.

CITY OF MORENO VALLEY, COUNTY OF RIVERSIDE,

STATE OF CALIFORNIA, AND UNITED STATES
Personal Income
Year
City of
Moreno Valley
County of
Riverside California United States
2019 $4,085,746 $104,794,676 $2,632,279,775 $18,542,262,000 2020 4,500,668 116,939,915 2,767,521,400 19,609,985,000 2021 4,490,722 126,261,006 3,013,676,900 21,392,812,000 2022 5,301,976 127,195,983 3,006,647,300 21,820,249,000 2023 5,969,563 --(1) 3,133,678,900 22,952,028,000

(1) 2023 figures not yet available for County of Riverside Note: Dollars in Thousands.

Source: U.S. Department of Commerce, Bureau of Economic Analysis and City of Moreno Valley Fiscal Year Ending June 30, 2023 ACFR.

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CITY OF MORENO VALLEY, COUNTY OF RIVERSIDE,

STATE OF CALIFORNIA, AND UNITED STATES
Per Capita Personal Income
Year
City of
Moreno Valley
County of
Riverside California United States
2016 $17,874 $38,114 $58,048 $50,015
2017 18,262 39,148 60,549 52,118
2018 18,796 40,587 63,720 54,606
2019 19,615 42,418 66,619 56,490
2020 21,551 48,265 70,061 56,533
2021 21,443 51,468 76,991 59,110
2022 25,319 51,415 77,036 56,419
2023 28,660 --(2) --(2) --(2)

(1) Per capita personal income is the total personal income divided by the total mid-year population estimates of the U.S. Bureau of the Census. All dollar estimates are in current dollars (not adjusted for inflation). (2) 2023 figures not yet available for County of Riverside, State of California and the United States.

Source: U.S. Department of Commerce, Bureau of Economic Analysis and City of Moreno Valley Fiscal Year Ending June 30, 2023 ACFR.

Agriculture
Agriculture is a significant source of income in the County. In 2020, principal agricultural products were milk, nursery stock, table grapes, hay, lemons, bell peppers, eggs, grapefruit, dates and avocados.

Four areas in the County account for the major portion of agricultural activity: the Riverside/Corona and San Jacinto/Temecula Valley Districts in the western portion of the County, the Coachella Valley in the central portion and the Palo Verde Valley near the County’ s eastern border. The County, and all of Southern California, has from time to time, including in recent years, experienced a severe drought. The County cannot predict the impact that a prolonged drought would have on agricultural production in the County.

Utilities
The City receives water service from the Eastern Municipal Water District and Box Springs Mutual Water Company. The City is also serviced by Frontier (formerly Verizon) and Southern California Gas Company. Electrical service for most of the City’s developed areas is provided by Southern California Edison.

The City has established Moreno Valley Electric Utility to provide electric service for the remainder of the south and east ends of the City.

Transportation
The City is centrally located within the Inla nd Empire. Highways passing through the City include California State Highway 60 and Interstate 215. California State Highway 60 connects in Riverside to California State Highway 91, which connects to Orange County and Long Beach. California State Highw ay 60 and Interstate 215 provide access to Interstate 10 within 15 miles of the City. Rail service in the City includes the Burlington Northern Santa Fe branch line. The main line service in Riverside has stop locations at the Union Pacific, Southern Pac ific and Burlington Northern Santa Fe stations. Metrolink commuter rail service is available in Perris and in Riverside to Los Angeles and Orange County.

Ontario International Airport (owned and operated by Ontario International Airport Authority), located within the City , is served by AeroMexico, Alaska Airlines, American Airlines, Delta Air Lines, Southwest Airlines, United Airlines/United Express, US Airways and Volaris. Various airlines provide freight services at

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Ontario International Airport. Riv erside Municipal Airport has general aviation facilities with 5,400 feet and 1,600 feet runways.

Education
The City is served by two public school districts: Moreno Valley Unified School District , with an approximate enrollment of 33,134 students , and Val Verde Unified School District , with an approximate enrollment of 20,244 students. Moreno Valley Unified School District has 23 elementary schools, six middle schools, four comprehensive high schools, one charter school, one adult school, one continuation school, a community day school, one pre-school and one academic center. Val Verde Unified School District serves the communities of Perris, Mead Valley and Moreno Valley. Val Verde Unified District has one pre -school, 13 elementary schools, four middle schools, three high schools and one continuation high school.

The City is also home to Moreno Valley Community College.

Recreation and Culture
Lake Perris State Park offers boating, swimming, water -skiing, fishing and camping within its 8,300 acres. Box Springs Mountain Park provides trails for hiking and horseback riding. The City centralized location allows residents to visit nearby mountain resorts, Palm Springs and the beach cities with relative ease. The City’s park system consists of 29 parks w ith 328 acres. The City offers a variety of recreational activities for adults and youth. The City is served by the City’s library system.

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APPENDIX B

SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS

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APPENDIX C

ANNUAL COMPREHENSIVE FINANCIAL REPORT
OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2023

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APPENDIX D

PROPOSED FORM OF BOND COUNSEL OPINION
[Date of Delivery]
Moreno Valley Public Financing Authority
Moreno Valley, California
Re: $___________ Moreno Valley Public Financing Authority Lease Revenue Refunding Bonds, Series 2024A
Ladies and Gentlemen:

We have acted as bond counsel to the Moreno Valley Public Financing Authority (the “Authority”) in connection with the issuance by the Authority of $ ___________ Moreno Valley Public Financing Authority Lease Revenue Refunding Bonds , Series 2024A (the “Bonds”), pursuant to the provisions of Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the California Government Code (the “Bond Law”), and pursuant to an Indenture, dated as of August 1, 2024 (the “Indenture”), by and among the Authority, the City of Moreno Valley (the “City”) and Wilmington Trust, National Association, as Trustee. The Bonds will be principally secured by lease payments to be made by the City pursuant to a Lease Agreement, dated as of August 1, 2024 (the “Lease”), by and between the Authority and the City. We have examined the law and such certified proceedings and other documents, agreements, opinions and matters as we deem necessary to render this opinion. This opinion is based on current statutory and constitutional law and published court decisions as of the date hereof. Capitalized terms used herein and not otherwise defined shall have the meaning ascribed thereto in the Indenture.

As to questions of fact material to our opinion, we have relied upon representations of the Authority contained in the Ind enture and in the certified proceedings and certifications of public officials and others furnished to us, without undertaking to verify the same by independent investigation.

We have assumed the genuineness of all documents and signatures presented to us, the authenticity of documents submitted as originals and the conformity to originals of documents submitted as copies. We have not undertaken to verify independently, and have assumed, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions referred to in the preceding paragraphs of this opinion. Furthermore, we have assumed compliance with all covenants and agreements contained in the Indenture, the Lease and the Gr ound Lease. We call attention to the fact that the rights and obligations under the Bonds, the Indenture, the Lease, the Ground Lease, the Assignment Agreement and the Tax Certificate may be limited by bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, by the application of equitable principles and the exercise of judicial discretion in appropriate cases and by the limitations on legal remedies against cities and public agencies in the State of California.

Based upon the foregoing we are of the opinion, under existing law, as follows:

1. The Authority is a joint exercise of powers authority duly organized and validly existing under the laws of the State of California with the full power to enter into the I ndenture and the Lease, to perform the agreements on its part contained therein and to issue the Bonds.

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2. The Indenture and the Lease have each been duly authorized, executed and delivered by the Authority and the Indenture and the Lease constitute the valid and binding obligations of the Authority enforceable against the Authority in accordance with their respective terms. The Indenture creates a valid pledge of the Base Rental Payments and other moneys pledge d under the Indenture, subject to the provisions of the Indenture.

3. The Indenture and the Lease have each been duly authorized, executed and delivered by the City and the Indenture and the Lease constitute the valid and binding obligations of the City enforceable against the City in accordance with their respective terms.

4. The Bonds have been duly and validly authorized by the Authority and are legal, valid and binding limited obligations of the Authority, enforceable in accordance with their terms and the terms of the Indenture. The Bonds are limited obligations of the Authority payable solely from the Base Rental Payments and other moneys pledged under the Indenture as provided in the Indenture, but are not a debt of the City, the State of California or any other political subdivision thereof within the meaning of any constitutional or statutory limitation, and, neither the faith and credit nor the taxing power of the City, the State of California, or any of its political subdivisions is pledged for the payment thereof. The Authority has no taxing power.

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

6. Interest (and original issue discount) on the Bonds is exempt from personal income taxes imposed in the State of California.

7. The difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity is to be sold to the public) and the stated redemption price at maturity with respect to such Bond constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Bond Owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by a Bond Owner will increase the Bond Owner’s basis in the applicable Bond. Original issue discount that accrues to the Bond Owner is excluded from the gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals (as described in paragraph 5 above) and is exempt from State of California personal income tax.

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

The opinions expressed in paragraphs (5) and (7) above as to the exclusion from gross income for federal income tax purposes of interest (and original issue discount) on the Bonds are subject to the condition that the Authority and the City comply with all requirements of the Code, that must be satisfied subsequent to the issuance of the Bonds to assure that such interest (and original issue discount) will not become includable in gross income for federal income tax purposes. Failure to comp ly with such requirements of the Code might

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cause interest (and original issue discount) on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The Authority and the City have covenanted to comply with all such requirements. Except as set forth in paragraphs (5), (6), (7) and (8) above, we express no opinion as to any tax consequences related to the Bonds.

Certain requirements and procedures contained or referred to in the Indenture, t he Lease and Tax Certificate may be changed, and certain actions may be taken, under the circumstances and subject to the terms and conditions set forth in the Indenture, the Lease and Tax Certificate, upon the advice or with the approving opinion of counsel nationally recognized in the area of tax-exempt obligations. We express no opinion as to the effect on the exclusion of interest on the Bonds from gross income for federal income tax purposes on and after the date on which any such change occurs or act ion is taken upon the advice or approval of counsel other than Stradling Yocca Carlson & Rauth LLP.

Our opinion is limited to matters governed by the laws of the State of California and federal law. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction.

The opinions expressed herein are based upon an analysis of existing statutes, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. We call attention to the fact that the foregoing opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether such actions or events are taken (or not taken) or do occur (or do not occur). Our engagement with respect to the Bonds terminates upon their issuance, and we disclaim any obligation to update the matters set forth herein.

We express no opinion herein with respect to any ind emnification, contribution, choice of law, choice of forum, penalty or waiver provisions contained in the Bonds, the Indenture, the Lease, the Ground Lease or the Assignment Agreement; nor do we express any opinion with respect to the state or quality of title to any of the real or personal property described in the Lease or the Ground Lease, or the accuracy or sufficiency of the description contained therein, or the remedies available to enforce liens on, any such property contained therein.

We express no opinion herein as to the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds, nor do we express any opinion with respect to the state or quality of title to any of the real or personal property d escribed in the Indenture or the Lease, or the accuracy or sufficiency of the description of any such property contained therein. We expressly disclaim any duty to advise the Owners of the Bonds with respect to the matters contained in the Official Statement and any other offering material relating to the Bonds.

We have not made or undertaken to make an investigation of the state of title to any of the real property described in the Lease or of the accuracy or sufficiency of the description of such propert y contained therein, and we express no opinion with respect to such matters.

Respectfully submitted,

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APPENDIX E

FORM OF CONTINUING DISCLOSURE CERTIFICATE

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APPENDIX F

BOOK-ENTRY ONLY SYSTEM
The information in this section concerning DTC and DTC’s book -entry only system has been obtained from sources that the Authority believes to be reliable, but the Authority takes no responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial ownership interests in the Series 2024A Bonds, payment of principal, premium, if any, accreted valu e and interest on the Series 2024A Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the Series 2024A Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC.

1. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Series 2024A Bonds (the “Securities”). The Securities will be issued as fully -registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully -registered Security certificate will be issued for each maturity of the Securities in the aggregate principal amount of such maturity, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.

2. DTC, the world’s largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through ele ctronic computerized book -entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, ban ks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has an S&P Global Ratings highest rating: “AA+.” The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. The information set forth on such website is not incorporated herein by reference.

3. Purchases of Securitie s under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records.

Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as peri odic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction.

Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct an d Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book -entry system for the Securities is discontinued.

4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede &

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Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers .

5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subje ct to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

6. Redemption notices shall be sent to DTC. If less than all of the Securities within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.

7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote wit h respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).

8. Principal, redemption price and interest payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Authority or the Paying Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for th e accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Paying Agent, or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, redemption price and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Paying Agent, disbursement of such payment s to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

9. If applicable, a Beneficial Owner shall give notice to elect to have i ts Securities purchased or tendered, through its Participant, to tender/remarketing agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant’s interest in the Securities, on DTC’s records, to tender/ remarketing agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC’s recor ds and followed by a book -entry credit of tendered Securities to tender/remarketing agent’s DTC account.

10. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to the Authority or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.

11. The Authority may decide to discontinue use of the system of book -entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.

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APPENDIX G

SPECIMEN MUNICIPAL BOND INSURANCE POLICY

Moreno Valley City CouncilJune 4, 2024

Moreno Valley City Council
June 4, 2024